Fiona O’Hehir

Delays in finalising details of the federal government’s Direct Action and the voluntary Emissions Reduction Fund has put environmental certificate creator and trader Greenbank into a place of “uncertainty squared,” according to chief executive and founder Fiona O’Hehir.

Greenbank was founded by Ms O’Hehir is 2003 while she was working in the solar industry. She said that at the time, the industry required upskilling in how to generate environmental certificates, and as the various state and federal schemes saw increased uptake, Greenbank and the environmental certificate market both had a rapid growth trajectory.

Greenbank is the only aggregator to trade across all five environmental certificate types – Victorian Energy Efficiency Target; NSW Energy Savings Scheme; and the Federal Renewable Energy Target’s two schemes, the Large-Scale Renewable Energy target for commercial-scale wind and solar projects, and the Small-Scale Renewable Energy Scheme that applies to domestic solar installations.

Three are under a cloud, with the Victorian Coalition promising to repeal the VEET if re-elected at the upcoming November election, and the LRET and SRES which the federal government’s Warburton Review has suggested should be repealed or aggressively wound back. The NSW ESS however, has recently been strengthened.

The fifth market Greenbank aggregates in is the Australian Carbon Farming Initiative through creating, buying and selling Australian Carbon Credit Units from Australian farmers that have completed CFI projects. The CFI is the domestic offset mechanism originally established as part of the Federal Carbon Pricing Mechanism that was repealed in July this year but the CFI will be retained and expanded under the ERF. However, the ERF remains in a state of political limbo in the Senate.

“We are ready to transition our clients into the ERF, but its delayed implementation is causing our clients and ourselves sleepless nights,” Ms O’Hehir told The Fifth Estate this week.

“An ACCU is a financial product, and requires aggregators like ourselves to hold an Australian financial services licence to ensure we operate in a regulated manner and farmers are protected from rogue operators,” Ms O’Hehir said.

It took the company two years and a substantial investment to become certified to aggregate ACCUs, and this also led to the company forming two divisions – Greenbank Environmental and Greenbank Carbon.

The shifting and uncertain policy landscape of the last two years, which Ms O’Hehir said began building 12 months prior to the 2013 election, has taken an enormous toll on the company, which has 26 staff across offices in Sydney and Melbourne.

“In 2012 at the height of the domestic solar markets we created four million Small-Scale Technology Certificates and had a turnover across all five environmental certificate markets of $250 million. Today, this has reduced dramatically,” Ms O’Hehir said.

Ms O’Hehir said that with the rescinding of the carbon price, the market for ACCUs is considerably reduced, as liable entities dismantle their carbon teams and seem content to pay the Carbon Price for the last payment, known as ‘the true-up’ due in February 2015 rather than purchase cheaper ACCUs in the offset market.

This indicated that real cost of the carbon price was small in comparison to their overall costs, Ms O’Hehir said.

“Given the voluntary nature of the ERF, we hope but do not anticipate a large market to materialise, unless of course it transitions into a true emissions trading scheme.

“Voluntary markets historically have been quite small in comparison to compliance markets which are often used by companies to ‘voluntarily’ offset their carbon emissions as an element of corporate social responsibility policies.”

However, Ms O’Hehir said it is inevitable the government will have to implement some form of compliance-based carbon policy, such as a baseline and credit scheme, as this will be essential for Australia to meet its current and future obligations with carbon pollution, trading and foreign policy requirements.

The repeal of the carbon price meant there was no mandated carbon policy in Australia.

“So the RET must be retained to assist with the heavy lifting of reducing our carbon intensive economy and diversifying the future of it as the mining boom slows, and we see an overpriced housing sector.”

Noting the high degree of sovereign risk involved in the environmental certificate markets with the current uncertainty surrounding the VEET, RET and ERF, Ms O’Hehir said that in some ways she thinks “all governments lost the plot when we moved from talking about pollution to carbon”.

“Australians understand pollution, but carbon is much harder to make sense of for the average voter.”

Support for the ERF

The firm is now awaiting the final details of the ERF and the RET review, and is trying to maintain momentum in all markets by supporting the Government’s ERF. Greenbank has travelled around the country (at its own cost) with the: Carbon Markets Institute; Clean Energy Regulator; and the Department of Environment, explaining the ERF to stakeholders as well as actively supporting the small scale solar market in Australia.

“We strongly support the introduction of the ERF – so as to at least have some form of carbon policy in Australia – even if in our view it is a poor cousin of to the carbon price based on current empirical evidence,” Mr O’Hehir said.

“The RET currently has a legislated end date, which we agree with, but we need to keep it in place as it is currently legislated rather than repeal or aggressively wind it back as recommended by the Warburton Review to meet Kyoto and avoid ‘sovereign risk’ in the Australian economy.”

The uncertainty factor is also having an impact on industry sectors that are responsible for significant reductions in greenhouse gas emissions under the CFI, such as the piggery and sequestration sectors.

“I have been trying to develop a methane destruction project in an Australian piggery for two years now with my own money, and while we have gone to see all the major pig farmers, we could not proceed given the level of ‘uncertainty squared’,” Ms O’Hehir said.

“We are on the J-Curve, and we can only wait it out until its hits the upward trajectory again.”

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  1. Fiona, it seems that this government has a strategy of lingering a confirmed action plan against Climate Change till the most that they can. Under the global pressures, sooner or later, there has to be confirming mandate. The best that we could do till then is to be optimistic and try to advocate our viewpoints to the government at any forum possible.
    Industry stalwarts like you should be the torch bearer for such an advocacy and spreading awareness amongst the masses.