Fuel suppliers wear cost

THE inclusion of transport fuel emissions in the emissions trading scheme puts the compliance burden on fuel suppliers.

For companies like BP, this means that not only do they have obligation for the refining side of the business under the emissions trading scheme, but also as a fuel supplier.

While the emissions intensive trade-exposed refining side of BP's business will be eligible for permit allocation under the scheme, the company will need to buy emissions permits to offset the emissions from the use of its product by its consumers.

"The Australian scheme is far more extensive in its reach, and it fundamentally includes emissions that are created from consuming our products," BP Kwinana refinery managing director Thys Heyns said.

"It would be very difficult for individual consumers to measure and manage their transport emissions, so the intention is that the supplier of the product is liable for those emissions and passes on the cost of compliance to the consumer."

In preparation for the trading scheme, Mr Heyns said the company had focused on a number of aspects.

"One is making sure our measurements and reporting of emissions is accurate. We have also had an external audit on measurements and reporting. We're pretty well prepared from that perspective," he said.

"The other element is putting in place the appropriate systems and processes for emissions trading.

"We've also been generally involved in the evolution of the debate and legislation discussion between the government and industry."

The cost of compliance on fuel companies will inevitably be passed onto consumers through an increase in the price of petrol at the bowser.

That cost impost is one of the key rationales behind the inclusion of transport fuels in the scheme - the idea of providing a carbon price signal to influence long-term behavioural change in the form of reduced consumption.

The government has proposed fuel tax cuts to offset the Carbon Pollution Reduction Scheme burden for motorists and heavy vehicle road users.

The transport sector is a significant contributor to greenhouse has emissions, comprising about 14 per cent of Australia's total emissions.