cr john mitchell - city of greater geelong · web viewthis could save an average of $12.50 per...

Low Carbon Growth Plan for Greater Geelong

May 2011

3

Mayor’s statementThe City of Greater Geelong is honoured to be part of this Australian first research project.

The Low Carbon Growth Plan for Geelong provides a solid foundation for our city to position itself to overcome the challenges we face in a carbon-constrained future. These challenges include rising electricity prices, increasing competition from offshore production, a changing legislative environment, as well as state and federal carbon emission reduction targets.

This research provides a roadmap of practical actions to reduce Greater Geelong’s energy consumption and greenhouse gas emissions, and highlights a range of opportunities to collaborate with state government, local industry and the community to build a low-carbon economy. It will serve as a catalyst for new partnerships, research and development and employment opportunities, by increasing local demand for sustainability services and clean technology solutions.

Geelong already has a proud history of commitment to innovation and leadership in environmental matters. We have many organisations across the municipality who are already making significant strides towards ambitious emissions reductions.

Within the City of Greater Geelong operations, our Eco Challenge program has resulted in a considerable reduction of the Council’s carbon emissions. Ambitious targets are being met through building energy efficiency programs, conversion to green energy technology such as solar panels, electric cars and wind turbines, as well as major water saving initiatives.

The Low Carbon Growth Plan for Geelong will guide another inventive pilot program: Future Proofing Geelong. This program seeks to position Geelong as a demonstration city, showcasing our ability to transition to a low carbon future while continuing to develop existing local industry, to grow our economy and to ensure our city’s liveability.

We have before us an astonishing opportunity; through our combined efforts, Geelong can prosper in a carbon constrained future, and become the best place to live, work and invest in Australia.

Although this transition will present many challenges, by prioritising those actions that make good sense economically, socially and environmentally for Geelong, I believe we can be successful.

Finally, thanks must go to Cr John Doull for his efforts and the many partners who provided valuable insight during the development of this important research plan, particularly the Environment Protection Authority Victoria, Victorian Department of Susainability and Environment, Sustainability Victoria, ClimateWorks Australia and local industry.

Cr John MitchellMayor, City of Greater Geelong

4

Preface

ClimateWorks Australia (ClimateWorks) was founded in 2009 through a partnership between the Myer Foundation and Monash University, with a mission to substantially reduce Australia’s greenhouse gas emissions over the next five years. Funded through philanthropy, ClimateWorks is unaligned with commercial, political or NGO interests and acts as an ‘honest broker’ in enabling collaborative action.

ClimateWorks believes the practical steps required to achieve reductions in greenhouse gas emissions are more likely to be undertaken if presented in an easy to understand, overarching and cohesive climate change strategy for Australia.

In March 2010, ClimateWorks released the Low Carbon Growth Plan for Australia, which presents a range of actions to reduce greenhouse gas emissions at lowest cost across the Australian economy.

This report, the Low Carbon Growth Plan for Greater Geelong identifies a range of greenhouse gas abatement opportunities that can be achieved for the lowest cost within the municipal boundaries of Greater Geelong. These opportunities are based on the actions outlined in the Low Carbon Growth Plan for Australia.

The Low Carbon Growth Plan for Geelong has been developed with the participation of members of the local community, industry and government who have provided data, identified additional locally relevant actions for inclusion in the report and reviewed the report’s findings.

ClimateWorks hopes readers find this a useful contribution in assisting Greater Geelong’s transition to a low carbon economy.

AcknowledgementsThis report would not have been possible without the generous support of EPA Victoria, the Victorian Department of Sustainability and Environment and Sustainability Victoria.

In addition, ClimateWorks gratefully acknowledges the contribution of the following individuals in preparing this publication:

From the City of Greater Geelong - Mayor, Cr John Mitchell, Cr John Doull, Cr Rod MacDonald, Cr Bruce Harwood, Cr Andy Richards, Stephen Griffin, Gary Van Driel, Peter Bettess, Terry Demeo, Tim Hellsten, Rodney Thomas, Burke Renouf, Tim Moodie, Paul Jamieson, Sarah Jones, Richard Porter, Hayley Ince and Chris Silvestroni.

EPA Victoria; Victorian Department of Sustainability & Environment; Sustainability Victoria; Michael Malouf, Nicole Sexton and Tony Overman (Barwon Water); Geoff Caddy, Joe Cugnetto, Joseph Kurczycki and Stuart Olsen (Shell Geelong); Brendan Foran, Stuart Milliken and Tim Mcauliffe (Alcoa Australia); Peter Richardson, Brian McGrath and Ian Campbell (Boral Cement); Russell Scoular and Brendon Boyd (Ford Australia); Tim Maishman and Robert Lunardelli (Godfrey Hirst); Katherine Simmons (LyondellBasell Australia); Geoff Millard (Terminals); Mark Miller

5

(GreenEarth Energy); Peter Dyson and Anthony Douglas (Moltoni Energy); Mark Baker (SP Ausnet); Department of Business and Innovation; Enzo Bruscella (Barwon Regional Waste Management); David Peart (Geelong Manufacturing Council); Helen Millicer (Plastics and Chemicals Industry Association); Peter Dorling (Committee for Geelong); Elaine Carbines (G21); Bernadette Uzelac (Chamber of Commerce); Fiona Conroy and Graeme Brown (local producers); Grant Godden (Corangamite Catchment Management Authority); Paul Cohen (Barwon Health); Mark Sanders (Third Ecology); Chris Schroor (Keystone Business Park); Brian O'Donnell and Emily Water (HIA); Darrell Orr (MBA); Geoff Saunders (McGlashan Everist Architects); Max Findlay (Max Findlay and Associates); and Kim Stanley-Eyles, Natalie Cook and Ron Dodds (Greening Australia).

6

Contents

Key findings 7

Background 11

Geelong: a positive history of reducing emissions 12

The methodology 15

Chapter 1: The opportunity 17

The business-as-usual case 17

The opportunity for Greater Geelong 20

Achieving further greenhouse gas emissions reduction in Greater Geelong 23

Co-benefits 24

Chapter 2: Opportunities for reducing greenhouse gas emissions by sector 25

Industry 27

Buildings 32

Power 42

Transport 44

Agriculture 50

Forestry 53

Chapter 3: The challenge 56

Price barriers 56

Non-price barriers 59

Chapter 4: The roadmap of action 67

Priority areas for Greater Geelong 69

Appendix 1: Greater Geelong 2020 greenhouse gas emissions reduction cost curve 71

Appendix 2: Detailed assumptions 72

Glossary of terms 95

Bibliography 96

7

Key findings

The Low Carbon Growth Plan for Greater Geelong identifies a range of opportunities that can be implemented now within Greater Geelong to set in motion its transition to a low carbon economy. These will position the municipality to benefit from the economic opportunities that come from increasing demand for cleaner technologies, innovation and ‘green’ skills. It will also help to minimise the financial impact of a carbon price on local businesses and households.

Responsibility for this transition does not lie with one or even a handful of businesses or organisations. Every household and every business in Greater Geelong can play a role in reducing the municipality’s emissions.

The opportunities to reduce Greater Geelong’s greenhouse gas emissions identified in this report are intended to be low cost and practical. Many will save energy which often also saves money, even after factoring in the upfront capital investment needed to capture the opportunity.

Following are some key findings that highlight the variety of opportunities available to Greater Geelong right now. Capturing these opportunities will help build the momentum to successfully transition to a low carbon economy.

Greater Geelong can reduce its greenhouse gas emissions by more than 1,000,000 tonnes per year for less than $50 per tonne of abatement, as illustrated in Exhibit 1. Capturing these opportunities would also save almost $60 million each year across the Greater Geelong economy.

Exhibit 1 - Greater Geelong 2020 greenhouse gas emissions reduction cost curve – summary of opportunities below $50 per tonne of abatement

Source: ClimateWorks team analysis, derived from Exhibit 7

8

In fact, most of these opportunities (all of those that fall below the horizontal axis) offer financial savings to businesses and households even after factoring in the upfront capital investment needed to capture them.

Further emissions reductions can be achieved, but would come at a higher cost. This report identifies an additional 330,000 tonnes of abatement that can be captured within the boundaries of the Greater Geelong municipality. These higher cost opportunities come at an average cost of $65 per tonne of emissions reduced.

Together, all the opportunities this report identifies would reduce Greater Geelong’s greenhouse gas emissions by 14% each year by 2020 compared to business-as-usual, or 6% below 2000 emissions levels, as detailed in Exhibit 2. This is equivalent to eliminating the emissions produced by 110,000 homes1 in a year, or all the homes in Greater Geelong in 2020.

Exhibit 2 - Reducing Greater Geelong's emissions by 1.3 million tonnes achieves a 14% reduction below business-as-usual (BAU), or a 6% reduction below 2000 levels

Source: ClimateWorks team analysis, derived from ClimateWorks modelling, Victorian emissions growth 2

and refined with local input. Further detail on BAU emissions calculations can be found in Chapter 1: The opportunity (the business-as-usual case).

1 Based on Sustainability Victoria’s (Energy use in Victoria 2008) estimate that the average Victorian home produces 12 tonnes of greenhouse gas emissions from energy used in the home.2 EPA Victoria (2008) Australia and Victoria’s greenhouse gas emissions

9

The key challenge in achieving larger greenhouse gas emissions reductions lies in the fact that Greater Geelong does not control within its municipal boundaries some key opportunities to reduce emissions. For example, opportunities to reduce greenhouse gas emissions from grid power that supplies Greater Geelong’s households and businesses, or reducing emissions through farming activities or planting trees is largely beyond the control of the municipality.

Further, a large proportion of emissions generated within Greater Geelong are related to the production of export products (such as aluminium, vehicles and fuel) where production volumes, and therefore emissions, are driven by market factors that are beyond the control of the municipality.

However, the potential exists to achieve larger emissions reductions by partnering with other municipalities in the G21 region3 on projects that reduce emissions from centralised power, or from on-farm or forestry activities. Such activities could also play a key role in Victoria’s achievement of a state-wide emission reductions target of 20% below 2000 levels by 2020.

Within Greater Geelong, the largest financial savings can be captured through improving the energy efficiency of Greater Geelong’s commercial buildings. This could save an average of $12.50 per square metre for building occupants, or a total savings of $25 million across the Geelong economy each year. The largest savings can be found in the Retail, Education and Offices sub-sectors.

Greater Geelong’s industrial sector controls 40% of the identified abatement opportunities. One third of these opportunities already offer financial savings through improved energy efficiency, materials substitution or process improvements. Other opportunities will only become financially attractive with government support or the introduction of a carbon price.

Significant abatement can be achieved in Greater Geelong through local generation of cleaner power. Waste to energy, cogeneration, geothermal and solar photovoltaics can help to reduce emissions and improve long term energy security in Greater Geelong.

Businesses, government organisations and households can all benefit from the financial savings that come from reducing emissions in transport. Shifting to more fuel efficient vehicles, improving driving practices to minimise fuel consumption, and switching some urban car trips to walking, cycling or public transport could save $10 million across the Greater Geelong economy each year.

Implementing all the abatement opportunities identified in this report – those that are profitable and those that would come at a net cost – would generate over $1 billion in capital investment in the municipality.

SMEs4 in Greater Geelong control many opportunities for reducing greenhouse gas emissions. For example, in the retail sector where most businesses are small businesses, retrofitting retail spaces to improve energy efficiency could reduce energy consumption for individual businesses by up to 40%. In industry, SMEs dominate the ‘food, beverage

3 G21 – the Geelong Region Alliance - is the formal alliance of government, business and community organisations working together to improve the lives of people within the Geelong region across five municipalities – Greater Geelong, Colac Otway, Surf Coast, Queenscliffe and Golden Plains.4 Small to medium-sized enterprises

1

and tobacco’, ‘pulp, paper, print’ and ‘other industry’ sub sectors, where energy savings of approximately 13% can be achieved compared to business-as-usual. A range of solutions available to SMEs to capture energy savings are outlined in the Buildings and Industry chapters, and additional detail is provided in Appendix 2.

There are a range of actions that government, business groups and community organisations can take now to raise awareness of opportunities, facilitate access to funding and share outcomes to ensure the Greater Geelong community gains the momentum needed to transition to a low carbon economy.

In summary, there are opportunities available today that, if implemented, can save money, reduce energy consumption and reduce greenhouse gas emissions across the Greater Geelong economy. The volume of abatement and example opportunities available to each sector are detailed in Exhibit 3.

Exhibit 3 - Summary of Greater Geelong emissions reduction potential by sector


1

Background

The municipality of Greater Geelong, located 75km south- west of Melbourne, covers an approximate area of 1,250 square kilometres.

Greater Geelong is Victoria’s largest regional city, and is home to approximately 222,000 people residing in a mix of coastal, rural and suburban communities.

With more than 15,000 businesses including a robust manufacturing sector, Geelong plays an integral role in both the Victorian and Australian economies.

Greater Geelong’s population is expected to grow at about 1.5% per year between 2000 and 2020, reaching over 255,0005 residents by 2020. Much of this growth will be fuelled by increased growth in employment and tertiary education opportunities, a general shift from rural to urban living, immigration and outward population pressures from Melbourne.

Over the next decade, Geelong’s economy will continue to be dominated by manufacturing, but the city will also experience strong and steady growth in retail, health, education and property and business services.

5 City of Greater Geelong Population and Household Forecasts, City of Greater Geelong Website

1

Geelong: a positive history of reducing emissions

Greater Geelong is a city of contrasts, spanning a beautiful coastal environment, a thriving urban centre and the natural beauty of regional lakes, hills and plains.

It’s also one of Australia’s largest transportation and manufacturing hubs, with a high carbon emissions profile. This presents both opportunities and challenges for Greater Geelong and its community.

City of Greater Geelong leading the way

The City of Greater Geelong Council is on track to achieve an emission reduction target of 30% reduction from 2006 levels by mid-2011. Key contributions to this achievement include:

Energy-efficiency upgrades to buildings such as City Hall, City Works Depot, the National Wool Museum and The Link child care and learning centre, and across all Council facilities a bulk purchase of GreenPower electricity.

Energy-efficiency upgrades to the Council’s fleet of vehicles including downsizing vehicles, changing fuel sources and introducing hybrid cars and trucks as well as a fleet of bicycles.

Development of renewable energy sources such as wind turbines and solar systems.

Comprehensive Council-wide emissions tracking, engagement and training to improve staff capacity to consider emissions implications in all decisions and processes, and active promotion of events like Earth Hour and tree- planting activities.

Energy auditing and assessments at child care and maternal health centres, and business case development for opportunities such as cogeneration.

Membership of organisations working towards emission reduction including Local Governments for Sustainability and the Western Alliance for Greenhouse Action.

Partnership with Sustainability Victoria and Energy Mad to deliver a pilot community project supporting residents to improve the energy efficiency of their homes.

1

The Council won the Sustainable Cities Efficient Energy Award (a Victorian Government initiative) in late 2010 for its EcoChallenge program, which was responsible for several of these initiatives.

Planning for the future

With a commitment to zero net emissions by 2020, there is much more to do. As part of this, the City is in the planning stage of a number of carbon abatement initiatives including installation of a cogeneration system at Splashdown Aquatic Centre, development of a sustainable community at Armstrong Creek, and the rollout of energy efficient street lighting throughout the municipality.

Local business sector demonstrating climate commitment

Businesses across Greater Geelong are taking positive steps to reduce their contribution to climate change and advocate for emissions reduction within their customer bases, supply chains and community networks.

Barwon Water: Early adoption leads to dramatic change

Barwon Water provides water, sewerage and recycled water to the city of Geelong and has a significant carbon footprint. They are an example of a forward-thinking organisation that is benefitting from early adoption of emissions-reduction strategies. The organisation is embedding carbon accounting in decision making to ensure new infrastructure is as energy efficient as possible. Improved understanding of the energy efficiency of water and sewerage networks has enabled the business to save over 1,000 tonnes of greenhouse gas emissions per year by replacing pumps and process equipment. They also own and operate the Breamlea wind turbine, one of the first installed in Victoria. They have also installed a mini-hydro power plant which has a capacity to produce up to 1000MW of renewable energy.

Alcoa: Plans for new geothermal renewable energy project

Alcoa, one of Geelong’s largest employers, is working hard to reduce the emissions intensity of its smelting processes, reducing greenhouse gas emissions by more than 60 per cent since 1990. Alcoa also continues to partner with Greening Australia on forestry offset projects. More recently, the company has signed a Memorandum of Intent with Greenearth Energy to purchase electricity generated from the demonstration stage of the Geelong Geothermal Power Project.

La Madre Bakery: Social responsibility and financial savings too

Baking consumes its own share of energy, with constant use of electric ovens and regular delivery of freshly baked goodness to cafés, restaurants and stores. So when La Madre Bakery in Bell Park decided to take steps to reduce their energy use, they saw it not only as part of their social responsibility, but as a way to nurture the source of the natural ingredients they use in their breads. Upgrades included installation of a heat shifter

1

(extracting warm air from the production facility to heat the office and shop during the cooler months), automatic sensors to turn off lights, additional insulation, and double-glazing of windows – all of which is translating to savings on their energy bills. They’re also offsetting the production of their entire Easter range including Hot Cross Buns, and plan to add more products to their Carbon Neutral Portfolio over time.

Third Ecology: Walking the talk on sustainable living

The principles of ecologically sustainable and environmentally friendly design underpin all of the work of this architectural, planning and construction management firm, and the way the team runs the business is no different. Third Ecology is a 'carbon positive' business, through having a low consumption base and then offsetting 200% of its remaining emissions through the purchase of GreenPower electricity and Greenfleet for their CO2 offsets. The office is committed to recycling its own waste and employs a sustainable purchasing process for all purchasing decisions– from coffee to paper, equipment and vehicles.

PRD Nationwide Lara (formerly McManus Real Estate) Small changes adding up to a big difference

PRD Nationwide Lara has always had a triple-bottom-line approach to running its business, so the team didn’t hesitate when it saw an opportunity to implement a range of more sustainable business practices into its day-to-day operations. Implementing a range of ‘energy smart’ measures has not only improved both their environmental performance, but has reaped financial rewards too.

1

The methodology

The Low Carbon Growth Plan for Greater Geelong has been developed based on the methodology used for the Low Carbon Growth Plan for Australia (LCGP), refined with local inputs drawn from a range of credible published sources and local expert input.

The low carbon growth plan methodology is based on the following principles:

Include only opportunities for which technology is commercially available, or on the path to commercialisation

Exclude opportunities or actions which are expected to occur under state and federal government policies as these are captured in the business-as-usual case6

Exclude changes in the business mix (e.g. shifting the mix of the local economy from manufacturing to service industries)

Exclude changes in lifestyle (with a few exceptions in the transport sector that provide additional social benefits)

Exclude project transaction costs such as management time, project research or policy implementation costs, as these vary depending on the how the opportunity is captured. Some suggestions on how to minimise these costs are included in Chapter 3: The Challenge.

In addition, only those opportunities that are controlled within Greater Geelong’s municipal boundaries have been included. This means that emissions reduction opportunities from centralised power generation have been excluded, although some additional power opportunities that can be implemented in Greater Geelong have been added. Also, only a small volume of forestry and agriculture abatement potential can be captured within Greater Geelong’s boundaries. However, significant opportunity exists for additional abatement within the broader G21 region in which Geelong sits, providing potential for partnerships between businesses and government organisations within Greater Geelong and the G21 region.

This plan presents the costs of capturing abatement opportunities from an investor’s perspective, or in other words, the cost faced by a business, household or government department in implementing an emissions reduction opportunity. These costs include the private cost of capital for each sector (between 8 – 14%), and energy taxes, retail margins and subsidies, in order to illustrate the direct cost faced by a company or consumer in implementing an emissions reduction opportunity.

6 The business-as-usual case includes all Government policies and programs in effect at March 2010, as this is when the Low Carbon Growth Plan for Australia (which underpins the analysis in this report) was released. BAU policies include the Renewable Energy Target but exclude an emissions trading scheme. Since March 2010 there have been no major policy changes that materially impact the original analysis.

1

All dollar costs (such as $m or $/t) are expressed in 2010 dollars and refer to the opportunity in 2020.

The process for developing the Low Carbon Growth Plan for Greater Geelong is outlined in Exhibit 4 below.

Exhibit 4 - The low carbon growth plan methodology

1

Chapter 1: The opportunity

Reducing emissions can bring both economic and environmental benefits. For example, improved energy efficiency not only generates direct financial benefits for businesses and households, but also reduces the need for energy to be produced, which can reduce greenhouse gas emissions. It also reduces the risk for emissions-intensive businesses and economies as the world moves towards a low carbon future.

Chapter 1 identifies the opportunities for reducing greenhouse gas emissions in Greater Geelong. It aims to answer key questions such as: how can greenhouse gas emissions be substantially reduced in Greater Geelong for the least financial cost? What is the likely economic impact on businesses of reducing emissions? How can businesses and households save money through energy efficiency? What emerging technology opportunities exist that Greater Geelong should consider?

The business-as-usual case

‘Business-as-usual’ is an estimate of Greater Geelong’s greenhouse gas emissions in 2020, if none of the opportunities identified in this report or other similar efforts to reduce emissions are implemented. In this report, business-as-usual includes all federal and state government policies and programs in place in March 20107.

Greater Geelong’s 2020 business-as-usual emissions were calculated using outputs from ClimateWorks 2020 modelling (e.g. energy consumption from residential, commercial and industrial sectors) which draws on a range of data sources as identified in Appendix 2: Bibliography. Calculated 2020 emissions were refined for some sectors based on Geelong’s estimated share of national emissions in 2020 (e.g. petroleum and gas, cement and aluminium). Wherever possible, these emissions have been reviewed by Greater Geelong businesses and local experts. Emissions in 2000 and 2010 have been calculated based on the assumption that Geelong's emissions would grow at by the same percentage as Victorian emissions between 2000 and 2020, as identified in the Victorian Greenhouse Inventory 2000 and 2006.

Exhibit 5 shows that between 2000 and 2020, real GRP (gross regional product) is expected to grow by 3% per year in Greater Geelong. Over this same period, the City’s population is predicted to grow by 1.3% and greenhouse gas emissions by 0.5% per year8. The good news is that this illustrates that the prosperity of the municipality is expected to increase, and that the emissions intensity of the economy is expected to continue to decline over the next ten years.

7 See explanation in Methodology section above.8 Greater Geelong’s emission growth of 0.5% is slightly higher than that of Victoria (0.4%) but lower than Australia (1.1%) due to the expansion of emission intensive industries in other parts of Australia.

1

Exhibit 5: Business-as-usual projected economic and emissions growth 2000-2020 in Greater Geelong

SOURCE: ABS 2006 census data; City of Greater Geelong Economic Indicators Bulletin 2008-09; Victorian Greenhouse Inventory 200 and 2006; ClimateWorks team analysis* Greater Geelong’s greenhouse gas emissions are an estimate based on ClimateWorks’ team analysis. A more detailed description of how these estimates were calculated can be found in Chapter 1: The opportunity (the business-as-usual case).

Although Greater Geelong’s emissions are not growing as rapidly as its economy, they are continuing to grow. In 2020, Greater Geelong is expected to produce 7.1% of Victoria’s emissions and 1.3% of Australia’s emissions under business-as-usual9. Its contribution to Victoria’s GRP (gross regional product) and Australia’s GDP (gross domestic product) is estimated to be 3.6% and 0.7% respectively in 2020, while its share of population is expected to be 4.2% of Victoria’s and 1.0% of Australia’s population.

Greater Geelong is home to a number of national scale producers who contribute significantly to the local economy. The five largest employers in the manufacturing sector in Greater Geelong - Ford Australia, Boral Cement, Alcoa Australia, Godfrey Hirst Carpets and Shell Australia - provide jobs for 3,350 people. They are also high volume energy users and contribute notably to Geelong’s above average emissions profile.

9 Australia’s forecast 2020 emissions include the revised emissions estimates released by the Department of Climate Change and Energy Efficiency in February 2011.

1

As energy is a key cost in their manufacturing processes, it has also been the focus of significant efficiency improvement efforts, particularly in recent years.

The manufacturing sector as a whole provides jobs for 11,913 people across 688 companies 10, generating around $500 million in wages and about 51% of GRP for the Geelong community11 each year.

It is assumed that the mix of Greater Geelong’s economy will not change substantially over the next decade. As such, most of Greater Geelong’s emissions in 2020 will continue to come from the Industry sector, as illustrated in Exhibit 6.

10 City of Greater Geelong Council11 Geelong Manufacturing Council

2

Exhibit 6 - Greater Geelong business-as-usual emissions in 2020 by sub-sector

Source: ABS 2006 census data; City of Greater Geelong Economic Indicators Bulletin 2008-09; local data inputs; ClimateWorks team analysis

The remainder of this report shows that while a large portion of the low cost abatement potential is found in industry, all sectors of Greater Geelong’s economy have a role to play in reducing emissions if Greater Geelong is to achieve a transition to a low carbon economy.

The opportunity for Greater Geelong

Substantial opportunity exists for Greater Geelong to reduce its greenhouse gas emissions over the next ten years. More than 1 million tonnes per year can be reduced for less than $50 per tonne. This report also identifies a further 330,000 tonnes that can be achieved within the Greater Geelong municipal boundaries for an average cost of $65 per tonne of abatement. Together, all of these opportunities represent a 14% reduction in emissions from business-as-usual and a reduction in emissions of 6% below 2000 levels.

Even factoring in these more expensive opportunities, capturing all of these opportunities would generate a net savings of $37 million each year across the Greater Geelong economy12, without major technology breakthroughs, changes to the business mix, or disruptions to the lifestyles of residents.

12 Those opportunities that come at a net cost are offset by those that offer net savings. All costs factor in the upfront capital expenditure, annualised over the life of the asset.

2

Exhibit 7 demonstrates that there are a range of actions available to Greater Geelong to substantially reduce its greenhouse gas emissions over the next ten years at the lowest cost. This cost curve illustrates the volume of emissions abatement that each opportunity can achieve and orders them by cost per tonne of emissions reduced.

Opportunities that sit below the horizontal axis offer financial savings that businesses, households and government departments in Greater Geelong can begin to capture now. Opportunities that sit above the horizontal axis are expected to come at a net cost, unless there is a change in policy measures to reduce greenhouse gas emissions, such as a price on carbon or other state or federal government program to provide funding support or stimulate investment in technology development to reduce costs.

Exhibit 7 - 2020 Greater Geelong greenhouse gas emissions reduction cost curve

Source: ClimateWorks team analysis, based on opportunities identified in the Low Carbon Growth Plan for Australia and revised with local data inputs.

Note: a larger version of this Exhibit can be found in Appendix 1.

The reduction opportunities identified in Exhibit 7 for Greater Geelong are based on data and analysis from the Low Carbon Growth Plan for Australia, refined with local abatement data drawn from a range of credible published sources and local expert input.

The cost curve defines Greater Geelong according to six key sectors, depending on the source of emissions. These are Industry, Buildings, Transport, Power, Agriculture and Forestry.

Further detail on the cost curve methodology and how to read Exhibit 7 is provided in the box ‘How to read the greenhouse gas emissions reduction cost curve’ below.

2

How to read the greenhouse gas emissions reduction cost curve

The greenhouse gas reduction cost curve summarises ClimateWorks Australia’s estimate of the realistic volume and costs of opportunities to reduce Greater Geelong’s emissions.

The width of each box represents the greenhouse gas reduction potential of an opportunity in kilotonnes ( 1 kilotonne = 1,000 tonnes) per year in 2020 compared to business-as-usual.

The height of each box represents the average cost for that opportunity of abating one tonne of CO2e (carbon dioxide equivalent) in 2020. All costs are expressed in 2010 real Australian dollars, and the graph is ordered left to right from the lowest cost to the highest cost opportunities.

The volume shown represents an assessment of realistic reduction potential (rather than the full technical potential for each opportunity) which takes account of labour and capital constraints. However, we do assume that business and government are able to fully overcome the barriers to the capture of each opportunity identified in Chapter 3: The challenge.

Opportunities that appear below the horizontal axis offer the potential for financial savings even after the upfront costs of capturing them have been factored in. Opportunities that appear above the horizontal axis are expected to come at a net cost.

All costs include the typical private cost of capital for each sector (8 to 14%), energy taxes and retail margins and subsidies, in order to illustrate the direct cost faced by a company or consumer to implement an emissions reduction opportunity.

However, project transaction costs (such as management time or consultancy fees) have not been included, as these can vary significantly depending on how the opportunity is captured.

Exhibit 8 - How to read and emissions reduction cost curve

2

Achieving further greenhouse gas emissions reduction in Greater Geelong

The opportunities identified in this report would achieve a reduction in Greater Geelong’s greenhouse gas of 14% below business-as-usual or 6% below 2000 levels by 2020, as illustrated in Exhibit 9.

Exhibit 9 - Greater Geelong's emissions reductions in relation to 2000 levels

Source: ClimateWorks team analysis, based on Exhibit 7

The key challenge in achieving larger greenhouse gas emissions reductions lies in the fact that Greater Geelong does not control within its municipal boundaries some key opportunities to reduce emissions. For example, power that is supplied to Greater Geelong’s households and businesses is generated elsewhere in Victoria, limiting opportunities to reduce emissions from power generation within municipal boundaries

In addition, because Greater Geelong has a large proportion of urban land areas, the land available for agriculture and forestry emissions reduction opportunities is limited, reducing the potential for these sectors to contribute substantially to Greater Geelong’s abatement potential.

A range of opportunities exist to achieve a higher reduction in emissions:

Additional lifestyle or behaviour changes beyond those identified in the Transport section of this report. For example increased energy savings can be achieved by switching off appliances, equipment and lights when not in use, saving energy and money for no upfront investment. Reducing waste sent to landfill also reduces emissions, and can be achieved by

2

increasing recycling rates, reducing food or packaging waste, or finding alternative uses for waste (e.g. using waste to generate electricity, or creating compost).

Investment in emerging technologies. All technology opportunities included on the 2020 cost curve are already commercially available or on the path to commercialisation, and therefore low carbon solutions that will be mainstream in 15 to 20 years but are still in their infancy today are excluded. Greater Geelong could choose to invest in research and development or piloting emerging technology solutions, which would further help to position the municipality as a clean tech centre.

Investment in opportunities within the Greater Geelong municipality with a higher cost of abatement. The 2020 greenhouse gas emissions reduction cost curve focuses on least cost abatement opportunities within the municipal boundaries, but is not an exhaustive list of all abatement opportunities. More expensive opportunities in Greater Geelong will require greater investment, but will ensure a direct flow through of economic benefits to the local economy and community.

Investment in greenhouse gas emissions abatement beyond the boundaries of Greater Geelong, such as forestry offsets or purchasing and retiring Renewable Energy Certificates. Greater Geelong could choose to focus on opportunities within the boundaries of the G21 region, to ensure investment benefits neighbouring communities within the region.

In addition to financial, environmental and community benefits, achieving emissions reductions beyond those identified in Exhibit 7 would help Greater Geelong play a substantive role in assisting the Victorian Government to achieve its commitment to reducing the state’s emissions by 20% below 2000 levels by 202013.

Co-benefits

In addition to greenhouse gas emissions savings, many of the emissions reduction opportunities outlined above offer significant co-benefits including improved energy security, reduced energy infrastructure investment requirements, improved productivity and better health and welfare. For example, recent studies in the United States show that green buildings can deliver up to 10% increase in productivity and 40% decrease in sick days compared to average buildings 14. Similar numbers are confirmed in the Australian context by observations following a major green refurbishment at 500 Collins Street, a 30-year-old building in Melbourne15.

Industrial operational improvements, in addition to reducing energy costs, often improve productivity by making better use of equipment (e.g. reducing idle time or optimising the loads for trucks)16. And by increasing the carbon content of soil, the fertility of the land can be improved, leading to greater productivity17. Although these co-benefits have not been reflected in the cost curve, they can provide additional motivation to investing in the transition to a low carbon economy.

13 This commitment was passed into legislation in the Climate Change Act 2010.14 Colliers International. Colliers International Office Tenant Survey. 2008; McGraw Hill Construction. Smart Market Report. 2006; Turner Construction. Market Barometer. 2004.15 Sustainability Victoria. 500 Collins Street case study; The Hon Peter Garrett AM MP. Keynote address, Green Cities Conference, 200916 Low Carbon Growth Plan for Australia17 Low Carbon Growth Plan for Australia

2

Chapter 2: Opportunities for reducing greenhouse gas emissions by sector

The purpose of this report is to identify a range of least cost, practical emissions reduction opportunities that Greater Geelong can start implementing today in order to begin its transition to a low carbon economy. All the opportunities identified in this report are achievable by Greater Geelong’s businesses and households over the next decade without the need for technological breakthrough. Further, these opportunities can be achieved without any shift in Geelong’s business mix, recognising that the strength of the city’s manufacturing base can continue to grow and prosper in a carbon-constrained future with an increased focus on the use of cleaner technologies.

Exhibit 10 demonstrates that all sectors of the Greater Geelong economy have a role to play in reducing greenhouse gas emissions. Industry, although responsible for 73% of Greater Geelong's total emissions in 2020, controls just 40% of the identified abatement potential. On the other hand, buildings are expected to generate 13% of Greater Geelong’s 2020 emissions, yet control 30% of abatement opportunities identified in this report. This indicates that although Industry is emissions intensive, much has been done to reduce energy consumption (and therefore emissions), leaving fewer opportunities that can be achieved without considerable expense. In Buildings, where energy consumption tends to be smaller proportion of household or businesses overheads, significant opportunity to improve energy efficiency at low cost remains available.

Localised power generation also represents a substantial opportunity for Greater Geelong (21%), primarily through the implementation of waste-to-energy and geothermal energy technologies.

Transport offers a further 6% of the total abatement potential, and the final 3% of the identified abatement potential in Exhibit 7 can be captured through forestry and agriculture activities.

Exhibit 10 - 2020 Greater Geelong greenhouse gas emissions reduction potential by sector


2

The cost of implementing emissions reduction activities varies greatly and offers different returns on investment. Some sectors such as Transport and Buildings offer significant potential for financial savings through improved energy and fuel efficiency. In Industry the average cost of reducing emissions is relatively high, skewed by the cost of some abatement opportunities such cogeneration. Many opportunities in Industry actually offer financial savings, as detailed in Exhibit 11. Capturing abatement potential in Forestry and Agriculture also comes at a cost which, unlike other sectors, cannot be offset by financial savings through energy efficiency.

Table 1 - Weighted average cost of abatement in 2020 by sector

SectorCost per tonne of

CO2e18Weighted average

cost per unit

Industry $ 6 $0.4/MWh

Buildings -$105 -$1.3/m2

Power $38 $35/MWh

Transport -$118 -$6.9/km 19

Agriculture $ 11 $1.8/ha

Forestry $ 30 $106/ha

18 Negative numbers indicate a net financial savings19 Savings per kilometre driven in Transport includes the savings captured through eco-driving and reduced cartravel, which are applied to the same total kilometres driven under business-as-usual as other opportunities, increasing the weighted average savings across all opportunities in the sector.

2

Industry

Greater Geelong’s manufacturing and industry sector generates around $500 million in wages for the Geelong community; about half the municipality’s Regional Domestic Product. Industry is made up of over 600 manufacturers that include aluminium, automotive, transport equipment, metals, extractive industries, chemicals and petroleum, cement, engineering, textiles, timber and food20.

Industry in Geelong will continue to be vital to the municipality’s economic and employment prosperity over the next decade. Preliminary findings from a feasibility study by the Victorian Government to look at the potential to relocate the export and import of cars from the Port of Melbourne to the Port of Geelong has estimated that this could generate an additional 1,000 jobs in the Greater Geelong region and provide an additional $200 million in output to the local economy21.

As the backbone of Greater Geelong’s economy, Industry offers the largest potential for reducing Greater Geelongs greenhouse gas emissions. It controls 40% of the lowest cost abatement potential and could reduce emissions by 532,000 tCO2e per year.

Industry produces 73% of Greater Geelong’s total emissions, due to the energy intensive nature of many of the manufacturing processes that occur within the city’s municipal boundaries. But energy is a key input to manufacturing, and therefore much effort has already been exerted to minimise energy consumption, and the costs and emissionsassociated with it. Many of the most attractive opportunities have already been identified and captured through programs such as the Victorian Government’s Environment and Resource Efficiency program (EREP), or the Australian Government’s Energy Efficiency Opportunities (EEO) program. Therefore, many of the opportunities to further reduce emissions are expensive or offer returns on investment that are not sufficiently attractive to trigger the required investment.

20 Geelong economic development strategy 2005-201021 Premier of Victoria, Coalition Government’s massive jobs boost for Port of Geelong, 4 February 2011

2

Exhibit 11 illustrates that 32% of the abatement potential controlled by Industry can be achieved at a net savings to businesses, primarily through improved energy efficiency. These opportunities can save Greater Geelong’s industry sector over $13 million each year.

Exhibit 11 - 2020 Greater Geelong Industry greenhouse gas emissions reduction cost curve


The remaining 68% of the abatement potential this report identifies comes at a net cost, which means that it is not economical for businesses to undertake these emissions reduction activities without incentive. A carbon price will help to increase the attractiveness of some of these opportunities (see Chapter 3: The challenge for a more detailed analysis of the impact of a carbon price on the opportunities identified in this report), whereas others may need support from Government or third party investors to ensure they are captured over the next decade.

Key opportunities for Greater Geelong’s Industry sector are:

Energy efficiency. Energy efficiency improvements could save 413,500 MWh (208,600 tonnes CO2 e) each year across all Industry sub-sectors in Greater Geelong. Relatively low energy prices have reduced the attractiveness of some energy efficiency opportunities, meaning that an average of 5% in energy savings can potentially be achieved across the sector. Exhibit 12 provides a breakdown of energy savings through energy efficiency across the various sub-sectors that make up Geelong’s Industry sector.

2

Exhibit 12 - Industry energy savings through energy efficiency by sub-sector


Typically, these improvements in energy efficiency are captured through improving control systems and processes, reducing duplicated or oversized equipment, upgrading motor systems, decreasing energy losses in boilers and steam distribution systems, waste heat recovery for pre-heating or other uses, and improved building utilities. The value of capturing these energy savings to Greater Geelong is more than $7 million per year through reduced energy bills.

Cogeneration (also called combined heat and power or CHP). Cogeneration provides energy savings by creating heat and electricity from the same fuel source. Because natural gas is used, it also produces less greenhouse gas emissions than electricity sourced from the grid.

If the cogeneration opportunities identified for Industry were fully implemented by 2020, they could reduce Greater Geelong’s emissions by 237,600 tonnes of CO2e each year. This is expected to come at an average cost of $47 per tonne of emissions reduced ($30 per MWh).

The high upfront cost of installing cogeneration plants means that they are often not prioritised ahead of other investments focused on maintaining core business operations. The introduction of a price on carbon would improve the financial attractiveness of cogeneration, as would opportunities to partner with third party investors to on-sell either the energy or heat produced from the cogeneration process.

Medium scale solar PV. Solar PV generates electricity onsite by converting solar radiation into direct current electricity via solar panels typically installed on the roof or walls of a building. Although there is no clear definition, for the purposes of this report medium scale

3

solar is taken to be between 100 kW and 1 megawatt (MW)22, suitable for a larger office building or industrial facility.

With extensive roof space atop a large number of manufacturing facilities, Greater Geelong provides an optimal environment for medium scale solar, which could be used by businesses to offset demand for grid-supplied electricity.

The primary barrier to the uptake of solar PV remains cost: $183 per tonne of emissions reduced. Even though the price of solar systems has come down considerably in recent years, and a number of state and federal government programs exist to encourage the uptake of solar PV, upfront out of pocket costs and relatively long payback periods have discouraged significant investment in solar PV systems, particularly at a commercial scale.

Renewable Energy Certificates (RECs) have been excluded from the modelling of this opportunity, as it is anticipated that by 2020 the market for RECs will be saturated. However, businesses that choose to capture this opportunity in the short to medium term could be eligible for RECs, which would further offset the cost of abatement.

The Victorian Department of Primary Industries is currently exploring the barriers to the implementation of medium scale solar in Victoria, and potential solutions to overcome those barriers.

Other opportunities. Fuel or ingredient shift and industrial process improvement also have the potential to reduce emissions in Greater Geelong by 69,500 tCO2e per year. These include replacing a proportion of cement clinker during the cement manufacturing process with materials that are a waste bi-product of other manufacturing processes23, saving energy and reducing the use of raw materials; improved planning and operational controls in the mining, petroleum & gas and chemicals sectors; and switching fuel sources in the water treatment sector.

All of the opportunities identified for Greater Geelong’s Industry sector require an upfront investment of capital to capture them, and this is often a key barrier. The table below presents a summary of the upfront capital investment for each Industry sub-sector and a simple estimate of the payback period to recoup that investment24.

22 Based on the categorisation used in the Victorian Department of Primary Industry’s Medium scale solar discussion paper, 2010.23 Replacing clinker with supplementary cementious materials offers significant abatement potential, but thereare key barriers to its uptake. In particular, there remains some concern about the potential impacts of clinker alternatives on the quality of cement used, and how this might affect the longevity of buildings and infrastructure constructed with cement. In addition, suitable clinker substitutes are not always locally available and the cost of transportation can reduce the financial feasibility of using them.

Switching fuel, in particular from electricity to natural gas, offers additional abatement potential for a range of businesses in the Industry sector. The key barrier to its implementation is the difficulty in securing long term gas purchasing agreements that provide the certainty needed to make projects financially viable.

Significant research and development is taking place across the world to unlock the potential of emerging technologies that could potentially decrease emissions by up to 40%25 in the aluminium smelting process. ‘Drained wetted cathode’ and ‘inert anode’ technologies, when realised, are expected to change the future of aluminium smelting, significantly reducing the sectors’ energy consumption and associated greenhouse gas emissions. As these technologies are not yet commercially available, they have not been included on the Greater Geelong 2020 GHG emissions reduction cost curve.

Algae biosequestration could provide a future solution to greenhouse gas emissions as they are produced in Greater Geelong, converting them into useful products. Carbon dioxide can be captured from waste gases and directly injected into water containing algae. The algae absorb the carbon dioxide as they rapidly grow and reproduce, and can then be harvested and converted into biodiesel, oil and livestock feed.

3

Exhibit 13 - Greater Geelong Industry capex and payback by sub-sector


+ Simple payback, which excludes the cost of capital

A full description of all identified abatement opportunities available to the Industrial sector in Greater Geelong can be found in Appendix 1.

24 Simple payback has been used, which excludes the cost of capital.25 Low Carbon Growth Plan for Australia

3

Buildings

Greater Geelong’s commercial and residential buildings have the potential to achieve 30% of the total emissions reductions identified in Exhibit 7. Most of this abatement potential can be achieved by improving the energy efficiency of buildings; either by retrofitting existing buildings or by improving the efficiency standard of new homes and commercial spaces.

Retrofitting Greater Geelong’s commercial buildings (all buildings that are non-residential) offers businesses, community groups and government organisations a potential average savings of $12.50 per square metre per year, or $25 million across the Greater Geelong economy each year. This would also reduce Greater Geelong’s greenhouse gas emissions by 202,100 tonnes per year.

Energy and financial savings can also be captured by households. The potential exists to save$15 million across the Greater Geelong economy each year by retrofitting homes to improve their energy efficiency. These savings are achieved through technology solutions, and additional potential could be achieved through everyday shifts in behaviour that reduce energy use such as switching lights or appliances off when not in use.

Cogeneration also offers potential for the Buildings sector, reducing greenhouse gas emissions by generating electricity from natural gas and reducing energy demand by supplying heat (a bi-product of the electricity generation process) to households and businesses.

The installation of cogeneration to supply electricity and heat to new homes at Armstrong Creek could reduce greenhouse gas emissions by 5,700 tonnes per year and reduce demand for grid-supplied electricity by 6,100 MWh per year by 2020.

For commercial buildings, cogeneration installed at Greater Geelong’s aquatic centres and in the new commercial precinct at Armstrong Creek could reduce electricity demand by 3,700 MWh and reduce emissions by 3,400 tonnes per year by 2020.

3

Exhibit 14 - 2020 Greater Geelong Buildings greenhouse gas emissions reduction cost curve


Exhibit 14 shows that almost all opportunities in Buildings already offer financial savings for households and businesses in Greater Geelong, even without a carbon price.

Greenhouse gas emissions from Greater Geelong’s Buildings sector are generated through the energy used for heating and cooling, lighting, appliances and other electronic equipment. They are produced as either direct emissions from burning gas, wood and oil, or as indirect emissions from purchased electricity. Reducing emissions from buildings is typically achieved by improving energy efficiency, which also generally saves money.

Over the next ten years, shifting social trends in Greater Geelong and much of Australia are expected to continue to change the way people live and work. Houses will continue to get bigger, and will be occupied by fewer people. The number of electronic devices per home is also expected to continue to grow. These increases will be partially offset by improved national energy efficiency standards for electronics, the phasing out of incandescent light bulbs and electric water heaters, and the improved efficiency standards for new buildings. All Victorians will also benefit from a growing proportion of renewable energy supply in the Victorian grid, ensuring the energy we use is becoming cleaner.

While Greater Geelong’s Buildings sector is only expected to generate 13% of total 2020 business-as- usual greenhouse gas emissions, it represents 30% of the total volume of least-cost abatement potential identified in Exhibit 7. In other words, Greater Geelong’s buildings offer a substantial opportunity to reduce greenhouse gas emissions in the municipality, and this abatement potential has the additional benefit of saving money for businesses and households.

This report identifies 17 separate opportunities for reducing emissions in the Buildings sector, based on a range of technology solutions. Rather than implementing each opportunity individually, it is typically most cost-effective to implement a number of activities in a single retrofit effort.

3

Commercial buildings

In Greater Geelong’s commercial buildings, the largest proportion of total floor space is occupied by the food and non-food Retail sector (29%), followed by Education (20%). Offices take a further 12% of the total share, and all other sectors (Wholesale, Community, Accommodation, Health, Food service and other buildings) each occupy less than 10% of total floor space. This mix of businesses is not expected to change substantially between now and 2020.

Greater Geelong’s commercial buildings are predominately small to medium-size buildings of less than 4 stories. Most buildings are ‘middle-aged’ which means they were built at a time before energy efficiency in the built environment was a key concern.

As such, in Greater Geelong the largest potential to save energy and reduce emissions in commercial buildings is achieved by retrofitting existing buildings. This has potential to save over 202,000 tonnes of CO 2 e and $25 million across the Greater Geelong economy each year.

Existing buildings can be broken down into ten sub-sectors – offices, non-food retail, education, wholesale, community, accommodation, food retail, health, food service and other (all other building types). The total abatement potential for each Commercial Buildings sub-sector by technology solution is detailed in Exhibit 16.

Some opportunities are controlled by building owners, others by building tenants. While it is typically the building occupant who benefits in the short term through reduced energy consumption, investing in improvements to the energy efficiency rating of buildings increases their long-term value, by increasing attractiveness to potential tenants and increasing their value as an asset.

For commercial building owners and tenants in Greater Geelong, the key opportunities to reduce emissions are:

Improved energy efficiency through technology. Improving the energy efficiency of Greater Geelong’s commercial buildings can reduce Greater Geelong’s greenhouse gas emissions by 129,500 tCO2e per year by 2020 and reduce the energy intensity of commercial spaces by an average of 37%. This can be achieved by replacing inefficient light bulbs, improving the energy efficiency of all appliances and equipment, and decreasing energy losses from open refrigeration, insufficiently insulated ovens or water mains. Greater Geelong’s commercial buildings would also benefit from switching to less carbon-intensive fuels when possible, for example replacing electric water heaters with gas or solar powered systems. Upgrading control systems for lighting and HVAC (heating, ventilation and air-conditioning) systems and improving building insulation can also improve energy efficiency.

3

All types of commercial buildings can benefit from improved energy efficiency. Exhibit 15 details the average energy savings per square metre available to each sub-sector per year through retrofitting existing buildings.

Exhibit 15 - Commercial building retrofits energy savings potential by sub-sector


Energy waste reduction. The cheapest opportunity to reduce greenhouse gas emissions available to building tenants comes from reducing energy waste, which could deliver at least 10% energy savings across all building types with very little capital expenditure. Energy waste reduction can be achieved by actions such as reducing oversized and unnecessary equipment and better management of existing control systems. Energy waste reduction could save 71,900 MWh of energy and $8 million across all commercial buildings per year by 2020. These energy and financial savings could be captured for a total capital investment of just over $7 million which would be recouped by businesses through reduced energy bills in less than one year.

3

Exhibit 16 - Emissions reduction opportunities in commercial buildings retrofits

Source: ClimateWorks team analysis, derived from Exhibit 14.

Looking at all opportunities to reduce emissions from retrofitting existing buildings, Exhibit 16 shows that the largest volume of abatement potential can be found in the retail sector. Together, food and non-food Retail represents 37% of the total volume of emissions reductions in commercial buildings, while occupying 29% of the total floor space in commercial buildings.

Greater Geelong’s Education sector controls a further 18% of the abatement potential from retrofitting commercial buildings (while occupying 27% of the total floor space), and Offices can capture a further 13% of the abatement potential while making up 12% of total floor space.

These energy savings cannot be captured without an upfront investment of capital, and Exhibit 17 provides an estimate of the total investment required to capture the full abatement potential in each sub-sector of commercial buildings and the number of years it would take for that investment to be recouped (using simple payback estimates).

3

Exhibit 17 - Greater Geelong commercial buildings capex and payback by sub-sector

Source: ClimateWorks team analysis, derived from Exhibit 15^ Simple payback, which excludes the cost of capital

It can be seen that, using simple payback, all sub-sectors can recoup the upfront investment required to capture the energy savings in less than ten years. Food retail, Health and Food Service are particularly attractive, with payback periods of less than 2 years.

New builds. Increasing the energy efficiency of new commercial buildings above current standards (by the equivalent of one star for office buildings in the NABERS 26 rating system) could deliver 21,200 tCO2e of emissions reduction per year for Greater Geelong by 2020. These improvements could be achieved through improved building design and orientation, improved insulation and air tightness, usage of better materials and more efficient heating, ventilation and air-conditioning and water heating systems.

If new commercial buildings built between now and 2020 in Greater Geelong only achieve a 5 star rating (the current minimum standard), the energy demand of these buildings will be 47,900 MWh per year higher than it could be if they achieve the equivalent of 6 stars in the NABERS rating system.

Achieving a higher star rating does come at a cost; approximately $89 per square metre more in upfront capital than for a 5 star NABERS rating. But this higher cost can be recouped in approximately 8 years27.

Cogeneration. Opportunity exists for Greater Geelong’s commercial buildings to reduce overall energy consumption and generate cleaner energy onsite through cogeneration.

26 NABERS (the National Australian Built Environment Rating System) is a performance-based rating system for

existing buildings, which rates a building on the basis of its measured operational impacts on the environment.27 Using simple payback, which excludes the cost of capital.

3

Cogeneration provides energy savings by creating heat and electricity from the same fuel source, and because cogeneration is powered by natural gas it also produces less greenhouse gas emissions than electricity sourced from the grid. Cogeneration is particularly relevant to community buildings such as aquatic centres, where heat can be used to maintain comfortable water and ambient temperatures. It is also particularly appropriate for consideration in greenfields developments such as Armstrong Creek, where buildings designed and built with cogeneration can maximise the benefits it offers in heating, cooling and providing cleaner electricity.

Capturing the cogeneration opportunities identified in this report for commercial buildings could reduce Greater Geelong’s greenhouse gas emissions by 2,300 tonnes per year and would also generate net financial savings of $0.3 million each year.

A full description of each opportunity (by technology) can be found in Appendix 1.

Residential buildings

By 2020 it is estimated that there will be 111,350 households in Greater Geelong, an increase of 24% over this decade. This will include 27,000 new households, many of them in new developments at Armstrong Creek. The majority of Greater Geelong’s residents live in houses, with just 5% of the population living in units or apartments.

In residential buildings, much is already being done to reduce emissions, including increasing insulation in existing buildings, replacing electric water heaters with heat pumps, solar or high-efficiency gas water heaters, and improving the efficiency of new homes through minimum standards. These opportunities are therefore captured in the business-as-usual case. Yet potential still exists for householders in Greater Geelong to reduce emissions and capture financial savings by further improving the energy efficiency of their existing homes.

3

For Greater Geelong’s households, the key opportunities to reduce emissions are:

Retrofitting existing homes to improve energy efficiency.

Exhibit 18 demonstrates that the largest potential to reduce greenhouse gas emissions from residential buildings can be found in improving the building envelope of homes to improve thermal efficiency (achieved by measures such as improving insulation, reducing air leakage, and implementing basic passive solar principles) and choosing appliances and electronics with above-standard efficiency.

4

Exhibit 18 - Greater Geelong 2020 residential building retrofit opportunities by technology


Replacing CFL (compact fluorescent light) and quartz halogen light bulbs with LEDs (light emitting diodes) also provides an opportunity to reduce emissions. LEDs use significantly less energy and have a longer lifespan than other bulbs. Although LEDs are still relatively expensive compared to CFLs and quartz halogen bulbs, the price is expected to come down substantially over the next ten years.

Retrofitting Greater Geelong’s homes to improve their energy efficiency could save Greater Geelong’s households $15 million each year and reduce greenhouse gas emissions by 85,600 tonnes each year. Capturing this full abatement potential would need an upfront investment of $126 million but this would be paid back through energy savings in just over 3 years (excluding the cost of capital).

For low income households, energy costs represent a large proportion of household outgoings and therefore capturing energy efficiency savings can make a significant difference to day to day life. But access to the upfront capital required to capture these savings can present a real challenge. Government could provide increased support to help low income households capture energy efficiency opportunities and the financial savings that go with them. Local council and community groups can also help by facilitating access to grants programs for energy efficiency for low income households, which would also help to reduce Greater Geelong’s overall greenhouse gas emissions.

4

Building new homes to a higher efficiency standard. Improving the efficiency of new homes to achieve a 7.2 star rating (in the HERS rating system28) also provides excellent abatement potential for Greater Geelong. Achieving a 7.2 star rating means a maximum of 20.4 kWh/m 2

energy consumption is required in artificial heating and cooling to maintain thermal comfort for occupants. A 7.2 star rating has been identified as the most cost efficient in terms of emissions reductions for dollar spend.

Greater Geelong could reduce its emissions by a further 48,300 tonnes of CO 2e per year if all new homes were built to a 7.2 star standard, whilst householders occupying the more efficient homes would share in $4 million in savings each year through improved energy efficiency. Should electricity prices increase more than current forecasts, even greater savings could be achieved.

Distributed energy solutions for Greater Geelong’s homes. Solar photovoltaics (PV) generate electricity by converting solar radiation into electricity via solar panels typically installed on the roof of homes. In terms of cost of abatement, residential solar PV is the most expensive opportunity on the Buildings sector cost curve, at $100 per tonne of emissions reduced, but provides homeowners with long term security against rising electricity prices.

It should be noted that Renewable Energy Certificates (RECs) have been excluded from the modelling of this opportunity, as it is anticipated that by 2020 the market for RECs will be saturated. However, households that choose to capture this opportunity in the short to medium term could be eligible for RECs, which would reduce the cost. A range of government subsidies currently available also help to make solar PV attractive for home owners, who can earn revenue from excess electricity fed into the grid during the day and experience the benefits in the longer term of free electricity. These subsidies will also help to offset the higher cost of capturing this opportunity in the short term (the cost of this technology is expected to continue to decline over the remainder of the decade). A range of financing alternatives are also currently on offer through energy service companies that minimise or eliminate the upfront cost of installing solar panels, with costs recouped over time through energy bills.

Cogeneration also offers potential for new housing developments at Armstrong Creek. Sustainability Victoria developed a business case to explore the viability of installing cogeneration at the time of development to service new homes in the area29. It found that cogeneration was in fact an attractive solution, minimising the energy costs to households by providing access to centralised heat as well as locally generated, cleaner electricity. This report assumes that the full technical potential for cogeneration in Armstrong Creek’s residential developments is likely to be only partially achieved by 2020, reducing emissions by 5,700 tonnes.

A full description of all opportunities in Residential Buildings can be found in Appendix 1.

28 House Energy Rating Schemes, such as the National House Energy Rating Scheme (NatHERS), used to assess the thermal performance of residential buildings.29 Sustainability Victoria, Armstrong Creek: Sustainable Alternative Energy Supply and Demand Options Analysis

4

Power

The opportunity for reducing greenhouse gas emissions through power is limited in Greater Geelong, as there is currently no centralised power generation within the city’s municipal boundaries.

However, waste-to-energy and geothermal offer excellent potential for Greater Geelong, both in terms of emissions reductions and cost. Together these two opportunities can contribute 21% of the total abatement potential identified in Exhibit 7.

Exhibit 19 – 2020 Greater Geelong power sector greenhouse gas emissions reduction cost curve


Waste-to-energy. Converting waste to useful energy could save Greater Geelong a further 191,300 tonnes of greenhouse gas emissions for a cost of approximately $27 per tonne of abatement.

There are a range of technologies that convert waste to a variety of forms of energy, and Greater Geelong is well positioned to benefit from a waste-to-energy plant that could transform industrial waste into a combustible fuel commodity such as synthetic gas, typically achieved through a thermal gasification process. Synthetic gas could either be used onsite to generate power which could be sold to the grid, or sold as a direct fuel to local manufacturers that require gas for industrial processes.

Using waste to generate energy has a number of benefits. It provides a clean, safe solution to the problem of disposing of waste, including some waste products that are difficult to dispose of due to their environmental hazard. Modern waste-to-energy plants are built to stringent standards and can produce energy with almost no emissions, while also avoiding

4

emissions if the waste had gone to landfill. In addition, the ash produced through the incineration process can be used as an input into some industrial processes.

Although waste-to-energy is a cost-effective means of disposing of waste and providing renewable energy, it often faces community resistance. Community concern often stems from waste incineration practices from several decades ago, which resulted in emissions that affected air quality and local environs. Fortunately, stringent regulations mean that emissions from waste-to-energy facilities are negligible. Concern also exists that waste-to- energy processes destroy valuable resources and reduce the incentive to recycle. In fact, thermal waste-to-energy can typically process waste products that cannot be recycled and may be difficult to safely dispose of by other means. Using these products to generate energy creates a valuable resource from a waste problem.

Geothermal energy is a form of renewable energy generated by accessing heat from within the Earth’s surface to create steam, which can then be used to generate electricity. Greenearth Energy’s Geelong Geothermal Power Project is being designed as a staged, modular development that will lead, over time, to the construction of geothermal power generation capacity in the Geelong area. This project, which uses hot sedimentary aquifer technology, is currently at proof of concept stage, with a 12 MW demonstration plant planned for construction in 2012. Greenearth Energy has signed a Memorandum of Intent with Alcoa to supply geothermal energy to the Alcoa Point Henry aluminium smelter, potentially reducing Greater Geelong’s greenhouse gas emissions by 93,700 tonnes by 2020 at a cost of $60 per tonne.

If the demonstration plant is successful, it will be expanded to a 140 MW base load power plant, supplying renewable energy to the Victorian energy grid.

Distributed energy solutions such as cogeneration and solar photovoltaics also provide a significant opportunity for Greater Geelong. These opportunities for localised power generation are included in the sector (Buildings or Industry) that controls the implementation of the opportunity; that is, where it would be a household or business that would install the solar PV panels or cogeneration plant to reduce their demand for energy from the grid.

A full description of each opportunity can be found in Appendix 1.

4

Transport

Between now and 2020, Greater Geelong residents and businesses will purchase 88,850 new cars and light commercial vehicles, 1,950 medium duty trucks and buses, and 1,000 large articulated trucks, providing Greater Geelong with a key opportunity to substantially reduce emissions from its transport fleet.

The Transport sector has the potential to contribute 6% of the total 2020 lowest cost emissions reduction opportunity for Greater Geelong.

97% of the total Transport abatement potential will also bring net financial savings to the business or household who captures them.

Almost half of the abatement potential identified for Transport in this report can be achieved by improving the fuel efficiency of new petrol and diesel vehicles, which could save $7 million across the Greater Geelong economy each year.

Changing how vehicles are used can also achieve substantial reductions in greenhouse gas emissions (37,700 tCO2e per year) whilst saving businesses and households a total of$2 million with almost no upfront costs. This is achieved either through utilising eco-driving principles to reduce fuel consumption or shifting some urban car travel to public transport, cycling or walking.

New, cleaner vehicle technologiessuch as hybrid cars or electric vehicles also have potential for Greater Geelong. If 9% of all new cars sold by 2020 are hybrids (up from 2% under business-as-usual), and just 1% of new vehicles are electric, emissions could be further reduced by 4,200 tonnes per year. These new technologies also offer financial savings to car owners over their lifespan through reduced fuel consumption.

4

Exhibit 20 - 2020 Greater Geelong Transport greenhouse gas emissions reduction cost curve


Exhibit 20 shows that, overall, the greatest potential to reduce greenhouse gas emissions in Greater Geelong in the Transport sector comes from choosing new internal combustion engine (ICE) vehicles with a higher fuel efficiency, followed by behaviour change. Implementing all of the opportunities identified in the Transport sector can reduce greenhouse gas emissions in Greater Geelong by 83,600 tCO2e per year, at an average savings of $118 per tonne.

The key opportunities are:

Internal Combustion Engine (ICE) vehicle efficiency. For Greater Geelong, most of the emissions reduction opportunity in road transport (38,400 tCO2e) comes from efficiency improvements to traditional internal combustion engine (ICE) vehicles. This has the potential to save vehicle owners an average of $192 per tonne of emissions saved, through reduced fuel consumption over the life of the vehicle.

ICE efficiencies are created through a range of technology improvements, e.g. decreasing the accelerating and rolling resistance and weight of vehicles, and apply to petrol and diesel passenger cars, light commercial vehicles and large articulated trucks. Businesses and households can save money through reduced fuel consumption, which more than offsets the higher upfront cost of purchasing more fuel efficient vehicles.

A far greater technical abatement potential exists from fuel efficiency in traditional internal combustion engines, but it would be impossible for Greater Geelong to achieve this potential unless mandatory vehicle fuel efficiency standards are introduced across Australia.

4

For this reason, it has been assumed that Greater Geelong can still achieve some of this technical potential by choosing vehicles that sit within a combination of fuel efficiency categories. A range of cars are already available that achieve higher than average fuel efficiency in all price categories30. A focus on choosing vehicles from within these categories will not only help the Greater Geelong community to reduce emissions, but also to save money for vehicle owners through reduced fuel consumption.

Alternative technology. Greater Geelong can also benefit from an increased uptake of hybrid and electric vehicles, which can reduce emissions by 4,200 tonnes CO 2e per year at an average savings of $9 per tonne of abatement. Hybrid passenger cars are expected to remain moderately expensive to 2020; it is therefore assumed that they will make up 9% of new cars purchased in 2020. Even this relatively small uptake would reduce emissions by 2,900 tonnes per year and save the owners of this fleet of new hybrid vehicles a total of$65,000 per year in fuel savings.

If just 1% of all new vehicles purchased in Greater Geelong were electric, a further reduction in emissions of 1,200 tonnes per year could be achieved by the combined pool of new electric vehicle owners. It is assumed that the uptake of electric vehicles will be predominately in fleets or by people commuting to Melbourne, which makes this opportunity financially attractive due to the additional fuel savings captured.

By 2020, electric cars are anticipated to have a battery range of 250km, making them a good choice for commuters and fleets.

Given that recharging electric vehicles is only a small percentage of the total running costs of the vehicle (compared to traditional internal combustion engines), it is assumed that electric vehicle owners in Greater Geelong will choose to power their vehicles by 100% renewable energy, and this has been factored into the cost of abatement.

Although both hybrids and electric vehicles have a higher upfront cost, the potential savings to car owners over their life could increase if fuel prices continue to rise and the cost of these emerging technologies comes down faster than expected.

Converting existing vehicles to LPG. Existing vehicles can also reduce emissions by converting from petrol or diesel to LPG (liquid petroleum gas), which generates less greenhouse gas emissions and is cheaper than traditional fuels. This opportunity is most attractive for vehicles that drive above average kilometres per year. The Australian Government is currently offering subsidies to convert vehicles to LPG until 2014, which further improves the cost effectiveness of the conversion.

30 The Green Vehicle Guide is a useful tool to assist businesses and households to choose the most efficient vehicle in a particular category www.greenvehicleguide.gov.au

It is likely that biofuels derived from ‘first generation’ agricultural feedstocks will supply only a small proportion of Australia’s fuel needs. Over time, advanced or ‘second generation’ biofuels such as algal biodiesel (see the emerging technology breakout box on algae biosequestration in the Industry chapter for further explanation) and lignocellulosic ethanol are considered more likely to provide sustainable fuels with low overall emissions. Opportunities exist for the production of both biodiesel and bio-ethanol in Greater Geelong, providing an opportunity for a new industry that could help to develop Great Geelong’s profile as a centre for clean technologies. Costs for both of these fuels are generally likely to remain high until the technology matures. These opportunities have not been included on the Greater Geelong 2020 GHG emissions reduction cost curve.

4

Changed driving behaviours. A range of opportunities are available to Greater Geelong drivers to reduce emissions at minimal upfront cost, whilst also saving money. These include employing eco-driving practices to reduce fuel consumption, or shifting some urban car trips to walking, cycling or public transport. For example, the Good Practice Sourcebook identifies that training truck drivers in eco-driving practices can reduce fuel consumption by 20%, reduce gear changes by 29% and reduce braking by 41%31.


31 Victorian Freight and Logistics Council, Good Practice Sourcebook

4

32 United States Environment Protection Agency, Transport and Climate – Regulations and Standards.

Source: International Council for Clean Transportation, cited in the Report of the Prime Minister’s Task Group on Energy Efficiency

Exhibit 21 shows how Australia’s current fuel efficiency standards compare to those of other countries around the world, and it can be seen that Australia lags behind China, the European Union, Japan and South Korea. Although Australia’s current emissions standards are more stringent than those of the US (including California), this is about to change. The US has recently legislated to significantly improve the minimum efficiency standards for all new passenger cars, light-duty trucks, and medium-duty passenger vehicles built between 2012 through 2016 (additional standards for post-2016 are in development). The new standards require new vehicles in these classes to meet an average emissions level of 250 grams of carbon dioxide per mile (155 grams per kilometre), equivalent to 6.63 litres of fuel per 100 kilometres32.

Achieving greater fuel efficiency (and the financial savings and reduction in emissions that comes with it) does not require technological breakthrough. The Low Carbon Growth Plan for Australia found that achieving a comparable efficiency standard for traditional internal combustion engines

the current European Union standard of 140 grams of CO2e per kilometre would provide significant financial savings and abatement for Australia.

While changing the minimum fuel efficiency standards of new vehicles is beyond the control of Greater Geelong, there is a role that the municipality can play. Businesses, households and government departments can chose to purchase vehicles that achieve a higher fuel efficiency rating, with the additional upfront costs offset by fuel savings. And by choosing to manufacture more efficient vehicles locally, Greater Geelong can play a role in reducing emissions elsewhere in Australia as well as the potential economic benefits associated with local vehicle production. Finally, Greater Geelong municipal council could choose to advocate for improved standards on behalf of the local community, because an improvement in the minimum standards can be expected to bring down the cost of more fuel efficient vehicles, making it fairer for everyone.

4

5

Exhibit 22 - Greater Geelong land use map

Agriculture

As illustrated in Exhibit 22, Greater Geelong’s agricultural land is primarily situated in the north of the municipality, and comprises of 69,000 hectares of pastures, 22,000 hectares of cropland and 6,000 hectares of natural grasslands. The key crops grown are cereal grains, with a smaller portion of legumes, oil seeds such as canola, and perennial crops such as fruit trees or wine grapes.

Source: ClimateWorks team analysis, utilising spatial modelling and estimation systems, employing the National Carbon Accounting Toolbox (NCAT) and Victorian government corporate data.

5

Reducing greenhouse gas emissions provides an opportunity for farmers in Greater Geelong to refine land management practices that can drive long term sustainability. Reducing emissions and increasing carbon stored in the soil will therefore result from Geelong’s farming community doing things that increase or maintain the productivity of their land over the long run.

Eight opportunities have been identified in Greater Geelong’s Agriculture sector that can reduce greenhouse gas emissions by 15,900 tCO2e every year, either by storing extra carbon in the soil, or reducing emissions from agricultural practices. Exhibit 23 outlines these emissions reduction opportunities.

Exhibit 23 - 2020 Greater Geelong Agriculture greenhouse gas emissions reduction cost curve


The key opportunities in the agriculture sector are:

Reducing cropland soil emissions. Reducing cropland soil emissions is the lowest cost opportunity, and offers Greater Geelong farmers an average net saving of $69 per tonne ($3.60 per hectare) for a total reduction of 1,300 tCO2e. This involves reducing tillage, which reduces CO2 emissions through less disturbance of the soil, and improved nutrient management, which reduces nitrous oxide emissions through more precise application of fertiliser. These practices save farmers money by reducing labour, tillage and fertiliser costs.

Reducing livestock emissions. Active livestock feeding programs allow animals to gain weight more quickly with higher quality feed, thus reducing lifetime emissions. Anti- methanogenic treatments provide additional potential for reducing livestock emissions by reducing the amount of methane produced by livestock during the digestive process. These opportunities can reduce emissions by 800 tCO2e at an average cost of $9 per tonne or $1.30 per head of cattle.

5

Pasture management. In Greater Geelong, improving pasture management practices can reduce emissions and increase soil carbon by 8,700 tCO2e per year, at an estimated cost of$5.60 per tCO2e ($0.40 per hectare). Improved management involves optimising grazing intensity and timing to maximise productivity and carbon sequestration, increasing the use of deep rooted perennial grass species and increasing fertiliser use.

Cropland carbon sequestration. Cropland carbon sequestration activities can reduce Greater Geelong’s emissions by a further 2,100 tCO2e per year at an average cost of $25 per tCO2e ($3 per hectare), by increasing the use of deeper rooted crop varieties that allocate more carbon to the soil, reducing the use of bare fallow and planting cover crops.

Less-productive farmland restoration. Restoring the productivity of less-productive cropland and pastureland can increase soil carbon in Greater Geelong by 2,355 tCO2e per year, at an average cost of $73 per tCO2e ($8.80 per hectare). This is achieved by reducing salinity, acidification and erosion through revegetation, application of nutrients and other measures to restore the health of land and increase its ability to support vegetation and store soil carbon.

As cost is a primary barrier, economic incentives such as those proposed under the Carbon Farming Initiative33 can be particularly effective, potentially making some opportunities profitable for farmers.

Although Agriculture is not a key economic driver in Greater Geelong, there is a role for the sector to play in reducing the municipality’s emissions. The opportunities identified in this report relate to opportunities that can be found within the Greater Geelong municipal boundaries, but it should be noted that significant additional abatement potential exists in neighbouring municipalities that have a higher percentage of agricultural land. To capture the abatement potential that on-farm activities offers, Greater Geelong could choose to partner with other municipalities within the G21 region to achieve an even greater reduction in greenhouse gas emissions.


33 The Carbon Farming Initiative is a Federal Government initiative designed to give farmers, forest growers and landholders access to domestic voluntary and international carbon markets. Land owners will be able to earn credits for activities that either sequester carbon or reduce carbon emissions on their land and sell those credits in domestic or international carbon markets.

5

Forestry

Greater Geelong currently has about 8,300 hectares of forest cover within its municipal boundaries, primarily located in the region north of Anakie and West of Little River, as illustrated in Exhibit 22.

Forestry is a key tool in reducing greenhouse gas emissions as it provides one of the few opportunities to recover carbon dioxide from the atmosphere after it has been emitted. Trees absorb carbon dioxide as they grow, and store it in either in the soil in which they grow or in the wood of the trees themselves.

Forestry activities can reduce Greater Geelong’s greenhouse gas emissions by 22,500 tonnes per year by 2020, for an average cost of $30 per tonne. Most opportunities for increasing forests will occur on agricultural land, but opportunity also exists for other large land holders to contribute to efforts to reduce emissions in the municipality through planting trees.

Exhibit 24 - 2020 Greater Geelong Forestry greenhouse gas emissions reduction cost curve


There are five key measures that Greater Geelong can begin to implement now to reduce emissions through forestry activities. As illustrated in Exhibit 24, these opportunities are focused on either reforestation or improved forest management.

Some emissions reduction opportunities from Forestry activities that do not qualify under international carbon accounting rules have been included, to ensure the largest possible abatement potential from planting trees within the municipality’s boundaries. These are identified in Exhibit 24 as ‘non-Kyoto’ opportunities, and it is possible that these opportunities may be eligible under the Carbon Farming Initiative, currently under development by the Australian Government.

Reforestation. 82% of the total opportunity to reduce emissions from forestry activities in Greater Geelong is achieved through reforestation (total of 18,400 tCO2e). This is achieved through three specific opportunities:

5

- Reforestation of less-productive land with timber plantation for eventual harvest on land that is less suitable for other purposes. The timber provides a source of revenue for farmers, ensuring that the total cost of capturing this abatement is minimised, at a cost of approximately $7 per tonne of emissions reduced (approximately $62 per hectare). Over the long term, plantation forests capture around half the total carbon of a forest that is not harvested.

- Reforestation of less-productive land with environmental forest sees land planted with native forest that is not harvested and therefore does not generate higher revenue, but provides aesthetic and biodiversity benefits. This opportunity comes at a cost of $28 per tonne of CO2e (or $193 per hectare).

- Strategic reforestation of productive agricultural land with environmental forest would see 2% of productive farm land planted with trees in the form of windbreaks, plantings along waterways and tree islands to shade livestock. This is consistent with best practice farm management and is likely to increase the long term productivity and sustainability of farming enterprises. This opportunity would come at cost of$26 per tonne of CO2e (or $257 per hectare).

All of these costs take account of the opportunity cost of reforesting the land, plus planting and monitoring costs.

Forest management. Improving the management of existing forests provides a potential emissions reduction of 3,500 tCO2e per year at an average cost of $52 per tonne of CO2e. Improved forest management includes practices such as removal of weeds like lantana and blackberries that limit woody growth, control of feral animals, insects and pests to promote tree growth and fire management. These practices are intended to increase forest growth and therefore the quantity of carbon stored in forests.

20% of all agricultural land within Greater Geelong municipal boundaries is assumed to be less- productive34, therefore focusing forestry activities on these areas minimises the impact to productive farm land, although it can be expected that trees will grow at a slower rate therefore sequester less carbon dioxide overall.

For reforestation activities on less-productive land within Greater Geelong, it is assumed that 15% would be planted as commercial timber and 85% as environmental forests (native forests planted purely for sequestration, not harvest). This split reflects the greater area of land suitable for environmental forests and the increased ease of planting.

In reality the exact split of these two types of planting will be at the discretion of Greater Geelong’s landowners, who will need to make decisions based on what best suits their land and their long term business plans.

34 The volume of ‘less-productive’ land is based on national analysis undertaken for the Low Carbon Growth Plan for Australia which found that 20% of all agricultural land in Australia is less-productive. This is a modest estimate in comparison to estimates by CSIRO and the Food and Agricultural Organisation.

5

In addition to reducing atmospheric greenhouse gas, planting trees can provide biodiversity benefits and help to improve the productivity and amenity of agricultural land.

As all Forestry activities identified in this report are expected to come at a cost, additional incentives such as those anticipated through the Carbon Farming Initiative will be needed to improve the economic attractiveness of capturing this abatement.


5

Chapter 3: The challenge

In Greater Geelong, a large proportion of the total emissions reduction opportunities identified in this report are already financially attractive yet are not being captured, indicating that barriers exist that are preventing their uptake.

This chapter focuses on understanding the range of barriers to capturing all opportunities to reduce emissions in Greater Geelong and explores two key types of barriers:

Price barriers, and

Non-price barriers. These can be broken down further into three categories:

- Market structure and supply

- Information gaps and decision process

- Capital constraints and investment priorities

There is no single action or policy that can be implemented in Greater Geelong to overcome all challenges at minimal cost or disruption to the local economy. Also, many of the non-price barriers are complex and specific to an individual opportunity. Resolving them will require well designed and targeted measures. In addition, some barriers are beyond the control of the Greater Geelong community, as they require regulatory change to be fully realised.

Even so, there is more than ample opportunity to begin to reduce Greater Geelong’s emissions right now.

Where profit potential already exists, Greater Geelong’s business community should be encouraged to develop solutions to capture those opportunities, e.g. retrofitting existing buildings, or improving the energy efficiency of manufacturing processes.

In other cases, when timing is critical and when the barriers are too high for individual investors to overcome, there may be a role for state or local government to play in identifying or creating incentives for businesses and households to take action, e.g. mid-scale solar, geothermal power or algae biosequestration.

Price barriers

Where there is a net cost associated with reducing greenhouse gas emissions, it can be difficult to build a compelling case for action by businesses and households. Price barriers are most directly overcome through the introduction of a carbon price, which can transform opportunities that are currently costly into profitable ones.

Although carbon pricing is beyond the control of Greater Geelong municipality, it is worth considering how it can influence efforts to reduce greenhouse gas emissions. By imposing a cost on emissions, a carbon price will amplify the operational savings available from emission reducing activities.

5

In particular, a carbon price is key to capturing opportunities in the following sectors: Power. As a carbon price will increase the price of electricity generated from carbon

intensive fossil fuels, it will help to increase the financial viability of opportunities for cleaner energy in Greater Geelong, such as cogeneration, solar power, geothermal and waste-to- energy.

Forestry. Although Forestry represents only a small opportunity in the Greater Geelong region, there are additional biodiversity and aesthetic benefits from planting trees that make it attractive to the municipality. Reforestation is an initially expensive and long term commitment that landowners are unlikely to pursue without economic incentives. A carbon price provides an incentive for businesses to purchase forestry offsets to help reduce net emissions. For Greater Geelong’s land holders, understanding how carbon crediting under the Carbon Farming Initiative will operate is also critical to unlocking this abatement potential.

Industry. Opportunities that are not currently profitable for Geelong’s manufacturing sector, in particular those arising from new technologies or with longer payback periods, will become more attractive with a price on carbon.

To better illustrate the impact that a carbon price might have on the range of identified opportunities available to Greater Geelong, two 2020 carbon price scenarios are illustrated below. These scenarios are intended to be indicative only and do not consider the impact of carbon price pass through might have on the cost of other goods or services.

Exhibit 25 - Impact of $40/tonne carbon price*

*Carbon price in 2020 of $40 per tonne based on Treasury’s 5% below 2000 emissions reduction scenario (Australia’s Low Pollution Future) converted to 2010 dollarsSource: ClimateWorks team analysis, derived from Exhibit 7

5

The first, illustrated in Exhibit 25, uses a carbon price of $40 per tonne, associated with the Treasury modelling for a 2020 emissions reduction target of 5% below 2000 which currently has bipartisan support. This would increase the volume of abatement that is profitable from 44% to 75% and increase the average savings per tonne of abatement from $27 per tonne to $68 per tonne.

Scenario two, shown in Exhibit 26, uses a carbon price of $69 per tonne in line with Treasury modelling associated with a 2020 target of 25% emissions reduction below 2000, as modelled in the Low Carbon Growth Plan for Australia. A 25% target is the minimum of the range recommended by IPCC scientists, and the higher of the Australian Government’s conditional targets. Under this scenario, almost all of the abatement opportunities (97%) are profitable. Only the most expensive opportunities would still come at a net cost.

Exhibit 26 - Impact of $69/tonne carbon price*

*Carbon price in 2020 of $69 per tonne based on Treasury’s 25% below 2000 emissions reduction scenario (Australia’s Low Pollution Future) converted to 2010 dollarsSource: ClimateWorks team analysis, derived from Exhibit 7

While a carbon price will make the majority of Greater Geelong’s emissions reduction opportunities profitable, a carbon price alone may not be enough to ensure these emissions reduction opportunities are captured. The following section explores these non-price barriers and suggests a range of strategies to overcome them.

6

Non-price barriers

44% of emissions reduction opportunities identified in this report are already profitable for Greater Geelong yet are not being captured, indicating that non-price barriers exist that need to be overcome.

Price and non-price barriers interact. Effective action in Greater Geelong to address non-price barriers will increase the amount of emissions reductions that can be achieved when a carbon price is introduced.

Market structure and supply

Even when an emissions reduction project is profitable, the structure of a market or the behaviour of market participants can make it difficult to capture the opportunity. There are three key market structure and supply constraints:

1. High transaction costs. Transaction costs are the indirect costs of projects that involve multiple participants, e.g. information-gathering to choose a product, energy audits, price negotiations and monitoring of results. The smaller the activity or organisation, the larger the share of total costs transaction costs will tend to be.

As lack of scale or fragmentation of decision makers is the greatest driver of transaction costs (per tonne of emissions reduced), opportunities to share costs or standardise solutions across larger groups of businesses or households will have the greatest impact.

- Buildings – the fragmented nature of the sector means the transaction costs of pursuing energy efficiency can be very high—small businesses or homeowners in particular need to invest significant time to acquire the information, set up the financing and find the equipment or contractors to install it.

- Agriculture – the agriculture sector in the Greater Geelong is particularly fragmented, with numerous landowners with smaller landholdings, which may increase the transaction costs to set up and implement many emissions reduction opportunities.

2. Split incentives. Split incentives occur when the costs and benefits of emissions reduction accrue to different parties.

- Buildings – Split incentives can be particularly problematic in capturing energy efficiency opportunities in residential buildings, as they affect most of the residential housing stock. In tenanted homes, energy efficiency investments benefit the tenant while the owner is often responsible for the necessary investment. In owner-occupied homes, the average

Response: Energy service companies (ESCOs) can aggregate small scale projects on behalf of commercial building owners or city councils, therefore lowering the cost of assessment, planning and implementation of energy efficiency retrofits.

Response: Local chapters of organisations such as Landcare and National Farmers Federation can play role in information sharing and coordination of collaborative projects to reduce transactions costs for individual farmers.

5

length of ownership is 7 years, around the same time it takes to pay back some energy efficiency retrofits.

In commercial buildings the story is similar. Capital investments made by the building owner are recouped in part by the tenant or the next owner.

3. Contract structures. The profitability of energy efficiency opportunities can be strongly impacted by the energy price that businesses negotiate or the rate at which their energy costs vary with usage. e.g. some of the largest industrial energy users pay low wholesale rates for their variable electricity use and a relatively large fixed charge to access the network. This means the savings from energy efficiency improvements are only partially accessible by the user, while the large fixed network portion of their bill is not adjusted to reflect these savings.

- Industry – some of Geelong’s largest industrial energy users pay low wholesale rates for their variable electricity use and a relatively large fixed charge to access the network. This means they can only partly access financial savings from energy efficiency improvements, while the large fixed portion of their bill is not adjusted to reflect these savings, decreasing the profitability of energy efficiency measures. Other businesses may also be reluctant to implement costly upgrades to aging plants when facing low cost competitors or an uncertain future.

- Buildings – the incentive to reduce electricity use in buildings is also minimised for some large businesses or government organisations, who pay a larger fixed fee and discounted rate for their electricity consumption.

4. Other market structure and supply barriers

- Industry – low demand for energy efficient equipment has led to a gap or lack of variety in the equipment offered in some sectors. Moreover, equipment replacement often follows a breakdown and needs to be completed in a short timeframe to prevent operations disruptions. Replacements are therefore mostly taken from available inventory, made up of the most standard products which are not always the most energy efficient.

Response: Some large commercial real estate companies have begun to subsidise energy efficiency upgrades of their tenants’ buildings, even though the immediate financial benefit is enjoyed by the tenant rather than them. These companies have recognised that demand for energy efficient buildings will increase in the future (particularly as energy prices rise and climate change awareness increases) and are positioning themselves as leaders in the market.

Response: State Government is addressing the issue of split incentives in office spaces it leases by linking rent to the outgoings it pays, helping to drive the energy efficiency of commercial office spaces it occupies.

Response: Large businesses can negotiate Power Purchasing Agreements that stipulate a percentage of energy that is supplied from gas or renewable sources.

6

- Industry – Access to alternative fuels or ingredients, such as biomass or industrial waste material, is often limited and profitability decreases if they have to be imported or transported from a distant location.

- Transport – Although electric vehicles offer great promise, they will require costly new infrastructure and large scale rollout to become economically viable.

Information gaps and decision process

Access to adequate and accurate information is vital to achieving the full emissions reduction potential outlined in the Greater Geelong 2020 greenhouse gas emissions reduction cost curve (Exhibit 7). Even when an opportunity is profitable, it will not be captured if decision-makers are not aware of it, or not convinced of its impact.

1. Information gaps. Decision-makers may be concerned about emissions but be unaware of potential solutions, or may dismiss known emissions reduction activities because they do not have the knowledge to determine their effectiveness.

Energy use (price and volume) and related emissions are rarely transparent during consumption, making it difficult for decision-makers to make informed choices about how they use energy, e.g. consumers favour energy efficient appliances (fridges, dryers etc) when energy efficiency information is readily available at the point of sale through labelling. Contrast this with the strong trend towards larger televisions, which are not required to display information about energy use.

- Industry – Limited sub-metering and benchmarking, particularly in SMEs, makes it difficult to quantify the value of improved energy efficiency. The risk of operational disruption and production quality or timeline degradation involved in setting up new equipment or suppressing some back-up systems can be overestimated compared to energy savings potential.

Response: Coordination of waste streams between industrial and commercial sites can reduce the supply constraint on alternative energy sources. For example bi-products from the aluminium smelting process are already being used to fuel furnaces in the cement manufacturing process, reducing the need for raw material inputs whilst helping to solve the waste issue.

Response: Broad educational campaigns are a relatively simple way to raise awareness, e.g. the public water conservation campaign launched by the Victorian Government in 2000 resulted in a 22% per capita reduction in water use before high level water restrictions were introduced.

Response: Greater Geelong’s industry organisations can also play a role in sector-wide change, through the creation of educational materials or training programs for members which can also decrease transaction costs for members.Response: Awareness campaigns can stimulate demand for energy efficient equipment and spaces, as can promoting the secondary benefits such as increased property value or improved productivity and health for office workers.

6

- Industry – lack of certainty in the building industry about the comparative strength and longevity of cement products with a higher proportion of clinker substitutes compared to traditional cement is a key barrier to widespread acceptance and use of these products, hindering capture of the substantial emissions abatement potential.

- Buildings – Homeowners and businesses often don’t closely follow how much energy they use, and the savings that could be achieved through improved energy efficiency. The equipment needed to estimate and verify energy savings comes at a cost, making it more difficult to build traction on energy efficiency measures.

- Agriculture – Farmers may not always have access to information about methods to reduce emissions nor feel confident about their ability to achieve results on their land. Creating a reliable soil carbon accounting system is also a considerable challenge, as soil carbon levels vary widely between geographies and fluctuate naturally over time.

- Forestry – farmers and landowners remain uncertain as to how they will be able to earn income via various types of forestry. Without clarity on the options available, their different impacts, requirements and merits, it will be difficult for farmers to make long term decisions that potentially utilise their land for long periods of time.

2. Decision process. Even when full information about emissions reduction opportunities is available, a company’s decision processes may make it difficult for managers to act, e.g. in large companies where capital investment and operating expense budgets are separate, access to upfront capital for energy efficient equipment can be limited, leading to higher total lifecycle costs.

- Buildings - The decision process of smaller businesses and households is often delegated to suppliers, who can be motivated by competing incentives, e.g. plumbers play a decisive role in the choice of hot water heaters, and tend to prioritise the equipment they are most familiar with, or can achieve the highest return, which is often not the most efficient alternative.

Key response: Investment in R&D that demonstrates the material benefits of cement with a higher proportion of clinker substitutes is critical to capturing the abatement potential of this opportunity. Universities and industry itself can play a key role in removing this barrier.

Response: Farmers can alter management practices quickly, but this can only occur when a transparent accounting and investment system is in place, and the opportunities, regulations and risks are explained to them by trusted local institutions and individuals.

Development of credible agricultural carbon abatement methodologies that can earn additional revenue for farmers is critical to capturing the potential that farm land offers for reducing emissions.Response: Land owners will need to be provided with good information on the various forestry options available for their type of land. Trusted local organisations can play a leading role in this process and should be assisted to provide appropriate information to their constituents.

6

- Transport – The high upfront cost of new cars and relatively low fuel excise reduces the importance of fuel efficiency in the decision making process. Even fleet cars can be chosen on factors such as a preference for local manufacture or size requirements, rather than consideration of the total cost of ownership.

Capital constraints and investment priorities

Many emissions reduction opportunities require an upfront capital investment, which is then paid off over time through savings on operational expenses such as energy. These profitable opportunities are often not captured because businesses, organisations and families cannot access, or do not want to part with, the required upfront capital.

Often the sectors with lower cost emissions reduction opportunities (buildings and transport) require higher upfront capital in relation to the energy or financial savings captured, which is a key reason they are overlooked in business-as-usual decision-making.

1. Access to capital. The capital available to businesses and households is often limited by their other investment obligations, e.g. first home buyers do not have the additional upfront capital to invest in more expensive energy efficient appliances or higher levels of insulation even though the investment will pay for itself in energy savings.

Much of the capital spent on energy efficiency projects is not transferable once invested (e.g. a bank cannot easily remove or re-use light fittings, insulation or tailored machine parts), meaning there is little collateral if the borrower defaults. This in turn can drive up the cost of capital and increase the stringency of lending standards for emissions reduction projects, particularly for small to medium businesses.

Accessing grants and subsidies from the Government is also more difficult for smaller business, primarily because of the time commitment to research, apply and report on projects relative to the size of the grant required. Smaller businesses can also be overlooked in favour of projects with higher profit outcomes.

- Industry – Implementing emissions reduction opportunities such as installation of sub- metering or cogeneration plants can come at a high upfront cost. Competition for capital is intense and energy efficiency improvements or emissions reductions are often a low priority as they are not core business activities, offer lower rates of return and are perceived as riskier than other potential investments.

Response: Fleet owners can set voluntary fuel efficiency standards that surpass the average fuel efficiency of Australian new cars. Eco driving training for staff can reduce fuel consumption by a further 10 -20% for a relatively low upfront cost.

Response: Industry bodies can play a role in facilitating knowledge sharing about government programs and services to assist complying with the process with applying for funding.

Response: Working with local trade organisations to ensure their members are familiar with energy efficient equipment and its benefits to end users is critical ensure broad uptake of these technologies.

6

- Buildings – Banks are often reluctant to offer loans to energy efficiency projects at reasonable rates due to the lack of collateral and their already high level of property exposure.

- Forestry – Forestry projects typically require upfront investment for planting and preparation. Many farmers are capital constrained and will be unable to pursue reforestation options without financial support from government funding or private investment.

- Power – almost all emissions reduction opportunities focused on generating distributed energy require a large investment of upfront capital, making the cost of emissions reduction sensitive to the cost of capital. Depending on the degree of risk or uncertainty, the pool of available capital and other competing investments, such projects can face very high discount rates.

2. Long payback periods. Even where decision-makers can access sufficient capital to undertake profitable emissions reduction opportunities, investments may not be pursued because they have lengthy payback periods. Many businesses are constrained by payback periods of 3 years or less, whereas the payback for energy efficiency improvements is often longer.

- Buildings – measures such as insulation, switching to solar-powered equipment or whole systems upgrade are capital intensive, offer long payback periods and are usually perceived as non-critical to the business.

3. Investment priorities. Profitable emissions reduction opportunities may also be missed when their internal rate of return is less than alternative investments, or where the emissions

Key response: The Victorian Government is working with the City of Melbourne to ease the financial burden of retrofits, by amending the City of Melbourne Act to allow financial institutions to advance funds to commercial building owners for environmental retrofitting works. These funds will be recovered by the City of Melbourne through a charge linked to rates collection. The NSW Government has also legislated to introduce a similar scheme for all municipalities within the state. Greater Geelong could seek a similar legislative exemption to enable ‘pay-as-you-save’ energy efficiency investments in Greater Geelong’s aging building stock, providing an opportunity to revitalise buildings while improving their energy efficiency.

Response: Facilitating long term purchasing agreements between distributed energy generators and large energy users is often key to unlocking financing for these projects.

Response: Energy service companies or leasing companies can offer financing solutions to their capital-constrained customers, setting up reimbursement through savings schemes or leasing arrangements that can overcome payback hurdles.

Response: Large companies in Geelong that are sensitive to input prices but have fewer limits on their access to capital can help suppliers finance energy efficiency projects in return for lower prices in the future, which can also help to reduce product lifecycle emissions.

6

reduction activity is not considered core business, e.g. hospitals, where scarce capital is focused on improving patient care, or high growth industries where increasing market share may be prioritised over cost reduction opportunities.

- Agriculture – Many farmers are cash constrained, and the land management changes and improvements required to reduce emissions or increase carbon storage will require new investment priorities.

Government funding programs (such as Greener Government Buildings, Carbon Energy Efficiency Programs and Regional Development Investment Fund) are often critical in overcoming investment priority issues. Further details on these programs and how they align with the abatement opportunities identified in this report can be found on the Future Proofing Geelong website.

Response: Greater Geelong can encourage the creation of a clear, open and transparent system of agricultural carbon accounting and payment. Even if it is not perfect, once in place it will enable farmers to make investment and management decisions and allow capital to flow to on-farm emissions reduction opportunities.

6

Energy Service Companies, banks and leasing companies should be encouraged to design financing products to specifically target the needs of the SME sector.

Transaction costs can be reduced for the SME sector by centralised facilitation services provided through government or industry associations.

SMEs have significant potential for energy efficiency, and governments can assist them to capture these opportunities by providing a guarantee fund to lower the cost of capital or by enabling lenders to get access to capital in the case of defaults.

Challenges and opportunities for Geelong’s SME sector

Geelong’s business community includes approximately 6,180 SMEs (small to medium sized enterprises)35, who employ 80% of the Greater Geelong workforce. The SME sector faces additional challenges in capturing abatement opportunities, but can also reap significant rewards.

Challenges for the SME sector

SMEs generally face higher borrowing rates than large businesses, which makes capturing financial benefits from energy efficiency opportunities even harder.

SMEs incur higher transaction costs relative to the size of a project than large organisations.

It is often more difficult for SMEs to balance pursuing energy efficiency opportunities with core business, as they rarely have staff dedicated to energy management.

Opportunities for the SME sector

In Greater Geelong, significant opportunity for reducing greenhouse gas emissions is controlled by SMEs. For example, the retail sector offers the largest energy savings potential in commercial buildings, and the majority of Geelong’s retail businesses are small businesses. Offices can also achieve excellent energy savings potential through retrofitting.

In industry, SMEs dominate the food, beverage and tobacco, pulp, paper, print and ‘other industry’ sub sectors. Together these sub sectors make up 18% of the energy savings potential, and capturing these savings could be reduce Greater Geelong’s greenhouse gas emissions by 70,200 tonnes per year.

35 SME’s are defined by the City of Greater Geelong as businesses that employ 200 staff or less

6

Chapter 4: The roadmap of action

In Chapter 1, the Greater Geelong 2020 greenhouse gas emissions reduction cost curve (Exhibit 7) identifies a range of practical abatement opportunities that are available to local business, households and government departments, and illustrates the cost and abatement potential of each opportunity.

Chapter 2 breaks these opportunities down by sector, providing more detail for opportunity owners on the abatement potential of each opportunity and its costs.

Each opportunity will face a range of price and non-price barriers that affect the ease with which it can be captured, and Chapter 3 explores these barriers and identifies potential local solutions to overcome them.

The final stage in developing a low carbon growth plan is to consider the analysis undertaken in each of the previous chapters, and integrate the range of opportunities into an overarching emissions reduction roadmap – one that can be agreed and understood by Greater Geelong’s businesses, government organisations and the local community.

To do this, the ease of implementation for each emissions reduction opportunity, and how it will contribute to the realisation of Greater Geelong’s regional strategic priorities, is evaluated.

Ease of implementation

The ease of implementation is determined by how easy or difficult the barriers are to overcome, and how expensive the opportunity is to capture.

In the early years of a coordinated effort to reduce Greater Geelong’s emissions, it will be important to prioritise those opportunities that clearly demonstrate that the task is possible – that substantial emissions reductions can be achieved, and that efforts to do so often bring additional economic benefits – in order to help build community momentum towards a low carbon future for Greater Geelong.

Alignment with strategic priorities

Consideration has also been given to how well each opportunity will help Greater Geelong to achieve its economic, environmental and social strategic priorities, as identified in the G21 Geelong Region Plan.

Considering opportunities through this regional lens may see some opportunities that are harder to implement, more costly or with less abatement potential moved forward in prioritisation, because of the benefits they offer to the local community.

Consideration is also given to the ease of access to funding or other programs that can support the actions required to capture the opportunities.

Those opportunities that have been prioritised first will have a strong alignment with regional strategic priorities and barriers that are relatively easy to overcome, in order to ensure quick wins and inspire further action.

6

Opportunities that are identified as medium term priority will require greater effort to unblock barriers and motivate action, and might align less directly with regional strategic priorities.

Opportunities that have been prioritised as longer term opportunities are those that will require investment in research and development in the short term to ensure they can be can be captured within 10 years, or have a low alignment with identified regional strategic priorities. However, it is important not to lose sight of these opportunities, as capturing them is vital to Greater Geelong’s transition to a low carbon economy.

Exhibit 27 - Roadmap of Action

Source: ClimateWorks team analysis; G21 Geelong Regional Plan; local expert review

6

Priority areas for Greater Geelong

Based on the Roadmap of Action above, the following list details the short, medium and long term actions by government, and business and community groups required to capture the abatement potential available to Greater Geelong.

Short term

Upgrade Greater Geelong’s street lighting with energy efficient lighting.

Apply for legislative exemption for Greater Geelong to enable ‘pay-as-you-save’ funding of buildings retrofit projects, to unlock investment and allow financing to be recouped through council rates.

Develop awareness campaign to encourage increased use of cycling, walking and public transport for short trips.

Facilitate information sharing between Geelong’s businesses on benefits of eco-driving.

Work with Geelong Manufacturing Council and the Chamber of Commerce to identify SME project partners for industry and building energy efficiency upgrades, facilitate access to funding, and share learnings of costs and benefits with other SMEs.

Coordinate application to the Australian Carbon Trust and Greener Government Buildings programs to secure funding for energy efficiency upgrades to Geelong’s commercial building stock and installation of cogeneration in commercial buildings.

Build community awareness of the benefits of waste-to-energy and to overcome resistance to its implementation in Greater Geelong. Unblock financial barriers and facilitate the industry partnerships needed to make projects financially viable.

Provide assistance to Barwon Water to unblock barriers to the implementation of its fuel switch project.

Develop awareness campaign to highlight the financial benefits of LPG vehicle conversion for commuters and fleets, and the funding available.

Provide assistance to Greenearth Energy to unblock barriers to the rollout of the demonstration stage of its geothermal project.

Evolve operational and procurement processes to ensure low carbon opportunities are assessed

Medium term

Monitor the Department of Primary Industries’ response to unblocking barriers to investment in medium scale solar. Identify potential industry partners and formulate proposal for Geelong to host a pilot project.

Raise awareness with developers and commercial property owners of the benefits of commercial new builds built to higher efficiency (equivalent of 6 NABERS) than current regulatory standards.

7

Facilitate partnership opportunities between industry and cogeneration plant operators for the deployment of large scale cogeneration.

Work with VicRoads to raise awareness among Greater Geelong residents of registration discounts and lifecycle cost benefits of hybrid vehicles.

Work with building industry associations and community organisations to raise awareness of benefits of retrofitting residential buildings to improve energy efficiency, and funding available to support retrofits.

Work with Alcoa, government and financial partners to unblock financial barriers to the implementation of more costly aluminium energy efficiency opportunities.

Encourage Armstrong Creek’s developers to focus on the deployment of new homes to a higher efficiency standard in the development, preferably to 7 stars. Facilitate partnership opportunities for cogeneration to service new homes in the development.

Work with Shell Australia, government and financial partners to unblock financial barriers to the implementation of more costly petroleum & gas energy efficiency and maintenance opportunities.

Monitor development of the Carbon Farming Initiative and work with local Landcare, Catchment Management Authority and farmers groups to raise awareness in the farming community of opportunities to earn carbon credits via improved forest management, reforestation and reduced soil emissions.

Work with energy service companies to encourage greater take up of solar photovoltaics (distributed) in Geelong’s residential homes.

Investigate opportunities for fuel switch projects with industry, e.g. Gas fired turbines to replace other power sources that are more greenhouse gas intensive, or waste heat recovery and sharing between businesses.

Long term

Monitor development of the Carbon Farming Initiative and work with local farmers groups to raise awareness in the farming community of opportunities to earn carbon credits via livestock abatement and soil carbon sequestration.

Work with Geelong’s business and industry groups to promote lifecycle cost benefits to vehicle fleet owners of purchasing more efficient cars, light commercial vehicles, buses and trucks.

Work with the Geelong Manufacturing Council and PACIA to identify projects and source funding to capture high cost abatement potential through improved chemicals processes.

ClimateWorks Australia looks forward to seeing Greater Geelong implement these opportunities, and begin its transition to a low carbon economy.

Key action – Begin now to encourage research and knowledge sharing with the building industry about the comparative strength and longevity of cement products with a higher proportion of clinker substitutes compared to traditional cement, and promotion of CO2

and resource efficiency benefits.

7

Appendix 1: Greater Geelong 2020 greenhouse gas emissions reduction cost curve

Appendix 2: Detailed assumptions

Industry – opportunity assumptions

General assumptions

Cost of capital 9.8% - 10.4%

2020 electricity price $75.7 - $85.9/MWh

2020 gas price $65.6/MWh

Opportunity Action required to realise opportunity Capex Barriers36


Petroleum & gas maintenance

Increase planning and reduce emissions due to operating refinery at maximum rates to ensure energy input/unit throughput is minimised. Planning ensures smooth operation of an optimised refinery.

Assumptions Assume 2.5% reduction in fuel consumption can be achieved

by 2020. Operating costs of $1.5/MWh energy saved.

Shel

l Aus

tral

ia

183 -353 -$64 No capex required

Resource constraints Maintenance prioritisation

Cement energy efficiency Improve processes by reducing idle time and implementing

monitoring and controls of kiln and crusher.

Assumptions Assume 5% energy savings across all fuel sources can be achieved

by 2020. Lifespan of measures is assumed to be 10 years.

Bora

l Cem

ent

13,581 -159 -$60 $41/MWh saved p.a.

Investment priorities Resource constraints

36 A range of policies and programs that can be used to assist in overcoming barriers can be found on the Future Proofing Geelong website via www.futureproofinggeelong.com 72

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/M

Wh



73

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/M

Wh

Petroleum & gas energy efficiency

Maintenance and monitoring of steam traps/steam distribution or monitoring and reduction of fouling (deposit build up in pipes).Improve process control to reduce suboptimal performance from undesired pressure drops across gas turbine air filters, undesired turbine washout frequency, suboptimal well and separator pressures.

Efficiency measures that involve replacement/upgrades/additions that do not alter the process flow of a refinery such as waste heat recovery via heat integration and replacement of boilers/heaters/turbines/motors

Assumptions Assume 2.6% energy savings can be achieved by 2020 Operating costs of $26/MWh energy saved Assume lifespan of 20 years.

Shel

l Aus

tral

ia

27,610 -120 -$35 $22/MWh saved p.a.

Investment priorities Risk of

operational disruption

Capital constraints

Food, beverage and tobacco energy efficiency

Improve control systems (automated or manual); reduce duplicated or oversized equipment; improving efficiency of boilers and steam distribution systems; waste heat recovery (e.g. used for pre-heating or other sites); improve building utilities. The greatest benefits are usually achieved when energy use is considered as a whole system.

Assumptions Assume energy savings of 13% above BAU can be achieved. Assume lifespan of 10 years for energy efficiency measures

Food

, bev

erag

e an

d to

bacc

o m

anuf

actu

ring

busin

ess o

wne

rs

22,712 -117 -$39 $150/MWh saved p.a.

Capital constraints Investment priorities Risk of operational

disruption Limited choice of high

efficient equipment

Pulp, paper and print energy efficiency

Improve control systems (automated or manual); reduce duplicated or oversized equipment; improving efficiency of boilers and steam distribution systems; waste heat recovery (e.g. used for pre-heating or other sites); improve building utilities. The greatest benefits are usually achieved when energy use is considered as a whole system.

Assumptions Assume energy savings of 13% can be achieved by 2020. Assume lifespan of 10 years for energy efficiency measures

Pulp

, pap

er a

nd p

rint

busin

ess o

wne

rs

7,559 -103 -$44 $136/MWh saved p.a.

Capital constraints Investment priorities Risk of


Limited choice of high efficient equipment



Other industry energy efficiency

Improve energy efficiency by 13% by capturing opportunities with a payback of 4 years or more. Achieved through improving control systems (automated or manual); reducing duplicated or oversized equipment, improving efficiency of boilers and steam distribution systems; waste heat recovery; improving building utilities. The greatest benefits are usually achieved when energy use is considered as a whole system.

Assumptions Assume energy savings of 13% can be achieved by 2020. Assume lifespan of 10 years for energy efficiency measures

Man

ufac

turin

g bu

sines

ses

28,827 -100 -$44 $139/MWh saved p.a.

Capital constraints Investment priorities Risk of operational

disruption Limited choice of high

efficient equipment

Mining energy efficiency

Operational improvements such as reducing idle time of shovels/trucks, improved fuel monitoring and maintenance, etc.) and improved control and planning (truck despatch optimisation etc).Increase efficiency in operations and controls, and enact known equipment improvements (e.g. truck light weight dump bodies, improved weighing systems, shovel light weight dippers, and replacement of light vehicles with hybrid cars).

Assumptions Assume energy savings of 6% can be achieved by 2020 Assume average lifespan of energy efficiency measures of 15 years

Min

ing

busin

esse

s

2,689 -58 -$47 $99/MWh saved p.a.

Capital constraints Investment priorities Risk of


Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/M

Wh

74



Fuel switch projects

Installation of gas-fired turbine at Barwon Water waste treatment facility to reduce grid electricity consumption and offset greenhouse gas emissions by 10,000 tCO2e. Ba

rwon

W

ater

7,664 -48 -$45 $366/MWh saved p.a.

Capital constraints Investment priorities Lack of carbon price

Chemicals motor systems Introduction of energy saving measures in motor systems, such as

adjustable speed drive, more energy efficient motors, and mechanical system optimization.

Assumptions 10% savings in indirect energy compared to standard systems Assumes 25% implementation above BAU

Chem

ical

s m

anuf

actu

rers

2,439 -27 -$26 $510/MWh saved p.a.

Capital constraints Investment priorities

Supplementary cementious materials

Increase share of clinker substitutes in cement ingredients mix to 25% which reduces process and fuel combustion emissions as well as electric power from clinker production, which together accounts for over 90% of total emissions from cement.

Assumptions Assume substitute materials provide a savings of ~$42/tonne

(excluding transportation costs) compared to clinker

Blue

Circ

le

57,510 -15 -$9 No upfront capex

Political and building industry acceptance of higher share of clinker substitute materials.

Access to substitute materials

Chemicals cogeneration

Cogeneration or CHP (combined heat and power) is a technique to use the energy losses from power production to generate heat for processes, in order to increase system efficiency and decrease the amount of fuel needed for power generation.

Assumptions 4% direct energy savings can be achieved by 2020

Chem

ical

s m

anuf

actu

rers

1,821 -14 -$3 $719/MWh p.a.



Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/M

Wh



Other industry cogeneration

Generation of electricity and thermal energy in a single integrated system.

Assumptions Assumes a total energy savings across all ‘other industry’ of

5% can be achieved through cogeneration by 2020. Man

ufac

turin

g bu

sines

ses

11,184 6 $6 $827/MWh p.a.


Cement cogeneration

Combined heat and power (CHP) systems generate electricity and thermal energy in a single, integrated system which improves significantly the overall energy efficiency.

Assumptions Assumes electricity savings of 0.03 TWh can be achieved by 2020. Lifespan of 25 years.

Bora

l Cem

ent

31,920 19 $18 $386/MWh p.a.


Aluminium energy efficiency

Improve energy efficiency by methods which are known today but not taken up in BAU due to long payback periods.

Assumptions 3% savings in indirect energy and 4% in direct energy can be

achieved. Energy efficiency measures have a lifespan of ~10 years

Alco

a

119,448 34 $42 $744/MWh p.a.

Capital constraints Investment priorities Lack of a carbon price Non-market electricity

pricing

Petroleum & gas cogeneration

Efficiency measure using Combined Heat and Power generation in which waste heat from natural-gas fired power production is used in the refinery.

Assumptions Assume cogen capacity replaces 0.3 TWh electricity and 0.6 TWh

of thermal energy. Opex - $26.2/MWh Lifespan of 20 years

Shel

l Aus

tral

ia

192,760 54 $33 $685/MWh

Difficulty of building plant into existing facility

Capital constraints Investment priorities Lack of a carbon price Non-market electricity

pricing

Medium scale solar

Installation of solar photovoltaic panels on a range of industrial rooftops to a total capacity of 1,000 kW.

busin

ess

owne

rs

Inve

stm

en

1,285 183 $171 $2,407/MWh p.a.

Capital constraints Investment priorities

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/M

Wh

76



Assumptions Assume lifespan of 25 years Victorian solar resource of 1375 kWh per kW per annum Operating costs of $8.6/MWh Assume no RECs are earned in 2020

Chemicals processes

Improve chemical techniques such as process intensification, continuous processes, improved process control, preventative maintenance, increased burner and heater efficiency, logistical improvements. Catalyst optimisation (process and direct energy emissions decrease) such as improved chemical structure of catalysts, design to lower reaction temperatures, and chain reaction improvements.

Assumptions Assumes lifespan of process improvements is ~20 years

Chem

ical

s man

ufac

ture

rs

2,907 379 $77$1,325/

MWh saved p.a.

Capital constraints Process improvements do

not achieve financial payback with current electricity price forecasts.

77

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/M

Wh

39 A range of policies and programs that can assist in overcoming barriers can be found on the Future Proofing Geelong website 78

Commercial buildings – opportunity assumptions

General assumptions Floorspace:Cost of capital 12.7%

2020 electricity price $157/MWh38

2020 gas price $105/MWh

OfficesNon-food retail Education Wholesale Community Accommodation Food retail HealthFood service Other

239,045 m2

400,000 m2

543,525 m2

190,865 m2

150,415 m2

53,905 m2

190,000 m2

54,035 m2

68,735 m2

153,865 m2



Commercial retrofit HVAC

Install highest efficiency system when current expires; improve HVAC control systems to adjust for building occupancy and minimise re-cooling of air. Experience shows that significant downsizing of HVAC equipment can be done once other equipment improvements have been implemented (e.g. lighting, cooking, refrigeration).

Assumptions: Potential energy savings: Offices – 32%, Non-food retail – 29%,

Education – 31%, Wholesale – 22%, Community – 28%, Accommodation – 25%, Food retail – 19%, Health – 33%,Food service – 20%, Other – 32%

A further 20% savings can be achieved across all subsectors with no capital cost through HVAC positive interaction

Lifespan of HVAC equipment estimated to be 20 years

Build

ing

owne

r

34,584 -232 -$3.9 $9/m2

Split incentive Capital constraints Investment

priorities Non-market

electricity pricing Lack of

information Decision process

38 Based on an adjustment to the average retail price projections (sourced from MMA’s Report to Federal Treasury: Impacts of the Carbon Pollution Reduction Scheme on Australia’s Electricity Markets).

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

/sav

ings

$/tC

O2 e

Cost

/sav

ing

$/m

2




Commercial retrofit energy waste reduction

Experience shows that significant savings can be achieved with minimal capital investment by getting rid of or downsizing unnecessary equipment.

Assumptions Energy savings in 2020 estimated to be 10% across all end uses. Bu

ildin

g ow

ner

Tena

nt

46,800 -187 -$4.3 $3.6/m2

Lack of information

Investment priorities

Non-market electricity pricing

Cogeneration – Armstrong Creek

Build cogeneration plants to supply 2,500 MWh to new commercial buildings in Armstrong Creek. Based on Sustainability Victoria’s Armstrong Creek Development: Sustainable Alternative Energy Supply and Demand Options Analysis

Assumptions Lifespan: 15 years Operating hours/year: 2,500 Operating and maintenance costs: $6/MWh

Build

ing

owne

r

2,338 -$132 n/a$2.1

million in total

Capital constraints Investment

priorities Regulatory

constraints Split incentives

Commercial electronics & appliances

Replace traditional electronics, appliances, elevators/escalators and kitchen equipment with high efficiency equipment to reduce energy consumption.

Assumptions: Energy savings in 2020 estimated to be: Offices – 26, Non-food retail –

23%, Education – 18%, Wholesale – 24%, Community – 21%, Accommodation – 20%, Food retail – 14%, Health – 20%,Food service – 15%, Other – 22%

In new builds, energy savings in 2020 estimated to be 28%. Average lifespan estimated to be 18 years.

Build

ing

owne

r Te

nant

64,567 -100 -$2.3 $10.4/m2


priorities Decision process

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

/sav

ings

$/tC

O2 e

Cost

/sav

ing

$/m

2




Commercial retrofit lighting

Replace CFLs with LEDs, replace inefficient T12s or T8s with new super T8s and T5s, install lighting control systems.

Assumptions: Energy savings potential: Offices – 39%, Non-food retail – 17%,

Education – 27%, Wholesale – 31%, Community – 33%, Accommodation – 44%, Food retail – 16%, Health – 17%, Food service– 34%, Other – 19%

Lifespan of lighting fixtures: 24 years

Build

ing

tena

nt

21,138 -84 -$0.9 $6.4/m2


priorities Decision process

Street lighting energy efficiency

Replace 100% of existing 80W Mercury Vapour street lights with Twin 14 Watt T5 lamps.

Assumptions: OMR charge per 80W fitting $35 15,800 streetlights in Greater Geelong

Coun

cil

6,564 -$69 n/aTotal

capex $6 million


priorities

Commercial retrofit insulation

Improve air-tightness of existing buildings by sealing areas of potential air leakage, weather strip doors and windows.

Assumptions: HVAC energy savings potential: Offices – 20%, Non-food retail – 16%,

Education – 20%, Wholesale – 1%, Community – 19%, Accommodation – 22%, Food retail – 21%, Health – 22%,Food service – 20%, Other – 15%

Lifespan: 56 yearsBu

ildin

g ow

ner

22,864 -$8 -$0.1 $26.2/m2


priorities Decision process Split incentives

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

/sav

ings

$/tC

O2 e

Cost

/sav

ing

$/m

2




Commercial water heating

Reduce water heating energy consumption in existing buildings by replacing standard gas water heaters with tankless gas, condensing gas, or solar water heating; replace electric water heater with heat pump or solar.

Assumptions: Energy savings potential: Offices – 32%; Non-food retail – 48%;

Education – 13%; Wholesale – 11%; Community – 13%; Accommodation – 19%; Food retail – 45% ;Health – 3%; Food service – 17%; Other – 44%

Lifespan of water heater estimated to be 20 years.

Build

ing

owne

r

5,628 $5 -$0.01 $6.1/m2


priorities Decision process Split incentives

Commercial new builds

New commercial buildings achieve equivalent of 6 stars in the NABERS rating. Office buildings are taken as a reference as they correspond to the average energy consumption per m2 in the building fleet. New average energy consumption for central services is 68KWh/m2

Assumptions: Energy savings estimated to be 41% across all sub-sectors. Lifespan of new build estimated to be 67 years.

Deve

lope

rs

Build

ing

owne

rs

21,204 $8 $0.3

Increment al capex

$88.7/m2


priorities Split incentives

Cogeneration – Aquatic Centres

Build cogeneration plants to supply 1,205 MWh to 2 Geelong aquatic centres.

Assumptions Operating and maintenance costs: $48/MWh Lifespan: 20 years Bu

ildin

g ow

ner

1,127 $18 n/a $455,000per plant


priorities

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

/sav

ings

$/tC

O2 e

Cost

/sav

ing

$/m

2


Residential buildings – opportunity assumptions

General assumptions

Cost of capital 12.7%

2020 electricity price $198/MWh43

2020 gas price $150/MWh

Average floor space per household 193m2

Total Greater Geelong households in 2020 111,348

Opportunity Action required to realise opportunity Capex Barriers44Alignment with strategic priorities

Residential building envelope (basic)

Basic retrofit to improve building insulation including sealing areas of air leakage, weather stripping doors and windows, insulating attic and wall cavities.

Assumptions HVAC energy savings of ~15% can be achieved Average lifespan of insulating materials assumed to be 25 years. Assume 12% penetration rate above BAU.

Hom

e ow

ner

3,243 -270 -$0.4 $8/m2

Split incentive Upfront capital Low energy prices

Residential building envelope (advanced)

Retrofit to ‘passive’ standard at time of regular building renovations. Includes installing high efficiency windows and doors; increasing outer wall, roof, and basement ceiling insulation; mechanical ventilation with heat recovery, basic passive solar principles.

Assumptions HVAC energy savings of ~70% can be achieved.

Hom

eow

ner

38,436 -196 -$1.4 $64//m2

Split incentive Upfront capital Low energy

prices Long payback

43 Based on an adjustment to the average retail price projections (sourced from MMA’s Report to Federal Treasury: Impacts of the Carbon Pollution Reduction Scheme on Australia’s Electricity Markets).

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/m


Assume penetration rate of 29% above BAU Lifespan of insulating assets is assumed to be 30 years.

Residential HVAC(heating, ventilation and air- conditioning)

New air-conditioners and space heaters purchased are in the top performers of their category (named high-efficiency).HVAC systems are maintained more frequently (improved duct insulation, correct level of refrigerant and new air filters).

Assumptions Energy savings of 6% can be achieved on gas heating; 16% on

electric heating; and 12% on air-conditioning. Improved maintenance of HVAC systems can achieve an average

further savings of 8%. Lifespan for all HVAC technologies is assumed to be 20 years.

Hom

e o

wne

rs

6,893 -182 -$36.6 $0.4/m2

Lack of minimum standards

Low energy prices

Upfront capital Long payback Split incentive High transaction

costs

Residential appliances and electronics

New appliances and electronics purchased are in the top performers of their category (named high-efficiency)

Assumptions Energy savings of 25% can be achieved above BAU. Lifespan for electronics and appliances is assumed to be 10 years. Assume penetration rate of 38% above BAU by 2020.

Build

ing

tena

nt

25,328 -179 -$0.6 $0.7/m2

Lack of minimum standards

Low energy prices

Upfront capital High transaction

costs

Residential lighting

Replace standard quartz halogen bulbs and CFLs with LEDs.

Assumptions Energy savings of 30% can be achieved by switching quartz

halogen to LEDs; and 42% from switching CFLs to LEDs. Penetration rate 30% for replacing quartz halogen and 42% for

replacing CFLs can be achieved above BAU by 2020.

Hom

e o

wne

rs

11,732 -99 -$0.1 $0.2/m2

Low energy prices

Upfront capital Long payback

(CFLs to LEDs)

83

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/m


84

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

$/t

CO2 e

Cost

$/m

Residential new builds to7.2 stars

New houses are built to 7.2 stars in the HERS rating system, achieving a 46% improvement in energy efficiency compared to 5 stars, between 2013 and 2020.

Heating, ventilation and air conditioning (HVAC) energy consumption of households decreases from 38 KWh/m2 to 20.4 kWh/m2. De

velo

pers

N

ew h

ome

owne

rs

48,311 -86 -$0.5 $18/m2

Capital constraints

Split incentives Existing

standards not sufficient to motivate action.

Residential cogeneration Armstrong Creek

By 2020, 2 cogeneration plants providing electricity and distributed heat to 6,000 homes are built as part of the new housing development at Armstrong Creek. Based on Sustainability Victoria’s Armstrong Creek Development: Sustainable Alternative Energy Supply and Demand Options Analysis

Assumptions: Plant lifespan of 15 years Grid connection costs $40/MWh Operating costs $6/MWh generated Heating service charge $14/GJ Wholesale electricity price earned in 2020 $35/MWh

Deve

lope

rs

5,734 -79 n/a $7.1 million

Upfront capital Split incentives Long payback

Residential solar PVs

Install 28 MW of residential rooftop solar PV panels above BAU (approximately 5% of Greater Geelong homes) by 2020 to reduce demand for grid-supplied electricity.

Assumptions: Lifespan: 25 years Feed-in tariff earned $0.35/kWh ()

Hom

eow

ners

35,789 100 n/a $3,310/kW

Capital constraints

Lack of carbon price

Investment priorities

Power – opportunity assumptions



Waste-to-energy Installation of a ‘grate-type’ waste-to-energy facility with capacity to process 1,000 tonnes per day, including industrial waste.

Assumptions: Uptime 330 days per year Lifespan 40 years Fixed costs $45/kW Variable costs $4/MWh W

aste

-to-

ener

gy

faci

lity

inve

stor

191,300 27 $25 $11,300/kW


Geothermal Build Demonstration plant of Geelong Geothermal Power Plant with capacity of 12 MW.

Assumptions: Uptime: 95% Lifespan: 30 years Fixed maintenance cost in 2020: A$83/kW per annum Variable maintenance cost in 2020: A$3/MWh Grid maintenance/upgrade cost in 2020: A$40/MWh Wholesale electricity price earned in 2020 $35/MWh Price of RECs earned in 2020 $33.5/MWh Gr

eene

arth

Ene

rgy

93,377 60 $56 $6,025/kW



Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

/sav

ings

$/tC

O2 e

Cost

/sav

ing

$/M

Wh

Transport - opportunity assumptions

General assumptions


2020 petrol price $1.09/litre46

2020 diesel price $1.09/litre

2020 electricity price $198/MWh



Eco driving 20% of Greater Geelong’s truck drivers implement eco-driving principles to reduce fuel consumption and associated greenhouse gas emissions. Drivers are typically trained through a combination of theoretical and practical lessons to prepare and drive their vehicles to reduce fuel consumption. Eco-driving may also have the co-benefit of enhancing safe driving practices.

Assumptions: Eco driving reduces fuel consumption by an average of 10% Cost of driver training ~$180 per driver

Vehi

cle

owne

r

2,494 -354 n/a

Lack of information Relatively cheap fuel

prices

46 2020 fuel prices are taken from BITRE/CSIRO Modelling the Road Transport Sector. While these estimates are conservative, there are few other credible, published alternatives to draw from. Therefore the financial benefits of choosing more efficient vehicles is likely to be greater than the modelling in this report indicates.47 A range of policies and programs that can be used to assist in overcoming barriers can be found on the Future Proofing Geelong website via www.futureproofinggeelong.com 86

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2 e/y

ear

Cost

/sav

ings

$/tC

O2 e

8

Diesel car and light commercial vehicle efficiency improvement

New vehicle purchases of traditional diesel internal combustion engine passenger and commercial vehicles are highest efficiency in their class. Efficiency improvements can be grouped into 4 bundles: Bundle 1 – Variable valve control, mild engine friction reduction, low

rolling resistance tyres, tyre pressure control system, mild weight reduction (1.5%).

Bundle 2 - (additional to bundle 1) Piezo injectors, medium downsizing, medium weight reduction, electrification (steering, pumps), optimised gearbox ratio, improved aerodynamic efficiency.

Bundle 3 - (additional to bundle 2) torque oriented boost, air conditioning modification, improved aerodynamic efficiency, start- stop system with regenerative breaking

Bundle 4 (additional to bundle 3) increase injection pressure, strong downsizing, strong weight reduction

Assumptions: 20 year average life of vehicles Fuel economy of 9.2 litres per 100 km in 2020 before efficiency

improvements. Fuel economy of bundle 1 is 8.1 L/100 km, bundle 2 is7.4 L/ 100 km, bundle 3 is 6.4 L/100 km, bundle 4 is 6.0 L/100 km.

Vehi

cle

owne

r Fl

eet o

wne

rs

8,545 -213

Incremental capex in 2020:$383 for bundle 1,+$646 for bundle 2,+$861for bundle 3,+$820 for bundle 4

Insufficient vehicle efficiency standards


prices Upfront capital

88

Petrol car and light commercial vehicle efficiency improvement

New vehicle purchases of traditional petrol internal combustion engine passenger and commercial vehicles are highest efficiency in their class. Efficiency improvements can be grouped into 4 bundles: Bundle 1 – Variable valve control, mild engine friction reduction, low

rolling resistance tyres, tyre pressure control system, mild weight reduction (1.5%)

Bundle 2 (additional to bundle 1) – medium down-sizing, medium weight reduction, electrification (steering, pumps), optimised gearbox ratio, improved aerodynamic efficiency, stop-start system with regenerative braking

Bundle 3 (additional to bundle 2) – strong additional displacement, air conditioning modification, improved aerodynamic efficiency, start- stop system with regenerative braking

Bundle 4 (additional to bundle 3) – direct pressure injection strong weight reduction, optimised transmission

Assumptions: 20 year average life of vehicles Fuel economy of 9.6 litres per 100 km in 2020 before efficiency

improvements. Fuel economy of bundle 1 is 8.3 litres per 100 km, bundle 2 is 7.2 litres per 100 km, bundle 3 is 6.6 litres per 100 km, bundle 4 is 5.9 litres per 100 km

Vehi

cle

owne

r

24,600 -212

Incremental capital cost in 2020: $525for bundle 1,+$1,197 for bundle 2,+$1,147 for bundle 3,+$827 for bundle 4

Insufficient vehicle efficiency standards


prices Upfront capital

Large articulated truck efficiency improvement

New vehicle purchases of large articulated trucks are highest efficiency in their class. Efficiency improvements can be grouped into 4 bundles: Bundle 1 – rolling resistance reduction. Bundle 2 – rolling resistance reduction, aerodynamic improvement Bundle 3 – rolling resistance reduction, conventional ICE improvement Bundle 4 – rolling resistance reduction, aerodynamics improvement,

conventional ICE improvements.

Assumptions: 20 year average life of vehicles Fuel economy of 54L/100 km in 2020 before efficiency improvements.

Fuel economy of bundle 1 is 51 L/ 100 km, bundle 2 is 50L/100 km, bundle 3 is 49L/100 km, bundle 4 is 47 L/100 km.

Vehi

cle

owne

r3,825 -188

Incremental capex in 2020:$2,122 for bundle 1+$3,396 for bundle 2+$9,551 for bundle 3+$10,824 for bundle 4

Insufficient minimum standards

Long payback Low fuel prices

8

LPG Vehicle Conversion

Convert existing petrol vehicles to LPG to reduce overall vehicle emissions. As vehicle conversion only becomes economical for vehicles that drive long distances, it is assumed that this opportunity is only applied to vehicles that drive an average of 20,000 or more each year.

Assumptions: AusIndustry's LGP Vehicle Scheme offers rebates of $1,250 (reducing

to $1,000 on 1st July 2012) for each vehicle converted to LPG, but this scheme expires in 2014 and has been factored into the modelling accordingly.

Lifespan after conversion 10 years

Vehi

cle

owne

rs

416 -183 $4,500 per vehicle

Capital constraints Relatively cheap fuel

prices

Shift urban car travels to public transport

5% of urban car journeys are replaced by travel on public transport.

Assumptions: Average bus ticket price $3 Assume average parking costs of $3 also saved per trip Excludes investment which may be required to increase bus fleet

to service additional passenger trips

Vehi

cle

owne

r

11,916 -52 n/a

Lack of public transport infrastructure

Diesel car hybrids

New diesel hybrid cars (full hybrid or plug-in) replace 10% of new diesel internal combustion car purchases by 2020.

Assumptions: Assume 40% of all new vehicles in 2020 are diesel Full diesel plug-in achieves 27% fuel savings; plug-in diesel

achieves 23% fuel savings

Vehi

cle

owne

r

2747 -36

Incremental capex in 2020:$2,694 for full hybrid, $2,518

for plug-in hybrid

Capital constraints Low fuel prices

Shift urban car travels to walking and cycling

15% of urban car journeys of less than 3km are replaced with walking or cycling.

Assumptions: Cost of a new bike $600 Annual bike maintenance $80

Vehi

cle

owne

r

23,360 -33 n/a

Lack of cycling and walking infrastructure

48 A range of policies and programs that can be used to assist in overcoming barriers can be found on the Future Proofing Geelong website via 9

Petrol Car Hybrids

New petrol hybrid cars (full hybrid or plug-in) replace 8.3% of new petrol internal combustion car purchases by 2020.

Assumptions: Under business-as-usual, petrol hybrid cars will replace 1.7% of

new petrol vehicles purchased. Full hybrid petrol cars achieve 22% efficiency compared to

internal combustion engines; plug-in hybrids achieve 17% efficiency.

Vehi

cle

owne

rs

2,947 -22

Incremental capex in 2020:$2,855 for full hybrid, $9,335 for plug-in hybrid

Capital constraints Low fuel prices

Electric vehicles

By 2020, electric vehicles replace 1% of all new petrol vehicle purchases in Greater Geelong.

Assumptions: It is assumed that electric vehicles are powered by 100% renewables

(additional to the RET). A REC cost of $34/MWh has been included. It is assumed that electric vehicles are taken up predominately by

commuters and fleets and drive an average of 25,000km per year Infrastructure cost of $500 per vehicle for installation of plug-

in connection

Vehi

cle

owne

rs

1,282 18

Incremental capex in 2020:

$5,833 per vehicle

Capital constraints Lack of infrastructure

Bus and rigid truck efficiency improvement

Efficiency improvements to traditional diesel ICE bus and rigid trucks, grouped into 4 bundles: Bundle 1 – rolling resistance reduction. Bundle 2 – rolling resistance reduction, aerodynamic improvement. Bundle 3 – rolling resistance reduction, conventional ICE improvement Bundle 4 – rolling resistance reduction, aerodynamics improvement,

conventional ICE improvements.

Assumptions: Assume 20 year lifespan of vehicles Fuel economy of 28 litres per 100 km in 2020 before efficiency

improvements. Fuel economy of bundle 1 is 27 litres per 100 km, bundle 2 is 27 litres per 100 km, bundle 3 is 26 litres per 100 km, bundle 4 is 25 litres per 100 km.

Vehi

cle

owne

rs V

ehic

le o

wne

r

1,435 273

Incremental capex in 2020:$7,130 for bundle 1,+$3,190 for bundle 2,+$5,096 for bundle 3,+$5,421for bundle 4

Capital constraints Long payback period

90

Agriculture - opportunity assumptions

General assumptions

Total hectares in Greater Geelong 97,235

Total cropland (ha) 22,041

Total improved pastures (ha) 69,194

Share of land that is less productive 20%


Alignment with strategic

priorities

Reduced cropland soil emissions

Reduce tillage to zero or restrict to 1-2 cultivations. Avoid burning of residue. Use fertilisers more efficiently; adjust application rates based on precise estimation of crop needs, place nitrogen more precisely in soil, avoid application in times when susceptible to loss, use coated, slow release fertilisers.

Farm

ers

1,371 -69 -$3.6 n/a

Uncertainty of soil carbon potential sequestration

Labour constraints

Active livestock feeding

Actively feed beef cattle higher quality feed to increase growth rate and shorten time to reach slaughter rate, most likely via feedlotting

Farm

ers

655 -10 -$0.6 n/a

Information gaps Labour constraints

Pasture management - soil

Optimise grazing intensity and timing for carbon sequestration and productivity; promote land productivity; fire management; species introduction, e.g. perennial grasses with higher productivity or greater sequestration through deeper roots Fa

rmer

s2,283 4 $0.3 n/a


Labour constraints Investment

priorities

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2e/y

ear

Cost

/sav

ings

$/tC

O2e

Cost

/sav

ing

$/ha

9



priorities

Pasture management - livestock

Actions undertaken through Pasture management - soil also likely to reduce livestock emissions via better quality feed and animal management.

Farm

ers

6,328 5 $0.5 n/a


priorities

Anti- methanogenic treatments

The addition of dietary additives, injections, water medication, vaccines to reduce enteric emissions from cattle.

Farm

ers

811 18

$1.3per

head of

cattle

n/a

Information gaps Labour constraints Investment

priorities

Cropland carbon sequestration

Reduce use of bare fallow, use improved crop varieties that allocate more soil carbon and utilise cover crops.

Farm

ers

2,160 25 $3 n/a



priorities

Less productive cropland restoration

Restore less productive cropland to improve soil carbon sequestration. Reduce salinity, acidification and erosion by re-vegetation or applying lime. Improving fertility via nutrient application. Apply organic substrates.

Assumptions: Assume 20% of Greater Geelong cropland is less productive

Farm

ers

882 63 $12.5 n/a



priorities

Less productive pasture restoration

Restore less productive pastures to improve soil carbon sequestration. Reduce salinity, acidification and erosion by re-vegetation, applying lime, improving fertility via nutrient application. Apply organic substrates.

Assumptions: 20% of Greater Geelong pasture is less productive

Land

ow

ners

1473 79 $7.7 n/a



priorities

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2e/y

ear

Cost

/sav

ings

$/tC

O2e

Cost

/sav

ing

$/ha


48 A range of policies and programs that can be used to assist in overcoming barriers can be found on the Future Proofing Geelong website via www.futureproofinggeelong.com

9

Forestry - opportunity assumptions

General assumptions


Total agricultural land available for afforestation 10% of less productive farmland2% of productive farmland (in line with best practice farming)

Total hectares available for afforestation by 2020 3,500



priorities

Reforestation of less-productive land with timber plantation

Plant timber for harvest on less productive land.

Assumptions: 15% of less productive farmland land available for afforestation is

planted with timber for harvest (292 hectares). Management and monitoring cost $92/ha/year Rental cost of land (opportunity cost) $32/ha/year Revenue from selling timber $276/ha/year

Land

ow

ners

1,286 7Planting

cost$2,249/ha

Uncertainty of carbon sequestration potential

Labour constraints Investment priorities Lack of a carbon

price Opportunity cost

Opp

ortu

nity

owne

r

Abat

emen

tpo

tenti

al

tCO

2e/y

ear

Cost

/sav

ings

$/tC

O2e


Strategic reforestation of productive farmland with environmental forest

Plant small tree stands/forests selectively on productive land to create wind breaks, shade and erosion protection on waterways, in line with best practice.

Assumptions: 2% of productive farmland (1,555 hectares) is planted with

environmental forest Management and monitoring cost $53/ha/year Rental cost of land (opportunity cost) $89/ha/year

Land

ow

ners

7779 26Planting

cost$1,050/ha

Labour constraints Investment priorities

Reforestation of less-productive land with environmental forest

Plant forests that are not for harvest on less-productive land.

Assumptions: 85% of less productive farmland land available for afforestation is

planted with timber for harvest (1,653 hectares). Management and monitoring cost $49/ha/year Rental cost of land (opportunity cost) $34/ha/year

Land

ow

ners

5785 28Planting

cost$1,050/ha



Non Kyoto reforestation of less-productive land with environmental forest

Plant forests that are not for harvest on less-productive land that is non- Kyoto compliant.

Assumptions: Total non-Kyoto land reforested by 2020 is 510 hectares Management and monitoring cost $49/ha/year Rental cost of land (opportunity cost) $34/ha/year

Land

ow

ners

3570 28Planting

cost$1,050/ha



Improved forest management

Increase amount of woody growth in forests by the removal of weeds such as lantana and blackberry that limit native woody vegetation growth. Removal of feral animal species and insect/plant pest control to promote tree growth. Increased fire control.

Assumptions: By 2020, an additional 8,295 hectares of forest is brought under

improved forest management Improvement cost $43/ha/year

Land

ow

ners

4148 52

One-off improveme

nt cost$97/ha

Labour constraints Investment priorities

9

Glossary of terms

CO2e Carbon dioxide equivalent represents the concentration of carbon dioxide that would have the same level of global warming potential as a given type and concentration of greenhouse gas. The six most common greenhouse gases are water vapour, carbon dioxide, methane, nitrous oxide, ozone and chlorofluorocarbons.

ha Hectares

ktCO2e

kW

MW

MWh

Kilotonnes, or thousands of tonnes, of carbon dioxide equivalent

Kilowatt. A unit of energy equivalent to 1 thousand watts.

Megawatt. A unit of energy equivalent to 1 million watts (or 1,000 kW) typically used to measure energy generation capacity (or the maximum energy that can be generated at any given point in time). One medium-sized wind turbine could generate 1 MW at full output.

Megawatt hour. One thousand kilowatts of energy supplied for one hour. This report converts all energy sources to MWh

SME Small to medium-sized enterprise. In Greater Geelong this includes all businesses with less than 200 employees

Bibliography

ABS - Australian Bureau of Statistics (2006), Census Data, http://www.abs.gov.au/websitedbs/d3310114.nsf/home/census+data

BITRE (Bureau of Infrastructure, Transport and Regional Economics) and CSIRO (2008), Modelling the Road Transport Sector. Appendix to Australia’s Low Pollution Future: the economics of climate change mitigation, Australian Government, Canberra ACT

City of Greater Geelong (no date), Geelong Economic Development Strategy 2005-2010, Geelong Victoria

City of Greater Geelong (2011), Population forecasts,http://forecast2.id.com.au/default.aspx?id=268&pg=5000

City of Greater Geelong (2009), Economic indicators Bulletin 2008-09, Geelong Victoria

ClimateWorks Australia (2010), Low Carbon Growth Plan for Australia, Clayton Victoria

Colliers International (2008), Colliers International Office Tenant Survey, http://www.colliers.com.au

Department of Climate Change and Energy Efficiency (2011), Australia's emissions projections 2010, Australian Government, Canberra ACT

Department of Transport and Infrastructure (2010), Green Vehicle Guide, Commonwealth of Australia, http://www.greenvehicleguide.gov.au

EPA Victoria (2008) Australia and Victoria’s greenhouse gas emissions,http://www.epa.vic.gov.au/greenhouse/australia-victoria-emissions.asp

G21 - Geelong Regional Alliance (2007), The Geelong Region Plan – a sustainable growth strategy,Geelong Victoria

Garrett , The Hon Peter AM MP, Minister for the Environment, Heritage and the Arts (2009), Keynote address, Green Cities Conference 2009

Geelong Manufacturing Council (no date), Manufacturing Contribution,http://users.tpg.com.au/gmc/man_contribution.html

Greenearth Energy (no date), Geelong Geothermal Power Project,http://www.greenearthenergy.com.au/projects/

McGraw Hill Construction (2006), Smart Market Report, http://www.construction.com

MMA – McLennan Magasanik Associates (2008), Impacts of the Carbon Pollution Reduction Scheme on Australia’s Electricity Markets – Report to Federal Treasury, Melbourne Victoria

Premier of Victoria (2011) Coalition Government’s massive jobs boost for Port of Geelong – Media release, http://premier.vic.gov.au/2011/02/coalition-governments-massive-jobs-boost-for-port-of- geelong/

96

9

Prime Minister’s Task Group on Energy Efficiency (2010), Report of the Prime Minister’s Task Group n Energy Efficiency, Canberra ACT

Sustainability Victoria (no date), 500 Collins St case study,http://www.resourcesmart.vic.gov.au/for_businesses_3661.html

Sustainability Victoria (2008), Energy use in Victoria,http://www.sustainability.vic.gov.au/www/html/1819-energy-use-in-victoria.asp

Sustainability Victoria (2009) Armstrong Creek Development: Sustainable Alternative Energy Supply and Demand Options Analysis

The Treasury (2008), Australia's Low Pollution Future: The Economics of Climate Change Mitigation,Canberra ACT

Turner Construction (2004), Market Barometer, http://www.turnerconstruction.com

United States Environment Protection Agency (2010) Transport and Climate – Regulations and Standards, http://www.epa.gov/otaq/climate/regulations.htm#1-1

Victorian Department of Primary Industry (2010), Medium scale solar discussion paper, http://new.dpi.vic.gov.au/energy/projects-research-development/solar/energy-programs/medium- scale-solar-discussion-paper/medium-scale-solar-discussion-paper

Victorian Freight and Logistics Council (2009), Good Practice Sourcebook, Melbourne Victoria

A range of other sources underpin the analysis in the Low Carbon Growth Plan for Australia, on which the analysis for the Low Carbon Growth Plan for Greater Geelong is based. A full list of these sources can be found in the Bibliography of the Low Carbon Growth Plan for Australia¸ which is available at www.climateworksaustralia.org .

LOW CARBON GROWTH PLAN FOR AUSTRALIA

Published by ClimateWorks Australia Melbourne, Victoria, March 2011

© Copyright ClimateWorks Australia 2011

ISBN 978-0-9871341-0-3

This work is copyright. Apart from any use permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the publisher. Requests and inquiries should be directed to the publisher, at:

ClimateWorks Australia Monash UniversityBuilding 74, Wellington Road, Clayton VIC 3800 Phone: +61 3 9902 0741Fax: +61 3 9905 9348Email: [email protected]

This document may also be downloaded from the ClimateWorks Australia website at: www.climateworksaustralia.org

www.completecolour.com.au

This publication has been printed by Complete Colour Printing, an ISO 14001 environmental management system & ISO 9001 quality management system certified printer, which holds Sustainability Victoria Wastewise Gold accreditation and is printed on an ecologically rated printing press using a chemical recirculation system and 100% vegetable based inks.Production and distribution of this report has been carbon offset saving 1,51 kgs of CO2. Calculations are individually audited and use data sourced from VECCI.

It is printed on 9lives 80, a FSC Mixed source certified paper containing 80% post consumer recycled fibre and produced at an ISO 14001 EMS accredited mill using pulp bleached by a totally chlorine free process. This publication is fully recyclable, please dispose of wisely.

cr john mitchell - city of greater geelong · web viewthis could save an average of $12.50 per...

Documents