things you need to know about carbon right now
10 things you need to know about carbon right now. A practical guide to uncomplicating the issues and finding a business advantage in the age of carbon reduction and climate change.
1.Carbon is complicated.
2. Itâ€™s all about energy. 3. Emissions trading is inevitable. 4. Big business is being smart. 5. For SMEs, itâ€™s all about supply chain pull. 6. Government cares about supply chain, too. 7. First mover wins. 8. Carbon management is a saving not a cost. 9. Returns are immediate.
10. Doing nothing will cost more than doing something.
1. Carbon is complicated. Really complicated. In just a few years it’s led to a dictionary of new words and ideas, such as CO2e, carbon footprint, offsetting and credits, carbon neutral, NGER, emissions trading, CPRS, and a whole lot more*.
complicated no-one knows what’s going to happen. In all this complication, one thing’s for sure. Whether you’re a believer or a sceptic, carbon is going to have a big impact on your business. That is, if it hasn’t already.
More importantly, scientists** And that means you’re say carbon is responsible for going to need some climate change, which is so simple answers to some complicated questions.
* If you would like to get a quick download on what all these terms and acronyms mean, simply flip to the back of this book where you’ll find them all explained, and more. ** Which scientists? Quite a lot of them really, and from all over the world. Read about it at www.ipcc.ch
2. It’s all about energy. Whether you manufacture, transport or simply maintain a network of offices, one equation is true: The more energy you use, the more carbon you emit.
Until now, this hasn’t been a problem. But that’s all about to change.
You see, creating carbon is about to start costing you Why? Because carbon is not money, no matter how big just about energy use like your business. electricity, it is embedded in all the goods and services you use.
3. Emissions trading is inevitable.
You may have heard of the CPRS. Yes, it’s been put off for a few years. No, it’s not going away, whatever form it takes.* That means, for the first time, big energy users will be required to pay for the carbon, or emissions, they emit.
If you’re a big energy user, this is a problem that has only two answers: Reduce energy usage or accept an increase in the cost of doing business. Which do you think most businesses will choose?
*Just look at the USA. When they lead you know Australia will follow.
4. Big business is being smart. They know emissions trading will cost them one way or another, so they might as well find a way to get something back in return. By reducing emissions now, they can say they did it voluntarily, for the greater good.
Their emissions go down. Their brand reputation goes up. It saves them money in the long run. And a cost of doing business becomes a business benefit. See, smart.
Emissions trading. It’s not an if, it’s a when. ‘Together, we face two crises: climate change and the global economy. But these crises present us with a great opportunity – an opportunity to address both challenges simultaneously. Managing the global financial crisis requires massive global stimulus.
A big part of that spending should be an investment – an investment in a green future. An investment that fights climate change, creates millions of green jobs and spurs green growth. We need a Green New Deal. This is a deal that works for all nations, rich as well as poor.’
Ban Ki-moon UN Secretary General
‘We want a national emissions trading scheme... We want to boost the mandatory renewable energies target...We want a national demand side management strategy for the country to reduce electricity consumption.’
‘I take the view in terms of the climate change challenge, that...you’ve got to give the planet the benefit of the doubt. Even though there are people who question and doubt the science...we have to address it and deal with it.’
Some of the big businesses who are, mostly very publicly, dealing with their emissions now.
Of course, itâ€™s not just about the big guys. Smart SMEs are getting in on the action, too.
A year ago, environmental credentials were a nice to have. Now they’re a must-have if you want to do business with the top end of town. Next, all other things being equal, the company with the best green credentials will win.
their brand and, when they do, they’ll only deal with companies who support their values, even if it costs more. Smart SMEs know this and they’re making sure they’re first to mind.
5. For SMEs, it’s all about supply chain pull. Think it’s not true? Look at how ISO9001* flows down the supply chain. Inevitably, business will build environmentalism into *Want to know more about this International Quality Standard? Visit www.iso.org
Climate change gets people worried
People demand Governments act Government makes big business act
Big business demands a supply chain that â€˜shares their new valuesâ€™.
The supply chain in action.
What are your organisationâ€™s enviromental policies and practices? What are you doing to reduce your carbon footprint?
Does your ave company h ted a documen l enviromenta r o y u policy? Has et company s ets for mal targ g for reducin e greenhous s emission ?
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f 20% o r tende ng ti weigh on based n carbo ity l neutraplier of sup nal atio multin ercial commiant g
Is big business really interested in how their supply chain is dealing with carbon? These are real clippings from tender documents of some of Australiaâ€™s leading companies.
Major mining comp any
Big business isn’t the only one demanding better environmental credentials from their supply chain. Government is too. And right now, they’ve got the money. State and Federal Government will only rent space in buildings with a NABERS (National Australian Built Environment Rating System) rating of 4½ or above.
6. Government cares about supply chain, too.
And they prefer to deal with suppliers who have a sustainability policy in place. What’s more, you can bet their criteria is only going to get stricter.
Think banks. A few years ago, Westpac ran a campaign claiming the position of most environmentally responsible bank in Australia. A few years on, many of their competitors have matched, if not exceeded, Westpac’s credentials in this area. But Westpac owns the reputation, because they were first.
And they’re still enjoying the brand advantage earned from investing early. The same will happen in your industry. One company will take the first mover advantage. Then everyone else will spend twice as long and twice as much money yelling, ‘Me too!’
7. First mover wins.
While weâ€™re on the subject, have you noticed the new Woolies logo? Red to green. Coincidence? Perhaps.
It has been my observation that most people get ahead during the time that others waste time.
Weâ€™ve talked about how dealing with your carbon can create a brand advantage. Now letâ€™s talk about how it can earn you a cost advantage, too. Energy prices are already on the rise, but when emissions trading comes in, they will go up even more. Not a little, a lot. On average, 11% to 19%*.
8. Carbon management is a saving not a cost. *This depends on the source of your energy, the State you buy your power from and the price of carbon, amongst other things. In Tasmania, for example, hydroelectricity is the main power source so prices will be less affected. However, in Victoria, where coal powers most of the State, price increases could be even higher than these estimates.
What if...? If energy is a fundamental in your cost/profit equation, then what happens if suddenly your cost of energy goes up? You will pass this on to your customers. Your competitors will, too. But what if one of you puts in energy saving measures? What if you cut your energy use by 30%?
The cost of your competitorsâ€™ goods goes up while yours stays the same. Which means you can offer a price discount without actually discounting at all.
In 2008 we helped one of Australia’s leading law firms* measure and reduce their energy usage. By making $109,000 worth of changes, we helped them reduce their energy bill by $120,000 per year. That represented a 25% reduction in energy used as well as a 5% reduction in emissions.
Most of all, it was a nine month return on investment. In this financial climate, that’s right up there with the best. What’s more, in a time of recession, it has given them a new story to tell and helped them win new business.
9. Returns are immediate. *It is worth noting that this was an office business, where energy use was primarily from IT, air conditioning and lighting, and only represented one office out of the firm’s dozen Australia wide. In a more energy intensive, manufacturing setting the savings would likely be even more impressive.
Some of our businesses use more energy than others, but our strategy everywhere is the same: first, reduce our use of energy as much as possible.
Right now, dealing with your carbon is cheap. Energy reduction measures are easy to come by. It doesnâ€™t take a lot of effort to be ahead of the curve and itâ€™s voluntary, so you can still afford to test different strategies and learn from them without paying dearly for any mistakes.
10. Doing nothing will cost more than doing something.
As time goes on, this will change. Carbon trading will make a lot of companies scramble to reduce emissions and energy usage, fast. And, when everyone wants something at the same time, it always costs more.
And, while Government may be hesitant to burden business with extra cost now, when the good times return, they will not be. This has the danger to create a situation whereby those who have not dealt with carbon meet the end of the recession with a new set of costs. So that rather than enjoy the growth that comes with
recovery, they are left with the challenge of a ‘double trough.’
The Double Trough Avoiding the Double Trough
All of which leads to yet another challenge still. Any company that is hit with a ‘double trough’ will also be hit with a ‘why’ from markets and shareholders. If you are the person at the helm, there will be questions asked: ‘Why didn’t you see this coming when our competitors did?’ If you are a trusted advisor, this question will be equally poignant: ‘If you didn’t see this coming, why should we trust you anymore?’
Strong Growth • Improved sales opportunities • Reduced costs • Increased profits
Global Financial Crisis
More dangerously, now that the financial crisis has become an accepted part of the business landscape, climate change is once again the biggest item on the political agenda.
Implement CPRS Strategy CPRS Research and Planning
Economic Recovery Period
• Exclusion from sales opportunities • Increasing costs • Low profits/losses
Impact of the CPRS
Benefits of acting Brand reputation Supply chain status Cost savings
Risk of not acting Missed contracts Increased energy bills The â€˜double troughâ€™
Cost of acting Potential ROI less than a year
We need to push ourselves to make as many reductions as possible in our own energy use first... and that takes time. But we must do this quickly...the climate will not wait for us. Rupert Murdoch
Act now. Carbon Planet exists to help companies uncomplicate and take advantage of the new business landscape being created by climate change. By talking to us you will be assured of solutions tailored to your business and its individual needs. Through our â€˜Measure, Manage, Minimiseâ€™ three step strategy, we help businesses make the necessary changes to improve their sustainability and overall business efficiency in ways that deliver greater profits. Our team of specialists comprise PhD qualified engineers, senior scientists and business analysts.
Together, this unique mix of scientific expertise and business insights deliver a broad range of services including: Audit & Advisory: greenhouse gas auditing and assessment, energy reduction and carbon management services Corporate Education: preparing corporate stakeholders for change Carbon Commerce: scientific analysis and consultancy to facilitate the creation of carbon credits from valid projects, aiding business to maximise commercial opportunities.
What is CO2?
CO2 is the chemical formula for carbon dioxide, the most prevalent greenhouse gas associated with anthropogenic (human) activities, and the most important in terms of contributing to climate change. When people talk about carbon emissions, they are talking about CO2 or CO2e.
What is CO2e?
Not all greenhouse gases are CO2. Other greenhouse gases include methane, nitrogen oxide and perfluorocarbons. CO2e stands for carbon dioxide equivalent. CO2e is the given amount of a greenhouse gas that has the same global warming potential as the equivalent amount of CO2 over a specified time frame, generally 100 years.
Whatâ€™s a Carbon Footprint? Your carbon footprint is the impact you have on the environment, measured in tonnes of carbon dioxide equivalent (CO2e). A carbon footprint can be applied to an individual or entity.
What is Carbon Offsetting? Carbon offsetting is when you reduce carbon emissions elsewhere to neutralise, or offset, the carbon emissions you create in the course of doing business. A carbon credit is the financial tool that allows this transaction to take place.
Whatâ€™s a Carbon Credit?
One carbon credit represents the reduction of one metric tonne of carbon dioxide, or its equivalent in other greenhouse gases, from the atmosphere. Offsets are typically achieved by providing financial support to projects that reduce the emission of greenhouse gases. These can include funding projects such as wind farms, hydroelectric dams, methane destruction, protection of forests (REDD) and forestry creation.
What does Carbon Neutral mean? Carbon Neutral describes any person, family or organisation that has zero net greenhouse gas emissions. One can only become carbon neutral by reducing, or abating, carbon causing activities, using clean energy and offsetting emissions that cannot be reduced elsewhere.
What is NGER? NGER is the Australian Governmentâ€™s system for reporting greenhouse and energy usage by industry. It stands for National Greenhouse and Energy Reporting. NGER aims to streamline the process of reporting emissions across all industries and jurisdictions and to minimise the reporting burden on businesses.
What is Emissions Trading? You have a company. Your company generates carbon. Let’s say for a moment that carbon could be disposed of in garbage bins. The Government gives you two bins. You can’t have any more. Let’s say your company only fills one bin, but another company fills their two bins and still
has more carbon to dispose of. You sell them the right to put carbon in your left over bin. You make money. That’s carbon trading. The Government sets limits. Companies who create less pollution pay less. Those who create more pay more. Simple as that.
What is the CPRS? The CPRS is the Australian Government’s proposed emissions trading scheme, due to start in 2011. It stands for Carbon Pollution Reduction Scheme. For more terms and learning, please visit our Carbopedia at carbonplanet.com/ carbopedia
I donâ€™t want to be left behind. In fact, I want to be here before the action starts.
1. Carbon is complicated. Starting at the back? We knew you would. Everybody does. Why not flick to the front and see what you find there...
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