While we await the final carbon tax policy from Treasury (due any day now) it is important to gear up for the impending legislation. Due to the fact that emissions reporting works in retrospect, much the way financial accounting and reporting does, having accessible, credible data at your fingertips eases the reporting process when you to come to it.
The steps to gear yourself up are as follows:
The first step is to find out if you have any activities that would place you directly in the tax net. This would include combustion of fossil fuels but may also include other activities. Carbon consultants are au fait with the proposed tax and should be in a position to provide the necessary information.
Once you know what your taxable activities are the second step – which is often the most arduous – is to understand what data is required to calculate your taxable emissions and bed down processes to ensure the data is accessible, accurate, credible and most importantly auditable. Because reporting is done in retrospect it is easier to ensure a good record of data now rather than scramble for dispersed information when reporting is required.
Moving on to step 3. With the relevant data in hand and the skills of a carbon consultant one can estimate what the financial exposure will be (if any) so you can plan accordingly. Solid mitigation plans will ensure a reduction in your financial liability over time as you transition away from carbon intensive activities.
Finally, one needs to understand that for many, the greatest financial exposure to carbon tax may be outside the four walls of your operations. One needs to look carefully at your value chain to seek out carbon intensive activities that will be impacted and hence have a knock on effect on your operating and input costs. One needs to expect price hikes, this is after all how carbon pricing works. Calculating the extent of the carbon costs within these activities will prepare you well.