Direct quote from the government’s 2009 budget web site:

“Households and small businesses will be able to calculate the potential dollar savings from their energy efficiency actions and make tax deductible donations to the Energy Efficiency Savings Pledge Fund. The Australian Carbon Trust will use these donations to purchase and retire Australian emissions units or purchase carbon offsets.”

What this means:

• If you voluntarily cut your household energy consumption to save greenhouse gas - sorry the greenhouse savings don’t count! If you want to reduce greenhouse gas emissions, you have to actually now go and pay to “retire” the carbon you’ve saved - and pay the government to do so. See my earlier blog posting rantings about the disincentives in the CPRS (Carbon Pollution Reduction Scheme) for more detail. Basically if you don’t pay to retire the greenhouse gas you’ve saved, the entity generating the energy (say an electricity generator) can claim it. And trade it. And you have contributed no additional greenhouse savings beyond that which the emissions trading scheme would achieve anyway.
• If you are a small business…. hang on… what is a “small business”? As only Australia’s top emitters get to participate in the CPRS doesn’t the definition of a “small business” in this context mean anyone who can’t participate in the CPRS? To participate in the CPRS you either have to directly generate over 25,000 tonnes of carbon a year, or consume more than 100 Terajoules of energy. In other words you are a small business if your annual energy consumption is less than 100 TeraJoules of energy or you directly produce less than 25,000 tonnes of carbon. What is a tera joule? You are probably familiar with kilojoules (1,000 joules), a tera joule is actually 1,000,0000,000,000 Joules. 100 TJ equates to an annual energy expense of about $2 million (as does the production of 25,000 tonnes). So, if you spend less than around $2 million a year on energy you are a “small business”!

So let me rewrite what budget actually means in plain English. “If you spend less than around $2,000,000 a year on energy, and you cut your energy use, in order to be able to also say that you’ve cut Australia’s greenhouse gas emissions you need to pay the government for it to recognise that what you’ve saved is an actual saving.”

Or, lets do a hypothetical here. Lets assume that you are a “small business” - ie your energy expense is less than $2 million a year. (What a tiny, wee business you’ve got if you’re not spending $2 million a year on energy!) You invest $10,000 in upgrading your lighting (using Mirrorlux Reflectors say). This saves you  $5000 a year on your electricity bills and about 25 tonnes of carbon annually. But if you want to say that your investment has reduced Australia’s emissions you actually have to pay. Lets say the carbon price settles at $50 a tonne. You’ll have to spend $1,250 a year to be able to genuinely say that your investment in your lighting upgrade is saving greenhouse gas. Because if you don’t, under the CPRS, the electricity generator supplying you the power that energises your lights has the right to the carbon you’ve saved.

Another hypothetical. This time you invest in a new gas heating system in your school. You spend $300,000 to put in gas space heaters and eliminate the old central heating system. It saves you approximately $20,000 a year in gas costs, and about 160 tonnes of greenhouse gas emissions a year. At $50 a tonne you have to pay the government $8,000 to “retire” the carbon you’ve saved. 40% of the financial savings you’ve realised goes to the government if you want to be able to say that your investment is actually reducing greenhouse gas emissions.

Are, you, like me, someone who believes that personal or “small business” action can do something to avert dangerous climate change? Do you, like me, spend less than TWO MILLION DOLLARS a year on energy? Well the government is clearly telling you and me that if we want to make a difference we have to pay twice. Pay for the investment to cut your emissions. And then pay the government to retire those emissions.

Isn’t there something really really wrong if we have to spend twice to cut our greenhouse gas emissions?

Its been a while since our last blog post. Which of course means we have been busy helping our customers save lots of carbon!

Its always tremendously satisfying to see customers act on our advice and thus cut their energy costs and carbon emissions. We recently helped one of our oldest customers identify savings in a building they have recently occupied, before I knew it our advice had been acted on and the next bill that comes in will be lower. As a consultant its pretty hard to beat the sense of fulfilment that comes from results such as this.

Over the last couple of years its been interesting to observe that the propensity for action is increasing. More of our customers are more willing to invest to achieve carbon savings. I think that there are a couple of  reasons for this.

Firstly, the obvious reason is that there is now much more popular support for efforts to reduce carbon emissions than there were three years ago. This has also transformed the mandate of many of the managers we deal with, to move from planning to action. Which is fantastic.

However another reason is also the experience of many of our customers. They have become “true believers” in energy efficiency because they have seen the results for themselves in the past. Two or three years ago they might have felt they were going out on a bit of a limb to put money into energy efficiency. Could our advice be trusted? But they did. And, surprise surprise, their energy consumption dropped. They saved money and carbon. Now they are much more willing to invest.

If you still haven’t seen the results of investing in energy efficiency yourself, do a small trial. Firstly, establish your baseline energy consumption. Pick a small building - for example your home - and go through the bills to establish your annual cost and carbon emissions (www.fossilfueldiet.com.au has a calculator which will help you do this). Then do some things to reduce your electricity use. Change any incandescent bulbs to compact fluorescent. If you have a beer fridge, used only occassionally, turn it off, and only turn on when needed. Rearrange your power boards so its easy to turn off stand by loads. Actively start thinking about light switches and turning off lights in empty rooms. If you can see that bad switch off habits in the household aren’t changing as quickly as you would like, try to do some things that “lock in” energy savings. For example, if your electric hot water unit is set to 70 degrees, lower this to 60 degrees, and start using timers to turn things off automatically.

You’ll learn a lot, and will see savings in your bills (remember to compare with the same time last year, as usage is seasonal). You can then apply these lessons at work to get much larger savings.

Become a “true believer” in energy efficiency and be a person of action. Simple, but something that can have a big impact when it comes to reducing carbon emissions.

This blog aims to show how acting vigorously to reduce carbon emissions is good for the environment and good for business. That it is possible to create a “win-win” with the right approach. The Emissions Trading Scheme - officially known as the Carbon Pollution Reduction Scheme (CPRS) clearly, as explained in earlier blog posts, is climate negative - its not good for the environment.  

Various blogs today responding to the release of the draft CPRS legislation by Climate Change Minister Penny Wong point out that its not just bad for the environment - it goes so far in its compensation to major emittors that its actually good for big business.  

Crikey.com refer to a study commissioned by the Australian Conservation Foundation which shows that many of the major polluters will actually benefit from the CPRS as a result of the free permits handed out. The Crikey post summarises this as follows “So let’s be clear: the the Government’s rationale for amending its already-generous ETS so that it rewarded big polluters was not to prevent the loss of jobs and emissions overseas, but to ensure the profitability of big polluters.”

Paul Gilding in the Business Spectator writes “This is as good a deal as business will get. It is easy to imagine a future government, when the icecaps have melted, the cyclones are hitting and the fires are burning, imposing a much tougher regime than the one currently on the table. The CPRS is a bad deal for the climate but it’s a great deal for business. Take it and run or you’ll rue the day you didn’t.

So lets summarise the above. The CPRS is bad for the climate, but good for big business. Its lose-win legislation - a loss for the environment and a win for those businesses that are major pollutors. In the short term anyway its a win for the major polluters, but in the long run won’t be - big business managers and shareholders won’t be immune to the effects of dangerous climate change.

Which brings me back to the argument that those of us who want to be climate positive need to be coming up with ways of reducing carbon pollution that are also great for the hip-pocket - in the short to medium term and not just in the long term. With products and services that business willingly buy because its good for the bottom line as well as being good for the environment. And that we need to be making the CPRS irrelevant - by making it so easy to be sustainable that its foolish not to. We have clarity now that the CPRS won’t cut emissions, and may actually put a floor on the amount of emissions reduction that can be achieved. Hopefully this flaw will be removed over the next few months as the legislation is debated. But we have a heck of of an innovation and entrepreneurial challenge!

And there is also a tremendous social challenge - the challenge of changing society to the point where carbon pollution becomes abhorrent and morally repugnant - for most of us.

If you care about future climate stability I’d encourage you to act as a carbon-saving innovator or entrepreneur, or to influence to create a society that is carbon-intolerant, and not put too much faith in the CPRS.

We assume so much in life, both personally and at work. Our assumptions and reality aren’t always the same. An occasional “reality check” can be very valuable. I wonder what expensive assumptions our organisations might harbour?

One of our clients, a medium size organisation somewhere in Australia, discovered in a very easy way that they were unnecessarily using $50,000 extra electricity each year.

It only took an overnight audit to discover this fantastic wastage. It was done by their staff as participants in our Greenhouse Gossip program

Most staff would shut down their computers when leaving work. No one was there to see that many of the computers were turning themselves back on around 8pm! Really, who would expect that?

After their audit, the staff came back the next day, to speak to the staff members whose computers were on. They discussed this and discovered the problem. By speaking to staff in other buildings in their organisation, and the ICT people, they discovered it was across the organisation.

The problem is now solved and they have an additional $50,000 to use each year from that one building (plus other savings identified and implemented in the program).

This is the kind of benefit that a structured, inquiring program can deliver.

Leisure centres are notorious for their high green house gas emissions. These facilities use energy for water heating, filtration, air heating, air handling, lighting, air conditioning, and gym equipment, to name the main loads. To maintain the strict chemistry requirements of the pool water and to avoid corrosion brought about by moisture laden air, several of these systems operate 24/7.

These characteristics often make a compelling economic case for onsite power generation through cogeneration. The perfect candidate for cogeneration is a leisure centre that has an indoor all year round heated pool, with an air handling system, and a base load of above 30kW. Below this magic mark, the cost associated with installation reduces the appeal of the investment.

Most Australian leisure centres use both natural gas and electricity, supplied through utility providers. Recently we have seen a growing interest in cogeneration from leisure centres that realise large greenhouse gas savings can be achieved, with reasonable pay back periods of 5 – 10 years.

Cogeneration is the process of converting combustible fuel into electricity and usable heat. This can be done in a variety of ways depending on the requirements of the facility. A cogeneration system is made up of the following:

Prime mover

Generator

Heat recovery system

Control system

Picture modified from http://www.epa.gov/greeningepa/images/cogen_shematic.jpg

In leisure centres the most suitable style of prime mover is a gas fired micro turbine, or an internal combustion engine. To size the optimal cogeneration system a numerical model is designed which considers the sites heat and electricity load profiles, electricity and gas associated cost parameters, and the market available technologies.

In conventional power generation 35% of the combusted fuel is converted into usable electricity, while the other 65% is lost as heat. A further 5 – 10% of this electricity then disappears through transmission. By producing electricity onsite with a cogeneration plant, the heat needn’t be wasted but rather put to work in heating operations, and in some cases it can be used for cooling when coupled with an absorption Chiller. By using the waste heat, the efficiency of the system increases up to 90%, and because the power is generated on site, transmission losses are kept to a minimum.

Cogeneration’s fast pay back and large greenhouse savings, situate it as an important short to medium term technology for carbon reductions. The current drawback is that the system does rely on natural gas which is not renewable, so its long term feasibility may rely on the development of grid connected bio fuels or reliable carbon offsets.