Today we explore how the introduction of a carbon tax could change the building industry.
You wouldn’t normally associate building or renovating a home with big polluters such as the coal and oil industries. In fact, the buildings of today are more environmentally friendly than ever. However, when you scratch under the surface of the new carbon tax you see that it will undoubtedly further increase the costs of building or renovating a home, as well as running a trades business.
Scientists agree that the world is warming as a result of human activity burning fossil fuels, such as coal and oil. These substances release Carbon in the form of CO2 which then traps heat in the atmosphere and can lead to climate change.
In an attempt to reduce the amount of CO2 released into the environment, the Australian government (along with the world) has been looking into a variety of solutions. The most recent of which is putting a price on CO2 emissions, more commonly referred to as the ‘carbon tax’
The carbon tax is a tax that big businesses will have to pay for every tonne of CO2 they release into the atmosphere. This includes businesses that manufacture steel, cement, aluminium, glass and bricks - all primary building construction materials.
The intent is for the tax to encourage these big businesses to find alternative means of energy production. However the concern is that it will simply drive prices up as the companies seek to cover the additional costs or force more business off-shore (to countries who do not have the tax) and thus reduce Australian jobs.
It’s a tough decision to make but the general consensus seems to be that we have to start somewhere. Placing a tax on carbon emissions will increase prices. With the tax, the Government intends to feed some of the money back into developing greener solutions. The prices will eventually be absorbed into the economy and this will be accepted as the price of a cleaner, cooler planet.
HIA (Housing Industry Association) is of the opinion that: “The Federal Government’s decision to ignore the residential building industry in today’s carbon tax announcements will have painful and widespread repercussions”. They believe that the tax will further increase all the costs associated with building and drive up housing prices.
However the GBCA (Green Building Council of Australia) are firmly in support of carbon pricing, provided it is implemented along with plenty of green initiatives and incentives. They state that it will add value to energy efficient homes and encourage a push from consumers for greener building materials and higher standards of efficiency. They have a very comprehensive report on the subject, Putting a price on pollution: What it means for Australia’s property and construction industry which is well worth the read.
Emissions intensive trade exposed (EITE) industries will be able to receive compensation for the first five years, however they will need to provide evidence that they are losing competitiveness. EITE industries include Aluminium smelting, Copper refining/smelting, Float glass production and Iron & Steel manufacturing.
Unfortunately it appears that clay brick manufacturing will not be eligible for compensation and as a result Brickworks are stating that they intend to raise their prices by up to 6% in order to recover the cost of the tax.
There is a widely-held misconception that Australia is the only country in the world introducing a price on carbon. In fact, many other countries including China, Japan, the USA and India are all implementing or piloting carbon trading or tax schemes, either in certain cities or throughout the country.
While the carbon tax has been proposed and there’s a strong chance it will go ahead, all the fine details have not yet been finalised. Once they are it will be easier to provide a clear forecast on how exactly the industry will be affected.
It is clear, however, that prices will increase - the whole intention behind the scheme is for it to affect us financially to the point that everyone starts to push for cheaper energy sources and reduce the use of fossil fuels leading to a reduction in CO2 emissions. Smart businesses will already be looking into what they can do to make their business greener and smart building designers will be designing more cost-effective, energy efficient homes.
What do you think the carbon tax will mean to you? Do you think it will change your lifestyle or the way you operate your business? Share your thoughts in the comments area below.