16 March 2011 – A carbon tax could cut business costs according to Energetics founder and executive director, Jonathan Jutsen.
While Mr Jutsen agrees that a carbon tax will increase business costs, the overall impact on operations will be modest, with many passing the extra onto consumers, he said.
Energy price increases from a carbon tax would also be relatively small compared to rapidly increasing electricity network charges or from international oil price movements, he said.
In a media statement released yesterday Mr Jutsen forecast that business might also be able to cut its energy costs after a carbon tax is enforced if the government used the proceeds to provide incentives for energy efficiency. This could result in businesses achieving energy savings that exceed the cost of the carbon itself and improve their competiveness.
He referred to a recent publication from the NSW Climate Change Fund which showed that the cost to the state for running its business energy efficiency programs was just 1.4 cents of government spending per kwh of electricity saved. Businesses in this program cut $31million year off their electricity bills from a total government investment of $24 million.
“If the Commonwealth recycled the carbon tax on the businesses sector by making these funds available as energy efficiency incentives, there would be an opportunity for business to reduce its costs of operations. They would then be better prepared to deal with other energy price increases,” he said.
The NSW climate change fund data also showed that business energy efficiency incentives programs cost the government only $12 tonne of carbon saved – significantly lower than the expected level of the carbon tax. This compared to the cost of Commonwealth programs implemented so far which cost $5.5 billion, an average of $168 tonne saved.
This demonstrated the need for the Federal Government to take a pragmatic approach to carbon mitigation by implementing the most economical measures first –lowest cost per tonne of carbon saved, reducing emissions at the lowest cost to the community. Mr Jutsen said the low carbon growth plan developed last year by ClimateWorks demonstrated the relative costs and benefits of potential actions to cut carbon emissions.
“The cheapest way to cut our carbon emissions is to drive energy efficiency improvements in business, particularly in manufacturing and mining. While the government has announced programs to drive energy efficiency of commercial buildings, there is an urgent need for incentives for energy efficiency in industry and mining sectors. The carbon tax provides a potential source of funds for these incentives,” he said.
He believes that business associations would better serve their members by assisting them to prepare for a low carbon economy by improving their efficiency and pressuring the government for incentives to assist this transition from the carbon tax.
The main threat to business competitiveness was not the carbon tax, but a failure to improve their energy efficiency in a time of energy price escalation, he said.
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