Response to Carbon Pollution Reduction Scheme

International professional services company GHD has welcomed the federal government’s unveiling of its Carbon Pollution Reduction Scheme (CPRS), but has identified significant risks for business.

“The federal government has committed to a minimum target of 5% greenhouse gas emissions reduction on 2000 levels by 2020,” GHD Principal for Sustainability and Climate Change Patrick Crittenden said.

“In acknowledging the need to support a transition to a low carbon economy, the government has announced a comprehensive funding package including $2.15 billion through the Climate Change Action Fund with other industry-specific funding also available.

“But what is not immediately obvious is that in order to meet the lower end target by 2020, the scheme caps and trajectory will need to drop significantly in 2013," Crittenden said.

“This means that over 12% of the reductions will need to be made between 2013 and 2020 if the government is to achieve the 5% reduction target by 2020.

“If the government increases the target to 15% following the outcomes of international negotiations, then the cost to business is likely to be even more significant."

According to Crittenden, the message to business is clear — with government assistance available up to the commencement of the CPRS and the likelihood of a significant increase in the cost of carbon after the first few years of scheme operation, the time for business to plan and act is now.

“Business is grappling with the financial, social and environmental aspects of climate change and needs to understand the risks and opportunities,” Crittenden said.

Crittenden sees the main actions required by business in the short term as:

• Planning to ensure that all major risks and opportunities are understood at senior management level;
• Measurement of both direct and indirect emissions to identify the direct costs of the scheme and the likely pass through costs in carbon-intensive business inputs;
• Accessing the transitional funding and assistance the government has made available; and
• Implementing carbon reduction and energy-efficiency initiatives.

GHD works with many of Australia’s major enterprises that will have to adhere to the CPRS — mining, energy, waste, forestry, transport and agriculture.

“Over the coming months and years, we will continue to work with these organisations to incorporate climate change planning and participation in the CPRS into their business,” Crittenden said.

“We find that companies that set ambitious emission reduction targets are surprised at how quickly they can be achieved as well as a range of other business benefits such as improved productivity that result.

“Ultimately, our work is about preparing companies to be successful in a carbon constrained world.”