ORIGIN ENERGY BACKS CARBON TRADING SCHEME
7 August 2008Cath Hart
CORPORATE Australia cannot afford to harbour climate change sceptics as the Government moves towards introducing its emissions trading scheme, according to Origin Energy's chairman.
In a resounding endorsement of the fundamental restructure of Australia's corporate and economic landscape, Kevin McCann yesterday told the Australian Institute of Company Directors that business must embrace the proposed scheme and get their houses in order in preparation for its introduction in 2010.
"As leaders of forward-looking Australian companies, we should not be looking in the rear-vision mirror.
"We have a responsibility to prepare for the opportunities arising from transition to a lower carbon world for our companies and for Australia," he said.
"I don't think business people can afford to be sceptics," Mr McCann said.
"I don't think business people can afford to decide they want another scheme.
"The scheme before us is the one that Garnaut advocated, which the Government has said is the most likely scheme." However, Mr McCann also threw his weight behind calls for a Reserve Bank-style independent regulator to set caps and trajectories for the scheme -- in contrast to the green paper's preference for government to set the targets annually with parliamentary oversight.
"We have a lot of confidence in the integrity of the Reserve Bank. We think it is a very apt comparison and deserves consideration," he said. "We need clear roles and responsibilities in making decisions about targets and trajectories, scheme design and how to run auctions.
"There is a role for government and there is a role for the regulator, and clarifying these roles is crucial.
"We need independence."
Mr McCann said corporate Australia's progress in preparing for the scheme had been "pretty uneven". "A lot of corporations have not started to measure their footprint, which really surprises me," he said.
They should be considering how to trade or hedge carbon prices as well as risk management, compliance and reporting. "It's surprising how many have not begun to map their carbon footprint," Mr McCann said.
"Boards and management must be preparing for more than just increased prices. Time is short and there is a lot to be done."
Origin, which has been investing in gas-fired generation and renewable energy, is facing a hostile takeover from BG Group.
Mr McCann said the electricity industry would "undergo significant transformation" because of emissions trading.
"Energy prices will be higher for Australian households following the CPRS -- it is inevitable, and in fact the scheme won't work if the costs aren't passed on to customers," he said.
However, Mr McCann warned that governance remained a challenge. "The governance challenges are not just limited to business," he said. "The Energy Supply Association of Australia estimates we will have $30 billion invested electricity alone over the next decade. To reassure investors of those funds we need a clear and stable investment environment."
Copyright 2008 News Ltd.
The Australian
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