By Dr Steve Hodgkinson, research director at Ovum

 

For most organisations this means that they will need to invest in systems to monitor operational processes and to analyse and report on their energy consumption, the energy efficiency of production facilities and offices and their overall CO2 emission outcomes.

 

Putting aside the politics of how best to design Australia’s strategy for transitioning to a greener economy, the Government’s Climate Change Plan finally gives businesses some clarity over the imperatives to invest in technology to reduce CO2 emissions.

 

For most organisations this means that they will need to invest in systems to monitor operational processes and to analyse and report on their energy consumption, the energy efficiency of production facilities and offices and their overall CO2 emission outcomes.

 

The case for such systems has been understood in a theoretical sense for decades, largely from an environmental and social responsibility perspective but practical imperatives to act have been lacking.

 

One positive effect of the Climate Change Plan will be to stimulate action, which will lead to spending on software and services associated with understanding and acting on carbon consumption and emission data.

 

We expect that the Plan, assuming it proceeds to legislation, will lead to increased opportunities for companies that specialise in the software and systems needed to manage energy use efficiently and to report on compliance under the new carbon pricing arrangements. 

 

The Government’s Plan is quite complicated, however, due to the need to appease so many different interest groups. 

 

While the broad principles are clear, the devil will lie in the detail of the pricing mechanisms and the assistance and transitional arrangements.

 

While not technically a tax regime, the setup definitely has the feel of the complexity of tax policy, and this will be reflected in the amount of effort and cost that organisations and their advisers will need to expend trying to grapple with understanding the implications of the scheme and setting up

processes and systems.

 

A number of new government agencies will be created, including a Climate Change Authority and an Australian Renewable Energy Agency, which will require also some investment in new processes and systems.

 

Some have commented that the IT industry, as a significant consumer of electricity, should have been specifically considered for assistance and transitional arrangements. The speed of technology obsolescence in the IT industry is such, however, that large IT providers have strong commercial

incentives anyway to invest in the latest technology, which is also the most energy efficient.

 

The Climate Change Plan may create additional incentives for economies of scale and M&A activity to consolidate facilities towards the highest standards of energy efficiency.