Discuss on Impacts of carbon tax…………………
3.1.0 Activity 1
5. 2.0 activity 2
6. 3.0 Activity 3
8. 4.0 Activity 4
9.4.0 Activity 5
9. 4.0 Activity 6
10. 7.0 Conclusion
12. 8.0 References
1.0 ACTIVITY 1 – Briefly discuss the 4 different methods of determining Scope 1
Emissions and why the first method is most appropriate for QEH. (2 Marks).
Method 1: The national Greenhouse accounts method
This method employs estimation procedures obtained from methodologies used by the department of climatic change and energy efficiency for preparing National Greenhouse Accounts. Approved and designated emission factors (which are national average factors determined by department of climate change) are used to determine, estimate and calculate emissions of greenhouse gases by various organizations, (Standards Australia, 2009).
Method 1 is most useful in emissions with relatively homogenous sources, an example being in the combustion of liquid and solid fossil fuels whose combustion and greenhouse emissions are similar across most facilities. Emission estimates are calculated using tools provided by the department of climate change and energy efficiency. The method employs the use amount of fossil fuel used multiplied by emission factor for a given area of company location.
Method 2: This is a facility specific method which uses industry sampling of fuels and raw materials using Australian or international standards to determine and analyze emission estimates at facility level. This method enables corporations to make measurements, example being the measurement of amount of fuel consumed at the facility which are used to calculate an accurate estimate of emissions for its facility.
This methods borrows a lot from Australian and international documentary standards which provide benchmark for procedures of analysis of chemical properties being consumed. This method is useful in fuels that show variations in key components, such as carbon content, that vary from source to source an example is coal, (Australian Bureau of Agriculture and Resource Economics (ABARE1), 2007).
Method 3 is similar to method in that it is facility specific and uses Australian or international standards in sampling and analysis of fuels and raw materials. However, in this method, reporters are required to comply with sampling standards as laid out in the Australian or international documentary standards for sampling of fuels and raw materials.
Method 4 involves continuous or periodic direct monitoring of emissions systems and involves direct monitoring of green house emissions that arises from any combustion activity. This method is more data intensive and accurate in certain cases than the other three methods discussed above. It is common in underground mines of coal to reflect the nature of emission and significance of correct data to aid in health and safety goals of the nation, (Commission of the European Communities, 2006).
Why the first method is most appropriate for QEH
Method is used to estimate emissions in liquid product with homogenous source. QEH is using liquid and solid fuel in their transport, which have homogenous source. Emission by this method is easily estimated by referring to reportable data on fossil fuel consumption. The volume of consumed fuel in tones can be easily determined which are used in this method to calculate emitted carbon dioxide. Chemical properties of fossil fuels used in vehicles is uniform and can be easily determined using the tools provided in the method.
2.0 ACTIVITIES 2 – Briefly explain Scope 2 emissions and how Scope 2 emissions from electricity purchased from the main electricity grid in NSW, Victoria and Queensland are calculated. (National Greenhouse Accounts Factors, July 2011).
Green house emission of purchased electricity is calculated as
Y = Q * EF/1000; where
Y is the scope of emissions in tones of carbon dioxide
Q is the quantity of electricity purchased in Kilowatt hours and
EF is the emission factor for the state or territory
For NSW; Y = 2, 000, 000* 0.89/1000 = 1, 780 Tonnes
For Victoria Y = 1,000,000*1.21/1000 = 1,210 Tonnes
And For Queensland Y = 250, 000*0.88/1000 = 220 Tonnes
|GHG Source||Quantities in
|Calculation||Emission in Tonnes, CO2|
|Scope 2- indirect Energy||3, 250, 000|
|Purchased Electricity NSW||2,000,000||2, 000, 000* 0.89/1000||1, 780|
|Purchased Electricity, Victoria||1,000,000||1,000,000*1.21/1000||1,210|
|Purchased Elec, Queensland||250,000||250, 000*0.88/1000||220|
3.0 ACTIVITIES 3 – Briefly explain Scope 3 emissions and identify the emission factors for fuel and electricity purchased. Using this information, complete the following table to calculate QEH Scope 3 emissions. (2 Marks).
Different emissions factors are used to estimate and calculate scope 3 emissions. They are used to calculate emissions from extraction, production and transportation of extracted fuels in organizations that burn fuels, and in firms that consume purchased electricity, used to calculate extraction, production and transportation of fuels and emissions due to lost electricity in delivery network. In some cases, scope 1 factors may also be used to calculate scope 3 emissions, ( Australian Energy Market Commission, 2008).
Other components of scope 3 emissions include disposal of waste transported outside the company, disposal of company depleted products, employee business travel, employee commuting, extraction, production and transport of company materials and goods, generation of electricity and transportation of wastes among others.
Scope 3 emission factors for unleaded fuel and own transport indirect fuel extraction is 34.4 just as used in scope 1, and for electricity emission is 0.17 for NSW, 0.15 for Victoria and 0.12 for Queensland.
|GHG Source||Quantities used||Calculation||Emissions
|Scope 3 – Indirect Other|
|Own transport fleet
indirect fuel extraction
(indirect fuel extraction
and line loss) – NSW
(indirect fuel extraction
and line loss) – Victoria
(indirect fuel extraction
and line loss) Queensland
|Customer use of vehicles( unleaded fuel)||800M litres||(800,000,000/1000)*34.4*(69.22/1000)||19,049.344|
4.0 ACTIVITY 4
1. Given the components of QEH GHG footprint in relation to Scopes 1-3, list the
information that will need to be captured from now on in order to monitor QEH’s
GHG performance. What impact will this have on the accounting system?
Discuss whether you think this information should belong as part of the
accounting information system and identify three reasons why this may not be
possible? (3 Marks). (NGER Technical guidelines, 2011).
Data on purchased fossil fuel and electricity used by the company. Information on the quantity of fuel used for own transport fleet, used in extraction, production and transportation of extracted fuel; electricity used to extract, produce and transport fuel plus line loss electricity. Fuel used by company customers renting company vehicles.
The impact on accounting system: It will increase company taxation level for it was previously not captured for taxation by the company. Accounting system will have to be more detailed to incorporate even minor fuel and electricity expenses that were previously treated as miscellaneous expenses. This means that a different accounting department need to be introduced that will account for all aspects involving carbon tax.
2. In future, what other information may be useful to calculate the QEH’s GHG
Footprint? (2 Marks).
Information on company waste disposal outside the company perimeters, employee business travel in vehicles, aircraft not owned by the organization, employee fuel use while commuting to from work, information on disposed products of the company, data on extraction, production and transport of purchased equipment of the company like new vehicles and equipment and information on transportation of products, materials and waste, (U.S. Environmental Protection Agency. 2003). Data on lost electricity during delivery which is the difference between consumed electricity and electricity supplied.
5.0 ACTIVITY 5
Identify what information should be reported to investment analysts to enable them to accurately reflect the financial impact of the carbon pricing mechanism in their valuation of QEH? (2 Marks).
Information on burnt fuel by the company in its transportation activities including those used by company customers and workers will be of necessity to the investment analyst. Information on used electricity by the company including lost electricity during transmission and delivery, (Clean energy future, n. d).
Information on consumed electricity by company clients is vital to investment analyst because it constitutes the bulk of company greenhouse emissions.
6.0 ACTIVITY 6
Identify opportunities and make recommendations to cost effectively reduce elements of the company’s GHG footprint over time and capitalize on business opportunities arising from the introduction of a carbon price. (2 Marks).
Customer fuel amounts to most of company greenhouse emissions; this is mainly from the leased and rented vehicles. This is the area that may need to be discarded especially if the associated carbon price cannot be covered by the revenues generated from the business.
I recommend for the proper accounting system that captures all greenhouse emissions generated by the company. This will help the government in their efforts of addressing the risks of greenhouse emissions.
Proper accounting will enable the management to understand the implications of energy use on the company, hence they will be able adopt energy saving technology and use of more friendly energy that will reduce financial burden for the company.
And finally, accounting if properly done will enhance investor and public confidence in the company for they will be able to accurately account for the reduced profit and this will enhance the performance of company shares in the market.
The company will definitely be affected by carbon pricing which may increase taxation expenses and reduce company profit. Reduced profit will in turn affect the share price of the company. However, proper accounting and reporting will instill confidence in the company.
Business areas that exhibit high carbon pricing may need to be reconsidered especially if they are not viable investments for the company. The use of fuel by company customers’ accounts for most greenhouse emissions and a clear analysis should be done in this line of business. However, carbon taxation is necessary for the country and the public for it will help reduce greenhouse emissions thus firccing most organizations to use more efficient technologies and forms of energy that are friendly to the environment.
Australian Bureau of Agriculture and Resource Economics (ABARE1), (2007) :Fuel and Electricity Survey – Fuel Codes, Commonwealth of Australia, Canberra, 2007
Australian Energy Market Commission, (2008): National Electricity Rules, Version 21, 2008.
Clean energy future. (n. d). [online]. Available at (http://www.cleanenergyfuture.gov.au/ (accessed on 27th April, 2012).
Commission of the European Communities, (2006): Commission Decision establishing guidelines for the monitoring and reporting of greenhouse gas emissions pursuant to directive 2003/87/EC of the European Parliament and of the Council. Brussels, 2006.
National Greenhouse Accounts Factors (July 2011), [online]. available at:
http://www.climatechange.gov.au ( accessed on 27th April, 2012).
NGER Technical guidelines. (2011): [online] retrieved from http://www.climatechange.gov.au (accessed on 27th April, 2012).
Standards Australia, 2009 – Stationary source emissions – Area source sampling – Flux chamber technique, 2009. (s5.17H and s5.17J)
U.S. Environmental Protection Agency. (2003) Code of Federal Regulations: Standards of Performance for New Stationary Sources. Appendix A – Test Methods. 40 CFR 60 Appendix A. Washington, D.C.
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