About Molycop

Molycop is the largest and most experienced manufacturer and supplier of grinding media to mining operations worldwide. Molycop is striving for greater sustainability through superior resource efficiency and defining a new standard of environmental performance.

How we helped

Since 2006, the Northmore Gordon Newcastle team has helped Molycop achieve annual energy cost savings and maximise their return on investment in energy projects through:

• Energy management strategy
• Energy audits
• Project development support
• Grants and funding options
• Energy and carbon reporting
• Energy and carbon certificates

The Challenge

Molycop is the largest and most experienced manufacturer and supplier of grinding media to mining operations worldwide. Whilst energy has always been important, and compliance with regulation critical, the Waratah site has since expanded its focus to form a long-term goal of decarbonisation through an end-toend energy strategy.

With over 20 years of experience and extensive knowledge in the steel sector, Northmore Gordon was selected to help Molycop develop their comprehensive portfolio of energy projects. Northmore Gordon consultants worked closely with the client’s energy and operations teams to investigate their processes and identify opportunities for improving efficiency. More recently, Northmore Gordon’s Energy and Carbon experts have been assisting Molycop to plan towards a low carbon emissions steel-making process.

The Process

Northmore Gordon adopted a systematic approach to identifying and prioritising energy and carbon management opportunities. This included investigating capital projects, low cost process improvements, government funding and revenue from energy and carbon certificates.

Our Energy and Carbon Consultants helped Molycop access over one million dollars worth of revenue through the NSW government’s Energy Saving Scheme and capital grants. Northmore Gordon also assisted Molycop in their purchasing of renewable energy through a corporate Power Purchase Agreement.

Some projects that have been implemented include:

• Installing Variable Speed Drives on large fans and pumps, including high voltage motors
• Modifying controls on fume extraction and cooling systems
• Improving yield
• Improving furnace controls
• Reducing pilot flame gas consumption
• Upgrade bag house
• Improving furnace heat recovery system
• Installing heat recovery on ladle preheating equipment
• Cooling tower upgrades

Outcome

Through Northmore Gordon’s multi-disciplinary approach, Molycop’s energy savings has grown to over $1.5M per annum. The consequential reduction in Greenhouse gas emissions has resulted in 15K tonnes of corresponding carbon emissions abatement each year. This has resulted in over $12M in energy costs and certificate revenue over the course of the project.

Do you need help developing a decarbonisation strategy? Contact: c.morgan@northmoregordon.com

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Carbon Offset Criteria:

1. Methodology
   Companies must scrutinize the methods employed in carbon offset projects. Whether it’s reforestation/Afforestation, Carbon removal, or methane capture, understanding the methodology is vital in determining the actual impact of the offset. Aligning your organization’s goal and scopes with high quality carbon offsets is critical. For instance, projects utilizing carbon capture and storage (CCS) technologies directly capture emissions from industrial processes and power plants, preventing them from entering the atmosphere. On the other hand, nature-based solutions such as afforestation and reforestation leverage the natural ability of ecosystems to sequester carbon. Understanding these methods helps companies gauge the actual impact of the offset and its contribution to emission reduction.
2. Technology vs Nature-Based Solutions (NBS)
   Evaluate the balance between technological solutions and nature-based solutions. Tech-based projects may include carbon capture technologies (avoided emissions), while nature-based projects involve activities like afforestation and reforestation (sequestration / removal). A strategic mix can provide a more comprehensive approach to carbon mitigation. Striking a balance between these two approaches ensures a comprehensive and sustainable carbon offset strategy.
3. Vintage
   The vintage of carbon offsets refers to the year in which the emission reductions occurred. Companies should consider the vintage to ensure that the offsets align with their current emission levels and goals. This consideration prevents the purchase of outdated offsets that may not contribute effectively to a company’s current sustainability targets. Other target frameworks allow for some flexibility with vintage and act as a good yardstick for procurement.
4. Countries/Location/Market Boundary
   Geographical considerations play a significant role in the effectiveness of carbon offset projects. Companies should assess whether the projects are in regions where emissions reductions are critical and whether they align with global climate goals. To avoid greenwashing, considering market boundaries ensures that the offsets adhere to international standards and contribute meaningfully to the global effort to combat climate change.
5. Price Range
   While cost is a factor, it should not be the sole consideration. Assess the price range of carbon offsets to ensure it aligns with your budget, but also consider the impact and quality of the projects associated with the offsets. the price of carbon offsets varies based on project type, location, and vintage. Cheaper offsets may not always guarantee the same level of emission reduction or removal. Companies should evaluate the cost-effectiveness of offsets by considering the quality and impact of the underlying projects. Some frameworks require third-party audit for verification of the projects.
6. Registry Preference
   Choosing carbon offsets registered with recognized carbon registries is crucial for transparency and credibility. Well-established registries, such as the Verified Carbon Standard (VCS) or the Gold Standard, ensure that emission reductions are accurately measured, reported, and verified. Companies should prioritize offsets that adhere to these standards to build trust in the offset’s environmental integrity. CORCs (Carbon Removal Credits) by Puro Earth registry is another wonderful example of high-quality credits.
7. Quantity
   Accurately assessing the quantity of carbon offsets required involves a detailed understanding of a company’s current emission levels (Scope 1 ,2 and 3 measurement) and reduction goals. This may require collaboration with experts in emissions accounting and carbon offsetting to calculate the precise number of offsets needed to achieve carbon neutrality.
8. Diversity of Projects
   Building a diverse portfolio of carbon offset projects minimizes risks associated with a single project type. Including Afforestation/reforestation, Human induced regeneration (HIR) and methane capture projects, among others, ensures resilience against potential fluctuations in the efficacy or viability of any one project. This diversification enhances the overall impact of a company’s carbon offset strategy.
9. Alignment with Standards (CCP/Oxford/CORSIA)
   Ensure that the chosen carbon offset projects align with reputable standards such as the Carbon Clean Solutions (CCP), Oxford Standard, or CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). Compliance with these standards enhances the credibility and environmental integrity of the offset.

Purchasing carbon offsets is a strategic step toward mitigating the environmental impact of business operations. By delving into the technical intricacies of each criterion, companies can make informed and strategic decisions when purchasing carbon offsets. Technical expertise and a comprehensive understanding of these considerations will empower businesses to select offsets that not only align with their sustainability goals but also contribute meaningfully to the global fight against climate change.

Northmore Gordon has experience establishing a carbon offset criteria suitable for your business, Procurement of high-quality carbon credits and third-party verification.

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To achieve best practices, align the investment with sustainability goals and remove the risk of any claims of greenwashing, companies need to consider a number of criteria when purchasing.

These criteria include the technology generating the energy, the period (vintage) when it was generated, quantity required, location of generation, alignment with global programs or best practices, and risks associated with the registry (the authority issuing the certificates) or issuing country. The latest advance in RECs now includes timestamping the generation period to match load profiles.

RECs globally go by several different names:

• International RECs (IRECs)
• New Zealand (NZECs – Energy Certificates)
• Australia (LGCs – Large Generations Certificates, and in future Guarantee of Origin – GO)
• Tradable Instrument for Global Renewables (TIGR) a Registry for RECs

RECs Criteria:

1. Technology
   The technology employed in renewable energy projects significantly impacts the overall environmental benefits. Whether it’s solar, wind, hydro, or other clean energy sources, understanding the technology behind the generation process helps companies assess the long-term sustainability and effectiveness of the RECs they are purchasing. For example, Under RE100 Hydrogen is not recognized because hydrogen is not an energy resource. Rather, it is an energy carrier that is manufactured and has an underlying energy resource as an input. Hydrogen is therefore only renewable if the energy resource used in its manufacture is renewable, Hence it is critical to be aware of the technical criteria of the framework your business is committed to or adhering to GHG Protocol Corporate Standard is considered an excellent benchmark.
   
2. Vintage
   The vintage of RECs is a crucial factor, indicating the year in which the associated renewable energy was generated. Companies should consider aligning the vintage of RECs with their reporting year to ensure accurate representation of their commitment to renewable energy in specific timeframes. For instance, recent years have seen significant improvements in the efficiency of solar panels and wind turbines, leading to increased energy output. As technology advances, procuring recent vintages helps businesses make sure their procurement adheres to the latest regulatory changes and demonstrates commitment. For example, RE100 now only recognizes Starting January 1, 2024, RE100 members will need to secure renewable electricity or GOs specifically from power plants constructed or recommissioned within the last 15 years. However, there’s a provision: an exemption applies to 15% of a company’s overall electricity usage.
   
3. Quantity
   Assessing the quantity of RECs needed involves understanding a company’s energy consumption and sustainability goals. Careful calculations of your scopes will help determine the number of RECs required to offset a specific percentage of the company’s energy usage or achieve a certain level of renewable energy consumption. Tailoring to energy consumption patterns helps businesses match the right type of RECs. For example, a manufacturing facility with intensive production processes may have distinct energy needs compared to a technology company with extensive data centre operations running 24/7. In this case, the data centre may benefit from procuring new time-stamped RECs or ‘24/7 RECs’ as defined by RE100 Guidelines to match their constant usage.
   
4. Location
   The geographical location of renewable energy projects is significant in determining the impact of RECs. Supporting projects in regions with abundant renewable resources not only enhances the environmental impact but may also contribute to local economic development. Companies should consider aligning their RECs with regions that complement their sustainability objectives. Market boundaries are often defined by the framework you are adhering to or as a rule of thumb it is an advisable practice to procure RECs within the country where the emissions took place.
   
5. RE100 Alignment
   For companies committed to 100% renewable energy consumption (RE100), ensuring that purchased RECs align with this goal is paramount. RE100-aligned RECs contribute directly to a company’s renewable energy targets, demonstrating a clear commitment to transitioning away from conventional energy sources. Here RE100 Members have another option to procure green power directly from the supplier supported by retirement of EACs corresponding to it.
   
6. Registry Preference
   Selecting RECs from reputable registries adds credibility to a company’s commitment to renewable energy. Registries like the Green-e Energy Certification or the International REC Standard ensure that the purchased RECs meet stringent environmental and social standards, providing transparency and accountability in the renewable energy market. Some examples of registries are Evident(I-RECs) , TIGR , Certified energy New Zealand , Clean energy regulator , M-RETS etc.
   
7. Sovereign Risk
   Companies operating internationally should consider the sovereign risk associated with the countries where their chosen renewable energy projects are located. Assessing political stability, regulatory frameworks, and potential risks related to changes in government policies can mitigate potential challenges and uncertainties in the long-term viability of RECs. For example, Under recent changes in RE100 guidelines 8 countries have been excluded from the single-market boundary of Europe supporting the Guarantee of Origins RECs.
   
8. Major Operational Changes in the Past Year
   Companies should investigate whether there have been any significant operational changes in the renewable energy projects associated with the RECs over the past year. Changes in ownership, technology upgrades, or expansions can impact the overall effectiveness and reliability of the certificates. For example, Unbundled EACs cannot be used to decarbonize electricity from a non-renewable project. (e.g., a CHP system) under RE100 Framework when the project is owned by the company (therefore, the emissions from it are in scope 1), or when the project is on-site or when there is a direct line to the project (therefore, the electricity is not sourced from the grid).

As companies strive to integrate sustainability into their operations, the careful selection of Renewable Energy Certificates becomes imperative. This strategic approach not only enhances a company’s environmental credentials but also supports the global transition to a cleaner and more sustainable energy future. Although PPAs (Power Purchase Agreements) and VPPAs are feasible alternatives, most organizations prefer EACs due to their inherent flexibility and accessibility when navigating the intricate world of renewable energy procurement.

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Your company has announced with great fanfare 50% emissions reductions by 2030.  Everyone’s very excited!!! Except you, you’re the Sustainability and Environment Manager, they just told you and it’s your job – how are you going to make it happen?…   

One of the big pieces of the puzzle is Environmental Certificates and accounting for these under the various Carbon accounting regimes. We take a look at everything you need to know so you are prepared for what’s to come. 

The Journey to Net Zero 

The journey to carbon emission reductions (and eventually neutrality) involves several key steps: 

• Establish a baseline – audits & emissions accounting for different boundaries – Scope 1,2,3 emissions  
• Engage stakeholders and set targets  
• Identify risks and opportunities and the business cases 
• Build the roadmap and program for energy and carbon performance, which includes: 
  – Energy efficiency, heat recovery and direct emissions reductions projects
  – Onsite renewables and grid purchased renewables
  – And lastly use offsets (environmental certificates) for hardest reductions 

• Implement and Iterative  

To learn more about the steps see our “Net-Zero Webinar: Decoding the Buzzwords and Practical Sector-Specific Advice”.  For any terms in this article, you may want to reference Northmore Gordon’s Glossary 

Emissions Offsetting using Environmental Certificates 

Offsetting means taking steps to offset existing emissions from the business with abatement (emissions reductions from another source), one way to do this is by purchasing and surrendering Environmental Certificates. There are several distinct types of certificates, and not all can be used for offsetting.  

Environment Certificates 

Renewable Energy        CO₂ Emissions Reductions            Electricity & Gas Efficiency 

Put simply Environmental Certificates are a mechanism to measure the quantity and then decouple the environmental component (value) from a project or resource.  The environmental value can then be traded and used to generate income or to meet other objectives such as offsetting emissions. 

For example, a biogas boiler that generates 500 MWh of renewable electricity could register approximately 500 Renewable Energy Certificates (LGCs). The owner can sell the 500 MWh of electricity (via the grid) and separately sell the 500 LGCs (the renewable component) to receive additional income. 

The three main types of certificates for Energy and Carbon are as follows: 

• Renewable Energy Certificates (1 MWh Renewable Energy Generated) – RECs –  

• LGCs (large generation) are registered after measuring the generation that has occurred. 

• STCs (small technology) are deemed (calculated) for the expected generation through to 2030 based on the postcode of the installation and system size. 
• International Certificates TGRs, RECs, are either deemed or measured 

• Carbon Credits (1 Tonne CO2-e abated) – e.g. Australian Carbon Credit Units (ACCUs), Verified Emissions Reductions (VER), Certified Emissions Reductions (CER) 
• Energy Savings Certificates (typically 1 MWh electricity or gas energy saved), aka White Certificates, these are sometimes converted to tonnes of CO2-e through conversion factors.  NSW Energy Saving Certificates, VIC Energy Efficiency Certificates 

Putting it all together. Environmental Certificates and Offsets 

It’s important to understand that by selling the certificate, then the environmental component (renewable energy, carbon abatement, or energy efficiency) can no longer be claimed by the consumer of the physical resource or implementer of the project. 

The flipside of this is that an existing project that consumes grid energy or generates emissions can “made” renewable or carbon neutral by purchasing (and surrendering) the equal number of certificates as the amount of energy consumed or the amount of carbon emitted. 

Looking at the Accounting for each of the Australian certificate types: 

• RECs – Large-scale Generation Certificates (LGCs) can be purchased and used to offset grid-based energy used by a business for their sites.  This is done by surrendering that quantity of certificates in the REC registry, this takes the certificates out of circulation.  For example, a business that consumes 500 MWh from the grid and does not have the space to install Solar PV can simply buy 500 LGCs each year and surrender them and can now claim to be using renewable energy. 
• RECs – Small-scale Technology Certificates (STCs), unlike LGCs, under the Climate Active Standard, STCs can now be sold to assist with the system cost and the energy consumer can still claim the renewable energy.  STCs cannot be used for offsetting energy bought from the grid. 

• Australian Carbon Credit Units (ACCUs) and other international credits (recognized under different standards) can be purchased and surrendered to offset emissions.  e.g. If the business emits 500 tonnes of CO2-e p.a. they could purchase 500 ACCUs per year and surrender them to claim to be carbon neutral (e.g. for Scope 1 emissions) 
• Energy Saving Certificates (ESCs, VEECS) are neither renewable energy nor carbon credits, hence they cannot be used to offset energy consumed from the grid nor emissions from operations. The upside of this is that buy selling energy saving certificates and generating income towards the cost of the project does NOT currently undermine the emissions reductions which are a side benefit of the energy efficiency project.   Some Accreditation agencies are reviewing this at present. 
  

Voluntarily surrendering a certificate from a company’s account in a government registry means that the certificate has been taken out of circulation and this is done to claim the environmental value and hence reduce emissions by offsetting. 

Energy Saving Certificates (White Certificates)?

Energy efficiency projects that generate energy saving certificates, these certificates are treated as a financial incentive for typically awarding 10 years of savings to help overcome CAPEX barriers and to reduce demands from the network. This is particularly beneficially for VEECs generated in Victorian by energy savings activities from the grid reductions of renewable energy generation. EG Solar VEECs, and VEECS from Biomass, Biogas, and Cogeneration.  In all these cases the business has reduced their energy consumed and can sell the environmental certificates and sell them whilst still achieving the carbon reduction or renewable energy benefits.  Some agencies are reviewing this space, so make sure you contact Northmore Gordon to learn the latest. 

Standards for Carbon Neutrality 

To legitimately claim to achieve a certain level of carbon reductions, a business needs to be certified against one of the recognized standards. In Australia these include: 

Climate Active Carbon Neutral Standard (formerly the National Carbon Offset Standard, NCOS). Climate Active is an ongoing partnership between the Australian Government and Australian businesses to drive voluntary climate action. The brand represents Australia’s collective effort to measure, reduce, and offset carbon emissions to lessen our negative impact on the environment  

Science Based Targets Initiative (SBTi) Is an international initiative that drives ambitious climate action in the private sector by enabling companies to set science-based emissions reduction targets.  SBTi’s Corporate Net-Zero Standard is the world’s first framework for corporate net-zero target setting in line with climate science. SBTi is different from Climate Active in the that it does not allow offsetting in the same way.

Corporate Emissions Reduction Transparency (CERT) In February 2021 the Australian Clean Energy Regulator (CER) announced the CERT initiative which is underpinned by the National Greenhouse and Energy Reporting (NGER) scheme and available for large companies to demonstrate their action on climate change. Going live in January 2022 this new scheme is in a pilot phase and provides a supplementary reporting scheme to allow NGER reporting companies to voluntarily disclose their purchases of offset units and supplies of renewable energy.  The CERT guidelines specify which Environmental Certificates are eligible units for reducing Scope 1 and 2 emissions and in what circumstances.  NG can help navigate this new opportunity. 

Talk to Northmore Gordon today about your journey to carbon neutrality. 

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Australian industry is making bold commitments of its own to achieve science-based targets that stay in line with keeping global climate change under 1.5 degrees Celsius. This is positive for environmental health, and it also demonstrates savviness as Australia embraces technological advancement and innovation to drive economy into a bright future.  

To prepare for the changing nature of business, these are programs, ideas, and initiatives that should be on your radar:   

SBTi Launches Net Zero Standard 

Developed through a multi-stakeholder process, the SBTi is the first Australian guideline to help companies set science-based emissions reductions targets designed to keep emissions in line with maintaining global temperature rise under 1.5° Celsius.  

“The Net-Zero Standard gives companies a clear blueprint on how to bring their net-zero plans in line with the science, which is non-negotiable in this decisive decade for climate action. Because we are running out of time.” 

These targets include 1) near-term targets that must be met within 5-10 years of submitting a plan to SBTi and 2) long-term targets that need to be hit by or before 2050. 
 
Under the SBTi, carbon offset programs do not count towards near or long-term targets, placing real emphasis on companies to reduce their Scope 1, 2, & 3 emissions. 

Thinking about setting a Net-Zero target? Talk to us about your carbon reduction strategy.

Australian Carbon Credit Unit (ACCU) Price Increase

Increased demand from heavy polluters caused ACCU prices to soar this year. Even with increased supply of ACCU from the Clean Energy Regulator (CER), there has been unprecedented demand as companies that have surpassed government-set emissions levels scramble to offset their pollution.  

The ACCU price surge benefits organisations that are voluntarily generating credits through energy efficiency, biogas generation and fuel-switching. 

Carbon credits will continue to have their place and prices will likely continue rising as carbon neutrality maintains popularity. With greater focus on SBTi protocol, it is probable that their prevalence will shift as more companies embrace SBTi methods and prioritize their own emissions reductions over carbon offsets. 

If you haven’t factored ACCU pricing into your next project, now is the time to reconsider how the carbon value of your projects can be realised to boost the energy productivity of your business as the world transitions to net-zero. 

Shadow Carbon Price

While the concept of a shadow carbon price is not new, it should be given considerable thought if your organisation is not currently factoring the price of carbon into your investment or business operation strategy. With more and more governments announcing net-zero commitments, a cross border adjustment mechanism as proposed by the EU or other form of mandated carbon emissions control mechanism may be right around the corner. Hedging against those changes by incorporating a shadow price for carbon into current financial planning presents a good way to prepare for potential policy change.  

Upcoming Government Programs

Program implementation will make considerable funds available for technological implementation and innovation. 

• Energy Efficient Communities (EEC) Program – This is an Australian wide program that opens on 12 Jan 2022 at 9am AEDT. This grant provides food & beverage manufacturing businesses (with less than 200 employees) up to $25,000 to improve energy efficiency practices and technologies and better manage energy consumption to reduce their power bills. The program can provide grants towards energy efficiency projects, including:
  
  – installing energy efficient equipment (not including solar PV)
  – installing energy metering & monitoring systems
  – energy audits to identify opportunities
  – compressed air system audits
  – developing an energy management plan
  – feasibility assessments of energy projects (not including solar PV)

•  Business Decarbonisation Program — The NSW Government is investing $22 million towards helping businesses reduce their carbon emissions. Their plan is to provide strategy, monitoring, technological improvements, and skills training in order to lead businesses forward and build a workforce capable of identifying opportunities and implementing improvements to reach net-zero emissions.
  
  The program will have four areas of focus which will be progressively rolled out over 2021/22:
  
  1. Strategic planning for net zero
  2. Metering and monitoring
  3. Targeted technical services
  4. Industry upskilling

• Victorian Government — Infrastructure Victoria and Department of Environment Land Water Planning will provide final advice on December 31, 2021 on how to best use the gas transmission and distribution networks to stay on track to reach net-zero emission by 2050. Tasmania is engaging in similar discussions related to natural gas infrastructure and is still at the initial phases of discussion and consultation.   
   
• Net Zero Industry & Innovation Program — NSW Government strategy to partner with industry in order to reduce emissions, boost the economy, and spur job growth by investing $750 million. This grant funding is set to encourage innovation in technology and develop pilot programs for innovative methods at implementing low-carbon technology.
  
  The Program has three areas of focus:
  
  1. Clean Technology Innovation ($195 Million) – supporting the development and continued innovation of emerging clean technologies
  2. New Low Carbon Industry Foundations ($175 Million) – laying the foundations for low emissions industries by building enabling infrastructure and increasing the capability of our supply chains
  3. High Emitting Industries ($380 Million) – deploying low emissions technologies and infrastructure to reduce the emissions associated with existing, high emitting industrial facilities
   
  Talk to us today about any of these upcoming programs or what other energy efficiency support may be suitable for your business now and in 2022.  

Energy management may not be your business focus, yet it is becoming more deeply engrained in all business operations as Australia follows through on its commitments to reach net-zero. Staying abreast of these trends, new programs and changes is a powerful way to stay informed, prepared, and in a position to capitalize on the changing energy landscape. 

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Setting and reaching carbon targets can seem complicated, but there is no need to go at it alone. To help with implementation and successful follow-through of carbon reduction strategies, Northmore Gordon is working with businesses to reduce their dependency on fossil fuels and shorten the distance to net-zero carbon emissions. In doing so, Northmore Gordon helps Australian businesses develop and execute carbon reduction strategies that will help them improve energy performance and stay competitive in a decarbonizing global economy.

In this article, we’ve outlined a roadmap to reduce carbon emissions. If while reading you have any questions or find yourself ready to make forward strides, don’t hesitate to reach out for a courtesy consultation.

Step 1 — Determine business preparedness and state of carbon emissions

Understanding your business’s current situation is critical to developing an effective plan. With regard to industrial energy users, you’ll want to determine:

• What business resources are available to manage decarbonisation efforts
• How much carbon emissions the business currently produces

A great place to start is by taking the Carbon Health Check quiz on our website. With questions pertaining to your business, its current available systems, and its goals, the quiz will help your business realise whether or not it has sufficient resources to guide itself through a carbon reduction plan or whether outside consultation would be greatly beneficial.

After determining the extent of your business’s resources and ability to effectively implement an emissions reduction plan, now it is time to determine how much carbon the business emits. If you are a large energy user, it’s likely you already report greenhouse gas emissions to National Greenhouse and Energy Reporting (NGER) — a database that contains reported carbon emissions for each fiscal year — and can find your emissions there.

If you don’t report to NGER, then begin by examining the energy sources your business consumes. Most business operations are powered by electricity, which contributes to Scope 2 emissions. If some business processes require thermal energy, then they’re likely powered by burning natural gas.

Finally, if your business relies on forklifts and trucks to move goods within its facility or transport them elsewhere, then LPG and diesel consumption will constitute a portion of the carbon emissions. Natural gas, LPG, and diesel fuel consumption contribute to Scope 1 emissions. For more insight into your emissions and to take a deeper look at Scope 1, 2, & 3 emissions, check out our Carbon Footprint Analysis Form.

Step 2 — Establish your baseline year

Serving as a benchmark to measure progress, your baseline year is an important element to successfully carry out a carbon reduction strategy. It’s best to select a year that is representative of your most stable production or operations. Therefore, do not choose a baseline year in which the business:

• Implemented a number of energy efficiency projects, as this will inflate carbon reduction achievements
• Experienced abnormal increase in production or activity, as this is not reflective of typical years
• Suffered from decreased production, such as during Covid-impacted years

To establish an effective baseline emissions year, choose a year within a 3-5 year span when carbon emissions remained relatively steady (+/- 5%).

Step 3 — Create a carbon reduction project list

After establishing a baseline year, generate a list of potential projects that will contribute to net carbon emissions reductions. It can be effective to brainstorm this list with the whole operations team in order to brainstorm a range of ideas, from optimizing current systems, to transitioning to alternative energy sources, to adjusting procurement strategies, to offsetting emissions through other contributions.

Optimizing current systems — it’s often effective to start with energy efficiency measures using existing infrastructure because that will reduce energy intensity — therefore reducing emissions and saving on energy costs — without changing operations. For processes requiring thermal energy, there may be opportunity to recover waste heat and transfer it to another process in order to reduce energy consumption. Improving HVAC insulation or implementing LED lighting are potential ways to optimize current systems.

Transitioning to other energy sources — fuel source has a huge impact on how much carbon your business emits. Clean renewable energy sources, such as wind and solar, are significantly less carbon-intensive than burning natural gas. The most common renewable energy project is installing behind-the-meter PV solar. While not suitable at all locations, other alternative fuel sources to consider include bioenergy, hydropower, and geothermal energy.

Adjusting procurement strategies — there are a variety of options and sources to purchase electricity, some of which are less carbon-intensive than others. Purchasing Greenpower from your energy retailer is a common way to reduce Scope 2 emissions.

Offsetting emissions through other contributions — while it doesn’t impact local air quality and work environment as much as making on-site improvements, your business can purchase carbon offsets (such as planting trees) in order to work closer to net-zero emissions.

For each project on the list, estimate energy, cost, and carbon emissions savings. In addition, calculate other financial metrics such as simple payback and net present value (NPV). These parameters will be used for your target setting and roadmap analysis.

Step 4 — Set your targets

At this stage, you are setting the target goal for the carbon reduction strategy. A number of governments and other companies have set targets, allowing you to align with their ambition. For example, the NSW State Government has set carbon reduction targets for its state-owned assets to reduce carbon emissions by 50% come 2030 and 100% by 2050.

The Science Based Targets Initiative (SBTi) is a collaboration that provides science-driven tools and guidelines to establish an emissions reduction plan. To contribute to a healthier and more prolific future, consider using SBTi to serve as a model and leader for other businesses in your area and sector.

Step 5 — Create your roadmap

With a list of potential projects and a commitment to an emissions reduction target, it’s time to create a framework and timeline for your carbon reduction strategy.

Referring to your carbon reduction project list (Step 3), it’s important to differentiate between simpler, less expensive measures and harder improvement measures so as to determine the timeline that works best with your business and goals. Starting with energy efficiency measures may be low-hanging fruit, yet it may not cut emissions as significantly as fuel switching.

Creating your carbon reduction strategy is an iterative process. Adjustments will undoubtedly be made as situations change, policy shifts, and new technologies become available.

Once you have completed your roadmap, it’s important to get executive sign-off on the strategy and communicate it to the public. This transparency drives greater incentive to follow through with your plan.

Climate change affects us all. We are all in this together, and it will take all of us to take meaningful action to remedy the situation. That’s why it is so important for your business to establish and adhere to a carbon reduction strategy. Governments alone won’t be able to solve our climate problem — the private sector will need to play an active role if we’re to avoid the most severe consequences of climate change.

Because we’re all in this together, you can feel confident that support is available to help with your carbon reduction strategy. At Northmore Gordon, we will get you started on the right foot and will provide continuous support to make sure that you reach your target goals.

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The Clean Energy Regulator’s latest Quarterly Carbon Market Report predicts that the schemes will provide 57.1 million tonnes of emissions savings in 2021. That figure would represent an increase of more than 7% on the result delivered in 2020, when the schemes produced 53.1 million tonnes of emissions savings. The “conservative” estimate is based on the average emissions intensity of generation from all fuel sources.

However, the report notes that this emission intensity from all fuel sources is falling as the country continues to move towards more renewables. The March Quarter 2021 report also shows the continuing success of the Emissions Reduction Fund (ERF).

Key Takeaways from the quarterly report are:

• Auction 12, held on 12 and 13 April 2021, contracted 6.8 million tonnes of forward carbon abatement from 10 contracts at an average price of $15.99 per tonne, for a total commitment of $108 million.
• The Regulator expects the ERF to deliver Australian Carbon Credit Units representing 17 million tonnes this year, an increase of more than 6% on the record 16 million tonnes of 2020
• The Large-scale Renewable Energy Target (LRET) is on track to drive down emissions by 24.3 million tonnes – also an increase of 6%
• The third key pillar of the government programs – the Small-scale Renewable Energy Scheme (SRES) – is expected to provide the largest growth in emission reductions, with its 15.8 million tonnes of savings representing a 12% increase from 2020
• Rooftop solar was the strongest growth area under the SRES umbrella, with 792 megawatts (MW) worth installed in the first three months of 2021 – up 28% on the same period last year
• A total of between 3.5 and 4 gigawatts (GW) of rooftop solar capacity is now expected to be added across the country this year

The report also showed the Large-scale Renewable Energy Target of 33,000 gigawatt hours (GWh) was met by the end of January and that Australia has added a record 7.0 GW of renewable energy capacity in 2020. This is expected to result in an increasing oversupply in Large Scale Generation Certificates (LGCs) and may result in a softening of the LGC wholesale price over time.

No major large-scale renewable energy projects reached final close in the first quarter of the calendar year, but the Regulator expects between 2 and 3 GW of capacity will come online by the end of 2021 amid strong indications of healthy investment.

Voluntary private and state and territory demand for Australian Carbon Credit Units (ACCUs) and large-scale generation certificates (LGCs) reached record highs, rising 39% compared to the same quarter last year to 532,000 units and certificates.

Part of this was attributed to significant corporate commitments, with Coles Group becoming the latest major supermarket to commit to a target of net-zero emissions by 2050, joining Woolworths Group and ALDI.

The three major supermarket chains were responsible for a combined 1% of Australia’s reported emissions in 2019-20.

The Clean Energy Regulator is now assessing expressions of interest for the development of an Australian carbon exchange, with predictions that the implementation of such a program could slash business costs by as much as $100 million by 2030.

The exchange would make trading of Australian carbon credit units simpler and reduce transaction costs to support the rapidly increasing voluntary demand from the corporate sector. 

More information on the Clean Energy Regulator’s March Quarter 2021 Quarterly Carbon Market Report can be found in the highlights video below or here.

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It is clear that there will be a competitive advantage for those who are prepared for the transition to the low carbon economy.

Not sure where to start? We can facilitate a complimentary carbon health check for your management team to understand where your business needs some extra focus. Give us a call and we can arrange a time for this to be done either virtually or in person. Otherwise, try our online carbon health check!

The setting of targets is just one element of a complete carbon strategy as can be seen in the infographic below. 

If you aren’t sure where to start on your carbon strategy journey, or you have begun in a piecemeal fashion, we can run a complimentary carbon strategy benchmarking session with your management team to highlight areas where there are gaps, and develop a measured plan to filling them.

Contact our carbon team today carbon@northmoregordon.com

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