Are Australian businesses ready for a low-carbon future?

Australian business readiness to move to a low-carbon economy is higher than expected but an unclear regulatory environment is hampering progress. That’s the finding of a new Economist Intelligence Unit report, commissioned by GE, released on 16 May 2011.

The survey of 131 senior executives in Australia across a broad mix of industries found that more than half (54%) felt their organisation was ready for a low-carbon future, with the vast majority (70%) already implementing strategies to reduce their own carbon emissions. Notably, 29% of businesses are already modelling a carbon price into operations, with another 33% planning to do so.

64% of respondents cited an unclear regulatory environment as the biggest barrier to making further progress. This regulatory uncertainty is holding back investment, and some businesses even voiced concern that they were making poor investment decisions as a result.

When it comes to Australia’s transition towards a low-carbon future, 54% of respondents feel that the opportunities outweigh the threats, while 24% are neutral. Some of the opportunities highlighted include improvement in customer relationships, and the development of new products and services.

Many companies are investing in resources today to create these opportunities - 38% have new dedicated roles and teams to identify products and services for a lower-carbon economy.

Commenting on the report, Steve Sargent, President and CEO of GE Australia and New Zealand, said: “Businesses are already on the move. The findings suggest a broad acceptance and preparedness for the transition to a low-carbon economy. The survey found that a majority of businesses feel the opportunities outweigh threats but uncertainty is holding us back. A clearly defined carbon policy framework is a crucial element to encourage further change in business behaviour.”

Robert Poole, Head of Sustainability Murray Goulburn (the company behind the Devondale brand), was a participant in the research and he was also at the launch of the report. A private company owned by farmers, Murray Goulburn reported $2.24 billion worth of revenue last financial year and 55% of that revenue came from exports. The food manufacture of dairy ingredients (such as milk powders, butters and cheeses) is an energy-intensive business producing around 635,000 tonnes of carbon post the farm gate. The company is therefore required to report under the National Greenhouse Energy Reporting Scheme (NGERS) and the Victorian-based regulation called Environment and Resource Efficiency Plans (EREP).

Poole explained that when the CPRS was scrapped, Murray Goulburn did not changed its strategies but maintained the visions for energy management within the business. There were three drivers for this: one is strong regulation including NGERS and EREP; the second driver is resource efficiency where the company aims to get more product for the same amount of energy used or use less energy to produce the same amount of product; and the third is the market driver. “There is definitely a trend of the major food companies in the world wanting to know more information about how we do our business,” says Poole.

The company has one of the largest private transport fleets in Australia; around 50 of these trucks are now using liquid natural gas (LNG) rather than diesel with significantly lower emissions. According to Poole there are still some barriers with productive capacity and filling stations before the company can increase usage of this type of fuel.

Over time, Murray Goulburn has managed to extract more and more value out of the the milk product it processes. The remaining waste is now down to around 2-3% of the product and this waste stream is now being processed using anaerobic digestion. This process captures the methane from the waste, which can then be used in engines. “The engines can produce around 0.75 MW, which is equivalent to about a third of the capacity of a wind turbine,” says Poole.

Although the company has made relatively small changes to date, Poole believes the company is ready to make the big changes (such as cogeneration) when required. “We can’t sit back and watch costs get added,” he says. “We have to work hard to stay competitive.”