New drivers towards energy efficiency

Matt Shorten, Managing Director of Balance Carbon, has a message for Australian businesses: “Establish and implement an emissions-management strategy now or pay spiralling costs in the decades to come. Businesses can no longer afford to hesitate in creating changes to meet the increasing pressures associated with an imminent carbon price across the Australian economy.”

Australia’s export markets are also increasingly focusing on emissions and are already applying pressure to make our exporters accountable for the emissions resulting from the production and transport of their products.

In essence, Shorten says the emissions market is coming at Australian business in two directions - from domestic and foreign customers of our goods and services imposing their carbon reduction commitments and from the federal government’s commitment to a carbon price in our economy through an ETS scheme or similar.

No matter where the pressure comes from, Shorten predicts carbon costs will likely spiral dramatically upwards: “If you consider that the current debated cost per tonne of CO₂ under the first year of an Australian ETS is $10, you can expect that will double and potentially triple by even 2015. It’s these kinds of figures that start to drive a company towards energy and resource efficiency.”

Shorten’s take on the industry of carbon emissions management was presented in a recent symposium conducted by the Norfolk Group of engineering companies in Brisbane on the energy industry. The event was hosted by Senator Santo Santoro. Norfolk includes engineering businesses such as O’Donnell Griffin and Haden.

Shorten points out that a whole range of companies that produce 125 kilotonnes of CO₂ within a fixed financial year already face mandatory reporting and disclosure, under the federal government’s 2007 NGER Act. In the financial year of 2009-2010, that legislation’s threshold (above which a company must disclose its emissions) falls to 87.5 kilotonnes, the following year of 2010-2011 to 50 kilotonnes.

“So you can see that the net of companies that must report gets wider from a legislative perspective,” he says. “But the good business of managers creating systems to measure, manage and reduce greenhouse gas emissions is not just about direct financial cost per tonne, nor about avoiding legislative penalties. In many industries, where other countries have emission reduction commitments already in place, to maintain market access, an Australian company can simply no longer ignore it.

“Overseas competitors are finding it a useful way to block imports, so Australian businesses and industries in that position of needing to keep their way in, simply have to have an emissions figure and various management commitments sorted out.”

Shorten, whose company BalanceCarbon provides carbon management consultancy to business, cites the agribusiness sector including wine, fishery and even textile industries as prime candidates in this arena: “We have one client who has been approached by Armani and Marks & Spencer who want the top-quality Australian wool, but will only purchase it with an emissions offset price that covers the raising of the sheep, the shearing, super washing, spinning, dyeing and freighting. Supply chains are now asking companies to supply that offset figure.

“And in terms of carbon labelling, the UK company Tesco, for example, is beginning to require product suppliers to label their products, so a packet of chips for example will tell you how many grams CO₂ there are per gram of product. This gives consumers the opportunity to make an informed decision.”

Frank Halman, convenor of the seminar series and O’Donnell Griffin National Service Business Development Manager, adds: “As Matt quoted in his presentation, a manager doesn’t have the luxury any more of querying the reality of climate change. The market has already decided it’s real and companies must adapt.”

“A big part of the process is understanding what the market drivers are,” concludes Shorten. “Yes, there are some pretty big risks, but there’s also some pretty significant opportunities in a carbon-constrained environment.”