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McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com SPACIAL SCIENCES INSTITUTE PRESENTATION Melbourne 17 September 2008.

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Presentation on theme: "McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com SPACIAL SCIENCES INSTITUTE PRESENTATION Melbourne 17 September 2008."— Presentation transcript:

1 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com SPACIAL SCIENCES INSTITUTE PRESENTATION Melbourne 17 September 2008

2 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com A CARBON MARKET Australia’s Carbon Market will commence in 2010; There will be easing of entry for some eventual participants; Farming entry is postponed until 2015; Petrol is offset for 3 years; Everyone else – fasten your safety belts!

3 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com WHAT’S THE HURRY? Australia’s emissions are continuously rising; The Kyoto honeymoon is over; and There has been a massive turnaround in public opinion.

4 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com AUSTRALIA’S EMISSIONS ARE RISING DESPITE: the end of land clearing industries moving offshore permanent drought; and rising petrol price

5 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com EU-15 projected progress towards Kyoto Commitments

6 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com THE HONEYMOON IS OVER Australia received preference at Kyoto 2008 – 2012 target is 108% of 1990 emissions 2013 – 2017 target likely to be less than 90% of 1990 level

7 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com MASSIVE TURNAROUND IN PUBLIC OPINION Because of: Permanent drought; Rising sea levels; Unprecedented storm damage; and General uncertainty and fear of the unknown.

8 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com “Millions at Risk”

9 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com HOW THE MARKET OPERATES Controlled market Permits to be bankable Rules of supply and demand Effects all goods and services Present focus on energy prices Estimated prices $40 - $180 / tonne The reality is a little different

10 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com THE IMPACT OF PRICE ON COSTS

11 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Direct Impacts Indirect Impact Market Effects The energy purchased- gas, petrol, coal rises in price Materials produced with energy rise in price Alternate uses for materials drives higher prices 3 Types of Impact

12 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Electricity (at $40 a tonne) Victorian from Brown Coal: up 6c kwh Tasmanian and Snowy: no change On a base price of 2c kwh possibly 3x at base Direct Impact

13 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Victoria probably about 25% Direct Impact Gas at $40 a tonne

14 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Petrol up 10c per litre Diesel up 11c a litre LPG up 6c a litre Direct Impact Liquids (at $40 a tonne)

15 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Construction Steel up 20% Concrete up 12% Plastics HDPE up about 13c kg 6% Glass Up 15% Aluminium Up 30% (maybe) Indirect Impact

16 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Trees “soak up” carbon CO2 Plantations planted after 1990 can claim emission permits What will a company in Timber pulp or paper do if returns from selling credits at $40 each delivers an estimate annual return (per hectare) of $2,000 from fast growing eucalyptus perhaps $200 from sale as timber or pulp Therefore Timber Pulp and Paper (packaging, newsprint) will rise from market effects Market Impact

17 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com OPTING IN – OPTING OUT Tree growers can opt in to Carbon Trading Tree growers can opt out and sell timber products Opting in – long term obligations Opting in – higher prices but uncertain duration Opting out – market forces to drive prices up Opting out – alternatives will become competitive

18 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com THE SIGNIFICANCE OF EMBODIED ENERGY

19 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Construction Materials Maintenance Heating Cooling Lights HWS Appliances Electricity Gas Solid Fuel Greenhouse Gases

20 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Indirect Energy Extracting raw material Transporting to factory Running the business Building equipment Refining fuel Building offices Energy for Brick Kiln Direct Energy Embodied Energy - How much energy in a brick?

21 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com What is Embodied Energy “The energy, the cost of which (however small) eventually finds its way into the cost of a material or a thing that is made with materials, constitute collectively the embodied energy in that material or thing.” Ross Blair 2008

22 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Embodied Energy & Greenhouse Gases Embodied energy is energy from all sources Greenhouse emissions vary by source Greenhouse gases (CO2 only) vary from 60 kg/MJ to 150kg/MJ Embodied Energy = 37 years Operational Energy

23 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com

24 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com

25 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com

26 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Petrol 15,000km $3,353

27 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Hidden Factor - refurbishment

28 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com Either use too much energy or too energy intensive to refurbish Lemons Some Buildings will be Lemons

29 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com CARBON SINKS CARBON FARMING

30 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com CARBON OFFSETS Emission Permit certifies 1 tonne – CO 2 in Carbon Sink One tonne CO 2 to be retained – 100 years? Carbon Sink = Kyoto Forest, Geosequestration, Land Use Change Needs legal registration of a ‘right’ Issues of fraud, mistake and verification Australia’s Carbon Trading advantage

31 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com FORESTRY RIGHTS ACT 1996 – FOREST PROPERTY RIGHTS Enables separate ownership of Land and Forest Products Requires a Forest Property Agreement Forest Property Agreement is noted on Certificate of Title Creates ‘shared’ occupancy – occupiers’ liability issues Adds a further dimension to space Enables separate trading and mortgaging of forest products

32 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com FORESTRY RIGHTS ACT 1996 – CARBON SEQUESTRATION RIGHTS Necessary as legal foundation for Emission Permits Enable separate ownership of land/forest property/carbon sequestration rights Owner – right to commercially exploit carbon sequestered in trees Need to retain growing trees – 100 years? Four assets – Land – Forest Property Rights – Carbon Sequestration Rights – Emission Permits

33 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com FORESTRY RIGHTS ACT 1996 – ENVIRONMENTAL OUTCOME RIGHTS? Bio-diversity Habitat Many other environmental outcomes Gives right to retain/improve a status quo Gives right to maintain/improve environmental quality in the status quo Separately tradable environmental permits

34 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com CARBON OFFSETS SUMMARY Carbon farming will be bug business Carbon Offsets will be necessary to balance emissions for developments Verification and measurement Trading and mortgaging of rights Thinking into the future

35 McKEAN PARK 2008 Lawyers & Consultants www.carboncostcalc.com


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