Carbon constraint choices

Matthew Warnken,a sustainable business and research consultant, writes about the various carbon constraint options available and the need to move now.

The cause of climate change is arguably companies who have externalised costs of greenhouse pollution onto global society. Sir Nicholas Stern referred to this as ‘the greatest market failure ever’…the hidden kicker…is that to stabilise greenhouse gas concentrations global human emissions will need to reduce to five giga-tonnes of carbon dioxide equivalent (the estimated capacity of natural systems to absorb CO2e).There are three broad decarbonisation pathways to carbon neutrality: the market, stringent regulation and breakdown.

However this window will not remain open indefinitely. Inadequate reductions in emissions by 2030 (or earlier) through market mechanisms could trigger concerted campaigns for severe regulation – the type of regulation that equates carbon with the use of asbestos, lead in petrol, or CFCs. Accompanying this regulation (or even independent of direct regulatory change) will be class action law suits aimed at companies with high carbon legacy, in addition to action against company directors.

Under all three propositions, carbon-intensive business are at the beginning of their end.

The real challenge for the Australian economy is in creating the investment conditions to fast track the development and capacity of the carbon offset market. The challenge for investors and operators of ‘traditional’ businesses is in understanding their carbon exposure and in taking early action to decarbonise – or face shrinking profits and growing liabilities. One thing is certain, business as usual is not an option.


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