TopBusiness Risks in Australian Construction Industry

On 10 July 2011, the Federal Government released its ï¾Ãƒâ€šÃ‚Æ’??Clean Energy Future Planï¾Ãƒâ€šÃ‚Æ’??. A key element of this plan is the introduction of a carbon price starting at AUD 23 per tonne on 1 July 2012. Businesses will either purchase or be allocated permits and will then be required to surrender a certain number of permits each year to fulfill their emissions obligations. A fixed carbon price will remain in place for three years (indexed annually at 2.5 % in real terms) and then on 1 July 2015, the price will be determined by a market based mechanism under a cap-and-trade emissions trading system. This plan is central to the governmentï¾Ãƒâ€šÃ‚Æ’??s 2020 emissions target of at least 5 % below 2000 levels. Since construction forms the bulk of carbon emitter, investment in energy efficiency would not only reduce emissions but also support jobs within the construction sector which represents 9% of the national labor force. Government Assistance The government has also outlined several forms of industry assistance for emissions-intensive, trade-exposed (EITE) industries. Although these entities have not been fully disclosed, Key materials associated with the construction industry including steel, aluminum and glass will likely receive the highest exemption of 94.5 % (in the first year and reducing by 1.3% per annum) from the carbon price. Alternatively EITE industries deemed as less impacted by a price on carbon will receive free permits covering 66 % on their carbon cost obligations (both reduced by 1.3 % per annum over the scheme). Cement is also expected to receive between 66 % and 94.5 % industry assistance to shield it from the full carbon price, with the likely result closer to the upper end of the potential benefits. Measuring the Impact of the Carbon Price on Construction Global construction consultancy firm, Davis Langdon, has recently conducted a detailed assessment on the impact on construction projects of the Australia Federal Government's proposed carbon price scheme. It has built a Embodied Carbon Metric (ECM) in order to measure the carbon intensity of building materials using a cradle to site approach for all materials used in the construction of buildings and infrastructure. In doing so, a quantitative amount of embodied carbon intensity was able to be attributed to the various construction materials which in turn was used to calculate the price effects that the carbon price would have.

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