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Sent:                               Friday, 21 July 2017 4:06 PM

Subject:                          Carbon Extra 421: Big business risks being left behind: ARENA; Accept new energy landscape: Woodside CEO; & More ...


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Thomson Reuters Australia

Issue 421 , Friday 21 July 2017

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In this issue

Big business risks being left behind in renewables uptake: ARENA


CEFC appointments announced


Woodside CEO: Gas sector 'accept' renewables, be part of the solution


Acting Qld energy minister announced


Mining sector risks getting left behind: CDP


Editorial team



Big business risks being left behind in renewables uptake: ARENA

Big business in Australia is being left behind by its international counterparts and is out of touch with customers when it comes to renewable energy, Australian Renewable Energy Agency (ARENA) says.

Its Australian big business missing out on renewable energy opportunitiesreport found only 46% of major Australian companies were actively procuring renewable energy.

In the US, almost two-thirds of Fortune 100 and nearly half of Fortune 500 companies have set ambitious renewable energy or related sustainability targets. Seven of the world's largest companies are aiming to be powered 100% by renewables in the medium to long-term.

"Australian businesses have nowhere near this level of uptake," the report said. ARENA interviewed executives from more than 90 of Aust's largest private and public companies (ASX200 and top 200 private) to find out why.

ARENA also commissioned an IPSOS poll of more than 1,000 Australians which found 80% thought big business should be using renewable energy. More than three quarters (76%) would choose a product or service made with renewable energy over a comparable one that wasn't. Four out of ten indicated they would pay a premium.

But 57% of businesses ARENA surveyed believed their customers had no expectation around renewable energy.

While 46% of big businesses use renewable energy, their usage was low. Renewables made up less that 10% of the energy mix for the majority (61%) of those businesses, the report found.

Ignorance and confusion sees many miss out on renewable opportunities

There was a "substantial knowledge gap among many corporates about the true cost savings of, and demand for, renewable energy that's preventing them from making rational long-term investment decisions in the best interests of both shareholders and customers", ARENA said.

Confusion among some Australian corporates about the costs and benefits of renewables was also at play. Companies planning to use more renewable energy said they were doing so for the financial benefits, while businesses with no intention to use renewables said it was because it was too expensive.

This mismatch may be simply a case of familiarity, the report said. Companies already using renewables would likely have done in-depth cost-benefit analyses and would be more familiar with the financials compared to those that have never used it. And companies with no intention to use renewables did cite lack of knowledge as one of their top three barriers, it said.

A significant proportion of Australian corporates were missing an opportunity to capitalise on the considerable medium to long-term benefits from renewable energy, ARENA said. "If they stand on the sidelines for too long, they risk falling behind their competitors, both locally and internationally, in terms of saving on energy costs, reaching sustainability targets and meeting changing customer expectations."

The report said there were five steps to building a renewable energy business: start with a C-level mandate; integrate energy into the company's vision and operations; track energy use at all levels; shift to renewables and other advanced technologies; and engage key stakeholders (including customers) around energy.


CEFC appointments announced

The Federal Government has announced new appointments to the Clean Energy Finance Corporation (CEFC) Board. Finance minister Mathias Cormann with environment and energy minister Josh Frydenberg announced Steven Skala as the new CEFC chair. Skala is vice chairman, Australia of Deutsche Bank AG. He is a former director of Aust Broadcasting Corporation and chair of Film Aust.

Three new board members announced

Leeanne Bond, Samantha Tough and Nicola Wakefield Evans will join the CEFC board (above) as members. Bond has extensive experience in the water and energy sectors. She is currently on the board of the Snowy Hydro and deputy chair of Territory Generation. Tough has worked in energy and resource industries in WA. She is on a number of boards including Synergy and Saracen Holdings Ltd. Wakefield Evans is a leading corporate and commercial lawyer and currently on the board of Macquarie Group, BUPA Aust and Lendlease Corporation. The final board vacancy would be filled in coming months.


Woodside CEO: Gas sector 'accept' renewables, be part of the solution

It is time for the gas sector to accept the rise of renewables and work out how the industry can "play with that", Woodside CEO and MD Peter Coleman says.

Speaking at the World Petroleum Congress in Istanbul on July 13, Coleman said the rise of renewables and heightened climate concerns underlined how important it was for oil and gas producers to be part of the debate about the future energy mix.

"As uncomfortable as it may sometimes be for oil and gas producers, we need to be conscious of how we develop resources in a carbon-constrained world. We need to contribute to not only the social debate but also the solution," Coleman said.

"[W]e need to acknowledge the rise of renewables. We need to accept it, rather than deny it. The pace of change we can debate. There are, of course, limitations but those will be overcome. Humans have done that consistently over time.

"Things we see as limitations today will be opportunities for someone tomorrow. People will always get in and solve a problem, particularly where there's a financial incentive. Renewables will play a significant role into the future and we need to think about how we play with that."

Economic rationalists "like to say it's difficult to see how renewables come into the marketplace", Coleman said. But for countries not rich in resources there is motivation, be it geopolitical or social, to make or incentivise investments that "may or may not make the grade when it comes to investment return", he said.

It's "a social investment return that goes beyond normal economics we consider as we make our investments".

Gas is prime energy source to partner renewables

Coleman said: "It's a world that clearly has a desire for more gas in its energy mix as countries strive to reduce emissions, not just for pollution but also for the health of their citizens and the affordability of energy.

"We need to think about our place in the broader global energy mix, and acknowledge that a change is underway with the rise of renewables, opening up both challenges and opportunities."

The recent energy security review by Chief Scientist Alan Finkel proposed a generator reliability obligation. It would require new generators to ensure they can provide dispatchable power.

For Coleman, this presents an opportunity for gas-fired power to complement renewable generation. "Battery technology will continue to develop – it has some limitations – and the reality is that renewables will need to partner with another source of energy source and gas is the prime energy source for that partnership."

There is a need to "embrace innovation in technology and its applications. I'm not talking just about improvements in equipment. I'm talking about innovative contemporary technologies: data analytics, cognitive computing, robotics and additive manufacturing. These are the things that will start to differentiate companies."

Without greater sophistication and flexibility, the opportunity will pass. "[C]ustomers require energy and if our energy is not available, they will simply go somewhere else," Coleman said.


Acting Qld energy minister announced

Qld Treasurer Curtis Pitt will be acting energy minister, Premier Annastacia Palaszczuk says. Mark Bailey was stood aside from the portfolio on July 19 after the Crime and Corruption Commission (CCC) referred his deactivation of a personal email account to the State Archivist. CCC said: "[A]s the only conduct the CCC considers raises a reasonable suspicion of corrupt conduct relates to the treatment of public records, the CCC has referred the matter to the State Archivist for investigation." On July 20 Palaszczuk reported the CCC had said it identified during its review of the emails a number of other ministers using private email accounts. No corrupt conduct was identified, it said.


Mining sector risks getting left behind: CDP

Mining companies remain heavily dependent on fossil fuels despite some sourcing half their energy consumption from renewables, the latest report from CDP says.

The Digging Deepreport analysed a $US294bn market cap grouping of the world's 12 major publicly-listed mining companies.

Up to $US16bn generated in emissions

The companies (above) represent 66% of the global seaborne market in iron ore, 53% in copper, 42% in metallurgical coal and 28% in thermal coal. The report showed they generate up to $US16bn in emissions costs by passing down the risk in their value chain.

Mining companies were spending almost half of their capital expenditure on low-carbon materials such as copper and nickel but continued to spend more than a quarter on fossil fuels, it said. There were signs of strategic moves away from thermal coal but this was offset by twice as much oil and gas production over the last six years, CDP said.

The mining industry has significant potential exposure to carbon emissions regulation in its value chain. Scope 3 emissions from downstream customers are estimated at an average of 10 times and up to 30 times higher than operational emissions, it said.

CDP CEO Paul Simpson said: "The mining sector must take stock and not risk being left behind in the global transition towards a low-carbon economy. Miners depend on continuing demand for the commodities they supply and the countries consuming the most commodities are making significant changes in addressing climate change."

Simpson said this was most "acute" with China. It could play a "pivotal role" in the demand for low-carbon commodities and disrupt demand in seaborne bulks as it adopts a leadership role in climate change regulation. Its proposal to price carbon signified a strong transition to a low-carbon economy, Simpson said.

Highest ranked companies on carbon-related metrics were Vale, Boliden and BHP. Lowest ranked companies were Freeport-McMoRan, First Quantum Minerals and Vedanta Resources. Glencore made the largest gains while Teck and Vedanta Resources had the largest falls in league table rankings relative to 2015.

The research also found 27% of mining production, representing around $US50bn in annual revenue, would be exposed to significant water stress such as drought and shortages by 2030. Major mining regions such as Chile, Australia and South Africa were likely to be the most adversely affected, CDP said.


Editorial team

Editor: Kim Berry.; phone (02) 8587 7679. Managing Editor: Helen Jones. Twitter: @CarbonExtraTR




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