Climate Change Policy and its application to Australian SMEs

With the Federal Government’s recent commitment at the Glasgow Climate Summit to achieve a net-zero carbon emission economy by 2050, many Australian businesses must wonder what that means for them. And how will they be required to meet the net-zero target.

Reducing your greenhouse gas emissions

The government has, to date, adopted a voluntary, incentive-driven Emissions Reduction Framework, focussed on low-hanging fruit, for large-scale greenhouse gas emission reductions achieved by increased renewable energy supply to electricity grids across the nation.

Companies are encouraged to reduce their greenhouse emissions by:

  • adopting more efficient and innovative manufacturing techniques in the delivery of their goods and services
  • acquiring Australian Carbon Credit Units (ACCU’s) via auction from the Clean Energy Regulator or the secondary trading market.

There is currently no direct tax on large scale emissions in Australia. However, that may change if we look at climate policy implemented widely in European countries where a carbon tax (or the requirement to acquire carbon credits) is a well-entrenched compliance requirement.

Federal reliance on innovative technologies

The Federal Government is relying heavily on widespread adoption of innovative technologies to achieve its international net zero emissions commitment by 2050. Incentives are in place through a $3.5billion Emissions Reduction Fund, which partly funds projects (mainly in the agriculture sector) from soil management to plantation forestry.

The Australian Renewable Energy Authority also operates a minor incentive program, offering R&D grants to new approaches by companies addressing efficient adoption of renewable energy. These programs are limited — other government incentives for SMEs to adopt new technologies have yet to surface.

Rebates on renewable energy

The Small-scale Renewable Energy Scheme (SRES) is an exciting federal policy designed to make small scale renewable energy systems more attractive for individuals and businesses by offering rebates on the up-front cost. The SRES will phase over the period to 2030.

Plan to reduce your emissions

You’ll need to be proactive if you are an SME wanting to do your bit for a better climate. Develop a greenhouse gas emissions plan to reduce your emissions and start to “bank” carbon credits now, while the price is low, for future application.

Many SME’s are taking the first steps and are seeing environmental and financial benefits already.  Tabhlik, a family-owned winery in Central Victoria, recently applied a new paint, used in the space industry, to cool their buildings. This has reflected enough heat to allow decommissioning of several large air-conditioning units and has reduced their energy bills by more than $60,000, which represents a significant reduction in the company’s greenhouse gas emissions. All for $12,000 worth of paint. They have also created a detailed environmental plan to systematically introduce new energy-saving technologies. Tabhlik estimates that they are 97% on track to be carbon neutral within the next few years.

Doing your bit

Although trading in carbon credits, issued by the Clean Energy Regulator, may sound sexy and prove profitable, the opportunity to really contribute to reducing Australia’s emissions by re-thinking your business processes, can be even more satisfying!

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