Price signal would help alter consumer behaviour – Ferrell

CHIEF executive of the Gull Group of Companies, Wayne Ferrell, sees both risks and opportunities in the national emissions trading scheme.

Under the scheme, Gull is a liable entity and will be required to purchase carbon permits on behalf of its customers.

In its submission to the green paper, the company estimated it would be required to buy up to 2 million tonnes worth of carbon permits a year, potentially costing $40 million annually, assuming a carbon price of $20/t.

"We will need to be buying carbon permits on behalf of our customers, so that puts us front and centre of the issues and all of a sudden we're dealing with, depending on where you pitch the price of carbon, $50, $60, $70 million a year in carbon revenue," Mr Ferrell said.

"There's a competitive angle against that because all of a sudden we need to be as good if not better than the major oil companies of the world, which will also have the same requirement. That's the risk and an opportunity, if we can actually do that better."

Another opportunity for the company is in the area of biofuels. The company owns one of the country's few operational biodiesel-manufacturing plants, located in Queensland.

Mr Ferrell believes the scheme could make sustainable lower carbon fuels, like biodiesel, more attractive.

"We can work with our customer base and help them lower their transport, hence carbon, footprint," he told the forum.

Mr Ferrell said it was important to send a price signal to consumers in order to alter their behaviour.

"We have seen a price response [to higher oil prices], we have seen consumers react to higher prices so there is some truth that higher prices do in fact bring alternatives to the fore," he said.

"One of the biggest issues is price signals are often upstream, they're not with decision makers, individual customers. They don't see embedded carbon content.

"Companies like ours are buying carbon for fuel that you use, you won't actually see it. Potentially there's more power in you actually seeing what carbon content you use every day and making a decision to mitigate it or not."

Transport contributes about 14 per cent of Australia's emissions and is the second fastest growing source of emissions, up by 27 per cent since 1990.

In the recent green paper, the government proposed a cut in fuel taxes to offset the increased cost for consumers following the introduction of the scheme.

It will also rebate the effect of the carbon pollution permits on businesses in the agricultural and fishing industries, and cut fuel taxes for heavy vehicle road users on a cent-for-cent basis.