Get your house in order, warns EU carbon trade expert

BUSINESSES should already be developing monitoring and reporting systems for their carbon emissions to avoid a "time and cost" shock when a trading scheme is introduced, warns a PricewaterhouseCoopers spokesman.
Get your house in order, warns EU carbon trade expert Get your house in order, warns EU carbon trade expert Get your house in order, warns EU carbon trade expert Get your house in order, warns EU carbon trade expert Get your house in order, warns EU carbon trade expert

The company's European director of climate change services also casted doubts over the workability of the Federal Government's mooted exemptions for trade-exposed industries.

Netherlands-based Hans Schoolderman told PNN's sister publication EMN that Australia had "already missed the opportunity of the learning experience" by not adopting the Kyoto Protocol and being early movers – but some aspects of Europe's experience could help simplify Australia's transition to a carbon constrained economy.

Conceding most of the 27 EU member states were too generous setting emission caps in the first period, leading to an over allocation of allowances through 2005-08, he says the EU has learnt a lot from that 'trial' and the financial market "is expecting a scarcity" in the second phase, from 2008-13 - as evidenced by futures trading on allowances of around €23/tonne of CO2 ($36/tonne).

Volatility in the carbon price through the first period "made it hard to calculate your investments," a problem Australia could minimise by setting more accurate allocations.

"You need certainty in the market, and therefore you need a very good understanding of what are the actual emissions…I think this is one of the main lessons for the Australian Federal Government and for companies," he says.

"It is extremely important that companies have a good understanding of their carbon position now [and of their] future carbon projections. They must have a very good understanding of if they can meet monitoring requirements…our experience in the EU is companies really underestimated this.

"This data is worth money…you can compare it with a financial audit. [Companies] really have to take care their internal systems are in place to report transparent and accurate data."

Europe's carbon intensive and trade exposed industries were vocally opposed to ETS before its introduction, but Schoolderman points out "not that many companies left the EU because of emissions trading," raising question whether exemptions for some are necessary – or even possible - in Australia.

"There are no special arrangements for these companies in the European scheme...I'm fairly curious what the definitions [used in Australia] will be - this is a bit of a grey zone in my opinion."

Another tip he offered was that an Australian system should be limited to covering CO2 only – as it is in Europe – because "that's already complicated enough" without including other greenhouse gases.

There are also some sectors which may prove too difficult to cover. While he says "it makes sense to capture as much CO2 as possible" by having a broad scheme, he suggests the difficulty of accurately monitoring emissions from the waste industry will see it left out of an Australian scheme, as it is left out under Europe's system.