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Australia new carbon tax law needs standard methodologies

Tony Chan | July 13, 2011 | 1 Comment

Originally published in Communications Day

The Australian Federal Government’s new carbon tax of $23 per tonne could cost the country’s incumbent operator, Telstra, nearly $40 million annually, but how much it will costs the rest of the industry is still up in the air.

According to the carbon tax plan unveiled on Sunday by Prime Minister Julie Gillard, the country’s 500 biggest polluters will have to pay $23 per tonne of carbon emissions they emit starting from 2012.

While the policy will offer exemptions and aid to Australia’s emission-heavy industries such as mining, energy, and agriculture, the telecoms industry will now have to pay the tax, or purchase carbon permits to offset their emissions.

Under the new scheme, Telstra would have to pay $39,798,855 in carbon taxes based on its emissions of just over 1.7 million tonnes of carbon for the year 2009-2010. Startlingly, Optus, the number two telecoms operator in the market, will only have to pay $647,303 for the same period, because it only reported 281,361 tonnes of carbon emission.

Considering the fact that Telstra’ revenue for 2010 of $25 billion is only 2.8x that of Optus’s $9.3 billion for the year, the huge disparity between their emissions volume data suggests either Optus is vastly more, some 21x more, efficient than Telstra (or comparatively less intensive in terms of actual network and field operations), or that the two companies are reporting their emissions using different methodologies.

In carbon reporting, there are many different ways to implement measurement and many different variables to measure. The most commonly accepted methodology is the Greenhouse Gas Protocol developed by the World Resources Institute/World Business Council on Sustainable Development and International Organisation for Standardisation. However, there are multiple formats and multiple tools, each with their own calculations.

Indeed, that will be one of the big challenges, and eventually, the biggest benefit, for such carbon tax legislations. In addition to giving monetary incentives for corporations to reduce their emissions, it should eventually help to set a standard methodology for carbon reporting and auditing.

Unless the government outlines one, preferably with some kind of certification program for methodologies and tools, it will be difficult to establish an equal playing field for everyone.

Then there is the concept of carbon off-shoring. Theoretically, companies such as Telstra can start moving emissions-heavy processes, like data centres, off shore to locations without a carbon tax scheme – such as Guam, and avoid paying the tax at home altogether.

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