Decreased Emissions and Your Business

Fires, droughts and floods – oh, my! Sadly, there is not a bucket of water big enough to bring climate change down. In fact, the shortage of clean air and water is part of the impetus for countries like ours to regulate polluters and the business activities contributing to carbon emissions.

Climate scientists point to the increase of carbon dioxide in the atmosphere as the cause of rising temperatures, devastating rainfall and bush fires. Australia is among one of the highest emitters of carbon dioxide for its population according to independent watchdog the Climate Action Tracker.

In an effort to decrease harmful emissions, the public and private sector have to work together to combat climate change's looming effects on commerce and our way of life. So far, Australia has committed to the Paris Agreement and a decrease in greenhouse gas by 26 to 28% by 2030. Although, the commitment to decreased emissions could change at home.

What could future regulation say?

It's not clear how far legislators may go with limiting carbon emissions but there have been some indications. In May, the Labour party campaigned on 43% decreased emissions and the so-called teal candidates promised a reduction by 60%. With both the Green Party and their like minded climate-focused independent in parliament, businesses could face stiffer regulation including, tightening of the emissions baselines for certain industries under Australia's Emissions Reduction Fund.

If the baseline is raised on the over 200 large emitters it would cost them more to buy carbon offsets from the government. Under this scheme, a group of the largest polluters must adhere to the limitations, buy offsets or face penalties. For companies that can meet the restrictions on direct pollution, they are favoured for government contracts over those that cannot. Regulations that make the emissions restrictions from business activity higher than the previous administration will incur costs on businesses who wish to compete for lucrative agency contracts.

What should my business do in the meantime?

Although emissions limits apply to only the biggest facilities, it is wise for every business to do what it can to reduce their carbon footprint and communicate this as a differentiation among competitors. As the government invests more in greening the energy grid and integrating renewables, businesses can take advantage of incentives to upgrade their property and production facilities.

Also, overseas electronic vehicle (EV) manufacturers are waiting for Australia to reduce import tariffs and lower taxes on EVs. These incentives could be very good news for businesses that haven't been able to drop some green on renewables for their operations. Now may be the time to invest in more environmentally friendly processes and infrastructure.

Ask about our Business Services at WMC Accounting for more information on how to benefit from future eco-incentives for your business.