AICD Annual Conference EnergyCarbon Management Business Risks, Opportunities, Compliance

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AICD Annual Conference Energy/Carbon Management
Business Risks, Opportunities, Compliance

• Jonathan Jutsen
• JutsenJ_at_Energetics.com.au
• May 8 2008

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Why YOU Should be Interested in this Presentation

• On one hand Climate Change is the biggest
  threat facing humanity and
• Carbon trading will cost Australian business
  14-22B/year 40 of tax revenue
• .and on the other
• We see Climate Change as the greatest business
  opportunity of this century
• Carbon mitigation US18 trillion investment by
  2050.
• Australian permits 100B in first 10 years
  (size of bond market).
• Dotcom becomes watt-com in Silicon Valley.
• Capital funds increasingly directed to green
  investments/companies.

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Reducing Emissions by 60?We are Heading the
Wrong Way!

Australias emissions are rapidly increasing due
to 2 annual growth in energy use.
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Carbon Challenges for Business

• The future will not just be the past C tax
• Market Changes. Changed energy market
  dynamicsPerception of climate friendliness of
  products. Supply chain demands.
• Reputation Risk.
• Investment Risk Regulatory uncertainty,
  Litigation risks.
• Direct Carbon/Energy Cost C content of
  activities/products.
• Costs of Compliance
• Climate Exposure/Insurance

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What Keeps You Awake at Night?

• Rapid decarbonisation of the economy can
  radically change markets
• Rapidly changing customer expectations/demands
• Stranded assets because of new supply models
• Unexpected changes in utilisation/occupancy
• Loss of key customers, OR
• New opportunities through rapid adaptation
• Low carbon products/services
• Energy from low carbon/waste/renewable sources
• Energy efficiency/carbon reduction technologies
• Products/services for adaptation to climate
  change
• Participate in markets e.g. CDM

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Energy Supply Issues

• Oil prices at historical highs (US120/barrel).
  Global peak oil 2010? By 2015 Australia will
  import gthalf our needs.
• Record global LNG and steaming coal pricing
  trend to domestic parity pricing.
• Increasing domestic electricity and water prices
• Carbon Price 2010 24 A40 (expected 35
  2008-2020)

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The Next Wave Supply Chains

• Most companies aiming to manage own (scope 1/2)
  carbon footprint.
• Leading companies are also taking energy
  efficiency/carbon reduction to customers/suppliers
  
• Supermarket chains requiring carbon labelling of
  products.
• Lee Scott CEO of Walmart Today we are
  announcing initial steps that we hope to achieve
  by 2010 every air conditioner that we sell in
  the U.S. will be Energy Star rated and all our
  flat-panel televisions will be 30 more energy
  efficient.
• IBM and Fuji-Xerox taking EE to customers.
• IKEA scope 3 emissions client transport to
  stores.
• Materials stewardship extending cradle/cradle.

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Legal Obligations

• NGER Mandatory national reporting from July 1
  for corporations over 125kt, sites 25kt. Are you
  ready to deliver verifiable accurate base-line
  reporting?
• C trading from 2010.
• Energy Efficiency Opportunities Act. First
  assessments June 30.
• State reporting NSW DECC energy/water reporting,
  Vic EREP from March 2008. Queensland Energy Smart
  Business from July 2008.
• Voluntary public CSR reporting
• External rating agencies (e.g. CDP, DJSI)
• EIS/licensing for new energy intensive operations

Need for information management system PWC
report shows 2 major companies have auditable
data
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Energy/Carbon Management Must be Part of the Way
You Do Business
Understanding Opportunities
Management Commitment
Monitoring Reporting
KPIs
Awareness/Training
Formal Plan
Accountabilities
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Supply Models Will Also Change

• ENERGY SAVINGS POTENTIAL 50, not 10-20!

Typically just 10-20 of original fuel
actually delivers service required
Time to fundamentally rethink
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Carbon Management-Summary Action Plan
STEP 1 Understanding, Strategy Development
Understand energy/carbon market situation
Identify risks, opportunities, legal obligations
Measure carbon footprint
Determine corporate objectives
Determine strategy
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Summary Action Plan
STEP 2 Reduce Your Footprint
Implement carbon mitigation through-gt
Energy efficiency
Energy form switching
Offsets from within the business
Control of travel, waste..
Trading options
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Will the Real Business Leaders Please Stand Up!

• Visionary leadership improved solutions /
  surprising results!
• Companies taking the lead expected make
  substantial profits
• Since BP began focusing on its internal GHG
  emissions performance in 1998, nearly 2 billion
  of net present value has been created
• Walmart energy savings have not only saved the
  company 27M/year, but central to the companys
  strategy to transform itself, .
• Woolworths sustainability strategy -40 GHG
  emissions by 2015
• Sustainable projects expected to be loss leaders
  paid back in only a few years.
• Bottom line There is money to be made by being
  active, learning early positioning to act on new
  market opportunities.

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The Bottom Line That Counts
The Real Bottom Line

You know, humans are the first species to die
out because they could not calculate the payback
for saving themselves!