Issue 421 ,
Friday 21 July 2017
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In this issue
[1]
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.
[2]
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.
[3]
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.
[4]
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.
[5]
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.
[6]
Editor:
Kim Berry. Email:kim.berry@thomsonreuters.com;
phone (02) 8587 7679. Managing
Editor: Helen Jones. Twitter: @CarbonExtraTR
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