Whether one agrees with it or not - both CPD and carbon - it appears that things to do with continuing education, carbon and energy will be here to stay. What impact will these have on architecture? It is a reasonable question that needs to be explored and debated. On carbon matters, the tri-generators spoken about in CARBON 4 are of particular interest, as is the strategy for managing energy in Sydney CBD. While the subject is intriguing, what we must always remember is that architecture is more than things environmental. We should be careful not to be attracted to the fashion of the day and neglect the richness that is architecture. Remember history - both the history of architecture and that of the big money spinning programmes that were developed to save the world: QA - quality assurance, and Y2K - the turn of the century drama. We forget these at our peril.
Carbon: making the big switch
- by: SPECIAL REPORT: DEB RICHARDS
- From: The Australian
- April 20, 2012
From July 1, the federal government's Clean Energy Future legislation imposes a price on carbon emissions and stimulates investment in renewable energy while encouraging energy efficiency and improved land management. It represents a significant structural change for the economy, with the pain to be cushioned by incentives and compensation packages.
Nick Wood, associate director of climate change and sustainability at KPMG, has been readying CEOs and CFOs all over Australia and advising them to see it as an opportunity. "There are issues, but it's not a disaster waiting to happen," he says. "It's really about the speed at which business can adapt. You want to make a smooth transition, not too fast or too slow."
In fact, the carbon "tax" is not a tax in the true sense, but a way of "costing in" the gases that have been generated as byproducts of our thirst for growth and high standards of living. The theory is that if the activities that create these gases are made more expensive, then there will be a natural inclination to switch to less costly - and therefore "cleaner" - technologies. The big question is: Can severe adjustment pain be avoided while we develop another way to fuel our high living standards?
The effects will vary across business sectors. "It requires different actions, depending on where you sit in the food chain," Wood says.
The companies that produce more than 25,000 tonnes of carbon dioxide a year are the big emitters that will be directly liable. They include power stations, mines, heavy industry and waste disposal. Based on data submitted to the National Greenhouse and Energy Reporting Scheme, it is expected that about 500 companies will fall into this category.
They will be paying $23 per tonne of carbon, increasing by 2.5 per cent a year for three years. After 2015 the pricing becomes flexible and will be determined by an emissions trading market. The revenue will help households cover higher electricity charges, and the rest will be ploughed back into industry assistance and investment in clean technology and energy efficiency.
It's been estimated that the top 10 companies will pay nearly $4 billion a year, minus whatever government funds they get. Coal-fired electricity generators, such as Macquarie Generation, will attract little compensation and will feel the brunt. Macquarie recently said it would lose $100 million of its projected $140 million profit this year. "For this tier the carbon price means the company must buy and sell a lot of carbon credits," Wood says. "How it interacts with the energy market will determine its success."
Surprisingly, there is still a role for coal in this energy future, if the cost of the carbon can be justified financially. Electricity markets are highly complex, but companies that have done their homework are already positioning themselves. Explaining its plan to purchase 100 per cent of the Loy Yang coal-fired power station and the adjacent brown coalmine in Victoria, Australia's largest energy generator and retailer, AGL, says the carbon price has provided certainty for investors.
The government's $9.2 billion "jobs and competitiveness" program includes a range of assistance packages for "trade-exposed" big polluters, such as cement works, petroleum refiners and steel and aluminum makers. The Minister for Climate Change, Greg Combet, told parliament recently the carbon price would effectively be reduced from $23 a tonne to $1.30 a tonne for many of these businesses. The assistance is to be reduced progressively and will be reviewed in 2014.
According to Wood, these industries have multiple liability issues. The quality of their data and how they structure permit buying and selling within the company will be key factors. "The core mechanism of the carbon tax is straightforward. Complexity arises in how a company makes the transition."
The next sector down is at the sharp end. Medium-sized manufacturers, infrastructure and building products companies and the food industry will be buying materials on which the carbon price has been levied. Electricity costs will be higher, so usage and costs will need to be factored into monthly reporting. Also, the compliance requirements will be tricky, and the management of product cost increases must be watertight and transparent, because the Australian Competition & Consumer Commission will be vigilantly policing unjustified price hikes. Woods says this sector needs to work out how it will reduce electricity costs, and to identify any carbon "hot spots" within the supply chain.
The retail sector will need to look for energy efficiencies to address increased power costs. Yet that may not happen. There are doubts whether price signals alone are enough to meet the 80 per cent reduction goal for greenhouse gases by 2050.
Price hikes of 20 per cent a year in electricity charges due to infrastructure and other non-carbon- related factors have not provoked a widespread change of behaviour. In theory, efficiencies such as changing lightbulbs, switching off appliances, adopting new, less electricity-hungry technologies and processes should be easily achievable, with a quick cut to emissions, lower costs and higher productivity. But there is still resistance.
A 2011 Australian Industry Group survey of its membership found that while energy-intensive firms considered energy efficiency part of their core business, more than two thirds of the far more prevalent small to medium-sized enterprises had not improved efficiency in the previous five years. A number of them were even less energy-efficient.
Caroline Bayliss, of the not-for-profit Climate Group, says the solution lies in helping business see the need to innovate and adopt best-practice methods. "It's not just about compliance. It's about transforming the market, so that business brings carbon emissions down and pushes profits up."
The Climate Group is a global organisation initiated by Tony Blair while he was the British prime minister. Here in Australia, Bayliss works to bring governments and corporations together to identify ways of doing good business with lower carbon demands. Companies such as IBM, Origin Energy and General Electric are exploring ways to co-ordinate with government to build "climate- smart precincts" in which integrated services and information and communications technologies reduce energy costs and emissions.
The Climate Group will be investigating the role of electric cars in corporate fleets and is involved in other leading-edge integration projects. "This is showing what can be done," Bayliss says. "It's about thought leadership. The carbon price won't do this on its own. To have a new low-carbon economy, you need to have a positive outlook and to actively seek opportunity."