Cleaning up: Australia's readiness for a low-carbon future

Cleaning upAustralia’s readiness for a low-carbon futureA report from the Economist Intelligence Unit

Commissioned by

© The Economist Intelligence Unit Limited 2011 1

Cleaning upAustralia’s readiness for a low-carbon future

Contents

Preface 2

Executive summary 3

Introduction 7

The Australian Low-Carbon Readiness Barometer: Baseline expectations 10

Corporate sentiment towards a low-carbon future 13

Pricing carbon: How to reduce carbon emissions 13

Threat or opportunity? 14

Risks from going clean 17

Impact on competitiveness 18

Impactonoperatingcostsandprofit 18

Corporate preparedness for a low-carbon future 20

Modelling the impact of carbon prices 20

Reducing carbon footprints 21

Proactive planning 23

Targeting targets 24

Capitalising on opportunities in a low-carbon economy 25

Conclusion: Getting ready 28

Appendix: Survey results 31

© The Economist Intelligence Unit Limited 20112


C leaning up: Australia’s readiness for a low-carbon future is an Economist Intelligence Unit report, commissioned by GE. The Economist Intelligence Unit (EIU) conducted the survey and interviews

independentlyandwrotethereport.ThefindingsandviewsexpressedherearethoseoftheEIUalone. Elizabeth Fry was the author of the report and Sudhir Vadaketh was the editor. Gaddi Tam was

responsible for design. The cover image is by David Simonds. We would like to thank the following interviewees for their time and insights (listed alphabetically

by organisation):

• Tim Nelson, head of economic policy and sustainability, AGL

• Peter Burn, policy director, Australian Industry Group

• Craig Roussac, general manager of sustainability, safety and environment, Investa

• James Kell, CEO, Kell & Rigby

• Peter Shields, economics and sustainability team, Macquarie Generation

• Robert Poole, general manager, industry and government affairs, Murray Goulburn

• CarlMcCamish,executivegeneralmanagerofpolicyandsustainability,Origin

• RobKella,formerlychiefriskofficer,Qantas

• DavidPlunkett,generalcounsel,Qenos

• Susie Smith, manager for climate change and sustainability, Santos

• Armineh Mardirossian, group manager, corporate responsibility, Woolworths

May 2011

Preface



Executive summary

Although corporate and public opinion in Australia is, by and large, in favour of lowering carbon emissions, there is much debate about how to do it. Although it seems somewhat inevitable that

Australia will eventually transform into a low-carbon economy—thereby reducing its dependency on carbon for economic growth—the roadmap for this transition is not yet clear. The current government has announced plans to implement a carbon-pricing scheme from July 2012, but politicians have yet to achieveconsensusonthefinerdetails.

In this uncertain environment, Australian businesses must design and implement corporate strategy. How prepared are Australian corporations for a low-carbon economy? What are the biggest threats posed by Australia’s shift to a more sustainable model? What is industry’s preferred option for pricingcarbon,andwhy?And,crucially,haveAustralianfirmsidentifiedopportunitiesforgrowthoralternative markets that are emerging or may emerge from a low-carbon economy? This report, based onasurveyofover130seniorexecutivesinAustralia,attemptstoanswerthesequestions.

Thekeyfindingsoftheresearchinclude:

• Corporate strategy on carbon reduction is being held back by a lack of policy clarity, and companies are unsure when a clear policy will be implemented.Forthemajorityoffirms,thecurrentuncertainty around Australia’s future environmental policies is hindering the development and implementation of corporate carbon-reduction strategies. Almost two-thirds of respondents to the survey consider the unclear regulatory environment the primary barrier to making further progress on reducing carbon emissions.

Carbon reduction has moved up and down the corporate agenda over the past few years, partly in tandem with the perceived political commitment towards combating climate change. The years of political paralysis have also led to some corporate scepticism—just 16% of respondents believe that the Australian government has the political will to push through a carbon price.1

This uncertainty has already hampered corporate strategy and decision-making, particularly with regardstopotentialnewinvestmentsinAustralia.Somefirms,forinstance,believetheyaremakingpoor investment decisions—investing in emissions-heavy capital equipment and infrastructure—because they still do not have the certainty of a carbon price, which will make low-carbon technology more attractive.

1 The survey was conducted in January and February 2011, before the prime minister, Julia Gillard, announced plans foracarbontax



This suggests that Australia must resolve the current impasse over carbon pricing in order for corporations to design more effective long-term strategies, ultimately improving the economy’s competitiveness.

• The majority of Australian firms are doing something to address carbon emissions, but only a minority have detailed strategies for a low-carbon future.Some70%offirmssaythattheyhaveastrategyinplaceforreducingtheircarbonfootprint.Morethantwo-thirdsoffirmshavespecific,measureable targets for reducing their overall energy usage. However, some of these efforts may be quitebasic.Only21%ofrespondents,forinstance,saytheircompanieshaveaclearlydefinedcarbonreductionprogrammefortheirentiresupplychain.Lessthanone-thirdoffirmshavemodelledtheimpact of different carbon prices on their business operations.

Clearly,Australianfirmsareatmanydifferentstagesofpreparednessforalow-carbonfuture.Somehave developed thorough, holistic strategies; many have not done much at all, perhaps waiting for concrete legislative changes before acting.

• Australian firms see opportunities in a low-carbon future, and some have already started capitalising on them. More than one-half of respondents believe that the need to cut carbon emissions is a driver of process innovation, and is an opportunity to gain a competitive advantage by creating new or more marketable products. Meanwhile, more than one-half of the respondents believe that a corporatecarbontaxwillimproveinnovationandinvestmentincleantechnology.Morethanone-halfalso say their companies are ready to capitalise on growth opportunities in a low-carbon economy. More than one-third of respondent companies have created new dedicated roles or teams to identify green products or services.

• The biggest perceived risk in a low-carbon future is increased costs. When asked to identify the biggest risks to their business posed by Australia’s shift to a more sustainable economy, almost three-quarters of respondents say a major risk is added costs arising from compliance with regulations.

In addition, more than one-third of respondents believe that a carbon price will harm their international competitiveness unless their foreign counterparts are subject to the same requirements. These worries may be partly driven by uncertainty around carbon pricing—companies are still unsure of theexactcosttotheirbusiness.

They also do not know what, if any, compensation they will be entitled to. Ross Garnaut, the government’s chief climate-change advisor, believes that a carbon price will affect the international competitivenessofsomecompanies,andrecommendsthattrade-exposedindustriesreceivecompensation—varying depending on the industry—for three years from mid-2012.

Still, the prevailing uncertainty suggests that the public and private sectors need to invest more in carbon research to deepen Australia’s collective understanding of the potential impact of a carbon price.

• There is little corporate consensus about the impact of climate change. Surprisingly, there are manyexecutiveswhostillquestionthescienceofclimatechange—40%ofrespondentssaythattheimpactofcarbonemissionsonglobalwarminghasn’tbeensufficientlyestablishedtowarrantwholesale



changes in corporate strategy or behaviour. This indicates that broader, deeper climate-change education is necessary.

Similarly, there is a broad variation in assessment of the business impact of Australia’s shift to a low-carbon economy, with some respondents viewing it more as a threat to their business, and others more as an opportunity. They are similarly split on whether the opportunities created by introducing a carbon price will outweigh the risks in the long run. More than two-thirds of respondents do, however, feel that cutting Australia’s carbon emissions is principally a matter of changing corporate behaviour.

Puttogether,thesefindingsportraytheuncertainty,doubtandconfusioninAustralia’sprivatesector towards climate change and carbon reduction. This suggests that the national discussion and debate about sustainability is still in its infancy.

• The majority of respondents favour some sort of carbon-pricing scheme, but they disagree about which one.One-quarterfavouracarboncap-and-tradescheme,while20%preferasimpletaxonthecarbonfootprintoftheiroperations.Afurther12%wantaconsumertaxonthecarbonfootprintofgoods and services consumed.

Many of the companies interviewed for this report approve of the government’s idea of introducing acarbontax—whichgivesthempricecertainty—followedlaterbyamarket-basedpricingmechanism.Nevertheless, they are doubtful about the perceived accelerated timeline. They would also like more detailontheimpactontrade-exposedandemissions-intensiveindustries;theprovisionofincentives,allowances and a transition period; the potential for unintended consequences; and a host of other uncertainties surrounding any scheme.

This suggests that the Australian government must carry out further research and analysis into carbon pricing, as well as broad-based communication and dialogue, in order to secure buy-in from Australian corporations and society. By building a broader consensus behind its carbon-pricing policies,thegovernmentwillencouragemorefirmstomakelow-carboninvestmentsinthecountry,andspurclean-productinnovationwithinlocalfirms.ThisshouldhelptopositionAustraliancompanies for success in low-carbon economies around the world.

• Large firms are more prepared for a low-carbon future. The survey results suggest that bigger companies have invested more into preparing themselves for a low-carbon future. For instance, 41% of firmswithmorethan10,000employeesgloballyhaveassessedtheimpactofdifferentcarbonpricesontheirbusinessoperations.Thiscompareswithjust23%offirmswith10,000orfeweremployeesglobally.

Meanwhile,amongstfirmswithmorethan10,000employeesglobally,34%haveacarbon-reductionstrategyinplacethatcoversthewholebusiness,includingexternalpartnersandsupplychain.Thiscompareswithjust15%offirmswith10,000orfeweremployeesglobally.

Thesefindingsindicatethatlargerfirmsfeelagreaterimperativetoprepareforalow-carbonfuture. This could be because they worry more about the possible impact of a carbon price on their profitability.Largefirmsalsohavemoreresourcestodedicatetoacarbon-reductionstrategy.



About the survey

The research involved surveying 131 Australia-basedseniorexecutiveswhoarefamiliarwiththeircompanies’ sustainability strategy. Many of the respondents are in senior management—57% are in the C-suite or sit on the board. In terms of size, 47% workatcompanieswhoseglobalheadcountexceeds1000people.Some45%ofrespondentsworkatfirmswhoseglobalannualrevenuesexceedUS$1bn.

Therespondentsworkinabroadmixofindustries—23% work in the energy and natural resources sector; 18% work in construction and real estate; 11% are in the telecommunications industry; 11% work in transportation, travel and tourism; 10% are in the agriculture and agribusiness sector; and the remainder work in logistics and distribution; IT and technology; manufacturing; consumer goods; retailing; healthcare, pharmaceuticals and biotechnology; professional services; and education.



Introduction

As the world’s hydrocarbon reserves continue to be depleted, all countries will have to reduce their carbon intensity—the amount of carbon required per unit of GDP. This shift is being accelerated

by concerns about climate change, which have led to global agreements, commitments and efforts to reduce carbon emissions. Some countries, including Denmark, India, and the Netherlands, have alreadyimplementedacarbontax,largelywiththeintentionofreducingcarbonemissions.

ThisissueisparticularlyimportantforAustralia,theworld’stopcoalexporter,whichgeneratesmore than 80% of its electricity from coal and has per-capita CO2 emissions that are the highest in the developed world.2 Most other developed countries now have falling or steady emissions but, partly as a result of its resources boom, Australia’s emissions continue to increase rapidly.

Australia’s robust economic growth drove energy demand from 2007 to 2009. Yet emissions grewonlytwo-thirdsasmuchasenergydemandduringthatperiod,andfour-fifthsasmuchasGDP,reflectingadropinAustralia’scarbonintensity.Nevertheless,intheabsenceoffurtherpolicyaction,Ross Garnaut, the government’s chief climate-change advisor, estimates that total emissions will increase by 24% from 2000 levels by 2020.3 This represents an upward revision of four percentage points from 2010 projections, largely owing to the emissions from opening new coal mines and liquefyingnaturalandcoalseamgasforexport.ThesefindingsarefuellingagrowingawarenessinAustralia about the need to continue reducing its carbon intensity.

Australians have also suffered from tragic weather-related disasters recently, from the suffocating droughtsinthedecadeupto2009,tothedevastatingfloodsinQueenslandin2010-2011.Thesehaveheightened criticism of carbon emissions and the role they play in climate change.

AccordingtotheCommonwealthScientificandIndustrialResearchOrganisation(CSIRO),Australia’s national science agency, there is a 90% chance that greenhouse gas emissions resulting from human activities caused most of the global warming since the mid-20th century. CSIRO believes that future climate change in Australia will depend on the level of carbon emissions in the country. If emissionsarelow,CSIROexpectswarmingof1-2.5ºCbyaround2070,withabestestimateof1.8ºC.Ifemissionsarehigh,CSIROexpectswarmingof2.2-5ºCbyaround2070,withabestestimateof3.4ºC.4

Although public opinion in Australia is, by and large, in favour of lowering carbon emissions, there is much debate about how to go about it. Australia’s politicians have been unable to achieve consensus on the issue, largely because opinion is so divided.

2 The Global Carbon Project, 2009

3 The Garnaut Climate Change Review Update 2011

4 “Climate change in Australia: technical report 2007”, Commonwealth ScientificandIndustrialResearch Organisation



In 2007, the Labor Party, led by Kevin Rudd, swept into power partly because of his commitment to reducingcarbonemissions.In2008,MrRudd’sadministrationratifiedtheKyotoprotocolandoutlineda proposed Carbon Pollution Reduction Scheme (CPRS), a cap-and-trade scheme intended to cut Australia’s greenhouse-gas emissions by 5% over ten years. However, the proposal was defeated three times in Australia’s Senate (the upper house of parliament). Each time, members of the Australian Greens party opposed it on the grounds that the scheme would be too ineffective in reducing carbon emissions, while the opposition Liberal-National coalition claimed that it would unfairly harm trade-exposedindustriesliketheminingsector.

The Copenhagen climate conference in 2009, meanwhile, indicated that international enthusiasm for combating climate change had waned, and that a binding global pact was less likely to be agreed. Mr Rudd hence delayed implementation of the CPRS until 2012. This policy retreat, amongst other things, lost him his party’s support, and hence his job as prime minister. In June 2010 Julia Gillard, his Labor Party colleague, took over as prime minister, and soon after called an election, which resulted in a hung parliament. With the support of four MPs—one Green and three independents—Ms Gillard was able to form a minority-led government.

Soon after Ms Gillard’s ascension, a renewed global commitment towards combating climate change emerged. While the Copenhagen climate conference in 2009 had failed to deliver any international agreements, the subsequent Cancun conference in December 2010 produced some concrete policies (albeitwithvaguedetails).TheseincludedUS$100bnayearfordevelopingcountriesby2020asclimate assistance; a climate fund, partly under the direction of the World Bank, through which much ofthemoneymightflow;andadealontheconditionsunderwhichcountriesmaybepaidtodecreasethe damage being done to their forests.

In February 2011 (after the survey for this paper was conducted), Ms Gillard announced plans to introduceafixedpriceoncarbonfrommid2012,aheadofafullemissions-tradingschemein2015.Underthenewcarbon-pricingscheme,Australia’sbiggestpolluterswillberequiredtopurchasefixed-price permits for each tonne of pollution they produce.5Thepermitpricewillbefixedforeachyearbutwill increase annually at a pre-set rate. In effect, the price of the permit will be the carbon price.

Despite these plans, there is still uncertainty about Australia’s climate-change policies. Ms Gillard, afterall,doesnothaveawidespreadelectoralmandate.Buildingaconsensusisdifficultowingtotheunstable nature of the ruling coalition. Ms Gillard’s Labor Party and the opposition are committed to reducing Australia’s emissions by 2020 to at least 5% below 2000 levels. The Greens, meanwhile, want cuts of 25-40% below 2000 levels. They are also against generous compensation to the coal industry and the heaviest-polluting power generators. As such, the federal government could fail to win supportforitsproposedcarbonemissionstax.

In addition, powerful stakeholders, including the mining industry, are lobbying for or against acarbonprice.Export-dependentcompaniesareworriedaboutalossofcompetitivenessinternationally.Operatingcostswillprobablyrise—RepuTex,aHongKong-basedconsultantspecialisingincarbonriskanalysis,estimatesthatifthegovernmentsetsthecarbontaxatA$25pertonne,althoughnearlyone-halfoftheA$3.3bncostwouldbepassedontoconsumers,thetop200companiesbymarketcapitalisationwouldbeleftwithanetliabilityofA$1.75bn.6 Amongst

5 Throughout the paper, we will refer to the current government’s proposed plan—foracarbontaxin 2012 followed by an emissions-trading scheme in 2015—as a carbon-pricing scheme

6 “A 2012 Carbon Price for Australia?”,Reputex



consumers, meanwhile, there is some opposition to the scheme as people are increasingly worried about rising gas, electricity, water and food prices.

AllthissuggeststhattheAustraliangovernmentmustcarryoutextensivefurtherresearchandanalysis into carbon pricing, as well as broad-based communication and dialogue, in order to secure buy-in from Australian corporations and society.

Australian corporations ultimately need policy clarity. They are concerned that the different political parties will never be able to agree on emissions targets and carbon-reduction policies. The years of political inaction have also led to some corporate scepticism—just 16% of survey respondents believe that the Australian government has the political will to push through a carbon price. This uncertainty around Australia’s future environmental policies is holding back corporate carbon-reduction strategies.

PolicyclaritywillalsoallowAustralianfirmstocapitaliseonanyopportunitiesthatmightemergeina low-carbon economy. Though carbon reduction is often framed as an effort to control climate change and reduce fossil fuel dependency, from a corporate point of view, it is as much about developing innovativeproductsandexploitingnewgrowthmarkets.InthisreportweexaminecorporateAustralia’s readiness to face both the risks and opportunities of a low-carbon future.



The Australian Low-Carbon Readiness Barometer: Baseline expectations

Based on the survey conducted for this report, we have devised the Australian Low-Carbon ReadinessBarometer,anongoingindexofperceptionsof“low-carbonreadiness”.Importantly,

in future iterations the barometer will measure improvement or decline over current conditions rather thantheabsolutereadiness.Thischaptersummarisesthefindingsoftheinitialsurvey,whichformsthebaselineindex.

The barometer seeks to measure the degree to which companies believe Australia is prepared for the transition to a low-carbon economy, both in terms of minimising carbon emissions and seizing growth opportunities that this transition may present in terms of new markets for cleaner products and services.

Theoverallscoreistheaverageofthreequalitativescoresbyseniorexecutivesontheirperceptionsof “low-carbon readiness” of their company, their industry, and Australia overall, on a scale of 1 to 5, with5denotingexcellentreadiness.6

In turn, perceptions of “low-carbon readiness” at the company, industry and national level are measured by averaging respondents’ scores for two questions—“Please rate the overall readiness of each of the following for minimising their carbon footprint” (see Chart A); and “Please rate the overall readiness of each of the following to capitalise on growth opportunities in a low-carbon economy” (see Chart B).

Using this methodology Australia’s overall low-carbon readiness is 3.1. Thefollowingscoreswillformthebaselinefortheongoingindex:

Itisnotablethatexecutivesviewprospectsfortheirowncompany—thebusinessaboutwhichtheyare best informed—with the greatest degree of optimism. That may be because they are privy to new carbon-reductionstrategiesorcleanenergyopportunitiesthatrevealthepotentialfortheirownfirmtosucceedinalow-carbonfuture.Alternatively,theymaybeoverestimatingtheirownfirm’sreadinessinrelationtotheircompetitorsandtheoveralleconomy.Whetherexecutivesarebeingtoopositiveortoo negative will become clear in due course.

Overall score 3.1

Company score—low-carbon readiness of “your company” 3.6

Industry score—low-carbon readiness of “your industry” 3.0

Country score—low-carbon readiness of “the Australian economy” 2.6

6 For clarity, the scoring system in the barometer has been reversed from that used in the original survey questions (where 1=excellent).Theoriginalsurvey questions are reproducedintheappendix.



Barometer by industryWhenaskedfortheirperceptionsoflow-carbonreadinessintheirownindustry,executivesintheagriculture and natural resources, and construction and manufacturing sectors seem slightly less upbeat than those in the services sector.

This could be because companies in those industries typically emit more emissions than service-sectorfirms,andhenceareabitmorescepticalabouttheirabilitytoprepareforalow-carbonfuture.

Barometer by company sizePerceptionsoflow-carbonreadinessalsodependonthesizeofthecompany.Medium-sizedfirmsarethe least upbeat. This could be because big companies have deep pockets and plenty of resources to committoanycarbon-reductioninitiative.Smallfirms,meanwhile,mayfeeltheyarenimbleenoughtoquickly adjust to changes in market conditions.

Agriculture and natural resources7 2.9

Construction and manufacturing8 2.9

Services9 3.1

Small (<101 employees) 3.7

Medium (101-10,000 employees) 3.3

Large (over 10,000 employees) 3.7

7 Includes agriculture and agribusiness; energy and natural resources sectors

8 Includes construction and real estate; manufacturing sectors

9 Includes healthcare, pharmaceuticals and biotechnology; IT and technology; logistics and distribution; professional services; retailing; telecommunications; transportation, travel and tourism; consumer goods; education sectors

Itmaywellturnoutthatexecutivesinthisbaselinereportaretoooptimisticabouttheirowncompanies’ prospects, in relation to those around them. With uncertainty still surrounding a carbon-pricingscheme,manyfirmsmayactuallybecaughtunawareswhenthefinallegislationispassed.

With the overall barometer score at 3.1 out of 5, there remains plenty of room for movement in both directions over the coming year. To register your disposition—be it positive or negative—please join us online at http://digitalresearch.eiu.com/cleaningup/benchmarking-survey.

Barometer questionsItisencouragingthatthemajorityoffirmsbelievetheyarereadytominimisetheircarbonfootprintif need be (Chart A). Still, that does mean that some 46% of companies are, at best, at “average” readiness.Withalittlemorethanayeartogobeforetheproposedintroductionofacarbontax,inJuly2012,thisraisessomequestionsabouttheabilityofsomefirmstomanagethetransition.

Carbon reduction has moved up and down the corporate agenda over the past few years, partly in tandem with the perceived political commitment towards combating climate change. If and when Australiafinallydoesdecidetopricecarbon,morethanone-halfofAustralianfirmsbelievetheyare



Chart BPlease rate the overall readiness of each of the following to capitalise on growth opportunities in a low-carbon economy. Rate on a scale of 1 to 5, where 5=Excellent, 3=Average and 1=Very poor.(% respondents)

Your companyExcellent 5 2 Average 3 4

Your industry

The Australian economy

313420 12 3

245 42344

134 313517

Very poor 1

Source: Economist Intelligence Unit

Chart APlease rate the overall readiness of each of the following for minimising their carbon footprint. Rate on a scale of 1 to 5, where 5=Excellent, 3=Average and 1=Very poor.(% respondents)


Your industry


343519 10 2

175 52350

143 403112

Very poor 1


readytocapitaliseonanyopportunitiesthatarise(ChartB).Fortheotherfirms,theyriskmissingouton new growth opportunities, both in Australia, and in other countries that are transitioning to a low-carbon economy.



Corporate sentiment towards a low-carbon futurePricing carbon: How to reduce carbon emissions

ThereislittleconsensusamongAustralianexecutivesabouthowtogoaboutcuttingcarbonemissions. Some 40% of respondents believe that the impact of carbon emissions on global

warminghasn’tbeensufficientlyestablishedtowarrantwholesalechangesincorporatestrategyorbehaviour.

More than one-third of respondents, meanwhile, do not think that carbon should be priced, believing instead that green technology or behaviours should be subsidised (see Chart 1). The majority, however, favour some sort of carbon pricing. One-quarter favour a carbon cap-and-trade scheme,while20%preferasimpletaxonthecarbonfootprintoftheiroperations.Afurther12%wantaconsumertaxonthecarbonfootprintofgoodsandservicesconsumed.

Name a priceChart 1: What do you think is the best option for pricing carbon?(% respondents)Carbon doesn’t need to be priced; green technology or behaviours should be subsidised instead

Carbon cap and trade scheme (eg, CPRS)

Corporate tax on carbon footprint of operations

36

25

20

Consumer/sales tax on carbon footprint of goods/services consumed12

I don’t know7


Thispreferenceforacap-and-tradeschemeoveracarbontaxprobablyreflectstheperceptionthattheformerwillhaveagreaterenvironmentalimpact.“Themosteffective,low-costandflexiblesolution for a global problem is a globally traded carbon unit and a trading scheme that links countries andindustries,”saysCarlMcCamish,executivegeneralmanagerofpolicyandsustainabilityatOrigin,an energy company. “A price on carbon might affect behaviour but you don’t know by how much. If you put a cap on the total emissions that are ever going to be emitted, however, you have more certainty with the environmental outcome.”



Several interviewees for this paper feel that the success of a trading scheme is dependent on it being internationalised. Companies are searching for the cheapest source of abatement and that involves being able to trade permits internationally. For some companies, however, a straight carbon taxprovidesmuch-neededcertainty.Whenbusinessleadersknowwhatitwillcostthemtoemitaunitofcarbon,theycanbudgetandplanaccordingly.Withacarbontradingscheme,thepricefluctuates,creating some uncertainty.

Qantas,Australia’slargestairline,prefersthesimplicityofthetaxfornowsinceitmakesforeasieradministration and implementation. Businesses can easily use the information they already provide as part of the requirements of the National Greenhouse Energy Reporting Act (NGER) according to Rob Kella,untilrecentlychiefriskofficeratQantas.Theircarbontaxliabilitycanbeestimatedfromthat.10

Othersbelievethatthecurrenttwo-stepproposal—ataxfollowedbyacap-and-tradescheme—isthe most sensible approach. Once Australia is used to the general idea of paying for carbon emissions, it can then move to a more market-based system.

EvenQantaswouldpreferacap-and-tradeschemeinthelongrun,butitsappealdependsonhowtherulesareset.“Asatrade-exposed,emission-intensivebusinesswedidn’tfeeltheRudd-designedCPRSreflectedtheinherentlimitationsofourbusinessandwhatweweretryingtodostrategicallytomove things forward,” says Mr Kella.

MurrayGoulburn,adairyco-operativeandoneofAustralia’slargestexportersofprocessedfoods,has come to the same conclusion. As a moderately intensive emitter of greenhouse gases it was not eligibleforfreepermitsundertheCPRS.However,asafullytrade-exposedbusinessitwouldhaveincurredhighcostsandwouldnothavebeenabletorecouponecentofthetax.Itishopefulthatanyfuture cap-and-trade scheme will address these concerns.

TimNelson,headofeconomicpolicyandsustainabilityatAGL,anenergyfirm,alsosupportsafixedprice for now, but likes the idea of eventually moving to a cap-and-trade scheme. To him, a carbon price suchasA$20-30pertonneismanageableandwouldallowforagradualtransitiontoalow-carboneconomy. “We’re not talking about revolutionising the economy overnight, but a reform that will take three or four decades,” he says.

MrNelsonrecommendstransitionalassistanceforenergy-intensive,trade-exposedindustriestomitigatethefinancialimpactonthosebusinessesuntilcomparablecarbon-pricingschemesareimplementedincompetitorcountries.Healsosuggestsfinancialassistanceforsignificantlyaffectedindustrieslikehigh-emittingcoal-firedgenerators.“Itmakessensetopromoteinvestorconfidenceand ensure energy security as we move to cleaner technology and renewables,” he says.

Threat or opportunity?When asked if Australia’s shift to a more environmentally sustainable economy is a threat or an opportunity to their business, respondents are divided. One-half believe that the opportunities created by imposing a carbon price will outweigh the risks in the long run. The biggest opportunities, according to almost one-half of the survey respondents, will be in developing new products and services and in improving their relationships with their customers (see Chart 2).

10 For several years, energy-intensive industries have been forced to report energy use under the Energy EfficiencyOpportunityAssessment Act and the National Greenhouse Energy Reporting (NGER) Act. About one-third of Australia’s top companies are assessed. As a guide, businesses emitting more than 25,000 tonnes of carbondioxideequivalent,orconsuming more than 25,000 megawatts of electricity or 2.5m litres of fuel in a year, canexpecttoberequiredtoreport.



CompaniessuchasAGL,OriginandQantas—threeofAustralia’slargestemitters11—envision plenty of opportunities to develop new products and services for a ”clean” economy. In fact, they are already investing heavily in clean energy. Origin wants to justify building more gas plants that would cut average emissions when generating electricity. “We have just built Australia’s biggest base-load gas-firedplantsoweareveryproactiveinthatspace,”saysMrMcCamish.

11 Compared with others as reported in Greenhouse and Energy Information 2009-10, National Greenhouse and Energy Reporting, Department of Climate Change and Energy Reporting

Opportunity awaitsChart 2: What do you think are the biggest opportunities to your business in taking steps to reduce its carbon footprint? Select up to three. (% respondents)

Developing new products and services

Improving relationships with customers

Risk mitigation (eg, in supply chains)

Improved employee engagement/commitment

Access to new markets

Cost reduction

Improving relationships with suppliers

47

47

34

26

25

22

9


In response to demand from environmentally conscious consumers, Origin has moved to build a marketfor“greenelectricity”—wherecustomerchoosetopayextraforelectricitygeneratedfromrenewables rather than from coal.

Qantasrelentlesslylooksforwaystobecomemoreenergyefficient.Theairline’smassivefuelcostdwarfs any prospective carbon price, and hence its minimisation is a much bigger driver of innovation (seeCasestudy:Qantas).Morefuel-efficientaircraftwillhelp—QantaswillsoonintroduceafleetofBoeing787s,whichare20%morefuelefficientthantheirolderplanes.

“Therealtransformationopportunitieswilltakeplaceinthenextthreetofiveyearswithanewfleet,andinfivetotenyearswithanalternativefueloptionwhichhasabetterfootprint,”saysMrKella. He sees many clean energy opportunities in the aviation and automobile sectors, particularly with the use of alternative fuels, which would also allow countries to reduce their dependence on the Middle East for crude oil.

Reflectingapopularcorporateview,JamesKell,chiefexecutiveofKell&Rigby,aconstructionfirm,believes that any and all sustainability efforts are good for the planet and should be encouraged. Whilestillhesitanttospendmoneyonmeasuringhisfirm’scarbonfootprintormodelingrisksandopportunities, he feels any price on carbon will boost innovation and investment in clean technology.

For instance, although solar PV and solar thermal technologies are not yet commercially ready, and the grid in Australia is not “smart” enough to handle them well, they will one day be feasible. “Making buildings more sustainable and having a lighter footprint is the right thing to do, so I’m heading in that direction whether the debate is purely about carbon or not,” says Mr Kell. He sees plenty of opportunities through new building practices such as new substations, renewable electricity infrastructure and the like. Much of this will be demand-driven, according to Mr Kell, as “green”



case study Qantas

Qantas,Australia’slargestairline,hasbeenimplementingcarbon-reductionstrategiesforaboutfiveyears.UnlikemanyAustralianbusinesses,Qantascouldnotaffordtowaitforregulatorycertaintyaboutacarbontax.Spirallingfuelpricesforcedthecarriertoexamineitsfuelefficiency.“Ourcostofenergy—whichisone-thirdormoreofourtotalcostprofile—isadominantaspectofourbusiness,”saysRobKella,untilrecentlytheairline’schiefriskofficer.“Ifyougobackseven years we were pursuing fuel-conservation strategies then and looking at new equipment primarily because fuel was a high cost. Emissions became a bigger issue subsequently and in many respects just complemented the work we had already started on,” he says.

TherehavealsobeenopportunitiesforQantastomakeincrementalimprovementstoitsexistingfleet.Forexampleitswitched to lighter catering carts in order to lower the total onboard weight of the aircraft. The major transformations will occur in a few yearstime,however,withtheintroductionofmorefuel-efficientaircraft and alternative jet fuels that have a lower carbon footprint.

Thefinancialimperativeforfuelefficiencyfarexceedsthe

punitiveimpactofanyproposedcarbontax.Qantas’sfuelcostsfor2010exceededA$3bn,saysMrKella.Bycomparison,giventhatQantasemitsaround4mtonnesofcarbonperyear,ataxofA$25dollarpertonnewouldimplyatotaltaxliabilityofA$100m.“Westartedlookingatfuelefficiencyandaircraftdesigntodotherightthing for the environment but equally it’s to be smart from a business perspective,” he says.

Aviation is one of the most energy-intensive sectors in the world. Some 95% of airline emissions relate to the burning of aviation fuel. ImposingacarbonpriceonQantascreatesacompetitivedistortionsincethefirmcompeteswithairlinesfromAsiaandtheMiddleEastthathavefeweremissionssubjecttotaxortradingsystems.

ThereforeQantasishopingthatanynewcarbon-reductionregime builds in some transitional arrangements for the aviation industry and some incentives in recognition of initiatives already in place—especially given the work on cleaner aviation fuel.

“Government is asking for a response on pricing principles but seems to be putting the cart before the horse,” says Mr Kella. “It is creating opportunities for industry to participate but seems to have taken a view of how to proceed before the consultative period has begun. People are worried about the time they have to prepare.”

Innovation opportunityChart 3: Please indicate your level of agreement with the following statements. Rate on a scale of 1 to 5, where 1=Strongly agree and 5=Strongly disagree.(% respondents)

Cutting carbon emissions is a driver of process innovation

Strongly agree 1 2 3 4

Cutting carbon emissions is an opportunity to gain a competitive advantage by creating new, or more marketable, products/services

Cutting carbon emissions is an opportunity to find new clients in Australia

223726 8 7

4315 81124

813 173329

Cutting carbon emissions is an opportunity to find new clients internationally1315 212922

Cutting carbon emissions is an opportunity to gain a competitive advantage in terms of cost reduction1811 202922

Cutting carbon emissions is a necessity driven by government regulation617 172733

Cutting carbon emissions is a necessity driven by customer and other stakeholder demands/need to maintain reputation117 213131

Strongly disagree 5


buildings, which require different methods of construction, are more easily designed and constructed if they are requested by clients.

These anecdotes resonate with the survey results, where more than one-half of respondents believe that cutting carbon emissions is a driver of process innovation, and is an opportunity to gain a competitive advantage by creating new, or more marketable products (see Chart 3).



Firms are a bit more phlegmatic, however, about whether cutting carbon emissions can help them findnewclients.Onbalance,theyarealsosomewhatscepticalthatcuttingcarbonemissionswillgivethem a competitive advantage in terms of cost reduction.

Risks from going cleanAlmost three-quarters of respondents say compliance costs arising from new environmental legislation is the biggest risk posed to their business by Australia’s shift to a low-carbon economy (see Chart 4). Thisfindingunderlinesthefearofaspikeinoperatingcostsduetohigherenergypricesandtaxesoncarbon emissions. It also underscores the importance of policy clarity and regulatory transparency so companies can start managing and mitigating these risks. At the moment, policy uncertainty appears to be causing concern and hindering corporate strategy. Almost one-half of the respondents perceive loss of competitiveness as a big risk.

PeterBurn,policyheadattheAustralianIndustryGroup,anon-profitcross-industryassociation,does not believe that the additional ongoing compliance costs will be great. He points out that one-third of Australia’s biggest emitters already measure and report carbon emissions under NGER. AlthoughfirmsincursignificantcoststocomplywiththeNGER,hebelievesthatacarbonpricethatfeedsoffthatreportingregimeshouldnotbeexpensivetoimplement.

There will be additional compliance costs, says Mr Burn, if businesses participate in the Emission IntensiveTradeExposed(EITE)schemeorotherprogrammesaimedatoffsettinganylossofcompetitiveness. Both small and large companies may be involved. The EITE system has high upfront costs but much lower ongoing costs.

In terms of implementation, a cap-and-trade scheme would be costlier because instead of paying a tax,companieswillhavetoacquirepermits,expertiseandanyotherknow-howrelatedtothepermitplatform. Additional compliance costs would also be involved if the company were to buy carbon offsets, such as forestry investments.

All things considered, however, Mr Burn believes that loss of competitiveness could potentially have a much bigger impact on businesses than ongoing compliance costs.

Risky business?Chart 4: What do you think are the biggest risks to your business posed by Australia’s shift to a more sustainable economy? Select up to three. (% respondents)

Imposition of large costs through compliance with regulations

Loss of competitiveness

Creation of an uncertain investment environment

Risk of brand/reputational damage through non-compliance

Loss of strategic focus on enhancing corporate value

Enhanced supply-chain risk

73

49

42

27

16

15




Impact on competitivenessMany Australian corporations worry that any national carbon pricing scheme could make them less competitive internationally. Some have complained that this will ultimately lead to job losses in Australia. Almost one-half of respondents feel that any carbon pricing must involve a global agreement; they say Australia has no obligation to act unilaterally.

Thesecriticssaythatanycarbontaxwillhaveanegativeimpactonalltrade-exposedindustriesbecausethosefirmswillbeunabletopassonthecostofthetaxoverseas,andwillbeforcedtoabsorbit. The end result, suggests Robert Poole, general manager, industry and government affairs at Murray Goulburn, is that more manufacturing will be shifted abroad, as global corporations practice environmental regulatory arbitrage. The net effect on carbon emissions worldwide will remain unchanged. In fact, global emissions could even increase, if the company moves to a country that uses a more emissions-intensive production process, risking so-called carbon leakage. “Fears about carbon leakage are overblown but remain a powerful obstacle to the introduction of effective mitigation policies the world over,” says Professor Garnaut.

Mr Poole believes that an international solution is critical since at present trade is highly distorted by the fact that some countries price-in pollution and some do not. “If emissions reduction is the appropriateresponsetoaddressman-madeclimatechange,thenbydefinitionifwedon’tgetthemajor economies involved, we are not going to achieve the outcome we are seeking,” he says.

As with many companies, the dairy co-operative operates in a highly global competitive market whereitalreadyfacesrestrictedtradeaccessandexportsubsidies.“Wedon’twanttoseeanotherdistortion in the already tough global dairy sector,” Mr Poole says.

The Australian government, led by Ms Gillard, says it is engaged in genuine consultation with trade-exposed,emissions-intensiveindustries.Nevertheless,thegovernmenthasbeenforcedtopubliclydefend the consultation process, amid industry worries that the carbon price and compensation package have already been decided. Similarly, the interviews conducted for this paper suggest that manyexecutivesfeeltheirvoicesarenotbeingheard.“Moreworkneedstobedoneonsecuringinvestmentcertaintyduringthetransitionfromafixedcarbonpricetoacap-and-tradescheme,”saysoneexecutive.

Impact on operating costs and profitA national carbon price will inevitably have an impact on many aspects of business. Respondents generallybelievethatapriceoncarbonwillleadtohigheroperatingcosts,lowerprofits,andweakerinternationalcompetitiveness(seeChart5).Thisreflectsthefactthatataxisimmediateandunavoidable,whereasanyfuturefillipstoprofitabilityorcompetitivenessaremerelypotential.PeterShields, who works in the economics and sustainability team at Macquarie Generation, a state-owned powergenerator,believesthatthefirmwilllosehundredsofmillionsofdollarswiththeintroductionofacarbontax.Itcanpassonafairportionofthecostsbutthetaxcouldpotentiallywipeoutallitsprofits.



ItisasimilarstoryforQenos,aplasticsmanufacturer.“Ourproductionprocessisintrinsicallyemissions intensive, as our operations require very high temperatures and large volumes of steam,” saysDavidPlunkett,generalcounselatQenos.“Wehavealreadytakenstepstoimproveourenergyefficiencyandthereforereduceourcarbonemissions.Nevertheless,ifacarbonpriceisintroduced,andwe don’t get appropriate transitional assistance, our long-term viability will be threatened.”

Furthermore, a carbon price will dramatically change the dynamics in the energy sector and has led to fears that electricity security will be compromised. As evidence, the opposition Liberal-National coalition points to Professor Garnaut’s report, which it believes shows that the government’s carbon policywouldleadtobrownoutsandinsufficientelectricityproduction.

Balancing these detrimental effects, however, respondents to the EIU survey do believe that a carbonpricewillbenefittheirbusinessinsomeways.Morethanone-halfbelievethatitwillboostinnovation and investment into clean technology, while 43% say that their company’s brand value and reputation will be enhanced.

Several interviewees are concerned that proceeds from any carbon pricing scheme will not be used to develop clean technology. The government has recently said that one-half of the revenues from its proposed carbon-pricing scheme will be transferred to low-income households—probably through creditsandtaxcuts—tocompensateforhigherelectricitybills.Thishasfannedfearsthattherewillbeinsufficientfundstocompensatepollutersandforcleantechnologyinvestments.

“While you don’t want to disadvantage Australian households, the government must make sure that any additional revenue is invested in the most effective carbon-reduction measures,” says Mr Kella of Qantas.

Ups and downsChart 5: How do you think the introduction of a national corporate carbon tax will affect your company in the following areas? Pick the most likely impact for each of the following variables.(% respondents)

Operating costsImprove Stay the same Deteriorate Don’t know

Efficiency

Profits

62334 2

6221 216

19 5634

Competitiveness within Australia113 1769

Competitiveness internationally410 3848

Brand value/reputation194743

Employee engagement229 861

Innovation/investment into clean technology2113256

Risk management

Transparency

5125825

823 61 8




Corporate preparedness for a low-carbon futureModelling the impact of carbon prices

Aboutone-thirdofAustralia’stopcompaniesarealreadyassessedunderNGER,helpingexplainthesurveyfindingthataroundthesameproportionofrespondentshavemodeledtheimpact

of different carbon prices on their business operations (see Chart 6). In essence, NGER provides the frameworkforhowacarbontaxoranemissionsschemewouldwork.Oncecompaniesknowwhattheiremissions are, they can assess liabilities and look for cost-effective carbon-reduction strategies.

Assessing the futureChart 6: In your scenario planning, have you assessed or modelled the impact of different carbon prices on your business operations?(% respondents)

Yes

No, but we are planning to do so

No, no plans to do so

Don’t know

29

33

31

8


For many interviewees, the cost of carbon is incorporated into all planning and all investment decisions. However, one-third of respondents say they have no plans to model the impact.

AccordingtoAGL’sMrNelson,one-thirdofAustralia’scompaniesmeasureenergyefficiencyrather than carbon emissions per se, since energy consumption is the critical issue for them. The sophistication of the modelling is really in proportion to how much energy they use. Smaller users shouldfocusonhowefficientlytheyuseelectricityandgas,hesays.Biggerusersareprobablyalreadyefficientbuttheyshouldexploreabatementopportunitiesoutsidetheirsector,suchassourcinginputswith lower energy intensity and hence lower costs in an emissions-trading environment.

Like many heavy emitters, AGL models the impact of different carbon prices on operating costs, profitabilityandnetpresentvalueoverthenexttenyearsanddisclosesittoshareholders.Thecompany decided several years ago to start investing in clean assets in order to become more competitive in an environment where carbon costs are factored into fossil-fuel power generation.



Similarly, for nearly ten years, all of Origin’s investments have been subject to a carbon-price analysis. “Every time we make a new investment, build a new plant, or develop a new product we look at the carbon cost,” says Mr McCamish. “It is built into everything we do much the same as the cost of funding.”

Woolworths, a supermarket chain, factors a carbon shadow price into all areas of its business and all potential investments (see Case study: Woolworths). It is important to understand how prepared the business is for a low-carbon future, and to be ready to capitalise on potential opportunities, says ArminehMardirossian,thefirm’sheadofcorporateresponsibility.

case study Woolworths

Woolworths, Australia’s biggest supermarket chain by revenue, is targeting to cut its carbon emissions to 40% below “business as usual” levelsby2015.Inabidtoincreaseitsenergyefficiencyaswellasreduceitscarbonfootprint,thefirmcontinuestoinvestinlow-carbontechnology for stores (mainly refrigeration) and transportation.

Relatively speaking, Woolworths is a moderate emitter. It has a large electricity bill, however, and managing that is essential inalow-margin,fiercelycompetitivebusiness.AccordingtoArmineh Mardirossian, Woolworths’s group manager of corporate responsibility, the company is well prepared for the new carbon-pricing scheme, having undertaken analysis of potential risks and opportunities that may arise from a low-carbon economy. Woolworths is driven by the need to pass on the carbon price and still remain competitive, which means understanding which parts of the supply chain can bear the cost increase.

“We have to remain competitive...so we have put every possible

scenario on the table and looked at what that might mean for us. It’s an opportunity to say what is right for the business, which investments make sense and which areas can bear an additional cost,” says Ms Mardirossian. “We do factor in a shadow carbon price into future investments.”

Regulatory uncertainty has hampered decision making. Ms Mardirossian says that an appropriate carbon price should drive more investment into low-carbon technologies—investments that currently do not meet Woolworths’s return-on-investment hurdles.

Theimminentcarbontaxhas,however,alreadyledtosomeprocess improvements at Woolworths. In the course of setting carbon-reduction targets, Woolworths realised that its various business engineering divisions across the group had many different strengths. It subsequently centralised all the engineering divisions in a single unit, which is now responsible for shadow pricing, investment evaluations, pilot projects, and other initiatives that require coordination across functions. This has improved decision making in the group.

Reducing carbon footprintsAustralian corporations are at different stages of maturity in their efforts to reduce their carbon footprint.Morethantwo-thirdsoffirmssurveyedhavesomecarbon-reductionstrategyinplace(seeChart 7). Almost one-third, however, are concerned only with their own business. Almost 40% of companies,meanwhile,havestrategiesthatgobeyondtheirdirectoperations.Morethanone-fifthoffirmsappeartobeverywellprepared,withacarbon-reductionstrategythatcoversexternalpartnersand their supply chain.

ThesefindingsindicatethatAustralianfirmsareatmanydifferentstagesofreadinessforalow-carbon future. Some have developed thorough, holistic strategies; many have not done much at all, perhapswaitingforconcretelegislativechangesbeforeacting.Manyfirmsmayalsobeinthemiddleofa multi-year, multi-staged process that begins with their own business.



Smaller footprintsChart 7: Does your company have a strategy in place for reducing its carbon footprint?(% respondents)

Yes, it covers the whole business, including external partners and supply chain

Yes, it covers the business, including our supply chain, but not our external partners

Yes, it covers the business, including our external partners, but not our supply chain

Yes, it covers only our own business

No, but we are currently developing one

No, and we have no plans to develop one

Don’t know

21

15

3

31

17

11

2


The survey results suggest that bigger companies have invested more into preparing themselves for alow-carbonfuture.Forinstance,amongstfirmswithmorethan10,000employeesglobally,34%haveacarbon-reductionstrategyinplacethatcoversthewholebusiness,includingexternalpartnersandsupplychain.Thiscompareswithjust15%offirmswith10,000orfeweremployeesglobally.

Thisfindingindicatesthatlargerfirmsfeelagreaterimperativetoprepareforalow-carbonfuture. This could be because they worry more about the possible impact of a carbon price on their profitability.Largefirmsalsohavemoreresourcestodedicatetoacarbon-reductionstrategy.Smallerfirms,bycontrast,mayhavelesstimeandmoneytoinvestinplanningforanuncertainlow-carbonfuture.

Susie Smith, manager for climate change and sustainability at oil and gas company Santos, says that the company has been proactive in trying to understand opportunities and risks in a low-carbon future: analysing the possible pricing impacts on their business, identifying costs of abatement and exploringprojectsthatSantoscanimplementtoreduceitscarbonemissions.“Australia’sabundantreserves of natural gas provide a lower-carbon alternative to coal, and have the capacity to generate substantial employment and investment opportunities,” she says.

Qantashasalsointroducedenterprise-wideinitiativestoreduceemissions.Carbonreductionfallsunderthepurviewofthechiefriskofficersinceemissionsareclassedasbothastrategicandfinancialissue. “We are doing everything we can to understand the consequential aspect of the price on carbon fromafinancialperspective,aswellastheeconomicsofbeingabletopasssomeofthatthrough,”saysMr Kella.

Mr Burn of the Australia Industry Group says that while Australia’s bigger companies clearly have strategies in place, many manufacturers are not managing their footprint as well as they could. Some are still putting off costly investments until they really need to spend the money. Mr Burn believes that evenlargerfirmscouldbedoingmoretoassesstheimpactofataxthroughoutthesupplychainandtoidentify vulnerabilities.

The reason they are moving slowly, says Mr Burn, is that they are assessing the likelihood and materiality of a carbon price against the cost of doing something about it. “They’re making very



rationalbetsandlookingatdifferentscenarios.Ifthecarbontaxhaslittleimpactonthemtheywon’tmakeabigcapitalinvestment.”Manyexecutivesarereluctanttoimplementthesestrategiesuntillegislative changes will allow them to make a better judgement about the return on the investment.

This also highlights the carbon-pricing dilemma facing the Australian government. Price carbon too high, and it risks undermining the viability of some businesses; price carbon too low, and it may not have much impact on corporate behaviour.

Proactive planningCraig Roussac, general manager of sustainability, safety and environment at Investa, a commercial property owner, believes that many Australian companies are focussed on short term energy-reduction strategies—simple changes that save them money—rather than a long-term plan to set their business on a clean trajectory. He views a close relationship between the sustainability manager and the other executivesasasignthatafirmhasthoughtthroughitsbusinessstrategyandstartedpositioningitselfforthelongterm.“Therearenotensionsbetweenexecutivesbecausefinancialstrategyandsustainability strategies are aligned,” he says. Almost one-half of the survey respondents believe there isalinkbetweenfinancialperformanceandcarbonintensityreductionintheirrespectivecompanies.

Origin has plenty of small and medium-sized customers who are fairly proactive. Others, however, are not. “It’s not because they’re ignorant that they don’t make those preparations,” says Mr McCamish, “It’s because they are dealing with other more pressing issues that have greater shareholder value attached to them, such as wage rises.”

Only11%offirmsdonothaveacarbon-reductionstrategyinplaceandhavenoplanstodevelopone. This is often because they are small, and do not consider it affordable, practical or necessary. This suggeststhattheremaybeaminorityoffirmswhowillnevermakesignificanteffortstoreducetheircarbon footprint, even as Australia transitions to a low-carbon economy.

Amongstfirmsthatdohaveacarbon-reductionstrategyinplace,themajoritysaytheyweredrivento develop it by the desire to do the right thing ethically (see Chart 8). This is seen as a more important driver than the need to comply with laws and regulations or the need for corporate risk management.

However, this may not be an entirely accurate picture of the motives driving efforts to reduce carbon emissions. Our interviewees suggest that the desire to reduce energy costs—or, in other words, to improveenergyefficiency—isoftenimportant.“Energyisamassiveexpenseandallforecastspointtowardsitbecomingmoreexpensive,”saysMrPooleofMurrayGoulburn.“Wethinkitisincumbentonlarge energy users to have a very clear strategy on how they source energy in the future.”

MurrayGoulburnhasmadereasonablygoodprogressinimprovingtheefficiencyofitsprocesses.Forexample,thedairyco-operativehaspioneeredtheuseofLNGinheavytransport,reducingtransportcosts and associated emissions.

Manylargeenergyusersarekeentoimplementlargeenergy-efficiencyprojects.AGLandQenos,forinstance,haveenteredintoanagreementtobuildaco-generationfacilityatQenos’sAltonaplant,replacing a steam boiler with one that uses a gas turbine to produce electricity and then captures the “wasteheat”,aby-productofpowergenerators,toproducesteam.Theplasticsmanufacturerexpectstocutcarbondioxideemissionsassociatedwiththeproductionofpolyethyleneby100,000tonnesper



Ethical behaviourChart 8: What have been the primary drivers for developing this strategy? Select the top three.(% respondents)

Desire to do the right thing ethically

Need to comply with laws and regulations

It is a part of ongoing corporate risk management

Need to meet demands of customers

Desire to discover new markets

Need to upgrade the company’s image

Need to improve the bottom line

Need to support recruitment and retention of employees

Response to pressure from NGOs and citizen lobby groups

Response to criticism in the media

Other, please specify

54

46

46

26

20

19

14

9

7

2

3


annum.“Notenoughthough,”saysMrPlunkettofQenos.“Thecarbonpricewillstillbite.”ThedesiretoboostprofitshasdrivenInvesta’sfour-prongedplan.Itscorporatestrategywasto

reduce risks, reduce costs, focus on building short-term relationships so as to secure deals, and then progress to longer-term relationships—becoming a business partner of choice for larger institutional tenants keen to be associated with more sustainable property. By reducing the carbon footprint of its buildings—throughreducedenergyuse—Investahasmanagedtolowercostsandimproveitsfinancialperformance.

“The less money we have to pay, the higher our net operating income from the building, the greater the value of the building. And tied to that is the awareness from tenants who are attracted to clean energyproperties.Soyougetrevenue-sideupliftandexpensesfall,sothenetpositionisstronger,”says Investa’s Mr Roussac.

Targeting targetsThemajorityofcompanieshavespecific,measurabletargetsforreducingtheircarbonfootprintinterms of overall energy usage, staff practices, green building technology, core products and services, and new investments (see Chart 9). In some ways, these represent the low-hanging fruit of carbon reduction.Lessthanone-thirdoffirmshavetargetsforcustomers,partnersorsuppliers.Thissuggeststhat these are areas that come later in the corporate carbon-reduction lifecycle. This also resonates withthefindingsfromChart7.

After a period of aggressive target-setting, however, some of Australia’s companies have ditched



Cutting carbonChart 9: Does your firm have specific, measurable targets for reducing its carbon footprint in the following areas?(% respondents)

Overall energy usageYes No Not applicable

Green building technology (eg, lighting)

IT Systems (eg, data centres)

68 28 4

58 537

85438

Staff practices (eg, commuting, recycling)53560

Core products and services64450

Suppliers86131

Partners96525

Customers86527

New investments104248


them, suggesting that once a company embarks properly on a carbon-reduction programme, targets lose their effectiveness as a way to drive behavior.

At Santos, Ms Smith says that there is an interest in emissions-intensity targets when they are new, but once companies become more sophisticated, the targets become redundant. Once a company has reduced its carbon intensity to a point, it takes much effort simply to maintain the status quo. “Also, the focus should be on implementing projects rather than watching the numbers,” she says.

Ms Smith has found there are better ways to change and drive behavior. For instance, she likes to give highly motivated people full ownership and responsibility for key sustainability indicators. These people can then move at their own pace and quietly develop support. She has found that in this way, Santos still delivers on its targets because it has the right people in place.

Capitalising on opportunities in a low-carbon economyMorethanone-halfoffirmsinthesurveysaytheyarereadytocapitaliseongrowthopportunitiesina low-carbon economy. Over one-third of respondents have created new dedicated roles or teams to identify “green” products or services (see Chart 10).

Somefirmshavetakenthelead,however,andarealreadyreapingthereturns.Investahasmanagedto get a head start on its competitors by being proactive about sustainability. Commercial properties are now forced to disclose their greenhouse benchmark rating at the point of sale and point of lease. Before this was mandatory, early adopters promoted only their relatively higher-rated buildings. Investa took advantage of this gap by disclosing information about even its relatively lower-rated buildings. “We took a corporate position that mandatory disclosure was bound to become compulsory at some point. When it did and all the buildings were rated, even our lower-rated buildings looked better than our competitors’,” says Mr Roussac.



AGL, meanwhile, decided several years ago to invest in zero-emissions electricity plants—assets which don’t have a carbon cost, so they will become competitive when there is a cost on thermal coal generation.ItforecaststhatthenetpresentvalueofthisinvestmentovertenyearsisA$200m.AGLhasalsodedicatedsignificantresourcestowardshelpingitscustomerswiththeirowncarbonmanagementand energy use. “We have an eco markets team—most energy companies or energy intensive companies are looking to become greener,” says Mr Nelson (see Case study: AGL).

Capitalising on carbonChart 10: What steps has your company taken to make the most of these opportunities? Select all that apply.(% respondents)

New dedicated roles/teams to identify “green” products or services

Customer/client focus groups to identify level of demand for “green” products/services

New dedicated roles/teams to identify “green” markets

Hired external consultants to help identify opportunities

Government lobbyist/liaison to maximise available support or subsidies


38

37

22

21

18

17




case study AGL

Tim Nelson, head of economic policy and sustainability at AGL, an Australianenergyfirm,believesthattheglobaleconomyismovingtowards a low-carbon future, and hence Australia “cannot isolate itself from the rest of the world”. However, he says that a carbon price will have a much bigger impact on Australia than it will on most other countries because Australia’s carbon intensity—emissions per unit of GDP—is generally higher. Therefore, in Mr Nelson’s view, the risk to Australia lies in not managing the transition well. “That’s why an early shift, but a gradual shift, is so important,” he says.

Mr Nelson argues that Australia already has numerous natural resources for alternative energy, which will smooth its transition to a low-carbon economy. “We have a number of wind sites that have speedsinexcessof8metrespersecond,whereaswindfarmsinplaces like Europe are generally built with much lower speeds. So we can get more energy out of the same capacity,” he points out.

AGL began publicly reporting its Scope 1, 2 and 3 emissions—which refer to emissions from direct activities, electricity consumed, and other indirect activities respectively—in 2003-04. He regards thisasanimportantfirststepincarbonreduction,asitallowsacompany to assess how carbon-intensive its business is, and what the risks associated with reducing emissions might be.

According to Mr Nelson, AGL is responsible for about 8% of

Australia’s emissions indirectly through the energy it purchases on behalf of its customers. Once AGL had assessed its emissions, therefore, it was able to make more strategic investments in low-carbon infrastructure. In 2005, AGL purchased 645MW of hydro-renewableenergy.“Itwasourfirstsignificantsteptowardsde-carbonising our energy supply,” says Mr Nelson.

AGLhasalsoimproveditsenergyefficiencywithinsomeofitspowerstations,anditsuppliesenergy-efficiencyadvicetosomeof its industrial as well as residential customers. “We view this as a partnership with our customers to help them not only reduce their emissions but also reduce their bills,” he says.

Aside from two government-owned utilities, AGL is already Australia’s largest renewable energy business. Mr Nelson cites Australia’s renewable energy target—41,000GW hours of new renewable energy power to be supplied by large-scale projects by 2020—as a primary driver of investment for AGL’s business. Achieving the target will require 10,000MW of new wind capacity to be built, whichisaboutA$30bnworthofnewcapitalinvestment.AGLrecentlysigned off on the 420MW Macarthur wind farm in Victoria—the Southern Hemisphere’s largest—and it has several others in various stages of development.

In a low-carbon future, AGL will also offer to its customers more energy-efficiencyproducts—thelowest-costmeansofreducingemissions, says Mr Nelson—including the use of smart grids and a shift to time-of-use pricing.



Conclusion: Getting ready

Forthemajorityoffirms,thecurrentuncertaintyaroundAustralia’sfutureenvironmentalpoliciesis holding back implementation of corporate carbon-reduction strategies. Almost two-thirds of

respondents consider the unclear regulatory environment the primary barrier to making further progress on carbon reduction in their respective companies (see Chart 11). Other hurdles include a lack of international standards (41%) and the availability of relevant technologies at an acceptable cost (37%).

Carbon reduction has moved up and down the corporate agenda over the past few years, partly in tandem with the perceived political commitment towards combating climate change. What this means isthatifAustraliafinallydoesdecidetopricecarbon,onlyslightlymorethanone-halfofAustralianfirmsbelievetheyarereadytocapitaliseonanyopportunitiesthatarise.Fortheotherfirms,they

Foggy roadChart 11: What are the primary barriers to making further progress on carbon reduction in your company? Select up to three.(% respondents)

Unclear regulatory environment

Lack of international standards (eg, an agreed method of calculating carbon emissions)

Availability at acceptable cost of relevant technologies

Risk that environmental practices will raise your costs in comparison to competitors

Difficulty in developing relevant targets and measures

Difficulty in funding environmental efforts

Lack of client engagement/ demand

Lack of systems and tools to monitor and enforce compliance with the company’s environmental policies

Lack of buy in and commitment from senior management

Lack of employee engagement


There are no barriers to making further progress

64

41

37

30

16

15

14

11

8

2

4

7




risk missing out on new growth opportunities, both in Australia and in other countries that are transitioning to a low-carbon economy.

ThespecificdetailsofAustralia’sproposedcarbontaxhaveyettobedecided,includingthelevelofthefixedprice,therulesforthetax-to-tradingtransition,thecapforthetradingphase,compensationforemissions-intensive,trade-exposedfirmsandelectricitygenerators,andgenerallyhowandtowhomthetaxwillapply.

Withoutcompleteclarity,itisnotpossibleforfirmstoaccuratelyassesstheimpactofanAustraliancarbon price. The only guidance companies have is the proposed CPRS, including the treatment of majorexportindustries,thecoalindustryandpowergenerators.BigemitterssuchasMacquarieGeneration fear they will not be compensated because they failed to qualify under the CPRS. Respondents are particularly concerned about potential unintended consequences of any carbon-pricing scheme.

ThissuggeststhattheAustraliangovernmentmustcarryoutextensivefurtherresearchandanalysisinto carbon pricing, as well as broad-based communication and dialogue, in order to secure buy-in from Australian corporations and society. By building a broader consensus behind its carbon-pricing policies, the government will be able to attract more low-carbon investment into the country, and driveclean-productinnovationwithinlocalfirms.ThiswillpositionAustraliancompaniesforsuccessinlow-carbon economies around the world.

”Will there be phase-in arrangements, what kind of transitional arrangements will there be, what willthecostbe,willtherebeassistance?”asksMrKellaatQantas.Qantasishopingforcreditsaswellasincentivestoaccelerateexistinginitiativestocutemissionsthroughincreasedfuelefficiency.“We could use more time to transition. We are hoping the new regime builds in some transitional arrangements not dissimilar to those made in the EU where the aviation industry was given an opportunity to transition into a 100% scheme within an eight-year period,” he says.

According to Mr McCamish at Origin, the uncertainty has not only stalled investment in the electricity sector but it has encouraged the wrong kind of investment. “Instead of laying out the billionsofdollarstobuildanewgas-firedorcoal-firedpowerstation,webuildsmallerpowerstationsthatarecheapertobuild,moreexpensivetorunandhavehighercarbonemissions.Whatweneedisthecertaintytoinvestinpowerstationsthatareefficientandmodern,”hesays.

AGL’s Mr Nelson agrees. “The longer we wait for certainty, the more bad investment decisions are beingmade.Energyfirmswillminimisetheircapitalatriskbydeployingthelowest-costelectricitygenerationequipment,whichisgenerallytheleastefficient.Itdoes,however,minimisethechancethat any capital outlay will be stranded through a subsequent decision on emissions trading,” he says. AGL’sresearchshowsthattheuncertaintyhascosttheeconomyasmuchasA$2bnayearinadditionalelectricity costs.

Moderate emitters like Murray Goulburn and Woolworths will face rising energy costs with or without acarbonprice,andsohaveanincentivetoimprovetheirenergyefficiencyregardless.Nevertheless,MsMardirossian says that a price on carbon would drive more investment in lower-emitting infrastructure that currently does not meet the company’s current hurdle rate.

30 © The Economist Intelligence Unit Limited 2011


Until there is policy clarity and action, much of the potential opportunity in a low-carbon future will remainunexplored.

ComparedwithAustraliancompanies,howreadyisyourfirmforalow-carbonfuture?Tofindout,pleasevisithttp://digitalresearch.eiu.com/cleaningup/benchmarking-survey,whereyoucanfilloutashort,quickbenchmarksurvey,whichwillrevealhowyourfirmmeasuresuptootherfirmsinyoursector.

31© The Economist Intelligence Unit Limited 2011

AppendixSurvey results


Appendix: Survey results

1. Are you familiar with your company’s strategy regarding sustainability? (% respondents)

Yes100

2. Please rate the overall readiness of each of the following for minimising their carbon footprint. Rate on a scale of 1 to 5, where 1=Excellent, 3=Average and 5=Very poor. (% respondents)


Your industry


343519 10 2

175 52350

143 403112

Very poor 5

3. Please rate the overall readiness of each of the following to capitalise on growth opportunities in a low-carbon economy. Rate on a scale of 1 to 5, where 1=Excellent, 3=Average and 5=Very poor. (% respondents)


Your industry


313420 12 3

245 42344

134 313517

Very poor 5

4. Is there a link between financial performance and carbon intensity reduction? Rate on a scale of 1 to 5, where 1=Strong link, 3=Average and 5=Weak link. (% respondents)


Your industry


243018 13 16

2515 151332

1313 133922

Very poor 5




5. What do you think is the best option for pricing carbon? (% respondents)Carbon doesn’t need to be priced; green technology or behaviours should be subsidised instead

Carbon cap and trade scheme (eg, CPRS)

Corporate tax on carbon footprint of operations

36

25

20

Consumer/sales tax on carbon footprint of goods/services consumed12

I don’t know7

6. Please indicate your level of agreement with the following statements. Rate on a scale of 1 to 5, where 1=Strongly agree and 5=Strongly disagree. (% respondents)A carbon cap and trade scheme is unworkable because it unfairly penalises companies in certain sectors of the economy (there would be no level playing field)


A carbon cap and trade scheme is unworkable because companies cannot pass on the full cost of carbon permits to consumers

The government should impose a scheme to force businesses to reduce carbon emissions

152725 22 10

2715 142124

1219 151934

Cutting carbon emissions is principally a matter of changing consumer behaviour726 112134

Cutting carbon emissions is principally a matter of changing corporate behaviour223 72444

A consumer/sales carbon tax is politically unworkable722 212921

A carbon cap and trade scheme would not sufficiently change consumer behaviour to make any difference to national carbon emissions816 123134

A corporate/consumer carbon tax would not sufficiently reduce carbon emissions911 232432

The Australian government has the political will to push through a carbon price

Any carbon pricing must involve a global agreement; Australia has no obligation to act unilaterally

215 343011

1827 151822

Strongly disagree 5




7. How do you think the introduction of a national corporate carbon tax will affect your company in the following areas? Pick the most likely impact for each of the following variables. (% respondents)

Operating costsImprove Stay the same Deteriorate Don’t know

Efficiency

Profits

62334 2

6221 216

19 5634

Competitiveness within Australia113 1769

Competitiveness internationally410 3848

Brand value/reputation194743

Employee engagement229 861

Innovation/investment into clean technology2113256

Risk management

Transparency

5125825

823 61 8

8. Do you think that the opportunities created by imposing a carbon price will outweigh the risks in the long term? (% respondents)

No

Yes

Don’t know

44

44

12

9. In your scenario planning, have you assessed or modelled the impact of different carbon prices on your business operations? (% respondents)

Yes

No, but we are planning to do so

No, no plans to do so

Don’t know

29

33

31

8




10. Does your company have a strategy in place for reducing its carbon footprint? (% respondents)

Yes, it covers the whole business, including external partners and supply chain

Yes, it covers the business, including our supply chain, but not our external partners

Yes, it covers the business, including our external partners, but not our supply chain

Yes, it covers only our own business

No, but we are currently developing one

No, and we have no plans to develop one

Don’t know

21

15

3

31

17

11

2

11. What have been the primary drivers for developing this strategy? Select the top three. (% respondents)

Desire to do the right thing ethically

Need to comply with laws and regulations

It is a part of ongoing corporate risk management

Need to meet demands of customers

Desire to discover new markets

Need to upgrade the company’s image

Need to improve the bottom line

Need to support recruitment and retention of employees

Response to pressure from NGOs and citizen lobby groups

Response to criticism in the media


54

46

46

26

20

19

14

9

7

2

3

12. Why not? (% respondents)

My company is too small for it to be affordable or practical

My company does not consider it as necessary

The cost involved is too high

There has been insufficient support for such a strategy at senior management level

My company should focus on making money, not saving the environment

Our competitors have yet to, so we see no need


36

14

7

7

0

0

36




13. Does your firm have specific, measurable targets for reducing its carbon footprint in the following areas? (% respondents)

Overall energy usageYes No Not applicable

Green building technology (eg, lighting)

IT Systems (eg, data centres)

68 28 4

58 537

85438

Staff practices (eg, commuting, recycling)53560

Core products and services64450

Suppliers86131

Partners96525

Customers86527

New investments104248

14. Do you agree with the following statements? (% respondents)

All senior executives in my company are aware of our sustainability agendaYes No Not applicable

The board should lead initiatives to cut carbon emissions

Carbon reduction will become increasingly crucial to all aspects of corporate strategy

74 19 7

73 919

52867

Carbon reduction is a short-term concern27622

The impact of carbon emissions on global warming hasn’t been sufficiently established to warrant wholesale changes in corporate strategy or behaviour25840

86131

96525

86527

104248

15. Has your organisation implemented the following measures? (% respondents)

Employee incentives to encourage “green” process innovationYes No Not applicable

Employee education and training

Means to track and analyse efficiency of resource usage

37 58 5

62 534

53759

Clearly defined carbon reduction programme (internal)55540

Clearly defined carbon reduction programme (supply chain)

Renewable energy use targets

Transparency with regard to carbon cost of business operations (internal disclosure)

Transparency with regard to publication of carbon footprint (eg, in annual report)

Climate change risk management: Insurance against potential impacts

77023

66331

85636

116128

87022




16. What are the primary barriers to making further progress on carbon reduction in your company? Select up to three. (% respondents)

Unclear regulatory environment

Lack of international standards (eg, an agreed method of calculating carbon emissions)

Availability at acceptable cost of relevant technologies

Risk that environmental practices will raise your costs in comparison to competitors

Difficulty in developing relevant targets and measures

Difficulty in funding environmental efforts

Lack of client engagement/ demand

Lack of systems and tools to monitor and enforce compliance with the company’s environmental policies

Lack of buy in and commitment from senior management

Lack of employee engagement


There are no barriers to making further progress

64

41

37

30

16

15

14

11

8

2

4

7

17. What do you think are the biggest risks to your business posed by Australia’s shift to a more sustainable economy? Select up to three. (% respondents)

Imposition of large costs through compliance with regulations

Loss of competitiveness

Creation of an uncertain investment environment

Risk of brand/reputational damage through non-compliance

Loss of strategic focus on enhancing corporate value

Enhanced supply-chain risk

73

49

42

27

16

15




18. What do you think are the most crucial policies the federal government should pursue to encourage the reduction of carbon emissions? Select up to three. (% respondents)

Subsidies for clean technology investments by companies

Imposition of a fair carbon pricing scheme

Establishment of incentives for green corporate behaviour

Establishment of national carbon emission reduction goals

Subsidies for clean technology usage by consumers

Establishment of environmental reporting standards

Provision of education on green practices for consumers

Establishment of penalties for lack of compliance by companies

Provision of information on sustainable practices for companies

Establishment of penalties for lack of compliance by consumers

None of the above: government can help most by doing nothing and letting the market come up with solutions

44

37

35

34

27

24

18

11

8

4

9

19. Please indicate on this scale the extent to which you see Australia’s shift to a more environmentally sustainable economy as a threat or an opportunity to your business. (% respondents)

Opportunity5 8 13 17 11 24 8 6 5 22

96525

86527

104248

100:0 90:10 80:20 70:30 60:40 50:5040:60 30:70 20:80 10:90 0:100

20. Please indicate your level of agreement with the following statements. Rate on a scale of 1 to 5, where 1=Strongly agree and 5=Strongly disagree. (% respondents)

Cutting carbon emissions is a driver of process innovation


Cutting carbon emissions is an opportunity to gain a competitive advantage by creating new, or more marketable, products/services

Cutting carbon emissions is an opportunity to find new clients in Australia

223726 8 7

4315 81124

813 173329

Cutting carbon emissions is an opportunity to find new clients internationally1315 212922

Cutting carbon emissions is an opportunity to gain a competitive advantage in terms of cost reduction1811 202922

Cutting carbon emissions is a necessity driven by government regulation617 172733

Cutting carbon emissions is a necessity driven by customer and other stakeholder demands/need to maintain reputation117 213131

Strongly disagree 5




21. What do you think are the biggest opportunities to your business in taking steps to reduce its carbon footprint? Select up to three. (% respondents)

Developing new products and services

Improving relationships with customers

Risk mitigation (eg, in supply chains)

Improved employee engagement/commitment

Access to new markets

Cost reduction

Improving relationships with suppliers

47

47

34

26

25

22

9

22. What steps has your company taken to make the most of these opportunities? Select all that apply. (% respondents)

New dedicated roles/teams to identify “green” products or services

Customer/client focus groups to identify level of demand for “green” products/services

New dedicated roles/teams to identify “green” markets

Hired external consultants to help identify opportunities

Government lobbyist/liaison to maximise available support or subsidies


38

37

22

21

18

17

23. Which of the following have been the primary drivers for the development of new “green” products/services in your business? (% respondents)Increased regulatory demands that are likely to come into place

A belief that relevant innovation in this area will be crucial to our ongoing business success

Increased customer demand (or belief that there is pent-up demand) for "green" products/services that use less carbon emissions in their creation

20

18

14

A desire to be first to market with a new product/service in our industry8

A belief that “green” products/services can improve your company’s productivity

Increased regulatory demands already in place

Increased customer demand (or belief that there is pent-up demand) for new "green" products/services that help cut users’ carbon emissions

The need to keep up with our industry competitors


Not applicable—we don’t currently provide "green" products/services

8

6

6

6

1

15




24. In which regions does your company have operations? Select all that apply. (% respondents)

Asia-Pacific

North America

Western Europe

Middle-East and Africa

Latin America

Eastern Europe

98

37

34

27

24

20

25. What is your primary industry? (% respondents)Energy and natural resources

Construction and real estate

Telecommunications

Transportation, travel and tourism

Agriculture and agribusiness

Logistics and distribution

IT and technology

Manufacturing

Consumer goods

Retailing

Healthcare, pharmaceuticals and biotechnology

Professional services

Education

23

18

11

11

10

7

6

6

2

2

2

2

1

26. How many people work at your organisation globally? (% respondents)1-10

11-50

51-100

101-200

201-500

501-1,000

1,001-10,000

Over 10,000

8

15

13

5

4

8

13

34

27. What are your organisation's global annual revenues in US dollars? (% respondents)

$500m or less

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

47

8

11

12

22

28. Which of the following best describes your job title? (% respondents)

Board member

CEO/President/Managing director

CFO/Treasurer/Comptroller

CIO/Technology director

SVP/VP/Director

Head of Business Unit

Head of Department

Manager

Head of Sustainability

Other

Other C-level executive

5

28

6

7

11

4

9

5

18

2

5




29. What are your main functional roles? Choose up to three. (% respondents)

General management

Strategy and business development

Operations and production

Finance

Marketing and sales

IT

Risk

Supply-chain management

Human resources

Procurement

Legal

Other

Information and research

R&D

Customer service

46

31

30

20

15

14

11

9

6

5

5

4

4

3

3

Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out herein.

Cover image - David Simonds

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Cleaning up: Australia's readiness for a low-carbon future

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