This presentation talks about the what, the why, and the how of managing carbon. It starts with climate change science and then moves on to Australia’s emission profile and how to reduce emissions. It gives an overview of the carbon pricing mechanism that has passed through both houses of parliament and how this affects companies. It will also give an overview on carbon accounting and carbon management/reduction.

1. Managing Carbon
The what, the why and the how
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2. Agenda
Climate change and global warming
International drivers – government action
Australia’s emission profile
Basic insights into the carbon pricing mechanism
Impact to companies
Opportunities for companies
Carbon accounting/footprinting
Carbon reduction/management
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3. Climate Change and
Global Warming
The Science and The Effects

4. The Greenhouse Effect: Natural and Enhanced
Source: http://www.nps.gov/goga/naturescience/climate-change-causes.htm
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6. Carbon Lifecycle and
Demonstration
Carbon is everywhere
Diamonds, sugar, wood, petrol, coal, plastic, graphite,
carbon dioxide, methane, meat and alcohol

7. The Global Carbon Cycle
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8. Government Response
Increasing Regulations and Incentives

9. Implemented and Planned Climate Change Action
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10. Australia's Reaction
Renewable Energy Target (20% by 2020)
NGER Act
EEO Act
NABERS ratings
State GHG legislation
Discussion about sequestration technologies (e.g., CCS)
Energy efficiency (move to national standards for buildings, electrical
goods, machinery, plant equipment & whitegoods)
Several state and federal subsidies for sustainability projects (Sustainability
advantage), clean energy (feed-in tariffs), etc.
Green skilling the workforce
AND: … A price on carbon from 1 July 2012!
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11. Existing Greenhouse Gas Legislation: NGERS
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12. Basic Insights into the
Carbon Pricing Mechanism

13. Australia’s pollution profile
Source: 2009 emissions from the National Greenhouse Gas Inventory 2011, DCCEE analysis;
graphic taken from Clean_Energy_Future_Final.pdf from www.cleanenergyfuture.gov.au
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14. Australia’s Emissions Intensity
top emitter per capita
Source: Garnaut Climate Change Review Update 2011, Update Paper 2
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15. The Big Threat: China and India Following our Path
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16. Australia’s projected growth in emissions
Source: Treasury modelling, 2011(medium global action scenario);
graphic taken from Clean_Energy_Future_Final.pdf from www.cleanenergyfuture.gov.au
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17. Ways to Achieve Emission Reduction:
These two will be
implemented, starting in 2012
Tax ETS Direct action
• Direct, fixed • Direct, • Indirect price
price on floating price on carbon
carbon on carbon • Government
• Market based • Market based controls the
approach approach abatement
Cap-and-trade Feed-in tariff
Subsidies
Renewable Energy Target
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18. Economic Efficiency of Policies
Economic Efficiency of Policies
US$/tonne of C02-e abated
$200.00 $190.00
$180.00
$160.00 $150.00
$140.00
$120.00
$100.00
$100.00
$80.00
$60.00
$40.00
$40.00
$20.00 $10.00
$-
Direct price tag (emissions trading, energy targets
Clean taxing)
Lower emission fossil fuel mandates Feed in tariffs (wind, biomass, solar)
Clean energy subsidies
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19. The Marginal Abatement Cost Curve
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20. The basics of a market-based carbon pricing approach
A company is faced with a price on carbon
It will now decide whether it is cheaper to
A B
Avoid or reduce
Pay the price
emissions
• Pay the tax or pay for • Cheapest way to
the permit avoid
• Pay for credits • Cheapest way to
reduce
As each company behaves similarly….
… the least costly abatement measures are adopted Australia-wide
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21. Carbon Tax versus the ETS
Carbon Tax:
Fixed price of $23 / t of CO2-e
Unlimited number of permits available for purchase during fixed price period
Carbon Tax ETS
Price is Price is
fixed variable
No cap on Cap on
emissions emissions
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22. Who are the biggest polluters in Australia?
Source: AFR July 16-17, 2011
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23. How does the carbon pricing work, video
Video, source: http://www.youtube.com/watch?v=fQd_DlkdQ1w&feature=player_embedded
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24. Important Dates for the Carbon Pricing
1 July 2012: Start carbon tax $23 $30
$25
1 July 2013: CPI increase $24.15 $20
$15
1 July 2014: CPI increase $25.40 $10
$5
$0
2011 2012 2013 2014
1 July 2015: price will be floating
(Cap-and-trade emissions trading scheme)
40
30
20
10
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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25. International Linkage
Fixed Price
* ETS
2015
Use of international International emissions
emissions units will not be units will be accepted
allowed International permits will
Kyoto compliant credits be allowed to offset an
from the CFI (ACCU) will be entity’s carbon liability
eligible for compliance with a 50% limit until 2020
purposes – limited to 5% Kyoto compliant credits
from the CFI (ACCU) will be
eligible for compliance
purposes – no limit
Significant opportunity
for the land use and
agricultural sectors
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26. How Does the Carbon
Price Impact Companies?

27. Impact for Large Emitters
Need to understand their own emissions – potential carbon liability
Need to understand the emissions of their suppliers – price pass through
Can companies accurately and reliably measure their current and
forecasted emissions?
How much of the carbon cost can they pass on?
Need to assess new and existing investments in terms of the carbon tax
Need to put governance processes in place to be able to deal with the 1
July 2012 start date
Is the company eligible for government assistance?
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28. Impact for Small to Medium Sized companies
No direct liability to pay the price on carbon
SMEs need a basic understanding of their emissions – are they under the
threshold for direct carbon tax liability?
SMEs need to understand the emissions of their suppliers – how energy
intensive are the products they are buying?
How much of the carbon cost that suppliers pass on to the company can be
passed on to customers?
What proportion of the carbon footprint is electricity and natural gas?
Is the company eligible for government assistance?
Tax change:
Small businesses can immediately write off capital purchases to $6,500
Small businesses eligible to access a $240m fund to reduce energy consumption
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29. Opportunities for
Companies

30. Risk or Opportunity?
Some of the most carbon intensive industries have seen the writing on the
wall and are pouring billions of dollars into renewable energy
“A carbon tax provides business with the certainty they need to continue trading in a modern economy, while
creating a revenue stream that can be directed at investment into supporting other industries that are crying
out for assistance, such as the renewable energy sector, an area of growth which has the potential to create
thousands of jobs in this country.”
Marius Kloppers, CEO BHP
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31. New Opportunities
Ability for land owners to generate carbon offsets under the
CFI
Energy-efficiency products and services will be in higher
demand
Carbon management products and services will be in higher
demand
Consumers may shift towards low-emission products, because
such products become more cost-competitive
Renewable energy projects will receive funding
Companies that reduce their carbon footprint will have a
better competitive standing
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32. Summary of Drivers for
Carbon Management

33. Drivers for Carbon Management
COMPLIANCE driver – NGER reporting
Legal tax avoidance through carbon management
Risk management – the cost of carbon will be passed through
Supply chain pressures
Enhance reputation
Product differentiation
To generate offsets (carbon credits)
To reduce costs
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34. Carbon Accounting

35. The Unit of Measurement: CO2-e
HFCs
N2O
CO2
PFCs
CH4
SF6
CO2-e
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36. Sulphur Hexafluoride
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37. Scopes
Source: http://www.cleanair-coolplanet.org/documents/zero.pdf
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38. Carbon Footprinting Process
Define Boundaries Temporal, geographic, organis
ational, operational
Emission Sources Direct and indirect sources
Scopes
1 and 2 are essential,
3 is optional
Inclusions Exclusions Materiality
Collect Data time-consuming
Calculate Footprint Easy once you have the data
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40. Example Carbon Inventory for a Small Services Firm
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41. Example Inventory (Education Sector): Emissions by Scope
Total Scope 3
Emissions
31%
Total Scope 2
Emissions
61%
Total Scope 1
Emissions
8%
Total emissions:
29,533 t CO2-e
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42. Example Inventory (Education Sector): Emissions by Source
tCO2-e
Scope 1 Scope 2 Scope 3
25,000
20,000
15,000
10,000
5,000
0
Solid Fuels Gaseous Fuels Liquid Fuels Purchased Transport Staff Taxi Travel Business Solid Waste Biological Paper Refrigerants
Electricity Fuels Commute Travel treatment of Consumption
solid waste
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43. Example Inventory (Education Sector): Emissions by Source
Transport Fuels
0%
Business Travel
0%
Solid Waste
17%
Paper Consumption
3%
Purchased Electricity
73% Refrigerants
7%
Gaseous Fuels
0%
Total emissions:
29,533 t CO2-e
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44. Carbon Management

45. It Makes Good Business Sense
Graphic reproduced from www.ghgprotocol.org, working 9-5 on climate change
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46. Carbon Management Hierarchy
Source: http://www.cleanair-coolplanet.org/documents/zero.pdf
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47. Emission reduction opportunities
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48. Thanks For Attending This Presentation
Sustainable Business Consulting
We are happy to help you further with your
Carbon Management needs
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49. Australia’s Electricity Prices in Comparison
Source: Department of Resources Energy and Tourism: Energy in Australia 2010
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