Think Tank: Sustainability - who has the energy?

• Louis White
• 19 August 2008
• Page 1 of 2 : single page

The panel

• Irena Bukhshtaber, general manager - communications, Clean Energy Council
• Dave Sag, founder and executive director, Carbon Planet
• Stephen Woodward, CEO of LPG Australia
• Rob Allan, CEO of Allomak
• Sandy Beard, CEO of CVC Sustainable Investments

Last year only 30% of the top 500 Australian Securities Exchange-listed companies reported on sustainability. This rate is far lower than countries where disclosure is regulated. Should Australian companies be required to report on sustainability?

Sandy Beard: It shouldn’t be mandatory. Almost all companies that do produce reports have noted there was a strong business case for doing so and that’s why they continue to report. The business case can include:

• Motivating, empowering and aligning staff with strategic objectives
• Attracting and retaining high calibre employees
• Driving change processes
• Developing effective risk management policies
• Encouraging innovation, and building and maintaining stakeholder relationships through engagement.
  

Dave Sag: It’s critical for investors that sustainability issues are incorporated into standard annual reports, as well as reporting into schemes such as the Carbon Disclosure Project and the National Greenhouse and Energy Reporting Act 2007. There will be a cost to carbon soon, and to other externalities soon after, and these costs must be made transparent to investors well in advance.

Stephen Woodward: It is important in a global context. If Australia reduces greenhouse gases and the world’s major emitters don’t, it will have little effect.

Rob Allan: We need to ask ourselves are the renewable energy targets set by the Federal Government sustainable and what is the costs of aiming for 20% renewable energy by 2020. In the initial stages, renewables will be more expensive than carbon-based energy sources, so we will be paying a social cost for the privilege of meeting targets.

Irena Bukhshtaber: I think what’s more important is the National Greenhouse and Energy Reporting Act, effective from July 1, which requires business to begin collecting mandatory information about their output of greenhouse gas emissions and their production and consumption of energy. That is a key step in the right direction for Australia and Australian businesses.

How vital is it that small businesses look to alternative fuel sources for cars such as LPG conversion? What are the benefits and should car makers be made to meet fuel-efficiency standards?

Stephen: Alternative fuels are very important for Australia, particularly LPG, which Australia has in abundance. We have an established LPG distribution infrastructure in place, and there are no impediments to Australia’s vehicle fleet running on LPG. Rising fuel prices are driving efficiency gains and will continue to do so. LPG offers greenhouse gas benefits over traditional transport fuels of around 10%, and this can be improved further with liquid injection technology. Hyundai has announced an LPG-hybrid car, available from 2009, which will travel 300 km on $10 of fuel.

Rob: LPG is certainly more energy efficient and it’s readily in place. We should be adopting it immediately, in place of hydrogen. We could halve the nation’s fuel costs and emissions by adopting LPG now. I think a lot more could be done to educate the Australian public about LPG.

Dave: LPG conversion is a good short-term measure but it only cuts emissions by 10%. If we aim for a 60% reduction in greenhouse gas emissions by 2050, LPG alone won’t do it. We need to push for greater fuel-efficiency standards. One litre per hundred kilometres should be our goal by 2020 – and to encourage people to use their cars less.

Sandy: It’s important we seek alternative fuel sources as oil prices rise. This will minimise transport costs and our exposure to volatile oil prices, and reduce emissions if we select the right alternatives. LPG may not be our long-term answer because LPG prices have always been linked to oil prices. The Australian Financial Review claims LPG prices have increased more than twice as fast as petrol in the last year.

Other potential low-emissions fuel options include compressed natural gas, liquefied natural gas, bio-fuels – particularly those derived from waste products and second-generation technologies – and electricity. The case for electric and hybrid vehicles is quite compelling particularly if they use low-emissions electricity generation. General Motors has announced the Chevrolet Volt, a plug-in hybrid electric vehicle which will sell for around US$20,000. You charge it over night and the battery will give you over 60 km for less than $3. That’s one-third the cost of petrol at around $1.60 per litre.

Irena: We only have 70 years of gas left, which is less than coal and nuclear. I don’t think LPG is the answer – people need to think carefully about using their cars.

Will carbon sequestration be a viable commercial alternative to traditional coal-fired power stations?

Rob: We have to look at the national perspective and it’s important to have a competitive advantage, which we have with coal but don’t have with renewable energies. A large part of our economy is exporting coal. Inhibiting that will incur a social cost. You can’t ignore the momentum of climate change and renewable energies but it’s important not to burden this country with our global conscience because it will impact the economy.

Sandy: We need to diversify our power-generation portfolio. We’re dependent on coal-fired electricity and the power price quadrupled in June 2007. Investing in renewables is likely to cost more in the short term but provide longer term benefits. Increased investment reduces the cost of renewables and provides us with greater energy security.

The target approach indicated in the proposed emissions trading scheme allows for continued use of coal – and gas-fired power with lower emissions generation gradually phased in. As reduction targets become stricter, old plants may be retired or retrofitted with carbon capture and storage as the technology is developed.

Stephen: The availability of energy is already a large political driver in the world. When oil supplies fall, the two major energy sources that are spread across the world are coal and uranium. The question is how to use them? The carbon burden from both will have to be reduced.

Dave: Uranium is no solution. Al Gore told me recently that every issue of nuclear proliferation he dealt with as vice president was triggered by a civilian nuclear programme. There’s simply not enough uranium to provide the power we need. While there is a lot of coal, many of the power plants are in areas unsuitable for geo-sequestration and carbon capture and storage is unproved technology.