Australia likely to have supply chain carbon accounting by 2030: government official

Australia is likely to realize carbon accounting for the supply chain of goods by 2030, which will allow customers to assess the carbon footprint of all types of products, David Parker, chair of the country's Clean Energy Regulator, said at the Australasian Emission Reduction Summit on Dec. 9.

Full supply chain carbon accounting allows companies in emissions-intensive industries to quantify and reduce emissions, which is highly important in the global push for decarbonization.

"I think probably by 2030, we might see what you could call supply chain carbon accounting. That is, when a product comes to market, you will know what the carbon content of that product is," Parker said.

CER is the government body that oversees Australia's development of carbon policies and market architectures.

"If you buy a dishwasher or fridge these days, it tells you how much electricity it's going to use, how much water it's going to use. I suspect that eventually we'll get to a point where you go and buy one of those things, and you will be told how much carbon is embodied in the product. And I think we'll see that very broadly across a whole range of things," Parker explained.

Australia has established a hybrid carbon market regime, in which the government-backed Emissions Reduction Fund purchases Australia Carbon Credit Units (ACCUs) from qualified projects. Private buyers can also purchase ACCUs voluntarily or under a compliance regime called the Safeguard Mechanism that covers large emitters with annual emissions above 100,000 mtCO2e.

Australia also issues Large-Scale Generation Certificates (LGCs), which certify renewables-based electricity use, to entities with obligations under Renewable Energy Target schemes, or private buyers.

On top of existing policy instruments, Parker said two new policies are in the pipeline -- corporate emissions reduction transparency reports for companies to publicly disclose their emissions and the Guarantee of Origin certificate to certify Australia's exports from green sources.

"Without integrity, the market won't function. It is a really, really important -- fundamental that all the carbon elements can be traced ultimately," Parker said.

These policy instruments will benefit companies that intend to decarbonize, especially given claims of greenwashing around things like "carbon neutral LNG", "green steel" and "low carbon hydrogen".

"Customers want to know what claims they can make. What they can genuinely say. If you are surrendering LGCs, you are using renewables. Things like this bring massive clarity to customers," Gregg Buskey, executive general manager for strategy and portfolio development with Shell, said at the summit.

"Speaking of green steel, what is the iron ore producer doing about removing carbon in their business? It needs to be accelerated faster and faster in terms of how a customer takes on pressure from the next customer along the supply chain to really decarbonize," Buskey said.

"We need to be super, super clear that we are doing what we say we're doing," Fiona Wild, VP of Sustainability & Climate Change with mining giant BHP, said at the summit.

She said as litigation risk and reputational risk associated with climate disclosures increase, it becomes much more important for companies to align words with deeds.

"And it does change the process of disclosure inside an organization when you are scrutinizing to that level of detail," Wild said.