Category Archives: Energy Efficiency

Future policies will affect our carbon emissions – guidance for upcoming federal election

As per the latest IPCC report on climate change, global warming of even 1.5 degrees Celsius can lead to severe consequences, let alone global warming of 2 degrees.

Limiting global warming to 1.5°C will require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities. Global net human-caused emissions of carbon dioxide will need to fall by about 45% from 2010 levels by 2030, reaching net zero around 2050.

These rapid and far-reaching transitions need to be achieved with the help of individuals, businesses and government.

Australia will elect its leaders in the upcoming May election. Climate change is a decisive factor for many, and so we have summarised the climate change policies of the two major parties.

Australia’s emissions

Before we compare the two parties’ policies on climate change, let’s have a look at Australia’s emission sources first. The single biggest source of our emissions is electricity consumption, followed by transport and agriculture.

Australia’s emissions sources
Figure 1: Australia’s emissions sources

Our commitments under the Paris Agreement

Australia ratified the Paris Agreement on 6 November 2016. Initially, we need to achieve a 26-28% reduction target from 2005 levels by 2030, which is our Nationally Determined Contribution (NDC) under the Paris Agreement.

However, it is expected that over time, action is ratcheted up to reach zero net emissions by 2050. This means that we will need to implement stronger emission reduction targets every five years. The first target update is due in 2020.

Australia’s reduction targets
Figure 2: Australia’s reduction targets

Australia also has a target to achieve 20% renewable energy by 2020 (the actual target is 33,000 GWh, which will likely equate to 23.5% renewables).

Will Australia meet its Paris targets?

Since the repeal of Australia’s carbon price in 2014, our emissions have been increasing and are continuing to do so.

In the following graphic, the green line shows the emission reduction we need to achieve by 2030 – to meet the intent of the Paris Agreement.

The dark line shows Australia’s emission over time, including a projection over time to 2030. Under the current policies, Australia is not on track to meet the objectives of the Paris Agreement.

The blue line shows our agreed Paris target of a 26-28% reduction.

Under Liberal policy, the 26-28% reduction will only be nominal, as left-over carbon credits from the previous Kyoto agreement will be used towards the target. This effectively reduces the actual carbon reduction we need to achieve in our economy under their approach.

Labor wants to increase the target to a 45% reduction, which brings us in line with the intent of the Paris Agreement.

Figure 3: Modified graphic from Investor Group on Climate Change via SMH
Figure 3: Modified graphic from Investor Group on Climate Change via SMH

Comparing key climate change policies of the major parties

Government policy is incredibly important in reaching our Paris goals. Governments need to implement policies that are here for the long run, credible and predictable. We compared the major parties policies on the following key climate change areas:

  • Carbon emissions and meeting our Paris targets
  • Energy efficiency
  • Renewable energy
    • Uptake of solar PV for households and businesses, battery energy storage
  • Transport energy
  • Support for hydrogen energy
  • Support the transition to a clean energy economy

The Australian Conservation Foundation, which is Australia’s national environment organisation, scored the Liberal/National Coalition 4 out of 100 on climate change action, and Labor at 56.

Let’s look at the policies of the two parties in these areas.

pdf-icon“Comparing climate change policies of major political parties”
Download the 3-page report here

100% Renewables are experts in helping organisations develop their renewable energy strategies and timing actions appropriately. If you need help with developing emission scenarios that take into account policy settings, please contact  Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

What you need to know about accounting for LGCs, STCs, ESCs, VEECs, ACCUs

100% RE - Carbon accounting for LGCs STCs ACCUs ESCs etc
100% RE – Carbon accounting for LGCs, STCs, ACCUs, ESCs, etc.

For many sustainability managers, navigating the many acronyms that exist for renewable energy certificates like LGCs and state-based certificate schemes like ESCs for carbon reduction activities can be confusing. Some schemes are federal; others are state-based. Some relate to energy, others to carbon. Some can be used for carbon reduction; others can’t. To make sense of these three and four-letter acronyms, we thought it was time to publish a blog post on this topic.

Renewable Energy Certificates (RECs)

Description

Once electricity from renewable sources enters the grid, it mixes with electrons from multiple sources, like coal-fired power plants, and becomes indistinguishable. To track renewable energy, Renewable Energy Certificates (RECs) are assigned for every megawatt hour created from renewables. Each REC is assigned its own unique number to track the ownership of the environmental (and social) benefits of the renewable energy. They can be traded separately from the underlying electricity.

Renewable Energy Certificates (RECs)
Renewable Energy Certificates (RECs)

Renewable Energy Certificates (RECs) were created to spur the development of renewable energy generation through a market-based mechanism of supply and demand. A REC has a financial value attached to it, which fluctuates depending on prevailing market conditions.

In Australia, RECs are supported by Australia’s Renewable Energy Target, which states that by 2020, 33,000 GWh must be generated from renewable sources (this equates to about 23.5% of the overall total). The scheme ends in 2030.

RECs are divided into Small Scale Technology Certificates (STCs) and Large-Scale Generation Certificates (LGCs).

Treatment

The party that owns the REC owns the claim to that megawatt hour of renewable energy. Renewable energy certificates are used to offset electricity consumption. They cannot be used to offset other emission sources like fuel consumption or Scope 3 emissions like waste or business travel.

Small-scale Technology Certificates (STCs)

Description

STCs are like an upfront subsidy for renewable energy systems that are under 100kW. They are deemed upfront and come with your renewable energy installation.

Treatment

Under previous Australian carbon accounting rules (NCOS Standard) selling the STCs (i.e., claiming the subsidy) meant that you were not allowed to account for the emission reduction. However, under revised NCOS rules, behind-the-meter energy usage originating from small-scale onsite generation systems can now be treated as zero-emissions energy, regardless of whether any STCs have been created, sold or transferred to any other party. This applies to systems installed in the past as well as future installations.

As such, you can add the self-consumption of electricity from your solar PV systems to your total demand for electricity, and this generation is treated as zero-emissions electricity for your carbon footprint. You can also use the generated renewable electricity against your renewable energy target.

Large-scale Generation Certificates (LGCs) from onsite renewable energy generation

Description

If your renewable energy system is larger than 100kW, you are eligible for one LGC for every megawatt hour your solar PV system generates. As opposed to STCs, the LGCs are not deemed upfront. You need to keep track of your renewable energy generation on an annual basis to be able to create and then sell LGCs. While LGCs currently have a much higher market value than STCs, this can change in line with the supply and demand for certificates by liable entities (like electricity retailers).

Treatment

If you sell the LGCs, you will generate income. However, if you sell your LGCs, the carbon reduction and renewable energy generation associated with the energy generated cannot be claimed.

According to the NCOS Standard, behind-the-meter energy usage originating from large-scale onsite generation systems that have created LGCs can be treated as zero-emissions energy only if the equivalent amount of LGCs are voluntarily retired. Behind-the-meter energy usage that is not matched by an equivalent amount of voluntarily retired LGCs must be accounted for in the same way as grid-based energy, and offset accordingly if a carbon neutral strategy is pursued.

Large-scale Generation Certificates (LGCs) from offsite renewable energy generation

Description

Rather than having a system onsite, you can purchase LGCs from a renewable energy project that is grid-connected, or offsite. There are principally two options to purchase offsite LGCs – either through a Power Purchase Agreement (PPA) or through a broker.

Treatment

Large-scale Generation Certificates (LGCs) are treated the same as the purchase of GreenPower® provided the certificates are retired. If you have entered into a PPA without obtaining and retiring the LGCs (purchasing the black portion only), then you cannot claim the emissions reduction/renewable energy attributes from the project.

 

A note on surplus electricity

The treatment of surplus electricity from renewable energy and batteries from the perspective of renewable energy and carbon abatement claims is complex. You can read more about this topic in our blog post at  https://100percentrenewables.com.au/how-to-account-for-exported-solar-electricity/.

GreenPower®

Description

The GreenPower® program is an independent government accreditation scheme and is recognised as the most highly regarded standard for offsite renewables in Australia. GreenPower® purchases are additional to Australia’s Renewable Energy Target, and an extensive two-tier auditing process ensures that no double counting can occur. To purchase GreenPower®, you can approach your electricity retailer, buy from an independent provider, decoupled from your electricity agreement or through a GreenPower® PPA.

Treatment

The purchase of GreenPower® is considered to be equivalent to the direct use of renewable energy. This means that you can claim the emissions reduction associated with this action. You can also use purchased GreenPower® towards your renewable energy claims.

Australian Carbon Credit Units (ACCUs)

Description

The Emission Reduction Fund (ERF) is a voluntary scheme that provides incentives for organisations and individuals to adopt new practices and technologies to reduce their emissions. Participants can earn ACCUs for emissions reductions. The ACCUs can be sold to the Commonwealth under a carbon abatement contract with the Clean Energy Regulator, or they can be sold on the voluntary market and are eligible as offset units under the National Carbon Offset Standard.

Treatment

If you generate ACCUs from emissions reduction projects occurring within your boundary, you can claim the reduction as part of your carbon account only if the ACCUs from your projects are voluntarily retired. If the ACCUs are not retired, you are required to account for your emissions without the reductions associated with the projects (i.e. as though the projects had never occurred).

Carbon offsets

Description

One carbon offset represents one tonne of carbon emissions that are not released into the atmosphere, that occur as a result of a discrete project. The emissions reductions from a particular carbon offset project can be sold to enable the purchaser to claim those carbon reductions as their own. Renewable energy is one type of offset activity, but there are many others like energy efficiency or forestry projects.

Treatment

Carbon offsets can be used to offset any emission source, including ones that are not electricity related. You cannot use carbon offset for any renewable energy claims.

State-based white certificate schemes

Description

Several jurisdictions have energy efficiency schemes that require energy retailers to achieve energy efficiency in their customer portfolio. The NSW Energy Savings Scheme and the Victorian Energy Efficiency Target Scheme are the biggest in terms of number of certificates. The ACT and South Australia operate similar, but smaller schemes mainly targeting households and small business.

Energy Savings Certificates (ESCs) – New South Wales only

ESCs created under the Energy Savings Scheme (ESS) reward energy-saving projects through a financial value on every tonne of carbon that is abated by an organisation. The objective of the scheme is to reward companies that undertake projects that either reduce electricity consumption or improve the efficiency of energy use. The ESS began on the 1st July 2009 and is part of the NSW Government’s plan to cut greenhouse gas emissions. The scheme is legislated to run until 2025 or until there is an equivalent national energy efficiency scheme.

Victorian Energy Efficiency Certificates (VEECs) -Victoria only

The VEET scheme was established under the Victorian Energy Efficiency Target Act 2007 and commenced on 1 January 2009. Each VEEC represents one tonne of carbon dioxide equivalent (CO2-e) abated by specified energy saving activities known as prescribed activities. The abatement is calculated by comparing the difference between the energy use after the completion of an upgrade or project and the ‘baseline’ energy use, which refers to the amount of energy that would have been used if the energy efficient installation/project had not taken place. VEECs are bought by large energy retailers with a liability under the scheme.

Treatment of white certificate schemes

You are not required to account for state or territory-based energy efficiency schemes. Emissions reductions resulting from activities supported by these schemes can be counted towards your carbon account regardless of whether any associated certificates have been created, sold or transferred to any other party. So, in short, you can claim the ESCs/VEECs/other white certificates and the carbon reduction.

 

Carbon accounting for all these different federal and state schemes can be confusing, as may be accounting for your Scope 3 emissions. If you need an expert to help you with putting your carbon inventory together, please contact Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog. 

Are ‘carbon neutral’ and ‘100% renewable’ the same?

It is not always clear what the targets carbon neutrality and 100% renewable energy mean. In this blog, we will define these targets and talk about the difference between your energy and carbon footprint. In one of our next blog posts, we will look at allowable offset mechanisms like RECs/LGCs and carbon offsets.

The difference between your energy and carbon footprint

Your energy footprint relates to your business’ energy consumption. For most organisations, ‘energy’ encompasses not only electricity but also stationary energy and transport fuels. Examples of stationary fuels are natural gas, diesel for generators, and LPG for forklifts. Examples of transport fuels include diesel, petrol, and LPG that power your fleet.

A carbon footprint is the sum of your emission sources, a big part of which is your energy consumption. You can develop a narrow carbon footprint of emissions that happen at your place of business (Scope 1) and the emissions associated with electricity consumption (Scope 2). Alternatively, you can develop a wide carbon footprint which also includes emissions in your supply chain (Scope 3).

A carbon footprint is usually broader than your energy footprint. You can see in Figure 1 that an energy footprint is a subset of a carbon footprint. From a carbon accounting perspective, your energy footprint relates to your Scope 2 emissions and to some of your Scope 1 emissions.

The difference between your energy footprint and carbon footprint and claims for 100% renewable energy and carbon neutrality
Figure 1: The difference between your energy footprint and carbon footprint and claims for 100% renewable energy and carbon neutrality

What is carbon neutrality?

Carbon neutrality (or zero net emissions) is reached when all emission sources in your defined boundary are zero. This is demonstrated in Figure 1 in the bottom line. Ideally, your defined carbon footprint boundary encompasses as many emission sources as possible so that your claim for carbon neutrality is credible.

You can reach carbon neutrality by:

  1. Reducing your emissions onsite through energy efficiency or by installing solar PV
  2. Building or purchasing renewables offsite, and by
  3. Offsetting the rest of your emissions through the purchase of carbon offsets

For further information on these three categories, you can read our blogs on the carbon management hierarchy, compare the value of onsite and offsite solar, and installing solar via onsite PPAs.

What is 100% renewable energy?

You are 100% renewable when the amount of renewable energy produced is equal to or more than what is consumed. In most cases, people associate only electricity with ‘100% renewable’. However, as you can see in Figure 1 ‘energy’ can encompass stationary and transport fuels as well. So, to be truly 100% renewable, you would have to include these fuels. While it is relatively straightforward to reach 100% renewable electricity, it is more difficult to achieve 100% renewable energy for stationary and transport fuels.

To avoid doubt if your real objective is to green your electricity supply, you can define your target to be ‘100% renewable electricity’. You can reach this goal by:

  1. Implementing onsite solar PV
  2. Building your own mid-scale solar farm or solar/wind farm in partnership with others
  3. Buying renewables (e.g., through a corporate Power Purchase Agreement)

For further information, you can read our Guide on ‘How to achieve 100% renewable energy’ or buy Barbara’s book ‘Energy Unlimited – Four Steps to 100% Renewable Energy’. Signed copies can be purchased here, and the ebook version is available from reputable bookstores.

Conclusion

Carbon neutrality and 100% renewable energy are two different targets. It is easier to reach ‘carbon neutrality’ than to reach ‘100% renewable energy’, especially if the boundary for energy encompasses both electricity, natural gas and transport fuels. However, to be a leader in climate change, your organisation should also strive towards a renewable energy target as your impact will be much greater.

It is possible to reach 100% renewable energy AND carbon neutrality. Microsoft has been achieving both since 2014. You can also pursue both targets in a staged approach. As an example, you could aim for 100% renewable electricity in the first instance, followed by carbon neutrality in the medium term, followed by 100% renewable energy in the long run.

If you have specific questions about defining a target that works for your organisation, or if you would like us to develop a pathway to your sustainability goal, please have a chat with Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.”

Financing options for sustainability projects for councils

Barbara Albert from 100% Renewables presenting on financing options for sustainability projects for councils
Barbara Albert from 100% Renewables presenting on financing options for sustainability projects for councils

Last week, 100% Renewables was asked to present at a webinar run by the Sustainability Advantage Program from the Office of Environment and Heritage about financing options for councils. Topics covered were why you need a funding strategy, how to align it with broader organisational strategies and plans, a detailed discussion about various funding options, how a financing strategy can be integrated into organisational planning and developing an optimal financing strategy.

Why you need a financing strategy for sustainability projects

Most sustainability initiatives require some sort of financing, and it pays to plan ahead so that you can seamlessly execute your environmental strategy and reach your stated targets. Knowing beforehand what your needs will be will also make sure that you are ready to submit your business cases in line with budgetary cycles.

Free Download: Financing Options for Sustainability Projects

Aligning your financing strategy

A funding strategy for local governments is not a standalone document – it needs to tie into broader strategies like the Community Strategic Plan, delivery and operational plans, as well as the sustainability strategy. Figure 1 shows the hierarchy of organisational alignment.

Aligning a local government’s financing strategy for sustainability projects with strategic and operational plans
Figure 1: Aligning a local government’s financing strategy for sustainability projects with strategic and operational plans

11 funding options for local governments

Traditionally, local governments have funded their sustainability initiatives either from the budget or through a loan. However, there are many more options available. In the webinar, Barbara covered 11 funding options for councils, along with pros and cons for each option, as well as an indication of the challenge to establish and maintain them and a few case studies. You can find the 11 financing options in the list below.

  1. Pre-existing and future incentives and grants, free money
  2. Environmental levy/Special Rate Variation, internal funding
  3. Self-financed through the normal budgeting process, internal funding
  4. Self-financed through a Revolving Energy Fund (REF), internal funding
  5. Internal carbon price, internal funding
  6. Loan financed, Council borrows
  7. Equipment lease, third-party funding
  8. On-bill financing, third-party funding
  9. Onsite solar Power Purchase Agreements, third-party funding
  10. Energy Performance Contracts, third-party funding
  11. Community energy projects, third-party funding

It’s important that you keep in mind that these funding options are not mutually exclusive and that your funding strategy will most likely contain a mix of these.

What are the most suitable financing options for your council?

Every council’s needs, circumstances and objective are different, so a financing strategy needs input from senior management to make sure that it is fit for purpose. Here are two ideas for how you could filter out suitable financing options from the list above.

  1. Run a workshop with the leadership team and other key organisational stakeholders in which you go through all financing options and let the group determine the most suitable ones.
  2. Present a shortlist of pre-evaluated financing options to the leadership team so that they can provide feedback.

Both options lead to the development of a pathway for implementing your optimal financing strategy.

Defining your optimal financing strategy for your sustainability projects

In most cases, your optimal financing strategy is based around four different ways detailed in Figure 2. The best money is always free money, which you can access through grants and incentives. Grants are only available at certain times, and it is best to have projects shovel-ready, so you can submit when the time comes.

Incentives like Small-Scale Technology Certificates (STCs), Large-Scale Generation Certificates (LGCs) and Energy Savings Certificates in NSW (ESCs) will make the business case of investments more attractive, as there will be additional income streams for your energy projects.

Optimal financing strategy for sustainability projects for local governments
Figure 2: Optimal financing strategy for sustainability projects for local governments

The second-best option for councils from a financial-return-perspective is to finance projects internally. If you spend money from your funds (e.g., General, Water/Sewer, or Streetlighting Funds), you will be able to enjoy all energy project savings, without having to pay interest or sharing the benefits with another party.

The third-best option is to borrow money, which is typically done for capital-intensive projects. Councils have access to very favourable interest rates, but the Clean Energy Finance Corporation (CEFC) might also be able to co-fund your project, so it is worthwhile enquiring with them.

If you don’t want ownership of your energy project and you are happy to split the financial benefits with another party, you can also consider third-party financing through solutions like leasing, onsite solar PPAs, community energy projects or Energy Performance Contracts (EPCs).

Download Free Financing Options for Sustainability Projects

If you need help with a financing strategy for your sustainability plan and you want to run your ideas past our energy experts, why not contact Barbara or Patrick for an informal chat.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.”

Does the typical carbon management hierarchy apply to your business?

Clients sometimes ask us in what order they should deliver carbon reduction actions, often in the context of their carbon neutral/zero net emissions goal. Ordinarily, we suggest the ‘typical’ carbon management hierarchy such as that shown in Figure 1.

Typical carbon management hierarchy
Figure 1: Typical carbon management hierarchy

Typical carbon management hierarchy

The typical hierarchy suggests that a priority order of implementation should include:

  1. Energy efficiency: referred to as the ‘first fuel’, more efficient technologies, controls and practices helps to ensure that the least amount of energy is consumed before other measures are considered.
  2. Onsite solar PV: use of available roof space to implement solar PV to offset grid electricity consumption which is mainly produced from fossil fuels. Battery storage will enable solar PV systems to be expanded to offset a higher percent of onsite power demand in future.
  3. Offsite renewables: Power Purchase Agreements are becoming increasingly popular, particularly by large corporations and groups of organisations with similar aspirations and procurement processes. Some organisations have their own land and are interested in building their own solar farm to meet some or all of their energy needs.
  4. Carbon offsets: generally seen as the last step in a carbon management strategy, offsets are often purchased after all other ways to reduce carbon emissions have been exhausted.

Every organisation has unique needs

However, while this approach is ‘ideal’, every business’ situation is different, and this approach may not represent the best strategy for everyone. For example:

  • Energy using technologies may be capital intensive or new energy efficiency opportunities may be limited.
  • Onsite solar and batteries may be able to meet all of the energy demands of a warehouse operation for example. However old roofs, heritage buildings, multi-storey and energy-intensive facilities might have very limited PV capacity, or PV may only meet a small percent of energy demand.
  • Onsite solar PV may actually be cheaper and deliver a better return on investment compared with many efficiency measures.
  • Purchasing renewables via a PPA is becoming increasingly cheaper, particularly for large energy users. This may be a better option than many efficiency or onsite solar opportunities as it can achieve emissions reduction at scale that other options cannot, and at similar or lower cost to ‘standard’ grid power.
  • A business may have considerable Scope 3 carbon emissions that it has low ability to influence other than to purchase offsets; for example, flights, employee commute or catering expenses.

A business should tackle ambitious goals such as carbon neutrality with a multi-pronged approach that evaluates all of the abatement options and prioritises them based on what they can contribute to the end goal. The optimum carbon management hierarchy for each business may be different.

Individual carbon management hierarchy
Figure 2: Individual carbon management hierarchy for a client in a large heritage building

For example, a recent plan developed for a client in a large heritage building showed that their net zero goal can best be met through a PPA for renewable energy, followed by offset purchasing. Efficiency and onsite solar PV make only a small contribution in their case. This is shown in Figure 2.

Represented in this way makes it easier to communicate what is most to least important in the context of achieving ambitious carbon goals.

If you are interested to find out where your biggest savings are, both in monetary and carbon reduction terms, please contact Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

How USC developed their Carbon Management plan

Barbara was the main speaker at a TEFMA webinar focusing on the development of USC's Carbon Management Plan
Barbara Albert from 100% Renewables presenting at a webinar to TEFMA

This week, Barbara presented at a webinar run by TEFMA to Universities around Australia and New Zealand. The topic of the presentation was the Carbon Management Plan for the University of the Sunshine Coast (USC) developed with the University by 100% Renewables.

USC to become a carbon-neutral university

USC has a long track record of sustainability since its inception when several awards were received for design at its Sippy Downs campus. USC’s sustainability program encompasses the natural environment at the university, energy and water efficiency in design and operation, waste management, supply chain emissions, transport as well as a wide range of education and engagement activities for staff and students. Strong governance has seen the sustainability program thrive over several years.

Building on this track record, USC’s strategic plan commits that the ‘University will strengthen leadership in sustainability for the region and beyond’. One of the main initiatives to arise from this commitment was that USC should aim to be carbon neutral and should plan for this accordingly.

USC’s approach to developing a Carbon Management Plan (CMP)

A key priority for the CMP is that it be cost-effective through a program of actions over time that are similar in cost to or lower than the cost of not acting to reduce emissions. Initiatives that can drive this outcome were informed by a planned, systematic approach:

  • Carbon emissions data were analysed for all USC operations, and forecasts of future emissions developed based on known changes in facilities and expected growth in student numbers,
  • Extensive analysis of onsite energy efficiency and renewable energy opportunities was carried out,
  • A market-led proposal to develop a central thermal energy storage system and a large-scale onsite solar PV and storage project at the Sippy Downs campus was developed

The central element of the CMP development was the engagement with USC’s stakeholders, to present USC’s emissions forecasts, options for abatement, potential targets to aim for, and frameworks against which to measure and report on emissions. Workshops were held with key stakeholders from the USC executive, staff and student body to ensure a wide range of views and ideas were heard and considered.

USC’s recommended targets

The CMP development served to refine USC’s carbon neutral objective:

  • Carbon neutrality should be aligned to the National Carbon Offset Standard (NCOS)
  • Carbon neutrality should be achieved by 2025
  • A focus on in-house measures and renewable energy procurement is strongly preferred, with offsets purchased as a last step
  • USC should aim to make the Moreton campus carbon neutral from the beginning

The Carbon Management Plan (CMP)

The CMP will be underpinned by a robust emissions measurement methodology aligned with NCOS. This will develop over time as data management systems for small sites and some Scope 3 emissions are improved. The proposed data management approach is illustrated in Figure 1 below.

Figure 1: Staged inclusion for emission sources
Figure 1: Staged inclusion for emission sources

Initiatives to be implemented under the CMP were developed based on estimated future emissions for an extensive Scope 3 boundary for all campuses.

The CMP is divided into three themes:

  1. Management – management and governance of the CMP
  2. Carbon abatement – carbon reduction measures that form part of the journey to carbon neutrality
  3. Engagement – ensuring that both students and staff are engaged so that the actions of the CMP are supported

Based on assessed and recommended investments, marginal abatement cost (MAC) curves were developed to illustrate the cost-effectiveness of the planned CMP over time. Figure 2 below illustrates the MAC for the university’s plan at 2040, when most of the investments have paid for themselves and are returning a positive cashflow to USC.

Figure 2: Marginal Abatement Cost Curve for USC at 2040
Figure 2: Marginal Abatement Cost Curve for USC at 2040

The MAC curves illustrate that there are several highly cost-effective abatement measures that will pay for themselves within a few years. They also show that investment in rooftop solar – even at significant scale – is cheaper than offsetting emissions. The overall outcome in cost terms to USC will be cash positive.

If you would like to find out more about USC’s journey, please download our presentation here:

100% Renewables can help you with the development of your carbon management or carbon neutral strategy. For more information, please contact Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

How putting an internal price on carbon can help fund sustainability projects

We recently helped one of our clients with financing options for their sustainability objectives. We showed them the many funding options available for sustainability projects such as leasing and loan options, funding from the budget, but also more innovative solutions like Revolving Energy Funds (REF), or Energy Performance Contracts (EPC).

Another innovative funding option is carbon pricing. Increasingly organisations are implementing an internal carbon price as a method of managing climate risk and achieving sustainability goals. According to the CDP, 600 organisations around the world in 2017 are using an internal carbon price with almost 800 planning to implement it soon.

Free Download: Financing Options for Sustainability Projects

Microsoft, for example, uses the revenue from its internal carbon fee to fund renewable energy, energy efficiency, research into emissions reduction technology, and to raise employee awareness of climate risks and opportunities.

Update April 2019:  Microsoft doubled its internal carbon fee to $15 per metric ton on all carbon emissions.

Others, such as Shell, BHP, and BP, embed a shadow price in their business strategy to help evaluate business opportunities such as investing in low-carbon assets.

What is an internal carbon price and how does it differ from an external price?

An internal carbon price is a fee an organisation places on the greenhouse gas emissions it emits, which can be used to influence investment and business operations decisions.

An external carbon price, on the other hand, is a locally, or nationally regulated price on carbon emissions from organisations in that region. Around 45 countries now put a price on carbon, including for example the European Union, Chile, Korea and Finland. These countries as well as several sub-national jurisdictions all use carbon pricing to curb greenhouse gas emissions.

How does an internal carbon price help with getting sustainability projects over the line?

Implementing a carbon price not only prepares organisations for future government regulation, it also gives them a competitive edge over other organisations. The implementation of an internal carbon price places an obligation on the entire organisation to manage their emissions. This obligation assists in making the business case for sustainability projects stronger. An internal carbon price can:

  • Shorten the payback period and justify investments with lower margins that would otherwise not have met internal approval criteria
  • Improve long-term resilience through low-carbon decisions in operations and in the supply chain
  • Make a company’s sustainability strategy more effective and meaningful
  • Make it easier to get buy-in from organisational stakeholders

Types of internal carbon pricing

There are three types of internal carbon pricing that organisations typically choose from:

Type of Internal Carbon PriceDescriptionBenefitsRevenue GenerationAustralian Case Examples
Internal Carbon FeeA fixed fee on each ton of carbon emissions emitted by the organisationGenerates a revenue stream to fund an organisations emissions reduction targetYesMicrosoft (Global)
Shadow PriceA hypothetical price on carbon emissions emitted by an organisation to use when making long-term business planning and investment strategiesThis allows organisations to prepare for future regulation and prioritise low carbon investmentNo Wesfarmers, AGL, Stockland,BHP,Westpac, Shell (Global), and BP (Global)
Implicit PriceAverage cost per tonne of emissions borne by the organisation to meet its emissions reduction targetsGenerates the revenue required to meet the organisation's emissions reduction targets such as being carbon neutral through purchasing offsets or renewable energyYesNational Australia Bank (NAB)

Quite often organisations use a hybrid approach to create what works for them and their goals.

How you can implement an internal carbon price

100% Renewables has developed a 5-step method for the implementation of an internal carbon price. These steps are illustrated in figure 1 below. You first need to calculate your carbon impact and determine what your carbon, energy or sustainability targets will be.

After discussing the business case for an internal carbon price with key organisational stakeholders, you need to agree on an appropriate price level. After that, it’s a matter of making sure that carbon pricing permeates the whole organisation and that it is integrated into the long-term strategy, planning and operations. And finally, you will have to monitor whether the carbon pricing is performing as expected and make any necessary adjustments.

How to set an internal carbon price
How to set an internal price on carbon

Figure 1 – How to set an internal carbon price

How we can help you with determining appropriate financing options for your sustainability projects

We use a tried and tested methodology to help organisations meet their sustainability goals. Some of the ways we help organisations include the following:

  • Organise discovery sessions or workshops where we present relevant financing options to key organisational stakeholders and get their input to develop a funding strategy
  • Evaluate your current projects and help with selecting the most suitable financing method
  • Present and explain the pros and cons of each funding method
  • Provide case examples of how other organisations have funded their sustainability initiatives
  • Integrate a funding strategy into your environmental/sustainability strategy
  • Calculate the business case for your sustainability initiatives (NPV, IRR, payback – depending on the needs of your stakeholders)

We have developed a Financing Guide for Sustainability Projects for Local Governments that describes 11 funding options.

Download Free Financing Options for Sustainability Projects

If you want to discuss financing and funding options for your sustainability strategy, please contact Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

Should Councils upgrade to LED street lighting now?

There are around 2.3 million street lights in Australia, consuming close to 0.5% of all electricity generated. Between electricity and use-of-system (SLUOS)[1] charges local Councils and roads authorities are spending upwards of $400 million per year on street lights. For instance, a small regional council might spend $300,000 per year on street lighting for local roads, whereas a metropolitan council in a capital city might spend $2.5 million or more per year.

In many parts of the world LED technology is now the norm for new street lighting and when upgrades are carried out to existing street lights. In Australia, just 10% of street lights have been converted to LED, so there is an enormous opportunity for local governments to make significant savings that will lower their carbon footprint, reduce costs, and provide better public lighting services to ratepayers.

LED technology has been improving for several years, with current products capable of reducing energy demand by 50-60%. There are now numerous initiatives and examples of LED street lighting across Australia. The total greenhouse gas emissions savings if all street lights were converted to LED today would be more than half a million tonnes of carbon emissions per year.

Working with several councils in 2016 and 2017 we have seen that the payback for local road lighting upgrades is around 4 to 5 years. This is partly driven by recent volatility in electricity markets, which is causing higher electricity prices for the next several years for many councils. The case for investing in LED street lighting is therefore very strong.

For many local councils – the 90% who have yet to upgrade to LED – a missing piece is often understanding the business case and the benefits of switching to LED. We strongly urge all local councils to spend time to do this, so that when the opportunity to switch arises, the case has been made and funds are available to pay for the upgrade.

Evaluating the business case can involve an assessment of a number of factors:

1) Eligibility of lamps

The current street lighting inventory can be compared with LED options so that all eligible replacements can be identified. For example, networks may only have replacement options for non-decorative fittings on local roads, and main road lights may not yet be eligible. Councils can work with their network provider to get clarity on what can be done now, and what the expected timeframe for LED-eligibility of all lighting will be.

2) Energy savings

For eligible lamps, the potential savings will involve calculating the change in energy demand for new LED lights compared with the existing technology. It is best to refer to the Australian Energy Regulator’s lighting load table so that energy demand for each type of light is correct. For example, an 80W mercury vapour lamp actually consumes around 96W of power as it has a ballast that also consumes power. The energy savings can be converted to dollars by applying the energy and network rates for street lighting. Remember that a proportion of street lighting energy is consumed during peak times, and not all during off-peak. In our experience energy savings of between 50% and 60% are typical.

3) SLUOS savings

Every year Street Light Use Of System (SLUOS) prices are released, showing the cost per year for the full range of luminaires and mounting structures within a network area. Similar to calculating energy savings, an analysis needs to be conducted of SLUOS charges for all eligible lighting that can be switched to LED. Councils should regularly receive data from their network provider which will confirm the SLUOS rates. These are then compared with the SLUOS pricing for LED equivalents. Councils should engage with their network provider to confirm the estimated benefits. In our experience to date, we have seen savings in SLUOS charges of around 55%.

4) Available incentives

In some states, there are incentives to help councils switch to LED lighting. For example, the NSW Energy Savings Scheme has a public lighting component, which allows efficiency upgrades to access Energy Saving Certificates (ESCs) and claim several years of savings effectively as an upfront discount to the cost of an LED upgrade. This can reduce the upgrade costs by more than 5%. It is also recommended that any potential grant incentives be identified and applied for where applicable. Energy-specific, climate/carbon or community/regional grants could all apply.

5) Timing for the upgrade

Typically the costs of bulk replacements are borne by the network provider and councils simply see billing for energy and SLUOS. However, an upgrade to LED involves a step change in technology, and whole luminaires and not just lamps are replaced. If possible, it makes sense to time an upgrade to coincide with a regular bulk replacement cycle, with the potential that labour costs for the upgrade can be reduced since this is part of the normal process.

6) Other ways to reduce costs

When undertaking a bulk replacement, it is likely that there is a ‘residual value’ remaining in some street lights – that is, capital costs incurred by the network that have not been fully recouped. This could make up around 10% of the LED upgrade cost, more in some cases. However, in our experience, a lot of this cost may be associated with just a small fraction of the assets. Where this is a significant factor councils should work with the network to see if these upgrades can be deferred to a later upgrade cycle and then weigh up the pros and cons of lost savings compared with the reduction in capital cost.

Armed with this analysis councils will be in a position to fully understand both the costs and savings of an LED upgrade to their street lighting. However, upgrading eligible street lights to LED technology should just be the beginning of a council’s efforts to reduce the carbon footprint of this service. There is more that can be achieved in future.

  • Development processes and controls should be examined and modified to ensure that all new land releases and road developments use LED as standard.
  • Off-grid street lights that are powered by solar technology and batteries can significantly reduce installation costs with no network connection requirement.
  • The Street Lighting And Smart Controls Programme (SLSC) is aiming to achieve more savings in street lighting by driving the integration of smart controls with street lights. While just 0.1% of street lighting in Australia has smart controls enabled (through trials), this will change in future and may see energy savings rise to well over 70%.
  • In addition to distributing light more efficiently than conventional street lighting technologies, LED lighting efficiency will continue to improve in other areas. Whereas some LED technologies produce around 100-120 lumens per watt (lm/W) today, in time this will improve. A 300 lm/W future LED will require far less power to provide the same light as LEDs today.

Saving 50-60% with an LED upgrade today makes a big contribution to reducing local government’s carbon footprint. But future advances in LED, smart controls and renewable energy can drive even greater savings in the long term. Active management of street lighting, engagement with council associations and industry bodies, and periodic re-assessment of opportunities to further reduce energy costs will see these savings realised.

For more information, contact or Patrick or Barbara.

[1] Street Light Use of System

Universities demonstrating sustainable energy leadership

Previously, we looked at commitments of all levels of Government regarding climate change. In this article, we would like to examine another industry segment that is driving ambitious carbon commitments – universities.

When tasked by a university in Queensland to develop their carbon management plan leading them to net zero, we investigated why universities are at the forefront of sustainable energy leadership and found the following three reasons:

  1. Leading by research in sustainable energy technologies

Across Australia, and globally, universities play a crucial role in researching solutions for mitigating climate change.  Australian universities have long led in renewable energy research, prominent examples including the establishment of the UNSW Solar Photovoltaics Group back in the 1970s. UNSW’s School of Photovoltaic and Renewable Energy Engineering and ANU’s Energy Change Institute continue to develop leading research in renewables and low carbon technologies. Across all Australian states and territories multi-pronged research on sustainable energy technologies is developing the solutions for tomorrow’s energy systems. Just a few examples include:

  • Griffith University’s Centre for Clean Environment and Energy
  • University of Newcastle’s Priority Research Centre for Frontier Energy Technologies and Utilisation
  • University of Technology Sydney Centre for Clean Energy Technology
  • University of Melbourne’s Melbourne Energy Institute
  • University of Tasmania’s Centre for Renewable Energy and Power Systems
  • University of South Australia’s Barbara Hardy Institute, which develops leading research on sustainable energy and low carbon living

These efforts, allied to ever-increasing opportunities for sustainable energy study, from degree to vocational education levels, will develop the skills to underpin Australia’s transition to a clean energy economy.

Universities also collaborate in forums like Climate KIC (Knowledge Innovation Community)[1]. Climate KIC is a national cross-sector innovation partnership, which is focused on climate change mitigation and adaptation. Its purpose is to help bring to market innovative climate change solutions by connecting key players across the whole innovation pathway. Amongst the founding members are Curtin and Griffith Universities, as well as the University of Melbourne.

  1. Leading by fossil fuel divestments

Divesting from companies that extract and burn fossil fuels is seen by many organisations as an ethical imperative to help address the problem of climate change. The movement has grown rapidly over recent years, and Australian universities are joining other organisations like councils and super funds in making divestment commitments. Examples of such commitments can be seen in the list below:

  • La Trobe: divest from the “top 200 publicly traded fossil fuel companies ranked by the carbon content of their fossil fuel reserves within five years
  • Swinburne: “divest from companies that earn significant revenues from fossil fuel extraction or coal power generation
  • Queensland University of Technology (QUT): “no fossil fuel direct investments” and “no fossil fuel investments of material significance
  • Monash University and the Australian National University (ANU) have taken first steps to partially divest by targeting coal

 

  1. Leading by reducing their own carbon footprint

Universities are large energy users, estimated to consume around 11 PJ of electricity and gas annually, leading to emissions of more than 1 million tonnes of CO2-e. According to research from the Clean Energy Finance Corporation[2], Universities may spend as much as $700m on energy per year.

Universities have tremendous potential to improve their sustainability performance and decrease their spend on energy, especially in light of rising energy prices. Being more sustainable is also seen by students as something universities need to excel in and as something students want to be involved with.

Reducing greenhouse gas emissions is thus an increasing focus of university sustainability strategies. While energy efficiency has long underpinned efforts to reduce cost and emissions, rising energy prices and lower technology costs are seeing many universities opt for large-scale on-site solar PV systems, generating emissions-free energy and visibly demonstrating their commitment to leadership and innovation.

More and more universities are setting ambitious goals for renewable energy and carbon abatement within their operations. A scan of carbon commitments made by universities can be seen in the list below:

  • Charles Sturt University (CSU) was the first University to obtain NCOS[3]-accredited carbon neutral status in 2015[4]
  • University of Southern Queensland (USQ) committed to carbon neutrality by 2020[5]
  • University of the Sunshine Coast (USC) committed to carbon neutrality by 2025
  • Macquarie University has committed to a 50% reduction in carbon emissions over 2012 levels by 2030, whilst growth in their operations is projected to increase by 40%[6]
  • University of Sydney has the vision to achieve a 20% carbon reduction across its investment portfolio by 2018[7], of which it has already achieved 40%
  • Monash University is headed towards zero net emissions with no target date, currently. It is also the first University worldwide to have issued a certified climate bond to finance sustainability and clean energy projects on campus[8].

There are also numerous examples where Universities have implemented large-scale solar on their campuses. The University of Queensland, for instance, has installed nearly 4.5 MW of solar at its campuses, including a 1.22MW system at St Lucia[9] (see picture below), the University of Southern Queensland has installed a 1.09 MW system at its Toowoomba Campus[10], and CSU is installing a 1.77 MW system at its campus in Wagga Wagga[11].


University of Queensland, 1.22 MW solar PV system, Photo: Stewart Gould

Universities are also looking for renewable energy opportunities off site. University of Technology Sydney (UTS) was the first organisation in Australia to directly purchase the output from a solar PV project and have this credited towards their overall energy demand by their retailer (200 kW Singleton II array, NSW)[12]. In May 2017, Monash University invited Expressions of Interest for the long-term supply of 55 GWh of electricity from an off-site renewable energy source. The power purchase agreement will also include the Large-scale Generation Certificates (LGCs).

100% Renewables recently completed the development of a long-term energy and carbon strategy with a university in Queensland which investigated innovative options for energy efficiency and renewable energy projects. The carbon management plan lays out the most cost effective path to achieve carbon neutrality and contains marginal abatement cost curves at 2030 and 2040. The MAC curves display the merits of energy efficiency and renewable energy projects that will see the University make large savings on energy consumption, which can be used to fund renewable energy and carbon offset purchases in future.

The project also included a comprehensive engagement strategy, with a number of workshops and several presentations to the University’s committees to get valuable input and to make sure that the plan had the buy-in at all levels.

To find out more about the project, contact Barbara or Patrick.

 

Footnotes:

[1] http://climate-kic.org.au/

[2] http://www.cefc.com.au/media/218731/cefc-market-report-clean-energy-opportunities-for-universities.pdf

[3] National Carbon Offset Standard

[4] https://www.csu.edu.au/csugreen/about-us/commitments/carbon-neutral-university

[5] https://www.usq.edu.au/about-usq/about-us/environment-sustainability/footprint

[6] http://www.mq.edu.au/about/about-the-university/strategy-and-initiatives/strategic-initiatives/sustainability/staff-and-students/partnerships-and-engagement/m-power2/watt-wise

[7] http://sydney.edu.au/news/84.html?newsstoryid=14575

[8] http://www.thefifthestate.com.au/business/investment-deals/monash-beats-universities-to-green-bonds-with-strong-and-visionary-leadership/87316

[9] http://www.brisbanetimes.com.au/environment/powering-from-the-rooftops-20110715-1hgzp.html#ixzz1SPJoA7RW

[10] https://www.usq.edu.au/toowoomba/sustainable-energy

[11] http://news.csu.edu.au/latest-news/charles-sturt-university/new-solar-system-for-clean-energy-at-csu

[12] http://newsroom.uts.edu.au/news/2015/09/uts-takes-lead-customer-led-renewables