The Clean Energy Future Plan and supply chains

ECO-Buy has undertaken a review of the Government's Clean Energy Future Plan, including a summary of the legislation, its implications and its potential for impact on organisations supply chains. A full copy of the paper is available to ECO-Buy members and Associates.

Summary and Conclusions

The intent of the Clean Energy Future Plan scheme is to reduce Australia’s CO2-e emissions to enable Australia to comply with its international obligations under the Kyoto Protocol. 

The introduction of the Clean Energy Future Plan:

  • Will impact all organisations in Australia in various ways.  It is unlikely any two organisations will be impacted in the same way.
  • Will change over time, firstly from a fixed price on CO2-e emissions and then transition to a trading scheme and potentially tie into international schemes.  It will also change as other sectors are covered; of particular note are transport fuels which in part are planned to be included in 2014.
  • Will allow some organisations and/or industries access to funding via various programs that have been proposed as part of the Clean Energy Future Plan. It will also allow them to put in place plans to reduce CO2-e emissions and reduce the potential financial impact to them.

The impact of the scheme will potentially increase electricity prices for small sized businesses by $800 per year and medium sized businesses by $6,000 per year. 

In addition depending on the carbon intensity of an organisation's services and products a small business costs could potentially increase by $3,000 per year and a medium sized business by $30,000 per year.

Key Messages

  • Understand whether or not your organisation is covered by the scheme.  As it is estimated the scheme will cover approximately 500 businesses, it is assumed most organisations will not be covered directly by the scheme i.e. will not have direct obligations under the scheme.
  • Assess whether or not your organisation is entitled to the various government programs available under the CEFP.  This includes the various Clean Technology Programs, the Clean Energy Skills Program and the Energy Efficiency Information Grants.
  • Once the price of CO2-e emissions is introduced understand how the cost will impact your suppliers.  Understanding your Scope 3 emissions will help to understand the potential impact on your suppliers with the introduction of a price on CO2-e.  If your suppliers are heavily affected by the scheme, you may see a significant increase in costs from your supplier.  It may be more competitive to locate an alternative supplier, or switching products or processes.
  • Once the price of CO2-e emissions is introduced, understand the impact on your costs and profits.  Knowing your Scope 1 and 2 CO2-e emissions will allow your organisation to focus on the areas where the largest savings can be made.  All energy contracts should be reviewed to assess the ability to pass on cost increases, which will impact your costs and profits.  Know your organisation's waste streams and determine ways to reduce, reuse or recycle waste.
  • Once the price of CO2-e emissions is introduced, understand the impact on your customers.  Again knowing your Scope 3 emissions and reducing them where possible will potentially improve the organisations competitive position.  New products which have a low CO2-e footprint are also likely to more successful in a CO2-e constrained economy.  Government tenders often request respondents to provide information on environmental policies and procedures, including sustainability purchasing. This request is likely to grow once the CEFP comes into effect.
  • Develop a CO2-e strategy that identifies risks, investigates opportunities for new products and or services, pursues energy efficiency programs and investigates new technologies and behavioural changes.
  • Know where your organisation can obtain help, e.g. industry associations, government bodies including the clean technology focus for supply chain website as part of the CEFP.
  • Keep up to date with new low emission CO2-e products as they appear on the market.