Transcript `on hold` What is an Engineer to do?

The CPRS is ‘on hold’
What is an Engineer to do?
Presentation to 2010 National Local Government Asset Management
and Public Works Engineering Conference
Dominique La Fontaine
Principal Consultant, Climate Change Strategy
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• pitt&sherry
• Snapshot of climate change policy &
regulation in Australia
• Post Copenhagen snapshot
• What asset managers and engineers do
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Who does pitt&sherry service?
pitt&sherry is a leading Australian professional
services company, founded in 1963 and
currently employing approximately 180 people
in five offices located around Australia
 Industrial infrastructure
 Land Transport
 Community infrastructure
 Climate Change and Sustainability
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Australia’s Emission Reduction
Commitment
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Energy Efficiency
Opportunities Program
• Introduced in July 2006 to improve
identification, evaluation and public reporting
of energy efficiency opportunities by large
energy using businesses.
• Corporations that use more than 0.5 pj/annum
(equivalent to a $1.5 million gas bill,
$11million diesel bill).
• Must undertake rigorous assessment of EE
opportunities with up to 4 year payback
period.
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Prime Ministers Task group
on Energy Efficiency
• Energy efficiency is a key plank of the Rudd Government's climate
change agenda
• Nine industry and non-government sector experts
• Reduce emissions and move Australia to a low-carbon economy.
• The role of the Task Group is to:
– report on the most economically and environmentally effective
mechanisms to deliver major improvements in Australia's
energy efficiency; and
– consult with industry and community groups and seek their
input on policy ideas and mechanisms to drive these changes.
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Renewable Energy Target
• Expand renewable energy in Australia
four fold
• $20 billion on investment, most of this
in large scale infrastructure
• REC penalty price $65MWhr
• Recent modifications to enhance
operation of the market
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National GHG and
Energy Reporting System
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Single, national reporting framework for reporting of energy
consumption, production and GHG emissions
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If an individual facility meets any one of the following:
– greenhouse gas emissions of 25 kilotonnes of CO2-e (scope 1
and scope2)
– energy production of 100 terajoules
– energy consumption of 100 terajoules
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Higher thresholds apply for a corporate group
Non compliance is penalised, CEOs personally liable
Contractor and subcontractors that undertake activities
associated with a facility will be asked to report emissions and
energy produced and consumed
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The Carbon Pollution Reduction
Scheme on hold for now
 Cap emissions allowed per annum to establish a
‘market’ for Australian emission units (AEU).
 Market will be sheltered by capping AEU price at $10
for the first 12 months then $40/tonne to increase
5% real per annum from 2012-13 until 2015-16.
 The Government will issue, mostly via monthly
auction, an equivalent quantity of AEUs. One
quarter will allocated free of charge.
 Cover 75% of Australia’s emissions through
mandatory obligations for approximately 1000 major
polluting companies (a small percentage of
Australia’s 7.6million businesses)
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The Carbon Pollution Reduction
Scheme on hold for now
 Liable entities must obtain and submit one AEU
for each tonne of C02-e they emit.
 Costs will be passed downstream to other
business and consumers through increased
prices.
 Business can bank and borrow AEUs indefinitely.
 Any individual or business can hold and trade an
AEU.
 Only AEUs and eligible international units
accepted for voluntary surrender
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CPRS Transitional Assistance
• Entities that are ‘trade exposed’ and highly
emissions intensive will be provided with
assistance.
• 95% and 65% free AEUs depending on emissions
and trade exposure.
• Initial assistance rate will decrease by
1.3%/annum for 10 years
• $3 billion of EITE assistance
• Electricity Industry Assistance
• Climate Change Action Fund
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May 2010 budget
$5.1 billion Clean Energy Initiative includes:
May 2010 budget announcement
Renewable Energy Future Fund $652.5 million over four years
• development and deployment of large and small scale renewable
energy projects, for example further investments in geothermal,
solar and wave energy; and
• take-up of industrial, commercial and residential energy
efficiency, helping Australian businesses and households reduce
their energy consumption.
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Coalition policy …
NGER liable business can reduce their emissions below their individual baseline
(‘historic average’) will be able to offer this CO2 abatement for sale to the government
in tender process
Expert panel to assess tenders, successful tenders will
1. reduce CO2 emissions;
2. deliver additional practical environmental benefits;
3. not result in price increases to consumers;
4. protect Australian jobs; and
5. not otherwise proceed without Fund assistance.
Small businesses and other entities not covered by NGERS can ‘opt-in’
Businesses with an emissions level above ‘business as usual’ levels will incur financial
penalty.
Value of penalties - sliding scale at levels commensurate with the size of the business
and the extent to which they exceed their ‘business as usual’ levels. Penalties will not
apply to new entrants or business expansion at ‘best practice.’
Value of the penalties will be set in consultation with industry.
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Coalition Policy?
Target - 5% by 2020 of 1990 levels
Establish Emission
Reduction Fund to pay
for abatement through
soil carbon and other
direct measures
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Industry Measures
AGIC – Sustainability Rating Tool
Engineers Australia Sustainability Charter
• Objectives for sustainable development
• Realisation of aspirational objectives
Roads Australia – Sustainability Chapter
Draft Sustainability Policy
• agree on a common set of national sustainability performance
indicators
• identify opportunities to reduce both greenhouse gas emissions and
unsustainable use of other resources such as water and pavement
materials
• address the impacts of a changing climate on performance of our
roads
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Carbon Disclosure Project
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Independent not-for-profit organisation
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2500 companies in 60 countries measure and disclose their
greenhouse gas emissions and climate change strategies through
CDP, to set reduction targets and make performance improvements.
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Responding suppliers include BASF, OneSteel, Intel Corporation,
Acer, Foxcom Technology, Siemans, Citroen, Pepsi, Cadbury’s, NEC
and Phillips
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“Between 40-60% of organisations’ total greenhouse gas emissions are
recognised as residing outside their direct control and are found within the
supply chain through activities such as processing, packaging and
transportation. It is therefore critical that senior management understand
climate change risks within their supply chain and how suppliers are
managing those risks.”
Carbon Disclosure project
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Copenhagen Accord
• Raised climate change to the highest level of government.
• Political consensus on the long-term, global response to climate change
• Deep cuts in global emissions are required to stabilize greenhouse gas
concentration to prevent dangerous anthropogenic interference with
the climate system,
• Increase in global temperature should be kept to below 2 degrees
Celsius
• Cooperate in achieving the peaking of global and national emissions as
soon as possible, recognizing that the time frame for peaking will be
longer in developing countries
• Pursue various approaches, including opportunities to use markets, to
enhance the cost-effectiveness of and to promote mitigation actions
• Establish a comprehensive adaptation programme including international
support
• $100 billion of funding for investment in low-carbon economic growth in
the developing nations to assist their transition
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Copenhagen Accord
Commitments so far equate to 80% per cent of
global emissions from energy use
• 41 industrialised countries’ economywide targets
• 35 developing countries’ nationally
appropriate mitigation actions
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Grocon’s Pixel
Carlton Brewery
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Infrastructure and climate
adaptation
Strategies to understand and manage the risk to asset
performance and value posed by the projected
physical impacts of climate change
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Lower rainfall
More frequent intense storm activity
Higher temperatures
Sea level rise
Inundation
How are these risks being analysed and risk
management strategies being disclosed to your
stakeholders?
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Don’t be sidetracked!
• Internationally – business is being proactive,
governments are pressing ahead with regulation
• Economies are understanding carbon
competitiveness
• Efforts to reach a binding international agreement
continue unabated
• Measurement and reporting obligations are well
entrenched for Australia’s higher emitters and
energy consumers
• Energy efficiency regulation is being enhanced
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Don’t be sidetracked!
• Carbon pricing (tax or market based) will increase
the cost of emissions intensive products and
services
• Opportunities exist for companies that embrace the
challenge
• Energy costs increasing – regulatory uncertainty
clean energy initiatives, lack of investment,
demand growth
• Community awareness about climate change and
sustainability is driving consumer and shareholder
expectations, client demand, corporate image
concerns, supply chain issues
• Climate change is a real risk that must be managed
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Questions for asset managers
and engineers
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Are you familiar with your organisation’s sustainability and climate
change objectives – are they measurable and relevant to your
projects?
Do you know how to operationalise these objectives for the assets
you manage?
Are you measuring the carbon footprints of your asset construction
and operation?
Do you use a decision making framework that benchmarks against
sustainability indicators in addition to performance, capex and opex?
How will the evolving climate change regulatory framework affect
your business and your industry
What funding opportunities exist to help with sustainable
investment?
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Questions for asset managers
and engineers
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How do you produce tenders that incentivise sustainable
resource use, low carbon and clean energy. How do you
evaluate and reward these proposals? How do you submit
tenders that leverage these aspects?
How will a carbon price and higher energy prices impact directly
and indirectly through the supply chain?
Do you know enough about low carbon and energy alternatives –
their availability, performance, cost?
How are competitors, contemporaries and clients addressing
sustainability and climate change challenges?
How do you communicate positive action to stakeholders?
Remember being proactive makes good business sense!
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Dominique La Fontaine
Principal Consultant, Climate Change Strategy
[email protected]
www.pittsh.com.au
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