Is the Australian Carbon Tax Working?

As the debate surrounding the controversial Australian carbon tax rages on, Allen & York Australia specialist sustainability recruitment consultancy, look at whether attitudes to sustainability are changing within Australian business and if carbon pricing is the best way to drive the sustainability agenda forward.

Background

“Australia is one of the most vulnerable developed countries to climate change and is already experiencing the impacts of more frequent and severe extreme weather. For instance, during the most recent Australian summer more than 123 heat, flood and rainfall records were broken. Australia is the 15th largest [carbon] emitter, larger than 180 other countries. This means that Australia has a responsibility to play its part and that Australian actions have a global influence.” The Climate Commission report published in April 2013[1]

The Australian Carbon Tax was introduced by Julia Gillard’s government on 1st July 2012.  It stated that companies emitting over 25,000 tonnes of carbon dioxide annually were required to buy carbon permits.  These permits are currently priced at $23AUD per 1 tonne for 2012-13, and will rise by 2.5% per year until 2015/16, when they will move to an emissions trading scheme set by the global market.

The carbon tax affects approximately 300 ‘liable entities’ and is part of a broad energy reform package called the Clean Energy Plan. This aims to reduce greenhouse gas emissions in Australia by 5% below 2000 levels by 2020 and 80% below 2000 levels by 2050.

The Australian Government have pledged to cut at least 159 million tonnes per year of carbon pollution by 2020, the equivalent of taking 45 million cars off the road. With a target of 20% of Australia’s electricity coming from renewable sources by 2020; these are ambitious targets and the additional taxes are designed to push high polluting companies towards cleaning up their operations and embracing renewable energy sources, but at what price?

Reactions to the Carbon Tax

The scheme has been widely opposed politically and within the Australian business community, fuelled by fears that business will be driven overseas, energy costs will increase and companies will collapse due to this additional cost burden. The national press and online media is awash with negative publicity.

In support of these concerns, in March 2013 the Australian Securities and Investments Commission reported that 10,632 companies had gone into liquidation over the last 12 months. They claim that this is more than 12% higher than during the global financial crisis and that one fifth of these collapses have come from Construction and Manufacturing, industries which are being heavily affected by the additional carbon taxes.

Adelaide Brighton the 2nd largest cement supplier to the Australian construction industry, reported an expected fall in profits from 2012 to 2013, sighting the key contributing factors to be; “the anticipated $3m carbon tax (not included in the first half of 2012), lower demand, particularly in Victoria and southeast Queensland, and the impact of earlier timing of planned key shutdown maintenance,” Mark Chellew, CEO at the Annual Shareholders Meeting held 23rd May 2013[2]

While the high Australian dollar is undoubtedly seen as a major factor in the economic squeeze, the carbon tax is being blamed for adding further financial burden to already struggling businesses. 

Julia Gillard was questioned about the much publicised Penrice Soda, an Adelaide based firm, established for 70 years, which was initially hit with an $8milion carbon tax bill. They successfully negotiated this down to $1million, but are still having to make 70 redundancies.

“Its a million dollar hit to our business overall. You can argue that the carbon tax pushed us into the red, I would argue that the carbon tax contributed materially to the loss in the first half,” Guy Roberts, the company’s CEO (Daily Telegraph on March 18th 2013)[3]

According to the Institute of Public Affairs, the coal industry in Australia will lose jobs to overseas competitors and mines will be closed. A forecast by the Centre for International Economics predicts the housing construction industry may decline by 12.6% as a result of the carbon price[4]

The impact of the Carbon Tax

So amongst all the controversy is the carbon tax actually having an impact on the Australia’s carbon emissions and driving change in corporate behaviour?

Six months after the introduction of carbon pricing the Department of Climate Change and Renewable Energy reported a 9% decrease in emissions from electricity generators[5]  and an increase in the renewable energy mix.  In 2009 Coal made up more than 85% of the National Energy Market and Wind was just 0.5%.  Today, wind generation is at 3.8%, hydro 8.7% and gas at 12.7%.

“Renewables are basically cancelling out coal,” commented RepuTex (energy and carbon research firm), executive director Hugh Grossman. “As a result, Australia’s CO2 emissions were driven down to a 10 year low” [6]

Is this evidence that the government’s imposed carbon tax is working?

Sustainability Careers & Investment

It is a contributing factor, however the real power to drive down carbon emissions, we believe is further investment to drive the Renewable Energy market forward.  “The transition to a low-carbon-emission model will require large investments in alternative and renewable energy sources. We would like to see more investment in this market to drive forward what is potentially a huge growth industry for the Australian energy market.”  Christopher Ouizeman, Managing Director, Allen & York Australia.

“As an established sustainability search consultancy Allen & York Australia’s technical expertise encompasses the broad spectrum of renewable energy careers.  This is an industry which is brimming with opportunity from Environmental Planners and Assessors, to Grid Engineers and Developers.  The potential for Wind and Hydro energy are particularly prevalent and we are already seeing growth within these job markets.”

“There’s no reason why Australia won’t hit its renewable target unless the RET is changed,” said Ric Brazzale, director of Green Energy Markets[7] and author of their recent report.  “Even if the carbon price remains in place after the election, it will be low because of its link to the European market. It’s really the RET that is driving growth of renewables.”  The report makes predictions that renewables are set to grow from 13% of the energy mix to 51% by 2050.

With 13 current wind farms, 2 in construction and another 6 in the planning stages, the Wind industry looks set to gather pace over the coming 5-10 years.

Global Giants back Renewable Energy

Australia is not acting alone on climate change. Countries like the United States, China, India and Brazil are also moving to reduce their carbon footprint.

The world’s largest polluters China and the US are moving to address their carbon emissions.  China has halved its growth in energy demand in 2012 and invested $65billion in clean energy - a massive 30% of the entire G20 nations’ investment in the same year.

Only a few years ago some commentators pointed to insufficient action in China and the United States to delay action in Australia. Today the energy giants are undoubtedly on the move, which will fuel global momentum.

Whether the carbon tax survives the elections in September is a moot point, and in many ways it might not be the best strategy for Australian sustainability, however if it has begun the push towards a heavier investment in renewable energy and sharpened awareness of corporate sustainability within the business community, has it been all bad?

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Allen & York are a leading international sustainability recruitment consultancy, specialising in Energy Services, Renewable Energy, Environment, CSR & Sustainability and Health & Safety recruitment. Established for 20 years with offices in Australia, the Middle East, UK & Europe, we deliver high calibre sustainability professionals to meet your business requirements.

www.allen-york.com.au
T: 1300 083 477

[1] http://climatecommission.gov.au/report/global-action-building/

[2] Reference - http://www.theaustralian.com.au/business/companies/carbon-tax-cements-concerns-for-adbri/story-fn91v9q3-1226648739552

[3] http://www.dailytelegraph.com.au/business/companies/australian-securities-investments-commission-reports-record-company-closures-many-blame-carbon-tax/story-fndfr3g3-1226599283585

[4] http://www.couriermail.com.au/money/beware-the-building-cost-of-carbon-tax/story-e6freqoo-1226388810936

[5] http://www.abc.net.au/news/2013-02-11/carbon-tax-emissions-drop/4512782

[6] http://www.smh.com.au/business/carbon-economy/emissions-from-power-sector-drop-to-decadelow-study-20130411-2ho1u.html

[7] http://www.greenmarkets.com.au/

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