Transcript Heading

Developing and Implementing
your Carbon Strategy
We provide strategic advice and assistance across Government,
manufacturing, finance, waste management, recycling,
agriculture, agribusiness and packaging.
We bring together expertise and experience across four areas:
Compliance and Management
Engagement and Communications
•
Environmental assessments and
environmental management systems
•
Glue internal and external engagement tool
•
Training and awareness raising
•
Corporate Social Responsibility, Global
Reporting Initiative and sustainability
reporting
•
Environmental accreditation and ecolabelling
•
Energy Efficiency Opportunities, National
Greenhouse and Energy Reporting and State
energy, water and waste efficiency programs
•
Research and market intelligence
Climate Change and Sustainability
Government Relations
•
Strategic planning and advice
•
Advice and assistance on grants
•
EASE™ carbon accounting and software
•
Submissions and lobbying
•
Carbon workshops and training and
education
•
Policy advice and strategy
Why measure and understand carbon emissions?
• Most Australian businesses will be impacted by the
carbon price mechanism:
• Increased energy costs - natural gas and non-renewable
electricity
• Increased costs of some input materials including
carbon intensive products
• Increased costs of services such as freight and logistics
• Changed reporting procedures
• Financial liabilities and risks
What are carbon emissions
Direct carbon emissions
Carbon price mechanism and energy
We are already experiencing higher transmission and
distribution costs increasing electricity prices in the
order of $0.04/kWh
Under a legislated price of $23/tonne in 2012/13
(increasing 2.5% - fixed price period):
• 75% flow-through rate by retailers is expected to
increase electricity costs by $0.02/kWh (additional 20%)
• Natural gas is expected to increase $1.18/GJ (15-20%)
under a carbon price.
• Waste to increase between $20 to $30 tonne.
Australian Government carbon price modelling
$/MWh
$/MWh
300
300
250
250
200
200
150
150
100
100
50
50
0
0
2010-11
2012-13
Wholesale prices
2019-20
Network costs
2029-30
RET
2049-50
Other costs
Upstream carbon emissions
Downstream carbon emissions
What other impacts could your business expect?
• Domestic aviation, domestic shipping, and rail
transport are included
• Proposal to consider heavy on-road transportation
from 2014 however fuel tax credits will remain at 100
per cent for the agriculture industry.
Material procurement costs
• The impact on materials will be dependent on
whether the:
• manufacturer is a liable party or not
• goods are majority imported or manufactured
locally.
• Locally sourced materials (i.e. packaging) where it
is subject to a price on carbon will increase in
cost.
• Materials that are required to be transported large
distances in the case that they are manufactured
overseas will also increase in price.
Upstream agricultural impacts
• Fertiliser production (although usually set by
world markets not domestic policies)
• Pesticide and other agrichemical production
• Extraction and processing of lime
• Production of other inputs (e.g., farm machinery,
greenhouses, etc.)
Downstream agricultural impacts
• Product storage (e.g., cool rooms)
Cost flows under the carbon pricing mechanism
• Customers – in-flow depending on what price can be
passed through and competition
• Suppliers – out-flow - depending on what price can be
passed through and timing of purchases/availability
• Operating and capital costs – out-flow – depending project
timing and sources of funding.
In the medium to long term – risks relating to the provision of
products and services given the uncertainty around climate
change impacts could add other costs.
Why measure and understand carbon emissions?
• Direct cost savings
• Benchmarking for improved operational performance
• Operational efficiencies
• Identification of less specific, lower quality or lower
cost inputs
• Increased brand awareness or competitive advantage
Why measure and understand carbon emissions?
• Identifying resource efficiencies can lead to a number
of indirect benefits:
• reduced repair and maintenance costs
• increased employee motivation and retention
• increased productivity
• reduced costs resulting from actions undertaken by suppliers
• availability of government grants or subsidies in relation to
the use of innovative technology or specialist training of staff.
• increased research and development allowances.
Other market pressures
• Do you currently need to report your environmental
improvement initiatives?
• What questions would you expect from your
customers and consumers around your performance
in reducing carbon emissions?
• What information would you expect from your supply
chain in relation to carbon emissions?
Questions
• Are there any companies represented here that have
developed and implemented a carbon strategy?
• What were your drivers?
• What barriers have you faced?
• Have you identified all of the opprtunities?
Developing and Implementing
your Carbon Strategy
Setting your boundary
• Decide your operational controls
• Obtain energy billing information
• Use financial account processes to collect the data.
• Consider:
• Assets and liabilities
• Capital expenses
• Operational expenses
• Leased assets, outsourcing, and franchises
Aligning carbon measurements and management
with existing business systems
• Quality management
• OH&S reporting
• Financial reporting
• Inventory management systems
Aligning carbon with financial accounting
Carbon accounting systems
Five general principles for measuring and reporting
emissions:
• relevance;
• completeness;
• constancy;
• transparency;
• accuracy
Setting the baseline
• Determine your baseline year and use this to compare
future emissions (trend analysis)
• Review your in-sourcing and out-sourcing activities –
will these change?
• Organic growth or decline
• Acquisitions and or mergers
Benchmarking your performance
• km’s travelled
• tonnes product manufactured
• No FTE’s
Calculate your emission profile
• determine your carbon intensity
Investigate opportunities for energy efficiencies
• look internally as well as your supply chain
Engage your employees as well as the supply chain
Plastics and chemicals manufacturing example
Areas for Improvement
Compressed air systems
Energy management
Pumps and motors
Power factor correction
Chiller and cooling Systems
Exhaust and hot air
Insulation and lagging
Steam systems and lines (boilers)
Lighting
Abatement
Opportunities
Cost/
Payback
Energy use breakdown at a grocery/convenience
store
• Some opportunities might be
obvious from an energy
perspective
• Energy efficiencies can be
easily be achieved through
technology and behaviour
change
• There may be some hidden
cost associated with your
supply chain
Waste generation from a typical retail store:
• can the material be reused?
• can the packaging be avoided?
• can the packaging be returned?
• can products be packaged
differently to reduce transportation?
• What are the costs impacts?
Direct and indirect emission sources
Calculating your liabilities and pass-through costs
• Understand the carbon intensity of the whole life cycle of
your products or service:
•
material inputs
• resource use
• waste outputs
• up-stream and down-stream supply chain impacts
• What is the percentage of costs that are likely to
increase as a portion of your overall operational
costs?
Carbon cost analysis - Packaging manufacturer
• Under a price on carbon, electricity costs will increase
between $277,000 and $555,000 by 2015.
• Natural gas costs were estimated to increase by $9,800 by
2015.
LPG <1%
Natural
Gas - 2%
Petrol - 2%
Diesel - 1%
Purchased
Electricity 95%
Current liability – between 3 and 8% cost increase per unit due
to a carbon price on electricity
Large product supplier and waste management
contractor to the health industry
• assessed the carbon liability from waste disposal practices
• modelled what the change in material composition would
mean to landfill carbon emissions.
• developed a carbon emission factor and expected price
increase amount to use in future contract negotiations.
Building your model
• determine pricing scenarios including pass through costs.
• identify impacts.
• develop knowledge and strategies.
• prepare engagement models and tools.
• negotiate positions and look for efficiencies.
• communicate your mitigation outcomes.
Workshops
(Scenario and
Educational)
Energy
Efficiency
Opportunity
Assessments
Rewards and
Recognition
Feasibility
Assessments
Carbon
Reduction
Strategy
Benchmarking
and Case
Study
Development
Internal
Engagement
and Training
Best Practice
Guidelines
ACCC – Passing on carbon costs
Review likely impacts:
•
•
•
•
fuel use
transportation
energy
travel
Any claims need to be:
• truthful and accurate
• not misleading
• based on reasonable grounds
• substantiated
Clean Energy Future funding
• Clean Technology Investment Program
• $800 million competitive, merit-based grants program to
support Australian manufacturers.
• Clean Technology Innovation Program
• $200 million to support research and development, proof of
concept and early stage commercialisation activities that lead
to the development of new clean technologies.
• Clean Technology Food and Foundries Investment
Program
• $200 million competitive, merit-based grants program to
support Australian food and foundry manufacturers