Planning for a Carbon Constrained Future
Main, Nick, New Zealand Management
By now you will have put in your submissions on the Government's five draft strategy documents about a sustainable economy. You will know your carbon footprint and be working on how to reduce it short term. Your strategy group is working on the long-term prospects for your industry with an emission price between $20 and $80 per tonne of carbon dioxide equivalent. Meanwhile, you are drafting a transition plan to redesign your business and your innovation group is focused on new opportunities in the new carbon constrained world.
Well perhaps not. Perhaps you are a sceptic on the science and believe that this will all go away--it all sounds too much like Y2K, SARS or bird flu. It would not be a good idea to take this approach.
Though we seem to be treating this as a new issue, it is far from that. In the latter half of last year a series of events--Al Gore's 'An Inconvenient Truth', the Stern Report and the International Panel on Climate Change (IPCC) scientists' report--moved public opinion and started to change mass consumer decision making. However, the debate started to get global warming on the agenda in 1987 through the Montreal Protocol, moved via the Rio Earth Summit in 1990 to the Kyoto Protocol in 1997. That was nearly 10 years ago. This issue already has longevity.
A number of things will keep it in the public eye. Between writing this article and you reading it another IPCC report will have been released. Every extreme weather event will be reported as a climate change issue.
And there are a number of political forces at play. They are most evident in the United Kingdom with the Labour and Conservative parties trying to out green each other and a number of other European countries which have had green legislation for many years.
A sensible approach is to expect change and, in particular, a world where emitting greenhouse gases has an associated charge.
So what should business be seeking from Government? Some indication of the long-term strategy for dealing with this. Anyone investing in long-term assets will need to be building in possible future carbon costs but the devil will be in the detail. Areas where a steer would be useful include:
* How a price for carbon might be determined and what mechanism will be used to apply this. It seems a form of carbon trading is the preferred method and this is to be applauded. Carbon trading should provide a mechanism for reducing emissions at the lowest cost and is designed under a cap and trade system to give a specific outcome. …