Carbon Trading. Maybe you’ve heard about it, maybe you haven’t. The idea of carbon trading is simple: Each business is given a certain amount of carbon trading credits by default. The more your business pollutes the environment with carbon emissions above the agreed limit, the more credits you are required to buy. Thus, low carbon-emitting companies can sell their excess carbon credits to those companies that pollute more, and make more profit, and the dirtier businesses must pay for their greater pollution levels.
The Australian Government has embraced the idea of carbon trading tightly with both arms, and released a white paper in December 2008 that states how the government is going to reduce carbon pollution by 15% (of year 2000 levels) by the year 2020, and a 60% reduction by 2050, using a carbon pollution reduction scheme. The execution of this scheme, however, requires a 1000+ page document to be understood, just so that Aussie businesses and the government can even begin to get the ball rolling! It is not overly complex, but in my opinion it is going to take time to successfully understand, set up and implement. There will be those who will find ways to exploit the system, as always, and undoubtedly there will be victims.
As an accounting student, I think the notion of adding carbon trading to my skill set is exciting. “Green Accounting” or “Green Auditing” have become recent new professions that merge environmentalism and sustainability with accounting practices. However, the notion of walking into a company and auditing their production facilities for carbon pollution and deliver bad news of illegal levels of emissions to struggling business owners during these times of recession may be a bit difficult for someone like myself to do, personally. I suppose you take the bad with the good in this case, and focus on the future.
Those involved with tourism and hospitality would no doubt be supporters of the carbon trading initiative, since their respective industries and profits depend on the existance of the natural wonders around them. As a resident of the Cairns region, global warming would have huge catastrophic effects on both the residents and the industry here. Can we imagine if the Great Barrier Reef no longer existed in 5-10 years? Or if our houses were washed away by flash floods similar to those seen by the recent cyclone Ellie? Perhaps we need to start planning ahead to avoid negative consequences that may result from carbon pollution and global warming right now.
The white paper produced by the government has the following main sections (divided into two downloadable volumes), which I will link to future articles as I write them after my readings:
- The Policy Context
- The Need for Action
- Shaping a Global Solution
- National Emissions Trajectory and Target
- A Framework for the Carbon Pollution Reduction Scheme
- Coverage
- Reporting and Compliance
- Carbon Markets
- Auctioning of Australian Carbon Pollution Credits
- Setting Scheme Emissions Caps
- Linking the Scheme to International Markets
- Assistance to Emissions-Intensive Trade-Exposed Industries
- Assistance to Strongly Affected Communities
- Tax and Accounting Issues
- Transitional Issues
- Governance Arrangements and Implementation
- Household Assistance Measures
- Climate Change Action Fund
- Comlementary Measures
As mentioned, I will be reading the paper and commenting on each section over the next few weeks, time permitting. Comments are welcome, as discussion and feedback can only help everyone’s understanding on this new behemoth of a topic.