In Australia I see essentially two political choices for taking action on climate change. Vote for a party committed to reducing greenhouse gas emissions and implementing an emissions trading scheme (ETS) or vote for a party not committed to an ETS and relying on ‘direct action’ to reduce carbon emissions. The major political parties are in essence providing these two choices to the Australian public – Labor for an ETS and the Coalition against an ETS. The two key minor, but still influential parties offer the same choice – Greens for an ETS and the Nationals against.

But what is an ETS and what is direct action? If people don’t understand the choices how are they to make an informed decision?

Direct Action

Direct action is essentially funding measures and initiatives through tax payer’s money that will reduce carbon emissions. Sounds simple enough, and of course voters can be led to believe that the government is taking control and doing something immediate to tackle Australia rising greenhouse gas emissions. The Liberal party is promoting direct action and refers to an ETS as a ‘great big tax’, but surely direct action could be termed the same – after all, direct action is still using tax payers’ money!

Emissions Trading Scheme (ETS)

What is an ETS and what advantage does it offer over direct action? The Department of Climate Change refers to its ETS policy as a Carbon Reduction Pollution Scheme (CPRS). An ETS is also commonly referred to as a cap and trade system or simply carbon emissions trading. What this means, is that the Government basically sets a cap or limit on the amount of pollution (carbon emissions) that can be emitted. This cap is sold to participants (the big polluters) in the form of carbon emission permits, which each are worth a specific amount of specified pollutant – in the context of tackling climate change, carbon dioxide. Holders of the permits are then allowed to trade the permits within each trading period set by the Government. The total amount of permits cannot exceed the cap, which over time is reduced by the Government, forcing the market to adjust and carbon emissions reductions to be achieved.

Essentially, participants of the trading scheme are allowed to pollute a certain amount within each period. If they exceed this amount (the cap), then they must purchase permits to allow them to pollute. So participants below the cap can choose to sell their permits to participants who require them. This puts a price on carbon pollution and if well designed, provides an incentive for participants to reduce their emissions.
The Labor Government came very close to passing an ETS, however it was blocked in the Senate twice in 2009. The Greens Party played a key part in the failed policy adoption of a ETS as they viewed the scheme as watered down, with a target to reduce Australia’s net carbon emissions by only 5 percent. To some degree I agree that the targets need to be much higher if Australia is to really move towards a low-carbon economy, however being too ambitious too early must have implications for our economy.

Labor is still committed to implementation of an ETS, but has postponed any commencement until 2013, claiming a divide on the issue due to a lack of consensus on climate change. They are offering direct action initiatives in the short-term, and a so called Citizens Assembly to form consensus for a future ETS. I get the feeling the lack of consensus is within the political realm, because I get the feeling most Australian’s want action on climate change, but just aren’t sure what the best action is.

Are you for an ETS or against?

I see the choice as simple – vote for a potential ETS or vote for no ETS. So what’s the advantage of an emissions trading scheme over direct action? An ETS is market-based, which from an economic perspective is more efficient and results in reducing carbon emissions at lowest cost. So the claim by the Liberal Party that an ETS is a ‘great big tax’ is not directly true. The problem lies in Government intervention in the form of subsidies and other exemptions, which are funded through tax payers’ money. Australia is a carbon emissions intensive nation, due to key sectors including the energy sector and aluminium smelter industry. An ETS without government intervention would mean these sectors would be the hardest hit, such that they would need to invest dramatically to improve energy efficiency and where above the cap, pay to pollute. This is argued to impact Australia’s global competiveness and will most likely increase the cost of commodities affected.

So, the argument against an ETS is that participants will have to spend money to reduce their carbon emissions and this expense will partly be passed on to consumers. While this may be true, at the end of the day, someone needs to foot the bill and if climate change is everyone’s problem then we should all be contributing.

Getting the balance right

The question is, do we contribute through direct government expenditure, or indirectly through a market-based scheme? Governments do not exactly have a good reputation for spending tax payers’ money efficiently so I would argue an ETS is the way to go. However, the success of an ETS really comes down to its overall design. Yes, we want to reduce emissions, but we don’t want to endanger Australia’s economic competitiveness. Like anything, it’s a balancing act, but if we get so bogged down in analysis paralysis, we’ll never achieve any real outcomes.

The Australian Conservation Foundation (ACF) has released its scorecard for the forthcoming federal election, and will update it weekly. With only 3 weeks to go, the three major political parties have clearly put entirely different emphases on the importance of the world in which we live. Which best suits you?

As the ACF states: “Unfortunately, the scorecard shows that to date the ALP and the Coalition are failing on cutting pollution and protecting the environment. Check out how the environmental policies of each of the parties rate, and what work needs to be done…”

These have all been calculated from the publicly stated policies of the political parties. Some of the criterion for the results above included:

Question 1 – Pollution and a Clean Economy:

• Deliver science based greenhouse gas pollution reduction targets with the urgency required?
• Reduce fossil fuel subsidies and re-invest the proceeds into the clean energy economy?
• Embed environmental sustainability into decision making processes of government?

Question 2 - Clean Energy:

• Boost renewable energy at the scale needed by 2020?
• Put Australia on track to be a leader in energy efficiency in the developed world by 2020?

Question 3 - Sustainable Cities:

• Result in world leading, better planned, resource efficient and sustainable cities by 2020?
• Boost federal transport spending to achieve world class public and active transport systems for Australian cities and regional centers?

Question 4 - Healthy Environment:

• Build resilience of ecosystems to climate change, protect carbon stores and significantly reduce land use emissions?
• Bans the importation of illegally logged timber products and helps achieve effective forest protection in the Asia pacific?
• Protect the cultural and natural values of the Kimberley with Traditional Owner consent?

For more detail on how the four scores were assessed, go to http://www.acfonline.org.au/default.asp?section_id=374 .

As you decide what you’re going to use your vote for, consider the consequences of voting for each of these parties. Some cultures plan for sustainability many generations ahead - the Iroquoi up to seven generations. Can enough Australians see beyond the next election?

Last week I had the pleasure of interviewing Christopher Ong, Vice President Business Development, First Choice & GoGreen for DHL Asia Pacific , Eastern Europe, Middle East and Africa. The express division has cut its emissions by 19%, an impressive achievement given the large size of DHL. Globally DHL employs around half a million people.

How has it achieved these savings?

Firstly the chairman identified that it was important for the company to reduce its emissions, as part of being a good corporate citizen.
Secondly, it set a carbon reduction target, of globally reducing emissions by 30% per kg delivered, by 2015.

Third it put in place a measurement and tracking system. Unlike many organisations which centralise their data collection for the purpose of tracking emissions, DHL developed a system where the data entry is decentralised system.

Fourth it got staff using the system. Initially it was hard to motivate staff to do this. However with strong management support, monthly data entry into the system is now the norm. Each month each facility fills in a on-line questionnaire, entering in information such as the litres of diesel used. This only takes a few minutes.

Fifth, graphs and reports from the system are printed out at each facility, and put on the facility noticeboard where they are prominent to staff and drivers.

Sixth, it has fostered competition, encouraged ideas that reduced energy consumption, and empowered staff to take actions to reduce their energy use. For example, in their facilities in Singapore DHL now practices “lights off at lunchtime”, an idea suggested by a staff member.

Chris highlighted the fact that saving energy saves money, and that the Global Financial Crisis has actually accelerated their savings.  He said that their total savings to date of 19,000,000 kgs have come from lots of people each saving a few kgs each day. Financial savings so far total ten million euros. His advice to other organisations:

1. Be able to measure your emissions accurately.
2. Give power to the people on the ground. Give them the information they need – what their emissions are now, what they were, how much they have saved. The results can be very immediate, and this reinforces what more can be done.

DHL provide a inspiring example for other organisations to follow. This good news interview with Christopher Ong can be found at http://carbonetix.com.au/wwx/good-news-interviews.

I caught up again today with David McInnes, Group Manager Environment for Linfox - you can find the interview here. Linfox have cut their greenhouse gas emissions by 28% per km since 2006/07. They are aiming to cut their emissions by 50% by 2015. I find this tremendously refreshing and a great example for other companies to follow. 

The 28% reduction has cut fuel costs by $18 million annually compared with what they would have been with no action. Most of the savings have come from what David calls cultural change, the process of engaging with staff and getting them committed to minimising their environmental impact at work. The company is putting all its drivers through its Eco-Drive program, the single largest source of its savings. The Eco-Drive program has now been translated into six languages by Linfox.

When Linfox started on its greenhouse gas saving program back in 2006/07 it didn’t do a dry cost-benefit feasibility study, rather its board took the attitude that as a large contributor to transport emissions it had a responsibility to act. It set a target of a 15% reduction by 2010, not knowing how to achieve that, but putting faith that by going through a structured process of cultural change the results would be achieved. Their faith in this process has certainly paid off.

Its modelled its change process on the eight step change model developed by Harvard University academic John Kotter, who has written several books on the process of organisational change.

The first step of Kotter’s process is to create a sense of urgency. Linfox created this by focussing on the climate change science. Part of this involved commissioning a series of mindmaps by West Australian artist Jane Genovese, one of which which can be viewed by clicking on the link below.

mindmap-climatechangeimpacts

The Intergovernmental Panel on Climate Change says that greenhouse emissions need to be reduced globally by between 25% and 40% by 2020 on 1990 levels to limit global warming to no more than 2 degrees.  David believes that this target can be achieved, and Linfox is a great example of how business can lead the way.

American retailer Walmart has announced it will cut its supply chain emissions by 20 million tonnes by 2015.

If Walmart can do this why can’t the Australian government get our country to do the same?

My understanding is that if the government’s proposed CPRS goes ahead Australia’s emissions will be cut by around 20 million tonnes by 2015. The Australian government’s target is a 5% reduction by 2020.

According to the Environmental Leader, Walmart’s target “translates into 150 percent of the giant retailer’s estimated global carbon footprint growth over the next five years.”

On a percentage basis Walmart’s targets eclipse Australia’s by a massive amount.

Australia has over 1.2 million people employed by state governments. I’m not sure how many public servants are employed federally, on top of this number.

Walmart has around 1.9 million employees.

From a staffing perspective the number of people whom Walmart and the Australian government have “operational control” over are not that dissimilar in magnitude. Obviously as a retailer Walmart has a much bigger supply chain over which it has influene than the Australian government. So in this regard a direct comparison between Walmart and the Australian government is not really fair. But on the other hand the Australian government in theory can influence all Australians to reduce their carbon footprint, either through regulation or incentives.

What is striking about the Walmart announcement is the seriousness of their commitment. If all businesses were this serious about reducing their carbon footprint our government’s incapacity to cut Australia’s carbon emissions would be less of a worry.

If Walmart, an organisation famous for keeping costs low and operating leanly, can significant cut its emissions, can’t yours do the same? I need to be clear here, Walmart is a for-profit business. Its margins aren’t huge – in 2006 its profit margin was 3.2%. Yet it can clearly see that the environmental benefit of cutting its emissions is not a bad business decision. 

Most of Walmart’s savings are likely to come from energy efficiency. Energy efficiency provides a positive return on investment. It makes economic and business sense, as well as environmental sense.
If Walmart can commit to significantly cutting their emissions, can’t your organisation do the same? Our government can’t, but you can. Are all Australian’s with worries about climate change going to be shamed by a business from across the Pacific, or are we all going to step up personally and in our workplaces and get serious about reducing greenhouse gas pollution?