News & Events

The shelving of Australia’s carbon pollution reduction scheme and parliamentary delay over proposed renewable energy targets has created business uncertainty and prompted some business leaders to question the value of continuing to invest in renewable energy and carbon abatement initiatives.

AGL Energy chief Michael Fraser has warned that Australia’s reputation as a stable investment destination was being threatened, echoing similar concerns to those that followed the failure of the Copenhagen climate talks, which dashed hopes that an international carbon-trading regime would be established any time soon.

The CPRS decision could also cause job losses in banks and big companies that were preparing to trade carbon permits ahead of the promised mid 2011 commencement. "Industry must be very frustrated,” warned prominent Australian National University economics professor and central bank board member Warwick McKibbin. “This is the worst possible outcome for them.”

The prospect of green energy targets and a price or tax on carbon have seen hundreds of large established companies sink billions of dollars into low carbon and green energy programs, while venture capital has backed hundreds of start-ups hoping to profit from a transition to a low carbon economy.

Therefore, the prospect of further regulatory delay and policy incoherence have refocused interest in the business drivers for tracking and improving energy and environmental performance, particularly among companies that are not compelled to do so by compliance reporting regimes such Australia’s National Greenhouse Energy Reporting System.

Certainly, many leading organisations view energy efficiency, carbon abatement and environmental performance reporting as essential to their broader strategic goals in areas such as risk management, business continuity and business transformation. Others have been spurred into action by shareholder agitation, the greening of large investment and pension funds, and the rising influence of initiatives such as the Carbon Disclosure Project.

Meanwhile dozens of large listed multinationals have already demonstrated that greener business behaviours translate to a better bottom line: companies such as Walmart, Target, Cisco, Campbell’s Soup, Hilton, Ford, Chrysler, General Mills, TXU Energy have reported saving tens of millions of dollars through initiatives such as using renewable energy, energy efficiency and recycling schemes.

Two years ago the Australian company Metcash Trading set a goal of becoming more environmentally sustainable. Today, this distributor of food and fast moving consumer goods is piloting energy and water-saving programs that could save the company millions of dollars in the cost of doing business.

The company’s Group Sustainability Manager Louise Rhodes leads the corporate sustainability strategy across four business groups. Her appointment was motivated by a desire to better measure and manage the company’s energy use and carbon emissions.

“Environmental sustainability is taken seriously at Metcash,” says Rhodes, who says it is viewed in the same context as risk management and business continuity. Indeed, Metcash CEO Andrew Reitzer chairs the company’s Environmental Sustainability Committee and its members include senior management.

Metcash is assessing the impact of new capital works designed to shrink energy and water use at its nine heaviest consumption sites. It will also use an energy and carbon intelligence system to track energy and cost savings from a new lighting modification pilot at one of its Campbells Cash and Carry stores.

The lighting pilot anticipates annual power use savings of 72,266 kWh, or 58.75 tonnes of Co2-e. It is expected to slash $8,670 from the store’s annual power bill and achieve payback within 3 to 4 years.

“If the pilots prove successful, Metcash will consider rolling out a national capital works program that could save us millions of dollars in lower power and water bills each year,” Rhodes says. “Our key focus is to make energy savings because electricity represents a majority of the company’s carbon footprint”.

Carbon accounting firms are among the hundreds of companies to have mushroomed in response to new regulations and the greening of business. Indeed, some industry reports suggest the nascent carbon accounting sector is enjoying impressive growth.

Verdantix has predicted that the carbon management software industry is set to rise from US$120 million in 2011 to US$250 million in 2012, as companies realise that calculating carbon footprints with spreadsheets and utility bills are suboptimal. A recent survey by AMR Research identified more than 150 carbon accounting providers in the US alone.

Tracking and reporting on energy, water, fuel and carbon emissions pose enormous challenges for many companies and organisations, according to David Solsky, whose company Global CarbonSystems has opened offices in New York and London.

“Industry reports suggest thousands of companies are still calculating their energy, fuel, water and carbon footprints manually with spreadsheets and other ad hoc methods,” he says.

“Carbon management is chiefly an energy data issue. The most complex and labour intensive aspect of developing a carbon footprint is establishing streamlined data collection processes. Enterprise carbon accounting vendors that have sophisticated data capture and management solutions will have a strong market advantage in this industry.

“Those that are doing well can remove this pain and bring clarity – by eliminating the hassle of data capture and giving clients financial grade information that paints a clear picture of energy, emissions and other environmental metrics.

“The very best ensure clients have data to verify the ROI of their environmental investments so they can cost-effectively manage business transformation for a low carbon economy.

“That’s where we pitch ourselves, and we’re finding significant interest among the large voluntary reporters – organisations that aren’t caught by compliance reporting but who want an enterprise-level system to support their carbon abatement, sustainability and corporate reputation programs.

“That said I remain convinced that compliance reporting of energy and carbon emissions will remain a significant driver for carbon accounting services despite continuing uncertainty around emissions trading and renewable energy targets.”

Since April 1, the UK’s mandatory CRC Energy Efficiency Scheme has required some 5,000 public and private sector organisations to record and monitor their CO2 emissions before purchasing allowances equivalent to their emissions each year in a 'cap and trade' mechanism.

In the US, regulations such as the EPA’s Mandatory Reporting of Greenhouse Gases Rule and legislation to create greener buildings in New York City are setting foundations for a significant new compliance-based reporting market.

“New York Mayor Michael Bloomberg wants his city to be a beacon of energy efficiency and emissions reduction efforts,” says Solsky. “In 2007 he released the first comprehensive inventory of greenhouse gas emissions in New York’s history. Then he championed a national effort that got 30 major US urban centres to report to the Carbon Disclosure Project and last year he signed a package to create greener buildings in New York and set the city a target of reducing its carbon footprint by 30 per cent by 2030.

“That’s why we opened our US operations in New York. Bloomberg’s vision and commitment is backed by a progressive legislative platform. And that makes me confident that our company do business in New York and use it as a platform for US expansion.”