According to Dr Nick Wood, KPMG Associate Director for Climate Change and Sustainability, "The carbon liability will put a premium on sound governance, data integrity, accurate reporting and credible disclosure processes. All businesses will need to assess the cost implications and identify and exploit opportunities to reduce costs."
"A low carbon economy has consequences for all Australian businesses and presents significant opportunities for those able to understand and act. Knowing how to access renewable or business innovation funding, or jobs and competitiveness programs, for example, may provide real competitive advantages and business growth opportunities," he said.
Governance and oversight of carbon related risks will become increasingly important. Risks will be heightened during the first year as businesses understand and embed new processes for the management of carbon issues and prepare for the uncertainty of a flexible carbon price in 2015.
Dr Wood says direct and indirect exposures to a carbon price require the management of strategic, operational and financial issues in relation to the low carbon economy.
Globally, the proposed carbon pricing mechanism aligns Australia with major trading partners.
Yvo de Boer, KPMG’s Special Adviser on Climate Change and former Executive Secretary of the United Nations Framework for the Convention on Climate Change, says the world is moving forward on climate change.
"Since Copenhagen, more than 80 countries have committed to limit their emissions by 2020, including emerging economies such as Brazil, China and South Africa. Taken together this accounts for more than 80 percent of the energy related CO2 coverage in the world.
"KPMG’s work with companies worldwide has found that many are concerned about how moving forward in this direction will affect international competitiveness. Australia’s Climate Change Plan, together with its provisions for an international trading scheme is a sensible approach to a complex issue. Regardless of which side of the environmental debate one sits, an increasing number of business leaders realise the risk of not acting on the opportunities for business as this global change unfolds," says Mr de Boer.
Dr Wood says it is useful to note that technically the proposed carbon price mechanism is not a tax, even during the fixed phase.
"While carbon permits are described in the material released by the Government to act "like a tax" during the fixed phase, they do not constitute a tax in the legal sense. ;Carbon permits are assignable personal property created by statute."
Dr Nick Wood is an Associate Director in KPMG’s Climate Change and Sustainability team. He has been involved extensively with the development of carbon pricing schemes since 2000. These have included the UK’s Emission Trading Scheme (UK ETS) established in 2002, the EU Emission Trading Scheme (EU ETS) established in 2005 and its planned extension to aviation in 2012.
Since joining KPMG in Australia in 2008 Nick has worked on numerous carbon pricing and climate change engagements both in Australia and across ASPAC. These have included advice to a KPMG client in Korea in anticipation of the Korean cap and trade scheme, technical support on GHG assurance for KPMG in New Zealand on the recently launched NZ cap and trade scheme and the development of emission reduction targets for a major global airline.
Yvo de Boer is KPMG’s Special Global Advisor, Climate Change and Sustainability. He is responsible for thought leadership on strategy development, driving the development of KPMG’s Sustainability Service and acting as KPMG’s global ambassador. Prior to joining KPMG, Mr de Boer was Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCC), the body responsible for a multi-lateral response to the climate change challenge.