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Carbon Management – A Practical Approach for Business
Jack Holden, Head Of Carbon Management, Ecos Corporation
Casey-Cardinia Business Breakfast
Pakenham 12th June 2008
Outline
• Global warming and carbon emissions overview
• Carbon trading and how it affects business
• Short term energy & carbon trends
• Actions for business
• The carbon neutral trap!
Digging out of a Carbon Neutral Trap
Climate ChangeWhat are we observing so far?
2007Hottest year ever in Victoria
Driest ever for Murray Darling rivers
2005Strongest hurricane ever recorded (Wilma)
Highest daily rainfall event in Indiaever recorded
The most Hurricanes ever
Hurricane Wilma, courtesy of United States National Oceanic and Atmospheric Administration
Mumbai Deluge 26/7/2005
• 1000mm rain in one day
Global mean temperature
Global averagesea level
Northern hemispheresnow cover
IPCC Forth Assessment Report WGI
Direct Observations of Recent Climate Change
1850 - 2005
Hotter days
Less rainfall
Carbon Cycle
Carbon Cycle
Carbon Cycle
The history of CO2 and temperature change shows great variations. A dynamic system.
We’ve built this civilisation in an unusually stable, temperate period. It wasn’t always thus.
Sea level 125 m lower
Sea level: Fairbanks, R.G., 1989, A 17,000-year glacio-eustatic sea level record; influence of glacial melting rates on the Younger Dryas event and deep-ocean circulation: Nature, v. 342, no. 6250, p. 637-642.
Sea level: Fairbanks, R.G., 1989, A 17,000-year glacio-eustatic sea level record; influence of glacial melting rates on the Younger Dryas event and deep-ocean circulation: Nature, v. 342, no. 6250, p. 637-642.
Sea level 4 – 6 m higher
We’ve built this civilisation in an unusually stable, temperate period. It wasn’t always thus.
Conclusion: The earth’s climate is a naturally unstable system. We’ve thrown a large CO2 bomb into it. It has now gone off.
?
-50
0
50
100
150
200
250
300
350Australia’s Carbon Emissions
Million tonnes/year
Adapted from Department of Climate Change, 2008
Greenhouse emissions per person -2003
~26t CO2-e/person
~4 t CO2-e/person
Business Case For Managing Carbon
Commercial Drivers
Regulatory Drivers
MEGA COMPANIES ARE ACTING
Commercial Drivers.
• Investors, employees and customers
• GM to sell Hummer brand, Mitsubishi closes in Adelaide
• SUV sales down 60% in US since 2002
• ANZ had a divorce from Gunns (costs $1M/day)
• Tesco & Walmart environmental disclosure requirements
• Health & beauty industry destocking harsh chemicals
Consumer AwarenessReduce your carbon emissions - Walk to the pub
Regulatory DriversNational Greenhouse Energy Reporting Act
(NGERS)
• Mandatory reporting of carbon emissions
• Begins 1st July 2008.
• Only 700 to 900 companies, 300 first time
reporters
• Corporate penalty is $220K, CEO’s penalty is
$44K
• “operational control”?
• The fuel you burn (petrol, gas, diesel) creates scope 1 emissions
• The electricity you buy creates Scope 2 emissions
• The carbon emissions embedded in the goods and services you buy are Scope 3 emissions
Emissions Trading (1)
• Make bad things more expensive than good things
• Carbon markets are created by governments – they
are not real
• Government mandates a cap (tonnes of CO2/year)
• “Liable parties” are polluters (defined by size and
emissions source)
Emissions Trading (2)
• All direct emissions from facilities above 25K tonnes/year in the following sectors
– Power stations yes – Manufacturing yes– Mining yes– Construction & property yes– Transport probably– Waste not sure– Agriculture & forestry too hard for now
How does emissions trading work?
1. Polluters buy permits (or credits) from the government to cover emissions
2. May be some free permits3. Polluters then surrender permits to governments to
cover emissions & 4. Can sell any surplus to other polluters who are short
5. Some activities like forestry may create extra permits
6. Reducing emissions saves $$ but no credits created
What it means for business
• If you are not a “liable party” (one of the top 500 -1000 emitters) then you won’t need permits
• Increase costs of:energy use - reduce or switch to cleaner fuelscarbon intensive goods and services
Where will it hit hardest?• Large impact from carbon price
– Coal, aluminium, steel, cement
• Moderate impact from carbon price– Oil, Gas, transport, paper
• No carbon price – Solar Water Heating (much cheaper soon)– Wind & Solar electricity (needs to get cheaper)– Geothermal (big potential – but not yet)– Nuclear, hydro (other impacts)– Timber– Recycled products
Carbon Price in Energy Costs
• Caps may start in 2010 on biggest polluters
• $20/tonne of carbon
5c per litre of fuel and
20% increase in Victorian electricity retail price
• $40/tonne of carbon
+10c litre
+ 40% Victorian electricity
Carbon Management for Business
1. Reduce energy use Improves profitability everyday
2. Cleaner fuels Increases costs. Depends on energy intensity of your business
3. Carbon Offsets Increases costs. Only if clients want it.
Carbon Accounting for Business• Use existing data systems for collecting energy data
(finance or inventory)
• Convert (kwh, Mj, litres) from the invoice data to carbon units (www.greenhouse.gov.au)
• Build into existing reporting and performance management process
• Build an emissions reporting system that suits you before your clients build one that doesn’t
Energy Efficiency Pays
• Compact fluro globes ~$6 each
• Each saves $15 each year
• Household saving in first year = $135
• Then saves $225/year for 5 years
Reduces about 1.4 tonnes CO2
15 lights in an average house
Also business opportunities in cutting carbon
Easy Being Green cut over 4 million tonnes in 18 months
But you have to understand the risks
But you have to understand the risks
2006/2007: Weekly Installation Sales (no. of globes)
0
20,000
40,000
60,000
80,000
100,000
8-Oct
22-Oct
5-Nov
19-Nov
3-Dec
17-Dec
31-Dec
14-Jan
28-Jan
11-Feb
25-Feb
11-Mar
25-Mar
8-Apr
22-Apr
6-May
20-May
3-Jun
17-Jun
1-Jul
15-Jul
29-Jul
12-Aug
26-Aug
9-Sep
23-Sep
7-Oct
21-Oct
4-Nov
18-Nov
2-Dec
16-Dec
30-Dec
Week Ending
Glo
bes
per
wee
k
Easy Being Green Weekly Globe Installations
Annex 3
140 redundancies as carbon price dropped 50%
The Carbon Neutral TrapKnow what you are digging into
Take Home Messages• Saving energy will make even more money now
• Action matters – not targets• Carbon accounting will matter soon but it isn’t hard. • Businesses can be very influential as consumers/
clients and advocates
• Develop your sustainability strategy before someone else does.
Innovation Pays
Most of the time