Carbon Pricing: Clean Green NZ and Paying for Pollution - some lessons for Australia?

Since 2008, New Zealand has been implementing an Emissions Trading Scheme (ETS). The scheme has three objectives:

Reduce carbon omissions as agreed under the Kyoto Protocol

Incentivise investment in clean technologies

Reward the planting of trees

To date, the NZ ETS only applies to forestry, energy generation and fossil fuels. We have seen the impact of the regime in the pricing of electricity and petrol. Further significant price increases are expected with the inclusion of industrial waste in 2013 and agriculture in 2015.

Carbon is actively being traded in New Zealand. The price of carbon has been capped until 31 December 2012 at $25 per NZU (NZ Unit of carbon - effectively the right to emit one tonne of carbon dioxide). Carbon is currently trading at $7.60 per NZU.

In Australia, the country's 500 biggest polluters will be required to pay for their carbon pollution from 1 July 2012 onwards.

What can Australia learn from the New Zealand experience:

This is an area where experts can truly add value to your business. The legislation and deadlines are constantly being amended and altered. Don't put your business at risk by not staying current with the rules. As an example, a deadline has recently passed for NZ forestry owners to register their rights to receive carbon credits. Failure to meet this deadline will have significant financial consequences for forestry owners.

Only deal with reputable intermediaries if buying or selling carbon credits. As with all new industries, there is the odd unscrupulous person that sees the opportunity to make a quick dollar. Make sure you deal with experts - MSI member firms will be able to help you find the advice you need.

Your carbon commitments will influence your business investment decisions. Make sure you understand the carbon implications of your decisions. For example, as a forest owner there is the cash flow opportunity to sell carbon credits now in the knowledge that credits must be purchased at the time of milling. Likewise, investing in new machinery may have a better pay back when the carbon implications are considered. Again, MSI member firms can assist in identifying opportunities and implications.

About MSI Global Alliance:

MSI Global Alliance (MSI) is a global association of independent legal and accounting firms in Adelaide, Brisbane, Melbourne, Perth and Sydney www.msi-anz.net.