As more businesses chart a course towards net zero emissions, we look at some of the steps to actually get there.
Almost a third of Australia’s 300 largest listed companies have now committed to net zero carbon emissions. The rate of business-led net zero commitments has also accelerated in the light of the alarming report delivered by the UN's Intergovernmental Panel on Climate Change (IPCC).
Pledging to net zero emissions is an encouraging step, following up with an action plan is the hard part. We look at five key elements of implementing net zero plans to help businesses take the next steps.
Achieving net zero emissions by the intended target date starts by understanding your business’ current carbon footprint. This means measuring your energy and emissions data across all sites and energy suppliers.
There is a difference though between energy intensity and emissions intensity. For example, a building may have low energy intensity as measured by the NABERS energy intensity framework and benchmarking tool. However, if the same building is heavily reliant on coal-fired energy sources, it will not have low emissions intensity.
As Dr Alan Finkel noted in the July edition of Quarterly Essay that 82% of Australia’s emissions in 2020 are related to fossil fuel combustion. This included electricity (34%), stationary energy (20%), transport (18%) and fugitive emissions in fossil fuel extraction and transport (10%). Businesses must thus examine energy usage, including when and where it is being used. Simple changes like motion-sensing lighting and opting for cost-effective, energy-saving equipment can reduce both emissions and running costs.
Replacing energy generated by fossil fuels with renewable energy should be a cornerstone of businesses’ net zero plans. Our clients have recently discussed how current low pricing large-scale generation certificates can help them to reach their net zero energy targets ahead of schedule.
Renewable energy options include onsite solar. Because these don’t have standard network supply charges, again, they can reduce both emissions and running costs. Through our Solar Auctions, businesses can have reputable suppliers bid competitively for their required system spec delivering further cost efficiencies.
Innovative low emissions procurements options are emerging. For example, we have launched Green Auctions, a cost-effective way for businesses to secure a renewable-backed energy supply agreement (RESA) and speed up their transition to net zero. Businesses can now leverage a standard energy supply agreement to access 50% to 100% firm priced renewable supply.
Some of our clients say that the type of energy they purchase and their upgrades to property and equipment are also opportunities to drive change through their investments and to signal to the energy market that emissions reduction is the intent.
Many businesses may have some residual emissions that are either very difficult to eliminate or outside of their control. This is where carbon offsets may help. These involve buying offsets from companies planting trees to absorb carbon or installing renewable energy, for example.
However, the price of carbon offsets remains low due to supply outpacing demand in previous years. This, it is argued, can make offsets more appealing than other more impactful pathways to deeper emissions reduction.
While carbon offsets can also help channel money into new technology, it is important to scrutinise their credentials. For example, would these projects have been financed without an offsets market and therefore do not offer additional environmental benefits?
Energy Action’s net zero plan also captures waste, paper usage, business travel and catering. Eventually, it will extend to events and conferences and our employees’ commute to work. But to ensure that energy initiatives are ongoing, stakeholder engagement and strong governance are imperatives.
Energy management policies that guide procurement teams through minimum performance or emissions reductions standards are emerging as one way to achieve organisational alignment. If you are considering how to formulate and implement these policies, we encourage you to attend our energy management webinar on 7th October.