local government carbon price impacts pp

Deakin University Centre for Sustainable and

Responsible Organisations

Carbon Management Public Seminar, Local Government and Related

issues, Melbourne 16th July 2012

CARBON MANAGEMENT & LOCAL GOVERNMENT

Matthew Tukaki, CEO

The Sustain Group

www.sustaingroup.net

Contents of this PP 1. Setting the scene and some

carbon price context

2. What are some of the challenges ahead and what is the latest in research telling us? Will this thing be thrown

out? 3. What does an effective carbon management

framework look like? What are some of the opportunities?

4. What do global frameworks mean for Local Government?

Rio+20 Hopefully by the end you

have learnt something new!

Deakin University / CSaRO

1. SETTING THE SCENE


The basics… The carbon price will ultimately impacts up to 500 companies, organisations and sites across

Australia It was estimated that 130 may be council sites or operated facilities / although the total liable

is currently sitting at 250 organisations A large number of landfill’s over 25,000 tonne The price has started at $23 per tonne $200 million has been provided as grants through the $200 million Community Energy

Efficiency Program (CEEP) (local councils and community based organisations $100 million Low Income Energy Efficiency Program t help in trials of new energy efficiency

technologies and approaches in low income households Large potential to consider the newly announced Carbon Farming Initiative Cost of living pressures across the rate payer base

There is no doubt that a carbon price is and will have impacts on cost of living which has flow in

effects across supply chains


Explanation of carbon pass through Direct Cost Pass Through in reference to carbon pricing is defined, for the purposes of this presentation, as a cost that is imposed on a supplier as a result of the Australian Governments carbon pricing mechanism. This cost, potentially less any compensation that has been applied to that supplier or that sector, may be subtracted before a cost increase is passed through the supply chain and directly onto a client. There is no specific requirement that any compensation passed onto a supplier who is directly liable for a price on carbon is then passed through to a client. Therefore, Direct Cost Pass Through is that cost which is passed on from a directly liable supplier to Council.

Directly liable organisation (Origin

Energy / AGL) Council


Explanation of carbon pass through (continued)

Indirect Cost Pass Through in reference to carbon pricing is when a supplier has a cost increase imposed on it by a directly liable organisation and passes that increase in costs directly onto the client. For example, a supplier may not be the highest of emitting organisations, yet they still procure their energy from a power supplier who is directly liable. Therefore, the energy supplier may increase the cost of supply to that organisation and that organisation will do one of three things: 1. Absorb the total increase and not pass the cost increase through 2. Absorb a partial cost and pass a partial cost onto the client 3. Pass the full cost on to Council

Directly liable organisation

(Origin Energy / AGL)

Supplier: Visy Industries / ACI

Glass Council


It is important to understand both your inputs & outputs

Map those outputs that are internal such as direct liability Map external inputs into council costs Understand what compensation / funding you may be eligible for Make sure you have a communications plan in place for stakeholders Stakeholders: small business, households / heavy industry / investors

Inputs Outputs Planning Communication

Effective planning and

medium to long term

Implementation

“medium to long term planning will be fundamental and organisations will

need to map things out with scenarios and higher risk profiling.”

“Communication is key.”


The

po

litic

al

Hyp

oth

etic

al

An election in 2013

The Opposition wins / takes Government at the end of 2013

Already reached year 1.5 of the fixed price period

Why it won’t be thrown out…

“We will dump this unfair tax”

Practically impossible to remove the scheme by January 1st of 2014 which means it could be July 1st of 2014 – the end of year two and start of year three

Why is it practically impossible? The practicality of the politics and the complexity of a sophisticated piece of legislation. This is economic, structural, social and taxation “weaving” – also, it is plausible that the Senate will still be controlled by the Greens which would likely cause a double dissolution election – which is a very big risk to take…


58% Of those surveyed...

Believe that a price on carbon at least provides certainty, in terms of policy...

61% Are uncertain as to the

impacts... A price on carbon will have for

their organisation as it is uncertain how they will be both directly and

indirectly impacted...

In 2011 we surveyed 347 business people and...

Climate change & the business response is about as big an issue as you can get...

68% Have no idea...

What the Coalition policy is or how it will impact them...

66% Already responding...

And yet business and industry have already begun to respond, some up to ten years ago...


42% Of those surveyed...

Believe that a price on carbon at least provides certainty, in terms of policy...

67% Were uncertain as to the

impacts...

We decided to repeat the exercise in November 2011 with local councils

71% Have no idea...

What the Coalition policy is or how it will impact them...

54% Already responding...


Three council groups / Individual / Small Group / Clusters Ranging in size and geographic location Rural, semi rural, large regional town centres

Some had a belief that the carbon price would be thrown out / therefore the politics had caused an immense amount of confusion

Planning was in place but there was confusion over the impacts of carbon pricing in relation t landfill (proximity rule)

Some software being used to assess emissions is rudimentary at best and flawed / wild variations when the software is tested

Some software assesses results only against other users of the software A significant number of plans were coming up for review

December 2011 a research project began…


Carbon Management Framework

Internal Factors

External Factors

Community Factors

Geographic Factors

Risk, Planning & Compliance

Infrastructure

•Property planning

• Natural resources

Waste Mngmt

• Landfill

•> 25,000

•< 25,000

Corporate

• Admin

• Buildings

City Services

•Parks and reserves

• Works and services

Water

•Water

•Waste water

• In order to plan for the future we need to understand whether or not your current carbon footprint is correct

• Has it been validated?

• We need to understand the price impacts across the first three years because this will also provide the context for potential cost increases across the organsiation

•What plans are currently in place and are they aligned

• It is important to get across what other organisations are doing who may have a similar profile to your council

• You need to review what is happening on an annual basis and this includes both an annual data review and validation / assurance

• Identify what other initiatives can be applied to lower the emissions profile of the organisation


Project phase 1 re-cap

Mapping the Council’s carbon footprint and understanding the underlying data enables us to feed this information into the development of recommendations for carbon reduction, risk profiling and the over arching carbon management framework.

Phase One: Carbon Footprint Analysis

Data Collection Organisational Footprint Overview / Divisional Breakdown

Assessment against current analysis

Council Carbon Footprint Analysis

Reduction strategies

Risk and Profiling

Carbon Mmgt Framework


Carbon footprint at the organisational level…

Total Carbon Output

Division Name

Current analysis

Validation Year1 Carbon Price Impact Potential

Year2 Carbon Price Impact Potential

Year3 Carbon Price Impact Potential

Totals

$23

$24.25

$25.40

1

2

3

4

5

6

Total

Price Impact Potential has been assessed on a constant footprint being maintained from year to year through the fixed price period


Trusting your data Making sure your footprint is correct – accurate data informs the short, medium and long term plans required…validate it / assure it Identify what additional funding you could access at both the State and Federal level / budgeting for the cost of compliance / potential increase in unpaid rates because of cost of living pressures Carbon farming / household and building efficiency programs The politics of climate change remaining toxic Uncertainty – which is why you need to plan for a series of outcomes Collaboration is key…

So what are some of the challenges?


Rio+20 Making sure your footprint is correct – accurate data informs the short, medium and long term plans required…validate it / assure it United Nations Global Compact Global Cities Program / encouraging knowledge sharing / global secretariat based here in Melbourne Regional Local Government Auckland City Council / Wellington City (NZ) & Ireland

What is happening @ the global level?

[email protected]


THANK YOU

local government carbon price impacts pp

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