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Insert site / company name and logo here Embedding Energy Management – Carbon introduction Embedding Energy Management is available from www.sustainabilityskills.net.au Manufacturing Skills Australia 1800 358 458 [email protected] www.mskills.com.au © 2013 Manufacturing Skills Australia. All rights reserved Insert presenter/s names here The material provided in this presentation has been produced in conjunction with our partner Energetics Pty Ltd. This publication was funded by the Australian Government through the Workforce Innovation Program under the title 'Carbonproof for Foundries'. What is the problem? • • Climate change Resource depletion – Energy – Water – Materials • • • Increased emissions, contamination & waste Reduced air quality Loss of biodiversity How is economic activity affected by climate change? Agriculture, tourism and insurance •Directly affected - more droughts, floods and bush fires. Carbon taxes, energy tariffs emissions trading. •To address climate change, emissions must be reduced Impact upon other sectors Indirect impacts include •Energy sector costs flow through to energy intensive sectors – mining, manufacturing •Reduced demand for products •Disruption to business activities •Potential litigation •Brand and reputation risk Longer term global impacts potentially: •Large scale refugee movement •Political instability •Social unrest. Risks specific to Australia Energy pricing Access to Water • Low energy costs, greenhouse intensive coal sources • Australia is the driest continent on earth • Costs to increase – oil prices, carbon, lack of investment, drought conditions • Many industry sectors are dependent on access to water for operation. Regulatory uncertainty • Carbon Price, leading to Emissions Trading. • Uncertainty - difficulty in longterm infrastructure/ asset planning Market related risks •Climate change risks in other countries may differ remarkably – regulations, consumer behaviour Things to consider when managing carbon – organisational boundaries Decisions must be made as to how emissions will be aggregated. Three approaches include: Operational control is default •Equity share boundary! – required for reporting to •Financial control Australia’s National Energy and •Operational control Greenhouse Reporting System (NGER) What is operational control? Defined in Australian law as the right to introduce or implement operating, health and safety or environmental policies Things to consider when managing carbon – operational boundaries Scope 1 “Fuel You Burn” Scope 2 “Fuel burnt for You” LPG Nat Gas Petrol Process emissions Electricity Scope 3 “Emissions from services you use and products you produce” Reporting / reduction programs • NGER (Australian) – Mandatory reporting of national energy consumption and production and greenhouse gas emissions above legislated thresholds. • Carbon Price (Australia) 1 July 2012 - $23/tonne CO2-e. Emissions trading scheme (variable price) from 2015. • EEO (Australian) – Mandatory identification of energy efficiency opportunities by energy users above legislated thresholds. • CDP (International) – Voluntary requests for greenhouse and energy disclosure from over 2,500 organisations. CDP acts on behalf of 655 global institutional investors. NB: No longer considered “voluntary” for Australia’s top 200 companies The business case for carbon management– emissions & profit Figure 8: Carbon intensity by sector (VicSuper Carbon Count 2009) The business case for carbon management – carbon management by suppliers Ford looking to reduce carbon footprint in supply chain: e.g. Toyota global requirements – improving environmental performance. Suppliers to improve in: • CO2 emissions • Water consumption http://www.toyota.com.au/toyota/sustainability/commu nity-and-stakeholders/suppliers • 2011 survey of 128 global suppliers • Represent $65bn of annual purchases • Goal to understand better the supply chain carbon footprint • Translate to risks and opportunities • Survey suppliers annually http://reviews.cnet.com/8301-13746_7-20118783-48/ford-looks-to-reducecarbon-footprint-in-supply-chain/ The business case for carbon management – Carbon Price Q: Who pays the Carbon Price? Some will pay directly eg. Large users of coal such as coal fired power stations Some will pay indirectly eg. Consumers of electricity / smaller users of fuels Think petrol excise – you pay, but payment collected upstream Buyers of goods, esp energyintensive products or materials Risk and opportunity identification These include: • Physical – damage to functioning of assets / take advantage of shifting climatic zones • Regulatory – exposure to / seize opportunities around: - current and future requirements; - administrative burden; - direct and pass-through carbon price costs (carbon price and trading) • Litigation – CEO liability or opportunity (NGER and EEO) • Competitive – business environment will change – advantage or risk? • Reputational – information is in public domain The business case for carbon management Experience shows that sustainability makes good business sense • • • Embedding sustainability within an organisation’s broader business strategies frequently results in organisational and technical innovations that generate both top- and bottom-line returns. Reducing inputs to a business, due to a carbon-constrained economy, reduces costs. Reducing inputs requires new or improved products or even new business lines. Additional slides for management presentation Insert following slides as required using data from “What's my footprint “ tool Summary graph from baseline tool Insert summary graph from baseline tool - Example Financial Year 2012 Energy Usage, Resources Cost and GHG Emissions 399 5,771 GJ $229,441 29,664 GJ $186,875 7,334 $906,400 48,135 GJ Energy Natural Gas $300,844 2,465 Cost Tonne CO2 -e Electricity Diesel Water The size of your footprint Insert summary graph 1 from inventory - Example Total annual emissions (kt CO2-e) 8 7 6 5 4 3 2 1 0 Scope 1 v Scope 2 emissions Insert Summary graph 2 from inventory - Example Scope 2 emissions 76% Scope 1 emissions 24% Energy use by emissions source Insert summary graph 3 from inventory - Example Annual energy consumption (TJ) 60 50 40 30 20 10 0 Carbon price impact Insert summary Slide 4 from inventory - Example Carbon liability under 3 pricing scenarios $350 $300 $250 Unknown financial impact without further and site $200 $150 Indirect liability Direct liability $100 Total $50 $- Scenario 1 Tax ($10/tCO2-e) Scenario 2 Permits: 5% target ($23/tCO2-e) Scenario 3 Permits: 25% target ($32/tCO2-e) Scenario 4 Regulation without price