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Test bed for carbon trading

Test bed for carbon trading

Up to 100 clients of KPMG will try out a carbon pollution auction simulator in the New Year.

Backed by a new team of non-accounting types, a leading big four accounting firm will launch its carbon pollution permit auction

simulator in the New Year to help clients better understand the impact

of carbon trading.

Nick Wood, an associate director in KPMG's sustainability, climate

change and water practice, said: "The biggest thing we are working on

at the moment is to help clients understand the full implication of

the Carbon Pollution Reduction Scheme. We are about to launch one in

Australia for up to 100 clients, which will last for six months."

The simulation is designed for organisations with emissions of 25

kilotonnes a year of carbon dioxide equivalent or more at a facility

level, and also for fuel suppliers to small energy users which want to

be ready to buy and sell Carbon Pollution Permits in preparation for

2010.

He said the simulation would be much bigger than the UK version

introduced in 2001. This will be the third such scheme in which he has

participated, having worked on the European Union version.

"The original UK scheme was quite narrow in its focus and the

Australian scheme is much bigger," said Dr Wood, who expects the

simulation to be launched in February.

"It puts people into an arena where they have to do all the things

they would do in the real scheme . . . people take in real live

auctions, they submit bids and we work out what they bought. We then

report back to the companies how cost-effective their carbon

management strategies have been."

Experience in the UK provided insights into the successful

participation in the auction process.

For example, during an auction simulation, some participants bought

permits when they had meant to sell, others purchased too many and

over-invested, while others acquired too few.

A nuclear reactor technology specialist, Dr Wood joined KPMG this year

after having been involved in emissions tradings schemes in Europe

since 2001.

He has degrees in physics and chemistry as well as a PhD in nuclear

reactor technology, and spent three years working on a European acid

rain research program.

"I've been involved in the impacts of energy technology on the

environment, whether acid rain from power stations or nuclear power

and associated issues."

Between 1997 and 2002, he ran his own business, undertaking

environmental awareness training for management and staff in key UK

industries.

When the UK proposed an emissions trading scheme, he joined KPMG for a

year as an associate in 2002, before joining another consultancy for

four years.

When Australia signed the emissions trading scheme in 2007, he looked

to moving here.

He joined a team in KPMG's climate practice that includes a geologist,

engineer, environmental scientist, marine scientist and several people

with degrees in public policy.

According to KPMG, 85 per cent of the firm's climate change practice

comes from a non-accounting background

The practice has six full-time partners and 12 part-time partners.

Full-time and part-time staff number 25 and 50-60 respectively. Last

year, the number of partners was two, assisted by 10 full-time staff.

In general, the firm is taking on more graduates from non-accounting

backgrounds - 25 per cent of the 2008 graduate intake were

non-accountants while 20 per cent of the 2007 intake were

non-accountants.

Meanwhile, fellow big four accounting firm Deloitte warned that the

Carbon Pollution Reduction Scheme White Paper put a multi-billion

dollar incentive on the table for Australian businesses to pursue

energy efficiency more strongly and reduce their exposure to a carbon

price.

Patrick Crittenden, the principal sustainability and climate change

consultant for GHD, warned that with government assistance available

up to the start of the Carbon Pollution Reduction Scheme and the

likelihood of a significant increase in the cost of carbon after the

first few years of scheme operation, "the time for business to plan

and act is now".

"If the government increases the target to 15 per cent [greenhouse gas

emissions reduction] following the outcomes of international

negotiations, then the cost to business is likely to be even more

significant," he said.

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