things you need to know about carbon right now

10 things you needto 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. It’s all about energy.

3. Emissions trading is inevitable.

4. Big business is being smart.

5. For SMEs, it’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.

* Ifyouwouldliketogetaquickdownloadonwhatallthesetermsand acronymsmean,simplyfliptothebackofthisbookwhereyou’llfindthemall explained,andmore.**Whichscientists?Quitealotofthemreally,andfromallovertheworld. Readaboutitatwww.ipcc.ch

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*.

More importantly, scientists** say carbon is responsible for climate change, which is so

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.

And that means you’re going to need some simple answers to some complicated questions.

1. Carbon is complicated.

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.

Why? Because carbon is not just about energy use like electricity, it is embedded in all the goods and services you use.

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 money, no matter how big your business.

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?

*JustlookattheUSA.WhentheyleadyouknowAustraliawillfollow.

3. Emissions tradingis inevitable.

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.

‘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.’

Malcolm Turnbull

Kevin Rudd

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-moonUN Secretary General

Some of the big businesses who are, mostly very publicly, dealing

with their emissions now.

Of course, it’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.

Think it’s not true? Look at how ISO9001* flows down the supply chain. Inevitably, business will build environmentalism into

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.

*WanttoknowmoreaboutthisInternationalQualityStandard?Visitwww.iso.org

The supply chain in action.

Government makes big

business act

Big business demands a supply chain that ‘shares their new values’.

Climate change gets people

worried

People demand Governments act

What are your organisation’s enviromental policies and

practices? What are you doing to reduce your

carbon footprint?

Does your

company have

a documented

enviromental

policy? Has your

company set

formal targets

for reducing

greenhouse

emissions?

20% of

tender

weighting

based on

carbon

neutrality

of supplier

Is big business really interested in how their supply chain is dealing

with carbon? These are real clippings from tender documents

of some of Australia’s leading companies.

Large TeLcoTop four

ausTraLiaN baNk

Major MiNiNg coMpaNyMuLTiNaTioNaL

coMMerciaLgiaNT

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.

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.

6. Government cares about supply chain, too.

7. First mover wins.

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!’

While we’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.Henry Ford

We’ve talked about how dealing with your carbon can create a brand advantage.

Now let’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%*.

*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.

8. Carbon management is a savingnot a cost.

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 competitors’ goods goes up while yours stays the same.

Which means you can offer a price discount without actually discounting at all.

What if...?

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.

*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.

9. Returns are immediate.

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.Rupert Murdoch

Right now, dealing with your carbon is cheap.

Energy reduction measures are easy to come by. It doesn’t take a lot of effort to be ahead of the curve and it’s voluntary, so you can still afford to test different strategies and learn from them without paying dearly for any mistakes.

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.

10. Doing nothing will cost more than

doing something.

The Double Trough

Avoiding the Double Trough

2009 2010 2011 2012 2013

Bus

ines

s P

rofit

abilit

y

Economic Recovery Period

Impact of theCPRS

Implement CPRS Strategy

Global Financial Crisis

CPRS commences

CPRS Researchand Planning

• Exclusion from sales opportunities • Increasing costs • Low profits/losses

Strong Growth • Improved sales opportunities • Reduced costs • Increased profits

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.

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.’

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?’

Potential ROI less than a year

Cost of acting

Brand reputationSupply chain status

Cost savings

Missed contractsIncreased energy billsThe ‘double trough’

Risk of not acting

Benefits of acting

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

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 ‘Measure, Manage, Minimise’ 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:

Act now.

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.

Glossary& Further Reading

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 CO2?

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.

What is CO2e?

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.

What’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.

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’s a Carbon Credit?

What is NGER?

NGER is the Australian Government’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 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.

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

What is the CPRS?

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 Emissions Trading?

I don’t want to be left behind. In fact, I want

to be here before the

action starts.

Kerry Packer

Starting at the back? We knew you would. Everybody does.

Why not flick to the front and see what you find there...

1. Carbon is complicated.

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