Penalties for carbon polluting businesses to be scrapped

Businesses will not be punished if they fail to meet carbon emissions targets under the federal government’s Direct Action plan.

The Direct Action plan aims to cut emissions to 5% below 2000 levels by 2020 and is outlined in the Emissions Reduction Fund green paper which is now open for comment.  

The Emissions Reduction Fund is set to commence on July 1, 2014 to coincide with the scrapping of the carbon tax and under it the government will “encourage” low-cost, effective emissions reduction opportunities.

Environment Minister Greg Hunt told SmartCompany there are no penalties for businesses which do not comply.

“We’ve always said we have no intention to raise revenue through the Emissions Reduction Fund,” he says.

“We believe in incentives rather than penalties. We’ll achieve our targets but without a tax.”

Under the existing system Australia’s 500 biggest carbon polluters are penalised if they do not comply with requirements to reduce carbon emissions. 

Acting opposition environment spokesperson Tony Burke said the government’s plan would do “nothing to reduce pollution, allowing big polluters to produce the same amount of pollution without any requirement to alter their operations”.

“But what is clear in the Green Paper is that there is no requirement for businesses to increase energy efficiency and reduce their emissions,” he said.

 “Direct Action is nothing but a dressed up slush fund which is ineffective and costly.” 

Matthew Curnow, joint managing director of carbon tax consultancy Pangolin Associates, told SmartCompany the Direct Action plan signals a move from a system of compliance to a system of voluntary action.

“The concerns around that are for farmers and other people who have looked at the carbon farming initiative as a way to provide income, and potentially there will be no or little market for them if no businesses choose to comply,” he says.    

Curnow says as the legislation is only aimed at very large businesses there is unlikely to be much impact on small and medium businesses from scrapping the penalties.