Speaking at the Adelaide event, Ernst & Young partner Russell Curtin said that a mandatory national emissions trading scheme was likely to hurt the hip pockets of many petroleum companies in the short to medium term.

“Companies are generally aware of climate change related risks, but action to date seems limited and the financial implications are uncertain,” Curtin said.

“They need to start assessing the risk and developing strategies now.”

Curtin said a recent Citibank report calculated that compulsory emissions trading would cost a typical petroleum company 2-5% of their annual profit, 1-3% of their sales revenue and 0.5-1% of their market capitalisation.

While Curtin conceded that the shift to natural gas was a step in the right direction, he said the benefits to companies were unlikely to be realised until about 2020.

“This is going to be quite a cost for oil and gas companies to bear,” he said.

“But if they wait for regulatory certainty, it will be too late.

“Companies need to start getting their heads round a few of the potential models on offer now and factor the risks into their investment decision making.”

Despite the overall inaction, several companies aiming at longer-term and broader emissions trading were already acquiring voluntary carbon credits outside the boundaries of existing government greenhouse schemes, according to Minter Ellison senior associate Scott Singleton.

Last month, AGL Energy became the first utility outside North America to join the Chicago Climate Exchange, where it is committed to slashing its greenhouse gas emissions by at least 6% by 2010.

Following hot on its heels was Origin Energy, which a couple of days later launched Australia’s first carbon reduction scheme to give businesses a consistent standard for buying and selling voluntary carbon offsets.

Also speaking at APPEA 2007, Singleton described the move as a “behind-the-scenes market” in emissions trading.

“Corporations like Rio Tinto have purchased carbon credits derived from land-clearing permits held by Queensland farmers in order to save around one million tonnes of greenhouse gas emissions,” Singleton said.

“This is being done even though there is no current legal obligation on business to acquire these credits have no statutory legal basis or real monetary value in Australia.”

According to Singleton, there were two main reasons why companies were investing in the speculative green market.

“Companies are learning about carbon trading in preparation for a future carbon constraint, and they are hoping the credits they acquire will have value under a future carbon regime,” he said.

Companies were also taking advantage of a wide range of state and Commonwealth government schemes to address climate change, according to Singleton.

“There are a range of what might loosely be called “emission trading” schemes already operating in Australia, such as the Commonwealth’s renewable energy certificates, the New South Wales greenhouse gas abatement certificates and the Queensland gas electricity certificate,” he said.

The biggest problem for business was the lack of consistency between the schemes and of interchangeability among the mechanisms, he said.