The Australian Government commitment to net zero emissions by 2050 could well be the embodiment of former Indian Mahatma Ghandi’s famous quote: “There go my people, I must hurry to catch up with them for I am their leader”.
The market has spoken. Business and the community is already moving ahead of Government on greenhouse emissions. Equilibrium has been fortunate to see this first hand as for a number of years it has worked with progressive companies on reducing emissions – and this activity has accelerated over the last 24 months independent of Government.
The Australian Government has now released “Australia’s Long Term Emissions Reduction Plan”. The plan provides a summary of the modelling and analysis which underpins the emissions target of net zero by 2050.
The modelling focuses on industry and businesses taking a voluntary approach to achieve net zero by 2050, without outlining constraints or incentives. This shift to net zero is to be pushed by “investor expectations” and “consumer preferences”. Fortunately, Australian businesses are well advanced in assessing their carbon outputs and are already working towards contributing to the target.
For example, Equilibrium was engaged by a major food manufacture in 2019-2020 to identify their carbon outputs and a carbon reduction plan. The company is now well advanced on a carbon management program that is aligned to its overall business objectives.
The process involved identifying scope 1 emissions (direct emissions eg. production, manufacturing and transport emissions), scope 2 (indirect emissions, emissions that may be generated at another facility) and scope 3 emissions (indirect emissions, employee travel to work/ transport and disposal of waste). The company set a target to achieve net zero emissions in operations and net-zero climate impact across the value chain by 2040, as well as 2025 interim goals to reduce energy, water and waste.
Equilibrium assists businesses with a wide range of services from carbon accounting to Climate Active accreditation. Please get in touch to develop realistic and measurable approaches to reduce your carbon outputs.
Climate Active certification provides businesses and organisations with the opportunity to demonstrate their commitment to managing their environmental impacts and committing to sustainable outcomes. Climate Active is the Australian Government backed program that enables business to measure, manage and offset carbon emissions from their operations or products and services. Organisations can also apply the certification to events, buildings and precincts that demonstrates their commitment to driving voluntary climate action in the growing face of pressures from customers and investors.
The Climate Active certification is awarded to organisations and businesses that have credibly reached state of carbon neutrality/ net zero emissions. The certification and verification process as well as public reporting requirements ensures that like for like businesses can be compared with respect to assessing, reducing and offsetting carbon emissions.
The emergence of voluntary schemes such as Climate Active are driven by “social license” and responsible business practice. The scheme presents the opportunity to achieve greater staff engagement and demonstrate to customers you have in place a robust climate strategy commitment. The scheme aims to incentivise voluntary action, with the certification assisting the greater community by making it easier to identify brands, businesses and organisations that are committing to making a real difference.
The Australian Renewable Energy Agency announced a $43 million grant program on behalf of the federal government to assist in identifying methods to cut industrial energy costs and emissions. The first round of the Industrial Energy Transformation Studies Program will offer $25 million to assist research and the development of business case projects for organisations in the mining, agriculture, manufacturing sectors, water supply, gas supply, waste services and data centres. Applicants can apply under one of two rounds:
>Round 1A – Feasibility Studies (Up to $10 million available). Grants can be between $100,000 and $500,00 for up to 75% of eligible project costs
>Round 1B – Engineering Studies (up to $15 million available). Grants can be between $250,000 and $5 million for up to 50% of eligible project costs.
The program aims to fund studies that deliver transformational improvements in de-carbonisation technology and energy efficiency practices for industry. Eligible projects must also demonstrate high replicability potential across similar industry settings.
Applications for the initial round of funding will be open on the 6th of July.
ARENA will be hosting separate information sessions for Round 1A and Round 1B in the week commencing 12 July, further information regarding these information sessions will be published on the Industrial Energy Transformation Studies Program website in the coming weeks.
Global markets, shareholders and consumers are impelling corporates to announce climate action and net zero policies across the globe. This movement has resulted in a rush of company directors announcing net zero pledges without fully examining their capacity and ability to meet their goals.
Renew Economy stressed that failures to meet these goals, could be considered “guilty or misleading conduct”, resulting in legal or regulatory penalties. The long timeframe to achieve net zero goals and the current lack of clear, unified regulatory approach, may have set a false sense of ease. In March, The Conversation among other researchers published the first analysis of net zero commitments of 4,000+ sub-national governments and companies which account for 80% of global emissions. The study highlighted that only 60% of plans announced interim targets and 62% of the corporates announced reporting mechanisms.
If corporates are serious with their net zero intent, it will be met with robust measures in place and pledging a target which can be held accountable by shareholders and consumers. Credibility should be demonstrated by accreditations from impartial mechanisms such as a science-based target, which will validate whether the plan is credible. Last week Australia Post and Newcastle Port have become the latest Australian organisation to have their emissions targets recognised by the Science-Based Targets program, validating both the corporates’ efforts to limit temperature rise “well below two degrees”.
Net zero targets are statements of corporate intent, and should not be made unless research has been undertaken to ensure they are deliverable. Corporates are encouraged to seek advice and support regarding this. Goals should be genuine, and importantly realistic in their approach to reach net zero.
Numerous corporations have joined the “race to net zero” emissions, announcing targets and policies to reduce their carbon outputs. The impacts these declarations will have on small to medium sized enterprises (SME) within major corporates’ supply chains should be considered.
For example, Unilever is a leader in producing fast moving consumer goods (FMCG) and their announced climate policy and targets in their Climate Transition Action Plan. The plan was put to shareholder vote earlier this month with the majority of shareholders voting in support of the climate action strategy. The company’s voluntary targets, signify a movement that responsible businesses cannot and should not wait for regulation. Corporates opting for voluntary annual emission reports and in this case, an advisory shareholder vote, signify an increased level of transparency and accountability between investors, consumers and businesses.
However, the impacts of these policies on the supply chain and wider network need to be considered.
>Where does the cost lie? The plan discusses the intent to cost neutrally reduce the emissions from raw material suppliers. The cost of reducing these emissions will be placed onto the suppliers, potentially placing the burden on the supply chains of SME’s to shoulder.
>What support for SMEs will be provided? The introduction of carbon data invoices is an example of an area where smaller companies will need assistance. Although it may sound like a simple tweak to the system, it may be complex to set up and deliver and potentially not cost neutral.
>How will the new supplier reporting frameworks chosen by major multinationals start to shape and influence the uptake of different reporting methodologies? As there are an overwhelming variety of these methodologies in use (TFCD, Science based targets, GRI, CDP, as well as national government systems), there is much debate around how to select one global standard to use. Unilever in this case have chosen Science Based Targets, which may have an influence on the uptake of that particular framework at a global scale.
Corporates are setting expectations on acceptable reporting methodologies for their suppliers. This has the potential to be a positive environmental step, as data will be influential in setting a global consensus for mass scale climate reporting methods. When large corporations dictate that science based targets are the new reporting frameworks they want from suppliers, it may be hard to envision how this reporting framework won’t become a new norm for SMEs in Australia and elsewhere.
Written by Marita Doak and Donald Fraser
The Victorian Government Climate Change Strategy aims to keep the state on track to meet the emissions target of net zero emissions by 2050. Victoria’s announcement marks all of Australia’s states and territories committing to a net zero target by 2050, despite the absence of the federal government’s embracing a national the goal. The strategy announced interim targets aiming to decrease emissions by 28-33% by 2025 and 45 – 50% by 2030. The objectives at the focus of the strategy include;
>$100 million package for electric vehicle subsidies, granting $3,000 for all new zero emission vehicles that cost less than $69,000 and a target for 50% of all new vehicle sales to be electric or hydrogen by 2030.
>Public transport – all buses purchased from 2025 onwards are zero emissions.
>Gas substitution roadmap – encouraging users to shift to electricity and other fuels.
>Investing $31 million to support high-energy using businesses to adopt energy solutions to reduce costs and prepare for a low – emissions future.
>$380 million to deliver “Recycling Victoria” – a 10-year plan assisting businesses and households to improve their resource efficiency, recycling and reduce waste.
The announcement signifies the push from state governments to reach net zero emissions and develop a harmonised approach to electric vehicle standards.
Agriculture is one of the state’s largest carbon emitters, and an industry that the federal government is debating to exempt from the national net zero targets. The Victorian strategy includes pledges for the agricultural industry announcing;
>$15.3 million invested in agroforestry, encouraging farmers to plant trees to sequester carbon and realise other on farm benefits such as protecting crops/animals from extreme weather
>Expanding the Agriculture Energy Investment Plan, providing an additional $30 million to support farmers to improve on-farm energy generation and efficiency.
The plan aims to ensure that farmers are well placed to be supported in using information and tools which will help realise emissions reductions opportunities on farms.
Earlier this month, the federal government announced a series of Modern Manufacturing Initiative (MMI) grants for major recycling and clean energy projects. The government is inviting applications under its Recycling and Clean Energy stream, offering grants on average of $4 million, ranging from $1 million to $20 million. The $1.3 billion in funding will assist manufacturers to scale up, commercialise and collaborate.
The MMI grant stream is now open and made up of two separate funding opportunities;
>Manufacturing translation component: will assist manufacturers in expressing their ideas into commercial outcomes and encourage investment in non R&D innovation.
>Manufacturing integration component: will assist in commercializing innovative concepts, integrating into local and domestic supply chains.
The government has outlined examples of the grants, addressing the funding suitability to include activities which aim to enable greater use of recycled materials across supply chains, and/or that promote increased use of clean energy within their industrial systems.
Applications for these grants close on the 5th of May and businesses must provide co – funding.
Organisations in Australia are demanding more environmental reporting, driving suppliers to update and make mandatory environmental commitments and changes. This is a growing trend in the agricultural industry and supply chain in particular. Large companies such as Coles and Woolworths are seeking additional control and oversight, requiring their suppliers to help them meet their environmental targets.
Last week the Coles group announced a “together to zero” campaign, outlining a collaborative scheme with consumers and its supply chain to meet their emissions targets. The group announced plans to be powered entirely by renewable energy by 2025 and to cut operational emissions by 75% below FY20 levels by 2030.
Equilibrium is working with a number of suppliers in the agriculture and food manufacturing sectors to develop and implement sustainability programs, including Environmental Management Systems (EMS).
An EMS aims to implement a plan and system of environmental actions and targets which align with the company’s environmental policy and business objectives and extend all the way to a ground level approach. An EMS is a journey of continuous improvement (plan > do > check > act) and assists organisations to manage their environmental impacts through;
> Achieving and maintaining compliance with relevant environmental laws, standards and the company’s environmental commitment
>Establishing systematic risk management processes to identify and rectify environmental risks;
>Establish a required level or environmental performance within the groups corporate environment to prevent the occurrence of events that are likely to significantly impact the environment
>Enabling visibility and periodic evaluation of environmental targets and performance metrics for decision making
The movement towards corporate responsibility, the ambition of businesses to meet their environmental objectives and better business outcomes are increasingly seen as mutually inclusive.
The Clean Energy Regulator has announced a new initiative to publish an annual Corporate Emissions Reduction Transparency report (CERT). The CERT report will detail the voluntary carbon offset processes undertaken by Australia’s major emitters. The report will be supported by the National Greenhouse and Energy Reporting (NGER) scheme, creating a streamlined approach and platform for reporting corporate emissions.
The CERT provides a framework to:
>Demonstrate the net position of participating NGER reporters’ annual energy and emissions report.
>Support business’ climate action claims, providing a trusted and independent resource.
>Promote voluntary participation in Australia’s carbon markets.
The CERT signifies that Australian companies are increasingly setting their own voluntary goals to reduce emissions. It reflects that the public, shareholders and supply-chain partners are increasingly interested in company’s tracking and transparency towards meeting corporate emission reduction and offsetting targets.
This CERT will assist companies in demonstrating their use of carbon offsets to meet their reduction commitments, and the increased visibility of corporate carbon offset purchases may increase demand for voluntary emission actions and targets.
Consultation is open for the Corporate Emissions Reduction Transparency Report and submissions can be emailed to CER-RETandEnergySection@cleanenergyregulator.gov.au.
The Commonwealth and State Governments currently have many programs to support businesses in improving their power usage and efficiency. The following grants provide either direct funding or credits for energy audits and programs to reduce emissions.
The Emissions Reduction Fund is open for all eligible Australian businesses wanting to reduce their carbon emissions. Participants in the scheme can earn Australian carbon credit units (ACCUs) for every tonne of carbon dioxide equivalent they store or avoid emitting by using new practices and technologies. These ACCUs can then be sold to generate income for your business.
New South Wales’ Energy Savings Scheme provides businesses with financial incentives to reduce their energy consumption by installing new equipment or modifying a current system. Savings will be converted into Energy Saving Certificates (ESCs) which are sold to an electricity retailer.
South Australia offers businesses and not-for-profit organisations the Resource Efficiency and Productivity (REAP) Grants. This program provides a 50% subsidy for resource efficiency and productivity assessments to consider circular economy options including electricity efficiency. An additional $10,000 is available on successful completion of an assessment to kick-start implementation of the recommendations.
Funding of $150,000 is available for Tasmanian Businesses to carry out energy audits on business operations and buildings in the state through the Power$mart Businesses program.
ACT has two grant programs: The Next Generation Energy Storage (Next Gen) Program and ACTSmart Business Energy and Water Program which provide businesses with rebates when installing battery storage systems or upgrading to more energy-efficient and water-efficient technologies and equipment.
The Smarter Business Solutions Program offers grant funding incentives of up to $20,000 for Northern Territory enterprises to adopt efficient, innovative technologies and best practices that will reduce their energy, water, waste and material costs.
If your business is interested in further information on any of these grants, or would like assistance completing an application, please contact the Equilibrium team on (03) 9372 5356 or at email@example.com
Be sure to stay up to date with our blog posts to get updates on Government grants.