Australian Carbon Policies - Essay Example

Environmental Accounting 1.0 Explanation of the Current and Proposed Australian Carbon Policies. In the year 2007, the Australian regime did participate in the ratification of the Kyoto protocol. The administration of the country commits itself to dropping the amount of green house emissions around the nation to 40% of the current amount of emissions by the year 2050 (Bennet, Richardson and Schaltegger, 2003). The Australian Government intends to achieve their set greenhouse emission targets through the use of a Pollution Reduction system that did start in the year 2010 to regulate carbon emissions. The most superior piece of legislation that the Australian government has put in place is the national greenhouse reporting law. It supports a reporting system on carbon emissions and is the most conspicuous regulation of carbon emissions in use to date. The Australian parliament did introduce a system for controlling the renewal of energy by passing the amendment on the energy targets. It provides that renewable sources of energy will produce approximately 20% of the nation’s electric power by the year 2020 (McKinsey, 2007). 1.1 The Current Legislation for Reporting Carbon Emission Data Since the beginning of the month of July in the year 2008, the Australian government did require that organizations provide precise information about their green house emissions (Unerman, 2007). The state’s legislative body did pass a law for regulating the reporting of emissions from greenhouses under the 2007 act on National Greenhouse reports. The administrators of this piece of legislation are the climate change department. The challenges coming from greenhouse emissions are under the regulation of the Water, Environment, Heritage and Arts division of the government (McKinsey, 2007). The government and various industries across the nation did take a deliberate initiative to regulate the amount of emissions through the Greenhouse challenge plus scheme. 1.2 The Proposed Carbon Tax and Its Requirements This is a proposal by the Australian authorities with the backing of the Rudd regime to introduce taxes on the amount of carbon dioxide emissions from companies. The carbon price is the amount of tax payable for the emissions a company produces. It is a tax which is constant and requires considerable analysis with respect to setting the level of the tax payable (Bennet, Richardson and Schaltegger, 2003). This tax is payable by the large companies that are responsible for the emissions in the environment. It suggests that companies producing more than twenty five thousand tons of carbon should pay a total of twenty three dollars for each ton they produce. The tax proposal has the purpose of providing effectiveness in reducing the costs that the regime incurs in fight against greenhouse emissions (Schaltegger, Burritt and Petersen, 2008). These taxes do assist the administration in collecting information about the major emitters who do not pay up for their mistakes. The finances that come from this tax are usually put to the use of improving public institutions such as hospitals. This proposal does assist the administration in knowing the big carbon emitters within their economies. It also helps the leaders in knowing the amount of carbon emissions in their environment (Gray, 2000). 1.3 The Relationship between the Current and Proposed Carbon Policies and Environmental Management Accounting. The use of environmental management accounting involves the application of the regular methods of identification, analyzing, managing and reduction of costs. This is done in ways that will benefit both the companies and their surroundings. This form of accounting is useful in identifying the matters affecting the implementation of the policies which aim at reducing the amounts of carbon emissions. These matters include the health crisis and safety problems that arise as a result of the emissions and the ignorance of the companies to the legislation (Gray, 2000). The activities that have the greatest blow and charge on the surrounding are easily identifiable. The legislations made by the Australian regime on carbon taxes are similar in many ways to the principles behind environmental management accounting. The regime did introduce the issue of making payments for the carbon emissions a company lets to the environment. This move helps the administration in knowing who the largest carbon emitters in the economy are and how much they produce (Schaltegger, Burritt and Petersen, 2008). By using this statistics, the administration calculates how much money is due from each of these companies. The revenue collection team spends their incomes on projects that benefit both the organizations and the surroundings (Unerman, 2007). 2.0 The Use of Environmental Management Accounting (EMA) In both Regulatory and Self-Regulatory Carbon Management. Environmental management accounting benefits both the internal managers of a company and the outsiders of the company. The outsiders make use of the reports available from the data to support their other works (McKinsey, 2007). The use of EMA does facilitate the compliance to protective regulations in the environment. These in turn enable the saving of costs and the creation of policies by the companies to make their environment safer. Examples of situations where EMA principles are applicable are in the preparation and implementation of pollution direction reserves. The companies paying the taxes make their own arrangements regarding the best use of resources at their disposal (Stern, 2006). Another benefit of EMA is that it facilitates the need of reducing the costs and brunt of environmental degradation to the company’s operations. This is done while ensuring that the resources at the company’s disposal are put to better use. The precise following of the course of resources at the company’s disposal is a good example of such a situation (McKinsey, 2007). The use of EMA’s assists organizations in supporting the assessment and applications of programs that aim at improving their surroundings’ in a cost effective manner. An instance of this benefit occurs when a company’s accountants performs estimations of the costs the management of a company will incur when making future guidelines (Unerman, 2007). 2.1 Real Life Examples of the Use of EMA in Carbon Management British Petroleum (BP) is an example of a company that involves itself in the activities of deep drilling. To effectively counter the effects of carbon emissions they first study the environmental management accounts. This is done for the purposes of identifying the impacts on their surroundings and the methods they can use in improving their performances (Stern, 2006). The company enters into associations with other partners to assist in giving back to the community. For example, the company did recently enter into an agreement with a company in the western part of Australia. This is for the purpose of planting trees to act as absorbers of the carbon emission. This move by the company gives back to the society and creates safer surroundings (Unerman, 2007). The E.ON Company is one of the leading producers of projects using renewable sources of power. This company creates and operates power projects that rely on renewable energy sources (McKinsey, 2007). The company’s main aim is to develop energy for their customers from various renewable resources. This is done while putting into consideration issues such as the insecurity of energy, the high cost of energy and changes in climate that result from analysis of their environments. They do commit a lot of their resources in ensuring that the resources in the energy sector are conservatively put to use (Schaltegger, Burritt and Petersen, 2008). Ford, a company that deals with the manufacture of motor vehicles has made tremendous efforts in controlling the amount of carbon emissions that their products emit to the surroundings. The management uses their environmental management records to determine the best ways to reduce the emissions and make the environment safer (McKinsey, 2007). The company is an active participant of the disclosure of carbon project and a member of the universal development sustenance organization. Bayer, a giant pharmaceutical company, does play a big role in the fight against pollution of the environment and relies on their records to disclose the carbon emissions of their organizations. The company is also an active participant of various organizations that aim at improving the environment. The final example of a company that uses their environmental management accounts in carbon management is the Volkswagen car industry. The company relies on records of the emissions they produce and any complaints from the authorities or customers to make improvements on their production policies (McKinsey, 2007). This helps in ensuring that they manufacture products that are environment friendly and safe. The manufactures are also members of various organizations that fight for the control of greenhouse emissions throughout the world (Unerman, 2007). 2.2 Explanation of the Findings of Burritt, Schaltegger and Zvezdov and Their Applicability to the Australian Context. The authors did come to the conclusion that the changes we witness in the climate have made our leaders to put in place legislations governing carbon emissions. This has been done for the purposes of creating awareness among the customers and the financiers. The laws help them in determine the ranking of a company in terms of the fiscal impact on their commercial worth. They suggest that the matter of controlling carbon emissions is increasingly becoming vital for the companies too (Steiner, 2007). This results in the companies collecting, analyzing, managing and communicating within the organization to hold up the administrations resolutions. The issue of climate change has become increasingly vital in determining the financial status of a business. The outline that the authors propose differentiates the methods they use for carbon accounting with a basis on precedent and upcoming directions that depend on the different situations a company encounters. The management of carbon emissions does aid the company in achieving sustainable expansion (Schaltegger, Burritt and Petersen, 2008). In Australia, many laws regarding the collection and reporting of greenhouse emissions are in operation. An example of such a regulation is the National Greenhouse Act of 2007 (McKinsey, 2007). This law requires that companies disclose information regarding their levels of carbon emissions and also pay for their actions of destroying the environment. The laws that have been put in place to ensure that there is sustainable growth in the nation are also numerous. A good example is the Renewable Energy Target Act which aims to regulate the amount of electricity in production from the renewable resources in the country. It aims at setting the levels of electricity available from these renewable resources to 20% by the year 2020 (McKinsey, 2007). The matter of climate change has become vital for the managers since it aids in determining the financial status of a business. Many managers in the corporate sector are thus joining hands in the fight against destruction to the environment that results from their activities. Various methods of accounting are also applicable in the country with some managers adopting carbon methods whereas the others go for environmental management methods (Unerman, 2007). 3.0 EMA as a Tool for Adaption and Innovation in Carbon Management. The accountants perform carbon costing as a sub division of environmental costing processes (Stern, 2007). Environmental management accounting involves the costing of raw materials, the labor in use, overheads, costs to incur in managing the wastes and the recycling costs. An understanding of the environmental costs enables businesses to integrate these costs into their decision making processes. The organizations that manage their environments effectively do have the ability to cut the costs they incur and increase their revenues. There exists a relationship between the efficiency of an environment and the levels of economic success one hopes to achieve in the area (Unerman, 2007). The results of an EMA enable the managers and decision makers to create adequate policies to assist them in controlling the emissions from their greenhouses. The use of environmental management accounting procedures enables a consumer to determine whether it is fair for him to pay a high price for his commodities. This is because the costs that the companies encounter in the management of the carbon in turn raise the prices payable by the consumers. EMA’s facilitate the compliance to the regulations set by the administrations since it enables them to cut costs and increase awareness of the conditions affecting their environment. EMA’s determine the changes that an administrator has to make in the production of his commodities to ensure that minimal negative effects pass on to the environment (Stern, 2006). They facilitate the modification of certain aspects of the process to ensure the harmful substances are put to more beneficial uses. An organization can adopt alternative methods of manufacturing their products to ensure that less harm is done on the environment (Schaltegger, Burritt and Petersen, 2008). These methods should be able to lead one to the creation of a safer environment. 3.2 Argument for EMA in Carbon Management EMA policies determine the individual changes that a manager requires to make to the production process to ensure there is less pollution of the environment (Schaltegger, Burritt and Petersen, 2008). Environmental management accounting is a compartment of the larger carbon costing field. It is a section that takes the charge of specifying the costs in relation to the production of a certain commodity (Stern, 2007). The uses of environmental management accounting vary from determining the costs of raw materials, labor, expenses, and the management of their wastes along with the process of recycling. The determination of the recycling costs occurs in three stages. These stages involve the calculations of the cost of a foregone commodity, integration of the cost effectiveness at the planning stages of the commodity and using the analysis of cost and benefits to sway the policy makers on various procedures that require adoption. In Australia, the agency in charge of environmental protection does encourage manufactures and other similar businesses to comprehend the entire range of costs arising from the environment. They also encourage the businesses to incorporate their actions into their decision making process (Schaltegger, Burritt and Petersen, 2008). The Environmental management accounting policies consider factors such as the period it takes to develop a product, the methods of processing the materials into final products, the types of energy put to use in the manufacturing process and the materials in use that are recyclable. They also aid in determining the lifespan of the components put to use in manufacturing a product. These policies are vital for carrying out an analysis among the raw materials for purposes of comparing the inputs to the outputs of a production process. Proper management of the environmental resources by a company ensures that costs are cut and revenues grow (Grbich, 2007). 3.2 Argue For the Use of EMA in Understanding the Risks and Opportunities in Carbon Restrictions EMA enables a manufacturer to get a deeper understanding of the production process and the implications of various components on the environment. They have the ability of giving an insight to this process as a result of the analysis they concern themselves with. These policies determine the individual changes that a manager requires to make to the production process to ensure there is less pollution in the environment. The EMA policies enable the understanding of various opportunities and risks that we are likely to encounter as a result of carrying out an extensive analysis. They assist business people and manufacturers in determining the best methods to use in order to avoid the effects of carbon emissions in their surroundings (Grbich, 2007). The concepts of EMA also assist a manufacturer in determining the amount of materials in the surrounding to assist in the production of a commodity. This is done in reference to the amounts of the material in nature. The use of sound EMA procedures enables a company to evade loss making environments and instead concentrate on profit making by boosting their revenues (Stern, 2007). 3.3 Challenges Organizations Encounter in Implementing EMA Environmental management accounting does encounter several problems in its implementation. These includes issues such as controlling the costs to incur, the costing of various components in the environment and analyzing the profitability of each component in the environment (Gray, 2000). EMA does not have standards that conform to management styles in every type of business that is available. Different organizations use different methods in carrying out an analysis on the environmental aspects of their production processes. There are also no set measures for guiding the decisions that a manufacturer takes as a result of carrying out this analysis. This leads to the adoption of different measures by different companies in order to ensure that they emit less carbon to the environment (Garnaut, 2008). 3.4 Relationship between Carbon Management and Environmental Management Accounting in Reference to Sustainable Business Carbon management is the process of controlling carbon emissions from companies dealing in the manufacture or production of commodities. It relies on the analysis done on the environmental conditions an organization is operating in. This process has the purpose of ascertaining which aspects of the production process lead to higher levels of pollution in the environment. An analysis of the environmental conditions affecting a business is done using the environmental management accounting procedures. They have the sole purpose of establishing the components of a production process that influence the emissions of pollutants to the environment (Garnaut, 2008). Both carbon management and environmental management accounting do play an important role in ensuring the sustainability of a business. The analysis of various components and procedures in the production process of a company enables a company to come up with resource and cost saving measures (Unerman, 2007). The results in turn enable the management of a company to make the best decisions regarding the use of the resources at their disposal while ensuring their conservation. References Bennett M., Richardson P. and Schaltegger D, 2003. Environmental Management Accounting Purpose and Progress, Kluwer Academic Publishers, Dordrecht. Garnaut R, 2008. The Garnaut Climate Change Review: Final Report, Cambridge University Press, Melbourne. Gray R, 2000. The Greening of Accountancy: The profession after Pearce, ACCA, London Grbich C, 2007, Qualitative Data Analysis. An Introduction, Sage, Los Angeles. McKinsey B, 2007. Costs and Potentials of Greenhouse Gas Abatement in Germany, McKinsey and Company, Dusseldorf. Schaltegger, S, and Burritt, R, and Petersen, H, 2003. An Introduction to Corporate Environmental Management, Greenleaf Publishing, Sheffield. Stern N, 2006. The Economics of Climate Change, Cambridge University Press, Cambridge. Unerman, J, and Bebbington, J, and O’Dwyer, B, 2007. Sustainability Accounting and Accountability, Routledge, London. Read More