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The Government has demonstrated its resolve to tackle climate change despite the global financial crisis with the release of exposure draft legislation and explanatory materials for theCarbon Pollution Reduction Scheme (CPRS) this week. So says Dr Karl Mallon, a director at Climate Risk, who notes that the CPRS is likely to have a discernable impact on the economy. “Even companies with no direct exposure to carbon emissions will feel the impact through electricity and fuel prices,” he warns. However, Mallon says it is worth remembering what the CPRS was designed to do – to change behaviour, not necessarily to impose costs on business. “Those businesses that don't change their behaviour will incur higher costs. But there are lots of opportunities to reduce a business's exposure or to benefit from the changes. And, this is what must be examined around most boardroom tables,”says Mallon. “For some companies, it could be as simple as just changing fleet specifications or commissioning an energy efficiency audit to see where cuts can be made.” Mallon believes the CPRS will herald large changes for businesses and a need to adapt or die. “It's a time for reordering choices... when companies need to look at where they can become the predator or where others will target their businesses. It's a time for strategic leadership and this requires a top down vision.” In addition to examining their companies' exposure to the carbon trading system, Paul Curnow, a partner at Baker & Mckenzie, says directors also need to be aware of their own potential liabilities under the CPRS, as well as the National Greenhouse and Energy Reporting System (NGERS). The liability, he says, flows backs to directors if a company does not comply with the scheme. To avoid penalties, directors will have to show that they have taken reasonable steps to avoid contravention of the law. The steps that should be taken are explained in the draft legislation. The draft builds on what was in the Government's White Paper on the CPRS, released last year. The proposed legislation can be viewed on the Department of Climate Change website here. Submissions on the legislation must be made by 14 April. However, Mallon advises directors to keep an eye on politics and the support needed by the Government to get its legislation passed. While the Opposition supports emissions trading in general, it has rejected the Government's model and could push for delays or major changes, while minority parties may lobby for higher targets. “This could potentially be a major source of uncertainty for business,” he says. |
