It appears that the government is hell-bent towards pushing this draft bill into legislation by June 2009. The scheme affects industries which are emission intensive, such as electricity companies, and also upstream vendors of fuel. The additional costs will no doubt be passed on to end consumers. The trading scheme allows purchase of emission credits overseas, but does not allow vice versa sale of local emission credits to overseas buyers. The scheme also allocates "free" units to the major polluters.
My first thoughts:
1. There is no incentive to reduce emissions, only a cost burden if emissions limits are exceeded. Such costs can easily be passed on to consumers, given the high barriers of entry to competitors. The target reduction of 5% below year 2000 levels by 2020 is ridiculously low. The compliance burden will be high, and a bonanza awaits advisors in this area. It is doubtful whether such activities actually brings significant real benefits to the economy. Given current economic conditions, it is surprising that so much time and effort is being spent on a matter which will increase burdens on businesses.
2. Clients in the property sector are not highly impacted. For example, air-conditioning emissions from buildings are not covered. Clients in the retail sector will have to prepare for higher energy and fuel costs. Clients in the investment sector will need to examine profit making opportunities in the trading scheme.
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