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Australian corporations unprepared for ‘cap and trade’ scheme

Tony Chan | August 26, 2008 | 0 Comments

With the Australian government proposing to implement a carbon cap and trade policy, there is now a growing need for corporations to be aware of their carbon profile, says a senior executive from Sun Microsystems.

In an exclusive interview with Green Telecom, Sun’s Asia Pacific Chief Technology Officer, Angus MacDonald says that corporations will begin facing pressures from both the government as well as their customers to develop mechanisms for measuring their environmental impact.

A survey in July of 2,500 IT professionals from 813 organisations in Australia found that only 78% of the companies did not have the ability to measure their carbon emissions. More worryingly, 33% of the respondents have no plans to put practices in place to reduce their emissions.

“I think it’s been one of those things because there was no imperative to do it and people were unsure of how they should do it, they just avoided it,” MacDonald said. “I think going forward, there’s going to be a lot of pressure on them to actually start measuring.”

In July, Australia put into effect a National Greenhouse and Energy Reporting Act, which requires the top 400 of Australia’s largest corporations to measure and report on their environmental impact. Telstra is among the 400 required to report their carbon emissions.

“Not only will organisations be unable to comply with these new regulations, they are unprepared for carbon trading which is due to be introduced in 2010. This could be a real challenge for the 33 per cent that have no plans,” he pointed out.

TOP 1,000 COMPANIES
The proposed scheme will go a step further than the Reporting Act and impose a carbon cap and trade system for the country’s top 1,000 or so corporations – those that emit more than 25,000 tonnes of carbon annually – as part of a national program to reduce national carbon emission levels. The Carbon Pollution Reduction Scheme would place caps on the amount of acceptable emissions, with corporations required to purchase credits for excess emissions over those caps.

The Department of Climate Change scheme is currently being developed by the government and is scheduled to take effect as early as 2010. Ultimately, the Scheme is intended to reduce Australia’s overall emissions to 60% of 2000 levels by 2050.

“I think there is an imperative first of all from a governmental regulation point-of-view going forward that they be able to report on what their carbon footprint looks like. But equally a lot of people have embarked on things like consolidation, and made a lot of use of virtualization, for that they need to measure their starting position,” MacDonald added. “I’m detecting already there are a lot of people out in the market place that have spent a fair bit of money on consolidation and virtualization, and now they are not able to really quantify financially, or from a carbon footprint point of view, what the savings they have made because they really didn’t know what their costs were to start with.”

Sun is hoping to play an active role in the government’s consultation process for the proposed Scheme.

“We are working with the government and trying to give them advice from the perspective we’ve seen in trying to implement these things ourselves elsewhere. We are trying to bring the industry and our customers’ experiences to bear and to make sure that, that knowledge is available to them [the government],” he said. “Internally, we are working very hard to ensure we have the infrastructure and capabilities in place to be able to do the measurement ourselves and to assist in helping customers do the same thing.”

POWER SAVINGS
Even without the government’s proposed Scheme, corporations are also beginning to see the benefits of going green in order to reduce their operating costs, in particular, for power intensive environments such as corporate data centres.

“I think that there are some people who think the whole green IT thing is a beefed up, but I think there are more who understand – whether they believe in global warming or not,” he added. “Global warming to a lot of corporates is not part of the issue – the issue for them is that they are spending millions of dollars in powering the equipment, millions of dollars on cooling it – there are real financial benefits in actually greening their data centres.”

In addition to simply saving money through efficiencies, growing social awareness of corporation social responsibility issues is also beginning to play a major factor in purchasing and procurement decisions.

“Generally, there’s a belief that most organisations need to do something, and these fall into three categories: Those who are leading edge and who are already starting to do it, and appreciate that it is not something that happens overnight, that it is a journey that can quite often take two to three years; There are those that know something has got to be done, but are still trying to figure out what precisely and I think it comes down to some confusion in the market place, of what sorts of things lead to reducing carbon footprint,” he said. “The third group acknowledged that there’s an expectation that they do something, but they’ll get around to it someday – those are the ones who will be in for the biggest shock because I suspect that socially, there’s going to be a lot of pressure over the next couple of years and certainly, when I talk to banks for example, they are painfully aware that they will lose customers if customers see them as non-green.”

ANOTHER Y2K?
Despite these factors, there continues to be some resistances in the market.

“There are some that think this is the next Y2K,” MacDonald said. “Y2K was an interesting challenge and there are people out there that feel the IT industry as a whole beat up the whole Y2K question substantially and that the problem never existed.”

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