Not all car­bon schemes are equal, or even of real value

The Weekend Australian - Review - - Investments - Al­li­son War­bur­ton is part­ner and head of Min­ter El­li­son’s Cli­mate Change prac­tice. Shelley Scott, of Min­ter El­li­son’s Dis­pute Res­o­lu­tion group, also con­trib­uted to this ar­ti­cle

IT seems that ev­ery­where th­ese days peo­ple are talk­ing about cli­mate change and the idea of car­bon neu­tral­ity. Car­bon neu­tral’ be­came so pop­u­lar that the Ox­ford Univer­sity Press de­clared it Word of the Year in 2006.

In re­spond­ing to the cli­mate change chal­lenge, in­di­vid­u­als and gov­ern­ments are in­creas­ingly look­ing to the private sec­tor to lead the way and demon­strate what they are do­ing to min­imise their car­bon foot­print.

Be­ing recog­nised as a mar­ket leader in cli­mate change has al­lur­ing PR op­por­tu­ni­ties, and busi­nesses are re­spond­ing ac­cord­ingly. Ev­ery day an­other busi­ness an­nounces it in­tends to be­come car­bon neu­tral’’.

But how does the cli­mate con­scious busi­ness cut through all the car­bon speak’’ and iso­late the best op­tions avail­able to it to re­duce its car­bon foot­print?

There are com­pelling rea­sons for a busi­ness to in­vest in a car­bon re­duc­tion strat­egy. Re­duc­ing emis­sions out­put can be part of a com­mit­ment to cor­po­rate so­cial re­spon­si­bil­ity and a gen­eral sus­tain­abil­ity strat­egy. Like­wise, a re­duc­tion in en­ergy con­sump­tion can gen­er­ate fi­nan­cial gains through in­creased en­ergy ef­fi­ciency and pro­duc­tiv­ity, and a re­duc­tion in pro­duc­tion costs.

A car­bon re­duc­tion strat­egy can also help main­tain a long- term, stable busi­ness model by min­imis­ing the busi­ness’s ex­po­sure to the cost of com­ply­ing with manda­tory gov­ern­ment mea­sures to re­duce car­bon emis­sions, such as an emis­sions trad­ing scheme.

For busi­ness, the start­ing point is to recog­nise that there is no one size fits all’’ approach to car­bon neu­tral­ity.

To be­gin with, a busi­ness needs to in­de­pen­dently ver­ify its di­rect and in­di­rect emis­sions to an ex­ist­ing ac­cred­ited stan­dard, such as the Aus­tralian Green­house Friendly scheme. A life- cy­cle as­sess­ment of the busi­ness’s ac­tiv­i­ties re­views the emis­sions as­so­ci­ated with the busi­ness’s own op­er­a­tions as well as those emis­sions caused by the busi­ness’s sup­pli­ers and the prod­ucts that it makes.

Then, to max­imise en­vi­ron­men­tal, fi­nan­cial and so­cial out­comes, the busi­ness needs to look at op­por­tu­ni­ties to re­duce its own emis­sions — be­fore con­sid­er­ing car­bon off­sets. This usu­ally in­volves seek­ing greater en­ergy or process ef­fi­ciency within its plant or fa­cil­ity, re­sult­ing in a re­duc­tion of emis­sions di­rectly within the con­trol of the busi­ness.

Th­ese in­ter­nal ac­tions can be com­ple­mented by pur­chas­ing Greenpower elec­tric­ity. The busi­ness could also en­cour­age its sup­pli­ers to be­come car­bon con­scious as well — for ex­am­ple, re­quir­ing ten­der­ers for the sup­ply of goods and ser­vices to out­line their own car­bon re­duc­tion ac­tiv­i­ties.

Fol­low­ing the re­duc­tion of di­rect emis­sions, a grow­ing num­ber of busi­nesses are choos­ing to aug­ment their emis­sions re­duc­tions strat­egy by par­tic­i­pat­ing in one of the ex­pand­ing num­ber of vol­un­tary car­bon schemes, even though they cur­rently are not re­quired by law to do so.

For busi­nesses in emis­sions- in­ten­sive in­dus­tries, such as the en­ergy and re­sources sec­tor, this can be an im­por­tant part of their emis­sions man­age­ment strat­egy. Busi­nesses are able to off­set’’ the emis­sions they pro­duce through ap­proved abate­ment ac­tiv­i­ties such as the gen­er­a­tion of re­new­able en­ergy or forestry se­ques­tra­tion of car­bon diox­ide.

Ac­cred­ited off­sets that are in­de­pen­dently au­dited and ver­i­fied are avail­able through pro­grams such as the Aus­tralian Gov­ern­ment’s Green­house Chal­lenge Plus Pro­gram and the Ori­gin En­ergy Car­bon Re­duc­tion Scheme. Both are vol­un­tary part­ner­ships be­tween in­dus­try and busi­ness that give pri­or­ity to the re­duc­tion of green­house gas emis­sions at the source but also fa­cil­i­tate the re­duc­tion of emis­sions through ac­cred­ited off­sets.

A word of cau­tion needs to be sounded, how­ever. Not all car­bon off­sets are the same. Vol­un­tary off­set schemes have vary­ing de­grees of ac­cred­i­ta­tion and ver­i­fi­a­bil­ity and some may not meet the ( yet to be de­ter­mined) cri­te­ria for recog­ni­tion un­der the com­mon­wealth Gov­ern­ment’s pro­posed emis­sions trad­ing scheme.

There­fore, a busi­ness needs to care­fully con­sider what ex­actly it wants to use the off­set for, be­fore pur­chas­ing off­sets — is it just for PR or is it to com­ply with Gov­ern­ment reg­u­la­tion?

In par­tic­u­lar, busi­nesses needs to take care to en­sure they can prove their claims of car­bon neu­tral­ity and that they do not over­state their en­vi­ron­men­tal cre­den­tials.

In Aus­tralia, a busi­ness that takes a less than rig­or­ous approach to car­bon neu­tral­ity po­ten­tially ex­poses it­self to le­gal ac­tion for breach of the Trade Prac­tices Act, or tort, or even for breach of di­rec­tor’s du­ties un­der the Cor­po­ra­tions Act.

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