Carbon 

CARBON PRICE (TAX) 

In November 2011, the Labor Government successfully enacted its Clean Energy Bills, including carbon pricing legislation. Despite political uncertainty, informed commentators believe it is unlikely that this legislation will be repealed.

The pricing of carbon will take effect in July 2012 after many years of debate, initially at a fixed price paid by large emitters. After three years a carbon emissions trading scheme will replace the transitional fixed price scheme.

Importantly for PEL, pricing carbon means a step change in the level of diligence and accuracy companies need to apply to measuring their emissions. PEL is well placed to provide expert advice and technologies to assist companies meet their obligations and optimise financial outcomes.

REPORTING REGULATIONS 

In preparation for emissions trading, larger emitters have been required by law since 2007 to report their greenhouse gas (carbon) emissions and energy consumption every year. Under the National Greenhouse and Reporting (NGER) Act 2007, emissions of the following greenhouse gases are reported:

• Carbon Dioxide
• Methane
• Nitrous oxide

Major industries targeted include:

• Energy
• Industrial Processes
• Non-legacy waste (private and/or council owned landfills)

Excluded industry sectors include:

• Agriculture
• Land sector
• Landfills (pre 1st July 2012)
• Combustion of liquid petroleum fuels, LPG, LNG or CNG (However, some fuels may be effected through changes in fuel tax rather than targeted directly by the carbon tax)

The emission attributes under the carbon pricing legislation include:

• Cost of unit is $23 per tonne
• Transferrable and can be used as a security
• Have unique ID numbers

CARBON TAX TIME PHASES 

During the introduction of the carbon pricing there are two significant time periods.

Fixed Price Period

This period is between 1st July 2012 and 30th June 2015. During this time all liable entities must pay $23 per unit, where one unit is equivalent to one tonne of carbon emitted. Some industries are excluded from paying tax and others will receive rebates. Only Australian related abatement programs (not international) are allowed during this period.

Abatement Activities

Liable entities can decrease their total tax costs by up to 5% through Carbon Farming Initiatives (CFI) or Australian based initiatives that reduce or avoid carbon emissions.

Cash flow

During the fixed price phase, all liable entities must pay 75% of their total tax by the 15th June each year and the remainder by the 1st February the following year.

Flexible Price Period

This period will begin on the 1st July 2015 where international abatements (Carbon Price Mechanism) will then also be allowed along with Australian CFIs and for up to 50% of the total tax amount. Carbon trading will also commence which will means the carbon price per unit will be more market driven.

With trading in place, the floor price of carbon will start at $15 dollars.

Making Payment Summary

Carbon units can be purchased from the Clean Energy Regulator during the Fixed Price Period and during Flexible Price Period also from market. Liable entities can also engage in Australian CFIs or international CPMs to less total tax costs. There may also be subsidy units from the government if you are in a qualifying sector.

CARBON TAX AND PACIFIC ENVIRONMENT 

What can the PEL Carbon Group do to assist with Carbon?

Audit

PEL has been providing audit support over the last few years to industrial and resource clients. We have consultants qualified at Category 1, 2 and 3 levels of audit.

• Category 1: Applicants for Category 1 (technical) and Category 1 (non-technical) must demonstrate knowledge of certain provisions of both the Act and its regulations. In addition, applicants for Category 1 (technical) must demonstrate knowledge of emissions measurement methodologies detailed in the National Greenhouse and Energy Reporting (Audit) Determination 2009. (minimum 350 hours of relevant audit experience).
• Category 2: Applicants for Category 2 need to demonstrate knowledge and experience in audit team leadership and the provision of assurance. (Minimum 700 hours relevant audit experience – 490 hours as Lead Auditor).
• Category 3: Applicants for Category 3 need to demonstrate the same knowledge and experience required for Category 2,and have participated in at least two greenhouse and energy audits.

Reporting

PEL has built a comprehensive managed service, using the NGER module from its EnviroSuite Platform to provide all reporting capabilities for clients. This also extends to NPI (National Pollutant Inventory), CDP (Carbon Disclosure Project) and EEO (Energy Efficiencies Opportunities) schemes.

Planning & Strategy

PEL consultants are uniquely versed in the science and the law surrounding emissions. We have represented our clients and legal companies in courts for many years. As an organisation, we are positioned as a leader in the field of end to end environmental management. Our consultants have experience in the field of carbon before the introduction of compulsory reporting greenhouse emissions in Australia. Our team of process engineers understand the fundamentals of compulsory environmental reporting and auditing.

Combined with our experience in the development of environmental management systems, we are also able to work with our clients on reporting verification and environmental auditing.

For automated solutions, our technology group has developed the EnviroSuite emissions reporting module, which is capable of producing real-time estimates of greenhouse emissions, as well as meeting all corporate and regulatory requirements.

Sustainability 

Large companies, both national and multi-national are putting in place the capabilities to prepare for increased environmental obligations. Carbon is only a small part of this. This will require implementation of new procedures, monitoring, technology and executive reporting. This has been in place for some companies for a number of years and is now extending to all who have emissions of one form or another to manage.

At an executive level, the intent is for a real time view on emissions and associated sustainability and improvement activities. Some organisations have been developing sustainability reporting for a number of years. The levels of investment are material and failure to develop pre-emptive capabilities can result in fines in the millions of dollars or, in the worst case, loss of operating licence.

Samples Sustainability Reports

Legislation 

NATIONAL POLLUTANT INVENTORY (NPI) 

EnviroSuite has specific modules to simplify complexities, process, minimise risks around integrity of data and upload automatically to the government’s reporting system, as per obligations.

Industry has legally controlled and monitored obligations to:

• Perform a site review (for pollutants) before realising approval for a new business (mines, food, water treatment, energy, large farms and others)
• Report on pollutants and associated management,
• Monitor and pro-actively report when exceeding pollutant thresholds,
• Manage complaints and prove fault – no fault.

When exceeding threshold and poorly managing complaints they typically have to:

• Pay fines, OR
• Can lose operating licences.

In Australia there are 100+ pollutants (of the 2,000 possible in NPI) that are monitored, including:

• Criteria pollutants such as NO2, SO2, PM10, VOCs, Lead,
• Dust pollutants such as TSP, PM10,
• Odorous pollutants such as H2S, VOCs, and
• Greenhouse gases such as CO2, Methane, Nitrous oxide, Ozone and CFCs

NATIONAL GREENHOUSE ENERGY REPORTING (NGER) 

NGER is the pre-cursor to carbon trading and / or taxes. Industry (in part depending on their current total and per site carbon emissions) has been legislated since 2007 to track their total emissions and report on this. Smart industry is engaging regardless of legislated responsibilities. This better prepares them for carbon trading and also to negotiate relevant carbon cessions for their business and industry before taxes and / or trading is introduced.

As a result of NGER most new industrial or resource projects must have as part of their approval and ongoing management processes, analysis and consideration of NGER related obligations.