The Other Credit Crunch

03 Apr 2008Archived News Energetics in the News

Published: FM Magazine - by Tina Luton - Cheryl Bowler, Principal Consultant; Carbon Markets, Energetics Pty Ltd speaks about the Kyoto Protocol and Green Markets.

 

The ratification of the Kyoto Protocol since the Federal Election November 2007 has seen a flurry of carbon markets activity. To provide a snapshot of the issues involved in this emerging area, FM speaks with leading expert Cheryl Bowler who has 16 years industry experience trading in both electricity and greenhouse gas markets.

FM: Australia has ratified the Kyoto Protocol, committing us to reduce our greenhouse gas emissions to 108 percent of 1990 levels in the period 2008-2012. In an effort to meet this target the Commonwealth Government has committed to introducing a carbon emissions trading scheme by 2010. How will this trading scheme work?
CB: The Australian Emissions Trading Scheme (AETS) will work by placing a cap on the emissions Australia can produce. Permits would then be issues (either freely or auctioned) up to the level of the cap. Each year, firms would surrender a number of permits equal to their emissions. Permits will be actively traded and will attract a price. Companies that can easily reduce emissions will avoid his cost, which frees up permits for those companies who have limited opportunities to reduce their emissions.

FM: Does Ratification affect Australia on an international level?
CB: The ratification of the Kyoto Protocol opens the door to a range of international carbon trading opportunities for Australian businesses and will link us to the multibillion dollar international carbon market. The design of the AETS will set up parameters around international linking, particularly in the early stages of implementation.

FM: What sorts of offsets are allowed under the trading system?
CB: The offsets will come from sectors that are not covered under the cap, such as reforestation activities and the agricultural sector. It is important to note that offsets aren’t a permanent solution to greenhouse gases. Trees are not infinite absorbers of greenhouse gases; once hey reach maturity they actually stop absorbing carbon dioxide. Offsets merely buy us some time while we transition to sustainable energy sources.

FM: The Australian government introduced the national Greenhouse and Energy Reporting Act in September 2007, with first reporting commencing from 1 July 2008. How will this affect the role of facility managers?
CB: Many of the larger building owners will be required to report under the Act. As a result owners will be pushing for the sub-metering of tenants where they are currently not sub-metered. Facility managers will need to ensure stringent protocols are set up for the monitoring and reporting of energy use to enable building owners to comply with the Act.

FM: The Australian Competition and Consumer Commission (ACCC) recently issued a warning to consumers about carbon offsets due to concerns over “misleading and deceptive conduct” by certain companies following investigations into ‘green’ advertising claims.
One of the companies under investigation claimed that use of its electricity would be the same as “not driving your car for two years”. Another company claimed that its products would provide “100 percent green electricity at no extra cost”. In each case, the companies acknowledged that this advertising might be misleading. How can consumers and indeed businesses protect themselves against misappropriation?
CB: The best way to ensure that you are getting what you paid for is to buy from government accredited sources, such as GreenPower for renewable energy and Greenhouse Friendly for carbon offsets. For example, GreenPower is the only way that a building can increase its Australian Building Greenhouse Rating (ABGR).

FM: There has been some backlash recently over some buildings being promoted as having a higher AGBR than they actually do…
CB: There appear to have been some cases where project developers and property owners have misled tenants over the star ratings of the building and the tenants are considering taking legal action. The ABGR rating must be done by and independent assessor and approved by the relevant state authority. It is important to realise that high ABGR buildings (non GreenPower) are more efficient with lower operational costs and lower greenhouse gas emissions. The lower costs and the desire to be green, is what attracts tenants to high start rated buildings.

FM: How is GreenPower affected by carbon emissions trading?
CB: There will still be a role for GreenPower once emissions trading commences. Unlike offsets, renewable energy provides us with a sustainable energy alternative. The higher the demand for GreenPower, he more likely that new renewable generation is built to displace the coal-fired power stations.

Five Key Concerns of Green Marketing

The ACCC has identified five main areas of concern when it comes to ‘green’ marketing campaigns:

  • Effectiveness of the ‘offset’ – the lack of accepted standards relating to carbon credits means that consumers may be misled as to the effectiveness of particular offsets at yielding reductions in carbon emissions. For example, the effectiveness of tree planting as a method of offsetting carbon emissions is highly variable, and often disputed.
  • Accuracy of the carbon footprint calculation – similarly, the process of auditing carbon emissions is currently unregulated, so that there are no clear standards as to how a carbon footprint is to be measured. As a result, a product or service claiming to be carbon neutral may only be ‘green’ to the extent of a potentially inaccurate carbon calculation.
  • False claims of carbon-neutrality – the ACCC is also concerned that companies may make false claims as to carbon neutrality that are simply false, and clearly in breach of the TPA.
  • Claims as to future carbon neutrality – are also potentially misleading where there are insufficient disclaimers as to expected time-frames of the offset process.
  • Claims of ‘low carbon’ – where the proportion of carbon neutrality is not specified, the ACCC is concerned that consumers could be misled as to the extent to which carbon emissions associated with a product of service have been offset.
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