Mixed Greens: Carbon winners and losers

Less than six months after Australia’s carbon tax was introduced, Australia’s listed companies are already shifting their focus from the risk to business of carbon pricing, to the risk of failing to implement effective low-carbon business strategies. Well, most of them, anyway. A new report issued today by the Carbon Disclosure Project has found that the number of ASX200 companies identifying risks from carbon pricing fell 12 per cent on last year, and only 3 per cent of responding companies rated risks associated with carbon pricing as high.

“Most businesses are handling the introduction of carbon pricing with minimal upheaval,” said Brad Pollock, lead partner in sustainability at Deloitte Australia, who wrote the CDP Australia and New Zealand Climate Change Report 2012 on behalf of 655 institutional investors representing $US78 trillion in assets. “Companies have continued to take action on the implementation of energy efficiency opportunities at an even greater rate and scale than 2011.”

The report also noted, however, a “less than strategic approach” among the ASX200 companies in high emitting sectors – with many of them still lacking emission reduction targets. “The focus on implementation of energy efficiency initiatives, at times in the absence of clear corporate emission reduction targets, indicates a less than strategic approach by many companies, and may be contributing to delayed action and higher than necessary costs to businesses in the medium to longer term,” Pollock said.

The report found that property companies (Commonwealth Property Office Fund, CFS Retail Property Trust, Mirvac Group), and banks (National Australia Bank and Insurance Australia Group) were the strongest carbon performers in the ASX200 overall, while ASX200 airlines (Qantas Airways was the equal-highest scoring company, alongside Commonwealth Property Office Fund, on the CPD 2012 ASX200 CPLI), and retailers have made significant improvements in the quality of their CDP climate change disclosures this year.

Australia gets carbon stamp of approval

As head of carbon trading for Standard Bank in the UK, Australian-born Geoff Sinclair has been involved in carbon schemes for most of the past decade, and says of Australia’s scheme that it has got it just about right. “The implementation has been remarkably well managed and the design is something that is really bankable.”

The key point, says Sinclair, is that it has gone to the trouble of establishing strong independent institutions, such as the Climate Change Authority and the Clean Energy Regulator. “It undoubtedly will have some teething problems, but the way the bureaucracy has been set up I’m quite confident they will deal with it quickly and efficiently – that’s quite a contrast to other places.”

He said the linking to EU allowed companies to hedge early and manage their risks properly, without having to worry about political uncertainty. Sinclair said there is some uncertainty about whether the scheme will continue beyond the next election, but this was tempered by the lack of a credible alternative to reduce emissions. “It is very robust and I think it is there to stay.”

Where’s Milne?

In light of the importance of the independent institutions, it was something of a surprise that Greens leader Christine Milne was not invited to deliver a keynote speech at the Expo, as she had done in recent years. Milne and former leader Bob Brown were instrumental in delivering the carbon pricing package, along with the independents, and particularly the independent authorities.

Milne’s absence is all the more surprising given that her party is the only thing standing in the way of Abbott’s “blood pledge” to repeal the carbon price and his ability to do so. Indeed, the Greens ability to hold the balance of power, at least in the Senate, would seem critical to the future of policies such as the carbon price and the renewable energy target. Anyone who care to believe that either the Coalition or Labor would act in the absence of the Greens need only remind themselves of how Abbott took the leadership of the Liberal Party, and – despite the excellent work of Greg Combet and Mark Dreyfus – the recent speech by Labor’s chief whip Joel Fitzgibbon.

And in other news…

Queensland’s Fraser Coast Community Solar Farm – the Sunshine State’s first solar farm and largest ground-mounted solar installation – at Nikenbah was officially opened this morning. Built by Ingenero, the $2.7 million, 400kW Hervey Bay facility consists of 1,630 ground-mounted monocrystalline Suntech solar panels. It was fully funded by the Queensland government, and will offset power usage for Wide Bay Water Corporation.

And note to those ASX heavy hitters who are dragging the chain on their emissions targets: Former UN climate chief Yvo de Boer has warned than the IPCC climate report will “scare the wits out of everyone” and should provide the impetus needed for the world to finally sign an agreement to tackle global warming. “I’m confident those scientific findings will create new political momentum,” de Boer said in an interview.