Carbon Pollution Reduction Scheme Green Paper

The ATA has published a broad overview of the scheme announced by the government last week in a point by point guide to the Carbon Pollution Reduction Scheme.

• The Government intends to set a yearly cap on Australia’s greenhouse gas emissions. It will then auction emission permits up to level of the cap each year to the 1,000 companies that are responsible for the bulk of Australia’s emissions.
• The cap will decrease over time, so companies will steadily find it more cost effective to invest in low emission technologies or change the way they work, rather than buying permits and passing the cost on to their customers.
• The scheme will have a profound effect on every part of the Australian economy over the longer term. But it will enable Australia to reduce its greenhouse gas emissions at the lowest possible cost because of the wisdom of the market. Companies and individuals will be able to make their own decisions about how to deal with the rising cost of goods and services that involve large carbon emissions.
• The scheme is expected to come into effect in 2010.

How the scheme will affect the trucking industry

The Government intends to include transport fuels in the scheme, but trucking companies will not have to buy permits. Fuel suppliers will be required to buy permits instead. Legally, the obligations under the scheme will apply at the point where the excise and customs duty on fuel is imposed.

• Some very large logistics companies may want to buy their own permits. The Government will look at the options for these companies after the scheme has been in operation for a year.
• The fuel suppliers will add the cost of buying permits to the price of fuel, so the main effect of the scheme on trucking companies is that the price of diesel will rise.
• The Government has not announced the initial cap on emissions under the scheme. As a result, it is not possible to put an exact figure on the scheme’s effect on diesel prices.
• However, a carbon price of $20 per tonne would increase the price of diesel by about 6 cents per litre.
• As a transitional measure, the Government will reduce the Road User Charge on a cent-for-cent basis to offset the initial impact of the scheme on the price of diesel. The Government will review this measure after the scheme has been in operation for a year.
• Trucking companies will need to be ready for an increase in electricity prices as well. A carbon price of $20 per tonne would increase electricity prices by about 16 per cent.
• The green paper recognises the importance of complementary measures to help drive down the cost of reducing emissions. The National Transport Commission has released a separate discussion paper about some of the measures that could be considered for the trucking industry.
• There will be a Climate Change Action Fund to help businesses make the transition. The Government will settle the arrangements for the fund when it makes the final design decisions for the overall scheme.

Reporting obligations

Although trucking companies will not have to buy emissions permits, many medium-to-large operators will have to lodge reports with the Government under the National Greenhouse and Energy Reporting System (NGERS).

This system came into effect on 1 July 2008. In 2008-09, reporting obligations will apply to trucking companies that:

• use 100 terajoules of energy in any state or territory in the year. Diesel is counted in the state or territory where it is bought, regardless of where it is used. Companies that buy more than 2.59 million litres of diesel in any state or territory in the year will exceed this threshold.
• use 500 terajoules of energy in total in the year, which is equivalent to using 12.95 million litres of diesel.

These companies have to register under the scheme by 31 August 2009 and lodge their first report by 31 October 2009.

The ATA will shortly release a guide to help trucking companies carry out an initial assessment of whether they exceed the reporting thresholds under the scheme.