I recently read an article ominously entitled:

“SMEs will be hit with carbon tax reporting requirements”

The article is based on a survey performed by the Australian Institute of Management, and provides the opinion that small business (SMEs) will have carbon tax requirements passed on to them by the major emitters that pay the tax, when they are in the supply chain of the large companies. I think this article, while presenting some very interesting information, gets its analysis wrong for a couple of reasons that I detailed in comments to it, but unfortunately they were not accepted so I will present them here.

While I do expect large companies to require information from their supply chain regarding their activities and energy use so that the large emitters may complete their mandatory filings and purchasing of carbon credits, any attempt to turn the supply chain on its head and pass down costs to the supply chain will not be the result.

Further, I believe that the conclusion that a significant number of large businesses that make up the 700 or so companies that are currently covered by the NGERs legislation from 3 years ago, and will start having to pay the carbon tax in July will pass on requirements to their supply chain in a manner that is going to be detrimental in time and money costs on that supply chain is overstated.

The truth is, most of the NGERs companies that will be required to acquit permits at $23/ton to the Australian Government will be acquiring and acquitting those CO2-e credits (and therefore paying their tax) on the basis of CO2-e emissions that come from burning fossil fuels and manufacturing process industries. It is clear that based on these increased tax payments, electrical utility suppliers will pass on costs to everyone, including small business. But that may be the end of it for many SME’s, based on the nature of their operations.

Where any large business wants to “pass on” requirements to reduce emissions to its supply chain, or require the supply chain to document their emissions of CO2-e , this will mostly be passing on requirements to establish energy use/efficiency information in most cases, since suppliers are not primary emitters of CO2-e. Primary emitters of CO2-e are typically large electrical power generators and some high carbon intensity industries, like cement manufacturing. These large primary emitters are the subjects of the regulations of carbon emissions to meet the country’s long-term goals to reduce emissions. However, all businesses can benefit from examining their activities on the same basis that large companies are required to do.

Basically, all companies should see the carbon tax as a heads up that they should start to “internalise” their emissions of combustion products from fossil fuel burning and energy use. Any business (large or small) that gets that change in their mindset can then begin the process of determining where they are at with respect to their competiveness related to these additional characteristics of their performance.

As the only HSE Consultancy in Australia to be Carbon Neutral certified, my company (An Meá) has direct evidence that the process of documenting CO2-e performance (and even voluntarily participating in the CO2-e neutral programmes) is not difficult or that costly. Anyone telling you otherwise should be required to demonstrate their case in the same manner we can.

The only of those companies that have anything to fear are those that do not have any interest in what their energy efficiency is, or think climate change is a hoax. If you are in that basket, you are going the way of the dinosaur. However, if your organisation does not have a philosophical issue of doing something about CO2-e, or simply wants to benefit from energy efficiency, primarily, then you might see more benefits (and opportunities) than detriments.