At the recent Packaging Council of Australia’s Victorian division meeting, the findings of a briefing note were presented on the proposed national emissions trading scheme (ETS) and its possible impact on the packaging industry.
The Packaging Council of Australia’s CEO, Gavin Williams, told attendees that under such a scheme, costs and competition could increase and supply chains could be 'squeezed'.
The Parker & Partners briefing note does not hold much good news for those involved in the production of packaging and packaged goods, saying the risks clearly outweigh the opportunities for the industry once a price is put on carbon.
The briefing note also says the primary opportunities lie in the review and reduction of energy usage; market differentiation on the basis of greenhouse gas (GHG) footprint; response to community expectations and consumer demands.
Polls show significant support for emissions trading and Government action to address climate change.
Gavin Williams says that some of the risks include; higher costs for energy which means that companies using more energy will be at a disadvantage; compliance costs; more competition particularly in a global market where other countries may not have a comparable ETS.
There may also be some disparity between those companies included in an ETS and those that are not.
At this stage the proposed ETS will apply to around 1,000 companies, whose emissions are more than 25,000 tonnes per annum (facility) or 125,000 tonnes per annum (corporation).
Imported packaging would not be covered by the ETS.
Williams says that as in other industries, packaging will see 'winners' and 'losers', based on each company’s level of exposure to the ETS.
He suggests that supply chain issues may result from an ETS, as customers/investors will have expectations in relation to a company’s carbon exposure.
This might also include pressure from retailers and brand owners.
There is a question around whether contracts being negotiated now, which extend into 2010 and beyond, should allow for ETS-related cost increases.
Packaging has also attracted its fair share of criticism from the public, with calls in recent years for bans on plastic bags and extended producer responsibilities.
However, Williams says given the focus on an ETS, other environmental issues such as the Packaging Convenant and significant packaging policy changes are likely to become 'second and third tier issues nationally'.
He says companies should be preparing for the introduction of an ETS through firstly understanding their emissions footprint and seeing where savings can be made, and the effect of price increases.
Along with establishing internal systems to manage the issue, companies should also examine compliance requirements, contracts with customers and their exposure to imported packaging.
For more information from Parker & Partner’s Briefing Note on Australia’s Packaging Sector & Climate Change Policy
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