Effectively Transitioning To Lower Carbon Emissions
By Brett Spicer, Head of Advisory, ERM Power
I am often asked by our customers “how do we make the transition to lower carbon emissions in a way that is appropriate for our business?” In principle, to advance the transition is relatively simple – we start with clear targets and move from there. To answer what is “appropriate” is more challenging as it will be quite subjective considering each business’s unique circumstances. Their journey towards lower carbon emissions may be driven by a desire for cost savings, evolving market or stakeholder expectations, or regulatory requirements. However, some don’t have the resources or capability to navigate the complex challenge. Further, some are unsure how to agree on a target that is both commercially viable and sustainability-focused, and this can be a deterrent to setting a carbon emissions target at all.
Carbon Emissions Target
From the outset, we assure our clients that there is no single way to define a lower carbon emissions target, and that any target is valid. A target may be ambitious or conservative, imminent or long-term, business-wide or for one part of an operation. These business decisions are different for each customer and need to consider a client’s corporate objectives and their unique operating environment. Take GPT Group, for example. GPT established a target of net zero carbon emissions for the GPT Wholesale Office Fund by 2020. We advised GPT on the best energy pathway to reach their target of net zero emissions by 2020, which they achieved earlier this year and will be validated through the NABERS rating process at buildings throughout the year. The rest of GPT’s managed portfolios are now working towards a similar net emissions path and we continue working closely with GPT on their planning.
Further still, your targets need not be specifically emissions-focused to make a difference. For example, Western Sydney Airport (WSA), an ERM Power client, has set an ambition for the equivalent of its operational electricity load to be sourced from 100% certified renewable energy by Day 1 of operations in 2027. A key driver for WSA is financial viability, and through ERM Power’s rigorous strategy development process, involving data analysis, expert energy market insights, evaluation of offset solutions, and investment and roadmap strategy, Western Sydney Airport feels confident they can satisfy their sustainability ambition while also realising a positive commercial outcome once they’re operational.
For your business, a substantial, near term target simply may not be feasible. Many of our customers have limited capacity to materially reduce carbon emissions in their current operating environment. Yet any well-conceived, interim steps to reduce carbon emissions, however small, can set you on a path to longer term targets, achieve favourable commercial and sustainability outcomes and may help to future proof your business as you face shifting stakeholder expectations, regulations and laws related to carbon emissions.
Another key aspect is ensuring your carbon emissions reduction ambition can be achieved within your commercial and investment constraints. Innovative funding models, project financing advice and immediate operating cost savings mean commercial and sustainability outcomes aren’t necessarily mutually exclusive. As experts in the Australian energy market, we have a deep understanding of how to maximise your value streams from solutions to reduce carbon emissions. For example, we advise customers on how energy saving certificates can contribute to funding energy efficiency projects, or how to generate multiple value streams from energy conservation measures.
While the first step on your journey to lower carbon emissions can seem daunting, our expertise in the Australian energy sector can guide you at every step of the journey. There are many pathways available when transitioning to lower carbon emissions, including but not limited to, any combination of the following:
- Onsite (behind the meter) renewable energy
- Efficiency upgrades at existing plants
- Switching equipment to lower emissions technologies
- Trading carbon offsets and/or environmental certificates
- Renewable energy power purchase agreements (PPAs)
ERM Power’s Advisory Team collaborates closely with our customers on their energy journey, offering holistic services, from the setting of targets to solutions delivery. We focus on data discovery and acquiring a comprehensive understanding of the customer’s unique operational context and constraints to establish meaningful and achievable targets. Together, we then develop a strategic energy roadmap to achieve your commercial and sustainability objectives.
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About the Author
Head of Advisory, ERM Power
Brett Spicer leads the ERM Power Advisory team. Brett is responsible for the development and delivery of energy consulting services to our commercial and industrial customers.