Carbon pricing will influence the way Australians do business

The carbon tax will come into effect on 1 July 2012 and the big question is, how will the tax affect confidence and spending, particularly in the first few months of introduction? Businesses will need to start planning and preparing for the anticipated increase in operating costs the tax will bring. Furthermore, retailers are encouraged to begin evaluating available options to reduce their carbon usage in everyday business.

Smart businesses will begin forecasting cost fluctuations and assessing energy minimisation strategies well before 1 July.

There is a common misconception in the market that the tax will only affect Australia’s ‘top 500 polluters’. The reality is that Australia’s largest energy generators are within that group, passing these new costs down the line, via energy retailers, to business. In many cases there will be little choice but to pass these costs on to the end consumer.

In 2011, Energy Action created and conducted a survey to gauge opinions on energy-related topics. The survey let respondents voice their opinions on a range of topics including the cost of energy, the role of media, energy efficiency and the carbon price. The survey was aimed at owners and key decision makers of commercial businesses.

The survey showed the majority of businesses believe the immediate and long-term impact of a carbon price will be negative on their business. Only 2% believe the carbon price will have an immediate positive impact on their business, whereas 9% believe it will have a positive long-term impact.

77% and 69% of respondents believed the immediate and long-term impacts, respectively, of the carbon price would have a negative impact or were unsure.

The most common opinions raised were:

• Concerns over the cost of the carbon price
• Lack of information available about compensation
• The carbon tax putting further constraint on already struggling businesses
• Promotes sustainable and renewable options
• Extra jobs will be created
• Concerns with overseas competition

What businesses should be doing to prepare for the carbon tax

Know your carbon footprint and understand what your largest sources of emissions are. Ensure that all major emission sources are evaluated, such as electricity consumption, fuel use and travel (vehicles and air travel).

To help you assess your exposure to the carbon tax, take advantage of Energy Action’s free online carbon tax calculator. It will estimate your cost impact under the new scheme in relation to increases to business energy bills. The online calculator helps all businesses to easily understand how the scheme will impact them over a three-year period.

The calculator was developed by a number of Australia’s leading energy specialists as a forecasting tool for business and is based on information outlined in the federal government’s climate change policy, Securing a Clean Energy Future. It incorporates information available from retail energy contracts.

The overwhelming majority of energy users in Australia will experience rising energy costs after the introduction of a carbon price. The only way to beat the carbon tax is to emit less carbon in your operations. Understanding the cost exposure is crucial to understanding the investment businesses should be making now to reduce carbon footprint and energy expenditure.

By Edward Hanna, Executive Director, Sustainability and Business Development at Energy Action, which is an independent energy management company, offering buying and management services aimed at reducing energy usage and saving businesses money. He has a background in energy pricing and trading and has been involved in the energy industry since the deregulation of the NSW electricity market commenced in 1997. He is currently a fellow of the Australian Institute of Energy, a member of the Alternative Technology Association and a member of the CEO Institute.