Category: Carbon Risk

Policy impacts, right side of the bell curve

The leap of faith to a low-carbon future – Engineers Australia

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The platitudes no longer cut it, the cries that the scientists are wrong is being proved wrong. Since the carbon pricing signals were removed from our (Australia’s) trade all the numbers are going backwards. Our energy intensive industries are increasing emissions (Hugh Saddler wrote, 2 December 2014) “the recent emissions trend ‐ since the last CEDEX® report with data to June 2014 – is an increase in total emissions of 2.2 million tonnes CO2‐e, with a large increase in electricity generation emissions and a smaller increase in petroleum emissions. Then on 3 December 2014 the national newspapers reported from the accounts data released that day – we are officially in an income recession. It follows our manufacturers are in decline, our commodities crisis is real and our trading partners have been stockpiling to ride out the storm – the financial storm that affects jobs, the economy and the deniers ability to hype hysterical nonsense about contributing to environmental fraud.

Outside of science, is anyone of note is taking this whole business of a low carbon future seriously? Yes, the banks are, and so are our engineers. The engineers’ story is:

Engineers Australia commits to designing the quantum leap to a low-carbon future. Willow Allento on 27 November 2014 published,

The interview write up and policy highlights are here: http://www.thefifthestate.com.au/innovation/engineering/engineers-australia-commits-to-a-low-carbon-future/70016

“Around 100,000 of Australia’s brightest innovators and designers and operational experts committing to a climate change policy and sustainability policy that is binding within the professional code of ethics, that’s a game-changer. Interviewing Dr Cruikshanks-Boyd this morning and reading the policies again and again [pithy, pointed and absolutely game-changing] I keep thinking – “This is the quantum leap we needed to escape the turmoil of the policy lens and have concrete action that really changes everything substantially.”

Can engineers save the planet? I reckon it’s tremendous they’ve set themselves loose on the opportunity to do so!

Engineers Australia has put sustainability and climate change mitigation at the core of the profession, with the formal adoption of two new policies and a series of events on opportunities.”

We read the policies were also peer-reviewed by 25 external bodies. So it is not insular it is outward looking to establish the practice and engage. They are actually committed to put sustainability up front engage with clients to promote the business case. We further quote:

“As engineers we have a role to play not just in innovating, but in selling the business case.

Regarding the property sector, he said engineers must make clear to clients there is a market for sustainable buildings, and use lifecycle cost analysis to demonstrate the cost-effectiveness of taking a more sustainable approach and gaining “market edge”.

While the policies were passed unanimously, there was robust debate, he said, particularly around the climate change policy, with a significant minority of members opposing the climate change policy on principle initially. He said given the organisation has about 100,000 members, all of whom were consulted on numerous drafts, a percentage of sceptics was to be expected.

On an organisational level, the policies mean Engineers Australia is throwing its combined weight and expertise behind efforts to transition to a low-carbon energy future, reduce fossil fuel dependence, design within a lifecycle costing framework, look for industrial ecology opportunities in managing waste, and prioritise renewable resources wherever possible.

There are a lot of engineers associated with the fossil fuel industries, and I thought we would strike problems with them during the debate [on the climate change policy]. But the more balanced members in that industry recognise it must be dealt with, so we resolved that through the simple addition of a statement that there would need to be a transition from fossil fuels,” Dr Cruikshanks-Boyd said.

At this point CO2Land org notes a fundamental point for getting anything done, as it is possible to get polices of government changed through professional lobbying and advocacy, the real impact happens at the individual level. We also learnt, and we admit we too are learning, sustainability has been one of the four pillars of the Engineers Australia organisation binding code of ethics since 2010; to continue the quotes:

“While Dr Cruikshanks-Boyd is disappointed in the current “entrenched situation” regarding government policies on climate change and sustainability, he said Engineers Australia would ensure the new policies and the views they represent were well known to government.

He also said that the profession was in a position to leverage enormous positive change regardless of government policy through placing its focus on achieving sustainable outcomes in all they do. Just as there are negative tipping points that lead to collapse, there are positive tipping points that lead to exponential progress”.

A fundamental point of our mortality is also made in that professions live longer than politicians. We assume what was meant is that politicians are most concerned for themselves and professionals for their legacy. Without too much more waffle below now is more direct quoting from the article:

“Some of the key statements in the Climate Change policy include:

Building upon a long history of Engineers Australia policy development, and as the largest technically informed professional body in Australia, Engineers Australia advocates that Engineers must act proactively to address climate change as an ecological, social and economic risk.

Engineers Australia is committed to natural resources policy reform to adopt full life-cycle analysis, including the pricing of resource use externalities, to ensure responsible resource allocation decisions.

Engineers Australia will work to facilitate statutory, regulatory and policy reform such as progressive Renewable Energy Targets, incentives to promote renewable and sustainable energy technologies, energy efficiency standards, transport emission limits, and incentives/disincentives to reduce dependence on fossil fuel sources. It is recognised this is part of a transitional process.

Engineers have an ethical responsibility for, and play a key role in, limiting atmospheric greenhouse gas concentrations, through transformative change and innovation in engineering education, and practice.

Reduction of the emission of greenhouse gases to the atmosphere associated with engineering activities should be accorded urgent priority in engineering endeavours.”

Some of the core statements in the sustainability policy include:

Our Code of Ethics requires us to develop engineering solutions that repair and regenerate both natural and social capital, while maintaining economic health.

Engineers Australia acknowledges that to achieve sustainability outcomes requires transformative change in business practices, lifestyles, and in the way resource allocation decisions are made.

Fundamental to this change is the recognition that a healthy economy is underpinned by a healthy environment and respect for all life on earth.

Engineers Australia and its members commit to ensuring all relevant stakeholders are consulted, and that open and regular reporting of progress towards delivering sustainability outcomes forms a fundamental component of engineering practice.

This Sustainability Policy is supported by an Implementation Plan, which articulates specific changes to engineering practice that arise from adoption of this Policy.

Specific sustainability considerations to be applied to engineering practice (policy and projects) include (not in priority order):

  1. The use of resources should not exceed the limits of regeneration.
  2. The use of non-renewable resources should create enduring asset value (everlasting and/or fully recyclable), and be limited to applications where substitution with renewable resources is not practical.
  3. Engineering design, including product design, should be whole system based, with consideration of all impacts from product inception to reuse/repurposing.
  4. Product and project design should consider longevity, component re-use, repair and recyclability.

Eliminating waste should be a primary design consideration. Unavoidable waste from any one process should be examined for recycling potential as input to another productive process.

The rate of release of any substances to the environment should do no net harm, and be limited to the capacity of the environment to absorb or assimilate the substances, and maintain continuity of ecosystem services. In all instances, such releases should be lifecycle-costed and attributed.

Proactive and integrated solutions are preferable to reactive, linear, “end of pipe” solutions, such that there is a net sustainability benefit.

In circumstances where scientific information is inconclusive, or incomplete, the precautionary principle and risk management practices should be applied to ensure irreversible negative consequences are avoided and not passed as a liability to future generations.”

Co2land , as you would expect is pleased to see Engineers Australia is throwing its combined weight and expertise behind efforts to transition to a low-carbon energy future. Our only point that could improve that position were they say ‘reduce fossil fuel dependence, design within a lifecycle costing framework, look for industrial ecology opportunities in managing waste, and prioritise renewable resources wherever possible’, we would prefer the words ‘eliminate fossil fuel dependence’. Sometimes the simple wording is more meaningful!

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Prepare for unexpected climate events – but can we?

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Reported is the driest ever on record and hottest ever recorded for the period, and OMG might be the response from agribusiness in those affected districts.

First look at these three stories:

South Australia and western Victoria head into drought after dry October

Catherine McAloon, Friday November 7, 2014 – 15:34 EDT

“The weather bureau’s latest drought statement shows severe rainfall deficiencies have developed in western Victoria and south-east South Australia.

South Australia recorded its driest October on record.

Australia-wide, it was the seventh driest October overall, but maximum temperatures across the country were the hottest ever recorded for the month.

Climatologist Lynette Bettio says rainfall from July to October in parts of western Victoria and southern South Australia was among the lowest ever for that period.

“”These are percentile rankings, so if you lined up all the July to October periods on record, starting at 1900, which is when we start our records, this July to October period, those areas covered by the rainfall deficiencies, which is much of western Victoria and southern parts of South Australia, would be in the bottom 10 per cent and the bottom 5 per cent,”” Dr Bettio said.

Richard Thornton, of the Bushfire and Natural Hazards Co-operative Research Centre, says the dry conditions could mean bushfires develop sooner than expected.”

Academic says climate extremes the major problem for farmers

Michael Condon, Friday November 7, 2014 – 15:27 EDT

“An academic says climate change will not be catastrophic for farmers, as they can manage any long term change.

Agricultural scientist Professor Richard Eckard, from the University of Melbourne, says extreme weather events like fire and flood do more damage to farmers and farming viability than the long term nature of any climate change.

“”That is where attention should be focussed,”” Prof Eckard said.

“”Because the real threats are dealing with the extreme weather events.

The attitudes are slowly changing to recognise that there is something changing in our weather.

I think a lot of the farming community might say that that is part of the natural cycle but regardless of whether or not you think it is a permanent change or a natural cycle, it does represent a change in what we see in the extremes.

A heatwave in November is one example of that.

Any gradual change we can adapt to over time, if is a gradual increase in temperature you can start breeding different animals or plants in that direction to deal with those changes.

It is really the unexpected extreme events that will catch us unawares that we need to be prepared for.

I am talking about the floods, the bushfires the extremes in temperature, in unusual times throughout the year,”” Professor Eckard said.”

Time to get serious about land use and emissions

By Stephen Bygrave on 10 November 2014

“Agricultural emissions in Australia could be responsible for over half of Australia’s total emissions. The land use sector has the most to lose, and the most to gain from climate change. Following discussion with farmers, it’s clear many of them are looking at ways they can stay on their land, and even make it more productive in the face of the changing climate.

There are those already revegetating their land, and experiencing the benefits of doing so. Others are looking to keep their topsoil, that otherwise blows all the way to Antarctica, with methods such as no-till farming.

Our research also found that just leaving native forests to recover could draw down more than 10 year’s worth of Australia’ total annual carbon pollution.

The recommendations in Land Use: Agriculture and Forestry are not radical – no more than the IPCC calling for global zero emissions is radical. They’re things that some are already doing, and that we must do if we’re to inhabit the planet into the future.

In fact one thing the fifth assessment report does very clearly is provide even stronger evidence that we’re already feeling the impacts of climate change. As if we needed it. We’ve already been in conversation with farmers who’ve been forced from their land, largely because of climate change. Farmers like John Pettigrew in the Goulburn Valley don’t bulldoze their 10,000 peach trees if there’s any hope of things improving.

We’re heading into a hotter, drier summer in a country where hotter, drier summers have become the norm.  In fact over 75 per cent of Queensland & northern NSW are approaching four years of drought now, and the western districts of Victoria look set to join them.

Even the National Farmers Federation, based on ABARES data, acknowledge that “without actions to adapt to a changing climate and to mitigate the effects of greenhouse gases, Australian production of wheat, beef, dairy and sugar could decline by up to 10 percent by 2030 and 19 percent by 2050.”

One of the pathways identified in our paper is to reduce livestock by 24% in the intensive zone and by 16% in the extensive zone. This matches the trend of Australians overall eating less meat, and allows farmers to take control of their production before the decisions are taken out of their hands.

This number is fully encompassed by the controversial live export trade – meeting this target would still allow for consumption of far more meat than is healthy for everyone in the country.”

Co2Land org asks: What does all this mean? We do not think it matters whether is it anthropogenic or not as the cause. However, we do care that what contributes to our wellbeing needs us to care. You see our markets need a healthy environment as much as carbon life forms do too. So even if we just assume people, and our activities are 50% responsible for the change in climate the measure still needs to be based on what if we don’t abate and what difference will that make.

Without complex modelling a significant number can still be indicative of what could be avoided. And, what must be avoided is the tipping point of climate change – the point not imaginable.

Effective Competition – pro what!

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What is your politics can be a confronting question. It is getting more difficult to answer the question – What do you do? If you answer too honestly it might make the next question even more confronting: Are you a pro-market forces person or a pro-business person? Initially the difference may not be obvious. But, there is a world of difference if you want to influence a result. The reason is a result requires someone to intervene to give you an edge in the competition for a position in the market. Whereas to get an outcome you might support effective competition to ensure the benefits of what you offer to the market are maximised.

As does happen when you start talking about something, along comes a story that illustrated the point very well, and being it is a political story relevant to today, it is worth making a reference to it: The message relates to whether we will we see more rent-seeking or less under Abbott, more of what The Economist magazine calls “crony capitalism”? Read more: http://www.canberratimes.com.au/comment/abbotts-choice-competition-v-cronies-20141019-1189dm.html#ixzz3GcjBa2XF

The opening lines being: “It’s still too soon to tell whether the Tony Abbott’s government is pro-market or pro-business, but so far the evidence for the latter stacks higher than that for the former.

The difference turns on whether the pollies want markets where effective competition ensures benefits to consumers are maximised and excessive profits minimised, or markets where government intervenes to limit competition – often under the cover of claiming to be protecting jobs – and make life easier for favoured businesses.”

Of course the background to this Canberra Times story is:

“Abbott and his ministers’ intemperate attacks on the Australian National University for its decision to “divest” itself of a few million mining-company shares for environmental or ethical reasons are a worrying sign.

Investors shouldn’t enjoy freedom to choose where they invest, regardless of their reasons? ANU is different from the rest of us even though its investment funds come largely from private donations and bequests? This from a government keen to complete the de facto privatisation of universities?

What is ANU’s offence? Bringing ethical considerations into investment? Or sounding like it believes climate change is real and we should be doing something real about it?

Abbott attacked ANU’s decision as “stupid” and believes “coal is good for humanity, coal is good for prosperity, coal is an essential part of our economic future”.

If ever there was an industry whose early decline could be confidently predicted – as it is being by hard-headed investors and bankers the world over – it’s steaming coal.

Yet Abbott seems keen to change the rules of the formerly supposed bipartisan renewable energy target in ways that, by breaking long-standing commitments to the renewables industry, would cost it billions and blight the future of its employees, all to provide the government’s coal and electricity industry mates with temporary relief from the inevitable.

The biggest problem with governments “picking winners” is that they quickly regress to picking losers, helping industries against which technology and other forces have shifted to resist the market’s pressure for change that would – almost invariably – make consumers and the economy better off.”

This where we think it gets really interesting: The review on competition policy is being considered. It becomes even more important to understand whether you are a pro-market or pro-business person. When you support the innovation of ideas you need to know whether the IP is protected when you make available for the market. It is the point of where you commercialise and the particular area where sound competitive principles are most important. It is where the regulation of intellectual property, such as patents, copyright, trademarks and plant breeder rights is critical.

Note we said ‘regulation’ and this implies that a form of government intervention in the market is needed to limit competition with owners of the patents and so forth for a limited period. It’s a necessary response to prevent market failure. However, another problem exists also – how do you encourage continuous improvements to incentivise new knowledge and ideas that progress the benefits?

No easy answer is the response. Maybe just too hard!

The Canberra Times article goes on the say: ” This makes it ripe for rent-seeking: pressuring politicians to extend the monopoly periods retrospectively (despite the lack of public benefit), to allow loopholes that permit phony “ever-greening” of drug patents that would otherwise expire, to limit poor countries’ access to life-saving drugs at realistic prices and to ignore blatant gaming of IP laws by two-bit operators that have never created anything.

Most of these excesses are at their worst in the United States with its easily bought legislature. The information revolution has made IP one of America’s chief export earners. And the free-trade preaching Yanks have made advancing the interest of their IP exporters their chief priority in trade negotiations such as the present Trans Pacific Partnership deal.

As always, we have a tendency to give the Yanks whatever they want. Trouble is, as Harper points out, Australia is and always will be (and should be, given our comparative advantage in world trade) a net importer of intellectual property.”

There lies our point: Australians have been one of the great inventors in the world. Yet something holds us back from being successful on our own country – Is it fighting cronyism!

 

Long view, short term bridging – selling the network asset

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What do you know about NSW and Qld privatising their energy networks? Worst kept secret was the reply. ‘They’ intend to divest of the high cost responsibility as quickly as possible. Yet, when you speak to ‘them’ they are stunned that it is possible – the standard reply is it is a position statement to be tested, not ‘yet’ policy. Typically, the form of reply is: ‘we have not been told, but we have been asked to consider what would happen if’. Our immediate thought is it is more proof the public and sector is now saturated with ‘micro managers’ and their work is to be without purpose other than pedant corrections of the efforts the junior staff to innovate.

We now hear you say – how could synergy be possible in that sort of workplace? Reality takes over – it is not possible to have synergy as it involves a need for common purpose. In those sectors what is actually happening is the portrayal of a fictional character as being real. You see for the networks companies, they are operating on a model that has reached the end of its economic life. They must change to survive or to be counted as an asset. The secret word here is ‘asset’.

Co2Land org has always been told that if the bankable is present then there will be an opportunity for business. This is not meant to be a profound statement as such, but a good indication that in the background changes are afoot and plans are being set for change. Why is this important in this post?

The day after our discussion the following story was published 8 Oct 2014:

http://www.afr.com/p/special_reports/energy_security/strong_appetite_for_energy_sector_zmEISUe8FvDkd9uxACcK6M?utm_source=outbrain&utm_medium=cpc&utm_campaign=outbrain_amplify – Strong appetite for energy sector privatisations.

“This content is produced by Commonwealth Bank in commercial partnership with The Australian Financial Review.

Australia’s energy and utilities sector is moving towards its most significant period of privatisation since the Victorian and South Australian experience in the 1990s and early 2000s.

Subject to election outcomes, the governments of New South Wales and Queensland have indicated a desire to sell their mature electricity network assets in order to free up funds for new infrastructure projects.

Both states plan to privatise their electricity networks and in addition, Queensland may sell its power generation businesses.

Across the two states, six electricity network companies are being privatised, with Ausgrid in NSW the largest.

Each government has appointed advisers and indicated that if they are re-elected the process will begin almost immediately.

The NSW program is expected to end in the middle of 2016 and Queensland is expected to finish six to 12 months after that.

The scale of the programs with more than $50 billion in assets coming onto the market at the same time presents potential challenges, says Simon Ling, managing director Debt Markets Commonwealth Bank.

“Given both electoral cycles are running on similar time frames, there are market liquidity considerations and constraints depending on the size and the timing of the assets coming to market.”

Both states are engaging in asset turnover – selling mature assets now in order to invest in new assets for the future. They each have commitments for new road and rail infrastructure, and they also want to be able pay down debt.

Fortunately, the timing is beneficial. There is a lot of interest in the market from domestic and offshore super funds, pension funds and infrastructure investors.

However, given the scale of the programs there will be pressure on banks to accept a larger exposure than they would typically take on an interim basis, before longer term funding plans can be put in place.

In terms of the structure of the financing, Mr Ling says, “We expect that the arranging banks will have appetite for significant holds on most of the assets and the balance will be syndicated out to local and international banks with interest. There will also be a need for a short term bridging component to the bond markets.”

Challenges

In programs of this size it is important to appreciate the challenges faced by the governments and financiers.

For NSW and Queensland, the first order of business is certainty of execution. Governments need to be sure that there is enough liquidity in the market to get the deals done.

And of course the other big priority is to deliver the optimum price and return for their communities.

“That comes back to the question about sequencing,” says Mr Ling. “The governments are going to have to be sensible with sequencing because if they want certainty of execution and price tension they need to be careful how they bring this to the market.

“The good news, however, is that there is more than sufficient appetite for this.”

Domestic banks will run multiple teams supporting a number of key bidders in order to increase chances of successfully backing the eventual winners.

For banks, the key risk is the large exposure they will have to take at the close of the transaction, given that the largest companies could require senior debt acquisition financing around $10 billion.

“Once again there is cause for optimism. Global demand for these assets means that ultimately the debt will be able to be placed widely around the world,” says Mr Ling.

Who will invest

Most of the demand for these assets will come from investors looking for low risk, stable assets and regulated cash flows to invest in. Offshore bond markets are also expected to be more receptive and active in this latest round of privatisation than compared to the Victorian and South Australian programs, for instance.

US private placement investors are very familiar with regulated assets in Australia and are expected to have a large appetite for these new opportunities when they come on the market.

In the US, UK and Europe assets such as these would appeal to local capital markets because there is a very highly developed long end to those capital markets. The long dated market in Australia is less developed, therefore core long term funding will be dominated by offshore investors who recognise the unique opportunity to invest in these high quality infrastructure assets operating within a stable regulatory environment.”

All this sounds so admirable, why are we suspicious? Well the answer may come in the form of the inquiry into the senate’s power price inquiry. The Business Speculator asked, “Is the Senate’s power price inquiry a useless witch hunt?” This story is by TRISTAN EDIS 3 OCT, http://www.businessspectator.com.au/article/2014/10/3/energy-markets/senates-power-price-inquiry-useless-witch-hunt?utm_source=exact

The story quotes: “The Senate has agreed to launch a far ranging inquiry into the effectiveness of regulation over monopoly power network businesses to assess the extent to which consumers may be paying too much for poles and wires.

In addition, it will also examine whether the arrangements for the connection and pricing of network services discriminates against households and businesses that generate their own electricity – for example, via solar PV systems. (The full terms of reference are provided at bottom.)

This inquiry comes on top of countless other reviews and inquiries, with timeline below, including a Senate inquiry looking into electricity price rises just two years earlier. This naturally draws the question, what will yet another inquiry possibly achieve?”

So CO2Land org asks is the result a forgone conclusion? Nothing more than a rubber stamp to say regulation will assure the new buyer will make money and the consumer continues to pay too much?

This is especially relevant when Ernst & Young also reported in the ABC on 13 October 2014, that “the Federal Parliament has announced a Senate inquiry to investigate whether the so-called gold plating of Australia’s electricity networks is artificially driving up the cost of electricity.

Up to 60 per cent of some household electricity bills can be attributed to network costs, which is the amount passed on to consumers for maintaining infrastructure such as poles and wires.”

We also feel it is important to know a little history – If you did not know Australia has in recent times had a non-regulated network in the east. How could this be possible? You see the regulatory rules were written for AC (alternating current) wires connections. DC (direct current) is not AC regulated. So what if we wanted to build DC lines? You could speculate it would introduce competition – assuming competition was welcome!

Another interesting matter is the preoccupation in the story ‘Strong appetite for energy sector privatisations’ with the bank on saying” “However, given the scale of the programs there will be pressure on banks to accept a larger exposure than they would typically take on” – And, “the unique opportunity to invest in these high quality infrastructure assets operating within a stable regulatory environment.”

Forgive us but what about the inquiry! A fair go? Or is it a means to the end!

 

 

Regulatory Response – Strengthened in NSW and Qld

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Resource recovery is a hot issue – pun intended – the problem is most that say they do have methods rarely have solutions at a commercial scale. Often the excuse is the rules are at fault. There may be some truth in that claim even if in the main it is the systems that are at fault for offering concept grants as opposed to solution incentives in Australia that dominates the innovation space. If you think we are saying that at least one iconic institution might have a reason to delay innovation. That is not what is being said: It is being said regulatory response mechanisms are in need of a rethink. In particular we find evidence that regulatory response with policy on reuse, recycling, reprocessing and energy recovery, is not necessarily consistent with the most efficient use of the recovered resources opportunity.

As we seem to doing so regularly lately we can report NSW and Queensland are doing something about the rules around resource recovery that do not weaken the intention of the rules, and at the same time they encourage a more flexible approach to offset harm. It is done with new policy positions being taken that alter the regulatory response to issues. This change means the EPA of both states are responding to solutions that says show me it works and we will listen as opposed to it does not fit the guidelines sort of approach.

It is true some in our society just want to exploit with disregard to good environmental practice and some media might even exploit our emotions in the interest of their own agenda, and strong regulatory responses remain in need to counter same. For example we found a story of a notice that the NSW Environmental Protection Agency (EPA) has issued a clean-up notice to a fuel transport company in relation to environmental issues at its depot. The NSW EPA found “that fuel or a similar material had leaked or been pumped onto the ground” at the site. According to NSW EPA the clean-up notice requires Xpress “to immediately stop receiving or removing any waste and contain any contamination within bunds on site”. Source NSW EPA’s media release on 3rd September 2014. Clearly the regulatory response was appropriate for this matter.

Staying on NSW rules, on 10th September 2014, the Office of Environment and Heritage announced it was rethinking its approach to its major projects policy in NSW. The benefit said is it is a more flexible approach aimed to put an end to case-by-case negotiations by providing a standard method for assessing impacts and determining offset requirements. The new policy is likely to be followed by additional changes to biodiversity protection arrangements in NSW, which are currently undergoing a comprehensive review.

Also related to this policy approach is a Legally-backed accreditation scheme that is the offsets policy for major projects will be accompanied by a new accreditation scheme for consultants who administer the policy’s supporting framework for biodiversity assessment. The accreditation scheme will be developed over the next 18 months, while the new policy is being implemented. The policy will be given formal effect through legislation after the 18-month interim phase, and the accreditation scheme will also have legislative backing. During the interim phase, consultants using the assessment framework must be accredited under the NSW BioBanking Scheme, in accordance with s142B of the Threatened Species Act.

Importantly to above is that it has planning protections that do not allow empowered consent authorities to allow economically significant projects to proceed with watered-down offset obligations if normal requirements would have affected their viability. In other words discounting is not allowed. However, the policy will allow credits to be earned from ecological rehabilitation. The NSW Government’s response to public comments on the draft version says it is also open to allowing “other forms of post-development rehabilitation” to earn biodiversity credits.

NSW biodiversity offsets policy for major projects (NSW Government, September 2014)

Framework for biodiversity assessment

Report of submissions on the draft policy (NSW Government, September 2014)

Individual submissions on the draft policy

 

Now to Queensland where the media reports would have you believe there are no rules. We read that on 2nd September 2014 the Queensland companies are now subject to pay five times more for some infringement notice offences, and the Department of Environment and Heritage Protection can now issue notices for a wider range of infractions. The Queensland Government introduced the changes, which took effect from September 1, through a new State Penalties Enforcement Regulation. Several offences under the Environmental Protection Act will now incur an infringement notice penalty of $11,385, up from $2,277:

  • contravening an environmental protection order;
  • carrying out an activity without an environmental licence (known as an ‘environmental authority’ in Queensland);
  • failing to comply with an environmental authority condition; and
  • failing as the holder of an environmental authority to ensure compliance with its conditions.

That later is most interesting as it makes it much more difficult to outsource your responsibilities.

The report goes on to say: Infringement notice penalties for most other offences have more than doubled, with many rising from $2,277 to $5,692. New Environmental Protection Act infringement notice offences include:

  • failing to provide a financial assurance before undertaking an activity that requires an environmental authority or before engaging in small-scale mining (penalty of $11,385);
  • not complying with conditions of a licence ($11,385);
  • ailing to comply with a notice ($8,538); and
  • unlawfully causing material environmental harm ($8,358).

Failing to comply with a condition of approval in breach of the Waste Reduction and Recycling Act will now incur a penalty of $11,385 (up from $2,277). Penalties have also risen for infringement notices issued under the Water Act and several other acts. In 2012-13, the most recent year for which statistics are available, the Department of Environment and Heritage Protection issued 280 penalty infringement notices for environmental and nature conservation breaches, a big rise on the 76 notices issued in the previous year.

You see, it will not just disappear – the regulatory response continues.

Links to customer value – Future Energy Supply Strategies

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Regulatory tests and security of supply –Sounds so elegant so simple when it is a strategic position statement or statements. Queensland gives some very good examples in recent times.

The first being the effort Ergon Energy put into the work to secure power supply upgrades to the ‘Granite Belt’ and that process started in 2011. It was abandoned 17 September 2014. What changed?

Then there is biofuel potential in Queensland. Why the focus on non-fossil sourced fuel now?

Then there are the Coal industry woes – China does not want the Galilee Basin coal type – it is too dirty for its cities!

Back to Ergon: After the Warwick Daily News headlined its story, 15 September 2014, “ERGON pulls the plug” – The story was quoting the Qld Energy Minister – Mark McArdle, as announcing the end of duplication of the Warwick to Stanthorpe power line and the controversy over the routes being selected. Ergon Energy then in a letter 17 September 2014 wrote to the landholders that were to be affected by the proposed duplication of the power line and formally advised they will no longer be effected. Clearly indicated for making the decision were the outcomes of the regulatory test(s). How could the regulator test find as it did to stop the project, even sway the politics of the project? Well, the key findings were:

  • The reliability standards changed on 1 July 2014. There is a heightened need to weigh the costs against the value to customers.
  • Existing demand is slowing and the evidence future demand will continue that trend if not further reduce. Certainly not inside the regulatory forecast periods.
  • Rising costs can no longer be blamed on rising demand predictions, that waste and excess must now be addressed for efficiency dividends.
  • There was very little to be concerned about with the reliability of the network as it stands now.
  • There is an edit the focus should be on affordability. That capital expenditure must be justified as needed.

Another way of putting all this is – Ergon Energy or any other supplier cannot get away with gold plating and excessive redundant equipment and infrastructure just because it gives them comfort – it must give value. How can you get value? You can improve the technology offering better monitoring, performance and be ‘smart’. The later is as simple as balancing the demand supply equation with incentives and/or implementing demand management strategies.

And, yes there is more: alternative energy supply is opening being touted as ‘planned initiatives’ What alternative energy? Call it what you like – clean, green or whatever. But what will stick is not only ‘proven technology’ as the descriptors now includes ‘likely technology’ of distributed type and ‘battery’ storage.

As an aside did you know as ‘battery’ can be a physical volume exchange as well as an electron store!

Does this mean technology will save coal? It is possible – but at the end of the day it will get down to the economics and it is not looking all that bright for coal as sustaining its position even for baseload demand.  Even our world partners are turning their backs on coal – it is now seen as too expensive in terms of the outlook, and the economics, the environment and the cost of the process to make it ‘clean’. Recent Chinese regulatory changes are testimony to that issue. Then there is the story -AngloAmerican boss sees coal mines closing at a rate of one a fortnight http://www.goulburnpost.com.au/story/2569015/angloamerican-boss-sees-coal-mines-closing-at-a-rate-of-one-a-fortnight/ … – no a good look is it!

Yesterday, 22 September 2014, in Canberra the Minister for Industry Ian MacFarlane addressed a biofuel forum on the strategy for Queensland to take the lead on bio fuel production. This follows a paper released through the Queensland University of Technology prepared by Corelli and Deloitte Access Economics. The paper called “Economic impact of a future tropical bioenergy industry in Queensland”. It talks of the ‘potential’ of new manufacturing facilities, and how biofuels can be used as an area of increased focus in agricultural strategy.

What all this means is that traditional energy is heeding a need for a strategic change of heart. Despite what is being said about business as usual, that is not the behaviour behind the scenes and increasingly it is coming to the fore that change is inevitable. The EUAA calls it a paradigm for the industry. The question is what part of the pack are we to become. Australia has always been world renown for finding solutions. What we have not been good at is getting things done, besides talk about it that is.

And, there is more: some government facilitations would assist in industry establishment. Not our quote, it is taken straight from the above papers key findings.

Govtape – emissions, consequences affecting rational thinking

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Wintelboff recently had a dilemma to resolve in a brokerage agreement – the best energy price was from a renewable sources retailer. The problem was the transition from the carbon price repeal might actually mean the supply would be from a brown coal generator. How could this happen? It happens when the market is artificially manipulated. When those that advocate and love liberal attitudes to the market it is very disappointing that intervention is done purely on the basis of lobbying and not on evidence.

Back to the outcome: The client decided a black coal generator was the better option, and that Gentailer made it very attractive in terms of an offset for their emissions. They carried no penalty for a solar array on the premises, as its purpose was to address the peak demand issues of the daytime energy use. On balance it was a good deal. Not perfect, however, much better than the attempts of interventionists.

We have found a story that backs up the recant above and tells a frightening story of how intervention brought on by ideology can have consequence – even after a very short time:

http://www.canberratimes.com.au/environment/climate-change/emissions-from-energy-generation-jump-most-in-eight-years-after-carbon-price-axed-20140903-10by8d.html

Emissions from energy generation jump most in eight years after carbon price axed

‘Carbon emissions from the country’s main electricity grid have risen since the end of the carbon tax by the largest amount in nearly eight years.

Data from the National Electricity Market, which covers about 80 per cent of Australia’s population, shows that emissions from the sector rose by about 1 million tonnes, or 0.8 per cent, at an annualised rate last month compared with June.

That is the biggest two-month increase since the end of 2006, and came as a result of an increase in overall demand and a rise in the share of coal-fired power in the market, according to Pitt & Sherry’s monthly Cedex emissions index.

“It is highly likely that the trend directions of electricity demand, generation and emissions seen in the last two months will become set in place,” the consultancy said, adding that the emissions intensity of the power industry was rising after six years of falls.

Environment Minister Greg Hunt did not comment on the rise in emissions when contacted on Wednesday.

Australia’s bipartisan goal is to cut greenhouse gas emissions by 5 per cent below 2000 levels by the year 2020. The government scrapped the two-year-old carbon price in July……..

The share of black and brown coal in the national market rose to 73.3 per cent from a historic low of 72.9 per cent in July, and will probably rise further as gas and hydro start to shrink.

The addition of new wind and solar energy capacity is also about to grind to a halt with the industry anticipating the Abbott government will take an axe to the Renewable Energy Target.

The latest emissions figures come as the 20-megawatt Royalla solar plant, the country’s largest solar farm to be added to the grid, was officially opened in the ACT on Wednesday.

About 370 megawatts of wind in NSW and Victoria and 170 megawatts of large-scale solar are under construction, but “after that, there’s very little in the pipeline”, Pitt & Sherry principal consultant Hugh Saddler said.

Emissions from the power sector account for the largest emissions share of any industry, making up about one-third of Australia’s total. The industry is expected to see a rise of millions of tonnes of emissions in coming months as gas in Queensland starts to be diverted to exports rather than domestic use and the main hydro plants scale back output.

If Hydro Tasmania’s production drops back to levels just after the last drought, output will be about 9 terawatt-hours a year – down from about 12TWh levels before the end of the carbon price.

“If that switches to brown coal, it will be nearly 4 million tonnes” of extra emissions annually, Dr Saddler said.

The share of gas in the market was little changed last month from July at 13 per cent, while hydro’s share dropped to 9.1 per cent from 9.3 per cent, Dr Saddler said.

Wind energy’s share last month eased to 4.6 per cent from 4.9 per cent a month earlier. A windy July saw record wind energy production in the country.”’

 

At the start of this post, we said: a dilemma existed, the client wanted to be progressive, was presented with regressive and it was difficulty to get through the govtape! That’s it – it is govtape not redtape or greentape in the way!

shallow and deeper sustainability – thinking in time frames

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Something is sustainable, and you talk about it. You do not a thing about it, what is your problem? We believe the issue is the sustainable risk reward structure is viewed as competition against short-term profits and makes it a target of disquiet with investors not concerned with long-term benefits. This in turn can be used to promote discomfort with our personal circumstances and immediate security. We are saying ‘the bad for the economy tool’ is used to confuse and give the impression it is not worth the effort.

If we start with the definition – CO2Land org is a great believer in defining adequately before you say your piece. If you don’t you are a target for ‘weasel’ word artists that can then exercise ‘plausible denial’ when you rely on their support. By this we say they will rely on the term plausible deniability as a legal concept. They may even say there are a lack of evidence proving they did not say exactly the level of support they would provide and it is not true and a allegation of support. Standards might even be quoted and reference will be made of the need of proof and how that may vary in civil and criminal cases – for example. www.urbandictionary.com/define.php?term=plausible .

What is sustainable? It is actually dependent on the eye of the beholder. It can be many different things to many different people. To some it is measurable as a financial cost – an economic cost. To others it is the environmental cost and a moral issue of securing the future. How often have you heard it may be immoral, but it is not illegal as a justification for a short-term gain? It is even more complicated if you introduce policy to the argument. At a macro level it is about security, at a micro level the economics of being in business. Nevertheless it is all about efficiency, and that is the problem – the measure of performance!

So what will be done about it, and what will make social and environmental matters more important than just references to being significant to actually doing something about it? Co2LAND Org found the Economist recently published a story that would explain what is needed:

http://www.economist.com/news/business/21614152-few-pioneering-businesses-are-developing-sustainability-policies-worthy-name-new?utm_content=bufferbb375&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer

“A new green wave – BILL MCKIBBEN, an American environmentalist, once dismissed sustainability as “a buzzless buzzword”. That seems about right. A survey of 2,000 companies by the MIT Sloan Management Review and the Boston Consulting Group found that two-thirds of businesspeople thought social and environmental matters were “significant” or “very significant” but that only 10% thought they themselves were doing enough about it.

That sense of disappointment should be no surprise. Sustainability can refer to anything from building wind farms to combating social inequality. The idea crops up everywhere from Starbucks to the deliberations of the United Nations (whose governments are in the middle of working out a set of so-called Sustainable Development Goals for 2015-30). An ill-defined, controversial notion is no basis for coherent policy.

Many corporate “sustainability plans” are therefore modest. They focus on saving energy, cutting waste and streamlining logistics. Nothing wrong with that: these things reduce operating costs while benefiting the environment. They help explain why sustainability efforts tend to increase profits, not reduce them. A study by Robert Eccles and George Serafeim of the Harvard Business School (HBS) found that, between 1992 and 2010, companies which adopted what they call high-sustainability policies were more profitable and improved their stockmarket valuation more than those which did not (though this may just have been because high-sustainability firms happened to be better managed).

However, there are drawbacks to such plans. For one thing, they are misnamed: these are efficiency policies, not sustainability ones. Companies ought to want to save energy or cut waste anyway, regardless of the impact on the environment. And it turns out that many of the schemes do not in fact do that much for the environment or social equity. The majority of greenhouse-gas emissions associated with consumer goods, for example, are produced either in the supply chain or by shoppers. So there is only limited scope for such products’ makers to lessen their environmental footprints through green measures of their own.

As a result, most corporate sustainability plans rarely amount to more than cost-saving measures and compliance with government regulations, plus a few projects with a public-relations punch (say, reforesting parts of a cleared jungle). They fall well short of putting sustainability at the heart of what firms do.

For some companies, though, that is changing. Take SABMiller, the world’s second-largest brewer. The firm has been a pioneer in the field. But until recently its sustainability efforts consisted of a laundry list of targets (there used to be ten) aimed at reducing carbon emissions or water usage in its brewing operations. This summer it unveiled new, broader targets—only five this time—which apply to suppliers, sellers and customers, as well as to SABMiller itself. It is promising to teach basic business skills to 500,000 small enterprises, mostly shops which sell its beer. It is helping farmers use water more efficiently: in Rajasthan, in northern India, it is working with wheat farmers who have been depleting their aquifer to reduce water use by a quarter, to ensure it still has water to brew beer. And it is sponsoring anti-drunkenness and road-safety campaigns aimed at its own customers.

Jane Nelson, director of the Corporate Social Responsibility Initiative at the Harvard Kennedy School, says SABMiller’s efforts are characteristic of a new wave of sustainability plans. These set targets not only for the company but for the people it works with and sells to. The targets are not only about the environment but society at large. (In a spectacular example, Unilever, an Anglo-Dutch consumer-goods giant, says it aims to “help a billion people take steps to improve their health and well-being”.) They are supervised by the board, not left to specialists. Domtar, an American fibre company, created a sustainability committee but the vice-president for sustainability does not chair it; the chair rotates among other managers so as to involve the firm as a whole. In short, she argues, for some companies sustainability has become a core part of their strategy, not just a green way to cut costs.

Little green men

But why should firms make sustainability central to what they do? Environmentalists might reply that virtue is its own reward. But companies need more concrete returns—higher profits, say, or increased sales, or higher stockmarket valuations.

The first wave of sustainability policies provided those. The new wave may not: sustainability targets could raise costs, not cut them, making environmentally friendly consumer goods more expensive than the eco-hostile variety. Efforts to combat social inequality could boost wages. Training can be costly.

Paul Polman, the boss of Unilever, argues that good sustainability policies still improve the fundamentals of businesses in the long run. They change customers’ behaviour in beneficial ways—by, say, increasing demand for green products that the firm makes. They also please investors concerned about environmental threats. The trouble is that consumer behaviour is often slow to change and that, if green products are too expensive, the firm risks losing market share. Environmental investors are still a minority among shareholders, most of whom continue to be more concerned about quarterly earnings.

The first wave of sustainability rewarded itself. The new wave will not do that. It is more akin to investing now to have a licence to operate in future, when consumers, lobbyists and regulators will be ever more demanding about the way firms behave. That does not mean the new wave will not reward its adopters. But it will boost their long-term competitive position, rather than their short-term profits. Unlike the rewards of the superficial first wave, those of deeper sustainability could take years to sink in.

Economist.com/blogs/schumpeter “

Co2Land org thinks the later point above is another way to think of sustainability – shallow and deeper sustainability when defining what it is to you. And, we say some ore thicker than others and it takes longer to sink in!

No place for flat earth society – Climate change priority one.

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The nightmare popped up during sleep time: They dropped the A off UStralia – what happened Anthony? Don’t you know there am no ‘I’ in team! What brought this about? Having just read Peter Costello’s comment before bedtime and having an uneasy feeling from it – in his words:

“Mr Costello believes the Prime Minister has missed the point.

“I don’t know about this Team Australia stuff…..I have heard it used in tourist and trade promotions. But as far as I am concerned, when it comes to stopping terrorism, it is not a matter of getting on the team.”

The rest of the story is found in – Peter Costello criticises PM Tony Abbott’s call to join ‘Team Australia’ By political reporter Karen Barlow, staff – “Former Liberal treasurer Peter Costello has hit out again at the Coalition Government’s agenda, following up on a swipe over unpopular budget measures with criticism over the Prime Minister’s call to join “Team Australia”.

The story actually sprung from Peter Costello taking a swipe over another agenda through, “his regular News Corp column to attack Tony Abbott’s decision last week to drop changes to section 18C of the Racial Discrimination Act.

Citing the need to engage Australia’s Muslim community on new anti-terror laws, Mr Abbott declared everyone needed to join “Team Australia” and support the Government’s proposed new counterterrorism laws….I want the communities of the country to be our friend, not our critic,” he said. 

Fair enough we say –the fact, we need friends.

But there is a twist – We need a meeting of minds for that to happen. So why would we think two faced or two minds and the characteristics of flux plus spring to mind. Why is he trying to solder the joints and soldier on with falsehoods? Ironically it is climate change that may be the catalyst to foster relationships after all. Yes, Climate Change! Yes, despite Ab bott saying in 2009 that Climate Change is ‘crap’. It seems that to be part of the universal club he now needs to embrace Climate Change.

Actually, CO2Land org predicted this a few months back in a previous blog.

Why do we know it now? From the story: US administration and Tony Abbott have ‘meeting of minds’ on climate change By Peter Hartcher and John Garnaut Aug. 14, 2014:

“The Abbott government has discussed with the Obama administration the subject that was supposed to be unmentionable between them – climate change”.

A senior US official said ”there was a meeting of the minds on the significance of the challenge” when the two countries held their annual Ausmin consultations in Sydney this week.

The subject was not mentioned at the Ausmin news conference on Tuesday.

But Daniel Russel, the senior official for the Asia-Pacific region in the US State Department, was involved in the talks and said the two governments had ”a good discussion of non-traditional security threats, among which is climate change”.

”The conversation was predicated on the reality of global warming,” he said, dismissing any hint that the Abbott government might be in denial on the subject.

”It was not a theological debate. It was an information exchange.”

He described it as ”a very practical, forward-looking conversation” on the matter………. The Barack Obama administration has made climate change a priority.”

“Mr Kerry is especially fervent. In February he said that it was ”the world’s most fearsome” weapon of mass destruction.

He has described sceptics of the science of man-made climate change as members of the ”Flat Earth Society” and said he and Mr Obama had no time for them.”

“Mr Abbott said in 2009 that the science of climate change was ”absolute crap”…… They exchanged views on the upcoming global conferences regarding climate change and they also touched on the relevance to the force posture agreement in the sense that the Asia-Pacific region is home to lot of wonderful things but, unfortunately, it’s also home to the lion’s share of natural disasters, and a significant component of the rationale and the mission for the rotational [US Marine] presence in Darwin … is to increase the region’s ability to respond to natural disasters.”

The head of Australia’s Climate Institute, John Connor, said: ”This government may be waking up to the fact that the heavy hitters in the US and China see climate change as a security issue and an economic issue, not just an environment issue.

The chief of US Pacific Command, Admiral Sam Locklear, has said that climate change could lead to the displacement of millions of people, ”and then security will start to crumble pretty quickly”.

Our turn, we told you so, and if you really want to be on TEAM UStralia you better remember there is no ‘I’ in team. Despite how hubris one may be!

Frailly – the morally weak resistance to Climate Change and Renewable Energy

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Frailly might explain the morally weak and the extraordinary resistance of some to climate change and a useful tool in fighting it – renewable energy. You might notice a Minister will flounder and adding insult to injury make confounding and confusing statements, ad hoc, and as the selective audience wants to hear. Authors that have had entrenched positions in the past are now desperate to distant themselves from any association with the evidence they previously exposed. You want some examples?

Adding insult to injury: Federal Environment Minister Greg Hunt is on record as not denying cabinet rolled him on climate change. He has since approved the Carmichael Mine in the Galilee Basin in Queensland. What is confusing is that the mine owners may end up with stranded assets, as the world appears to be turning its back on coal for either environmental or economic reasons. How could that happen, aren’t the Indian owners on top of the game? The answer may be they diversify and spread the risks. It may be they are looking at the risks seriously too, and their significant investment in Australia is under Climate Change risk that cannot be ignored. In particular their investment in and the serious threat to Agriculture. Indian Conglomerate, Olam is reported: http://www.abc.net.au/news/2014-08-10/agricultural-giant-says-climate-change-absolutely-real/5659058 . Olam International chief executive Sunny Verghese has told Landline that agricultural producers and processors need to take action now.

“It is absolutely a reality that climate change is going to significantly impact agriculture,” he said.

“It impacts it both from the nexus it has with water, and the nexus it has with micro-climate as well, so it is probably the most important driver to future agricultural production, productivity and therefore price.”

Mr Vergese was on the Gold Coast this week to address the 2014 Australian Cotton Conference.

His Singapore-based company has operations in 65 countries, and is the world’s biggest trader in cashews, and the second biggest trader in coffee and cotton.

Olam International has had a presence in Australian since 2007; it owns Queensland cotton, manages 12,000 hectares of almond orchards in Victoria and has investments in the grain, wool and pulse industries.

“Mr Verghese said one of Olam’s initiatives to tackle the impacts of climate change was to reduce water consumption.

We have a target that in our tier one manufacturing and processing facilities we will reduce water usage per tonne of product that we supply by 10 per cent by 2015, and in our farms by 10 per cent by 2020,” he said.

“Similarly we can track the carbon dioxide emission that we generate across all our commodities in each country.

Again we have put some hard targets of how we are going to reduce that carbon emission footprint for every tonne that we supply by 2015 and 2020.

My view is that there is no point if I say I’ve generated half-a-billion after tax earnings, but I’ve depleted $200 million of natural capital from the environment.

Because then I’ve got to question myself, what is the point of all this overwhelming effort if at the end of the day you’ve really depleted the natural capital and left a huge bill to pay for future generations?”

Co2Land org is also aware of Indian companies in Iron Ore and other minerals in Australia and you might conclude they are balancing their portfolio as opposed to placing all the eggs in one basket. But are they also positioning themselves to expect trade-offs from the government? You might say – but hang on the government says no assistance will be given to industry. Then again we know the federal government in particular likes to offer diesel credits and subsidies if they contribute to mining! Those subsidies are significant – like $b’s.

Then there is NSW Planning Minister Prue Goward saying she supports sensible renewable energy, then says she resists approvals of new renewable projects! Also representing the Southern tablelands area of Goulburn district is the Federal MP Angus Taylor. He is on record as saying sun and wind energy should not be increased in the southern tablelands. Which ironically is very well suited in terms of sunshine and wind and infrastructure availability. Then it is reported Angus, when speaking on 2WEB – Bourke – and in the Australian Financial Review, recently said that Solar Energy is an important part of the energy mix in regional Australia. He even called for changes to the regulation of electricity distribution network charges. He essentially followed the Grattan Institutes recent report: “The key here is to look for low cost ways to move towards clean energy…Increasingly we are seeing that solar is likely to be the renewable energy to win the race”. Then comes the contentious bit for the network companies: The advantage of rooftop solar is that it doesn’t need the distribution network, which is …very expensive”. Go figure we say!

Then we have Rod Stokes The NSW Environment Minister advocating we will have a demonstration town in NSW that is to be disconnected from the network grid in 2014. It all sounds back to the future does it not? A time back when many towns were not grid supplied in the past, and local government actually were responsible for power generation too. The issue in those days was, and is now the efficiencies needed for payback. CO2Land org recently looked at a Monaro region town that wanted to go fully solar. Think 30 years paybacks. Why? 105 households and backup infrastructure needed for reliable supply. Maybe just a little premature on that proposal as we are sure technology will advance to better suit but sometime later we think.

What all this leads to is sensitivity and concerns. On the one hand you need to keep your customers happy. On the other networks need to either change how they do business or just keep on encouraging the regulator to actively discourage renewable energy. So what are networks going to do? Even that gets confusing – it seems customers don’t want change either, and some say for example: I left the city for a lifestyle change and I buy from the local businesses and I create jobs because of it. Then some company builds a wind farm nearby, and a solar farm is proposed too. I wont have that! Note the ’we’ is missing here, and the local businesses say that the wind and/or solar farm is good for business and workers come in and buy and people come to see the area’s attractions! Even move perverse is many of the objectors tend to be those that were not offered revenue from the project. Even neighbour against neighbour can occur because one allows a tower or panel on their land for a rent and the other missed out. Get it, like not in my backyard, but if you pay me it is OK? We find it interesting that the tree change types are happy that conventional power station plumes can destroy our fertile areas like the Hunter Valley and they don’t care!

Ok, so the answer is go bush and the Southern Tablelands local MP (Angus Taylor) says Solar is fine – in the bush and networks are expensive – sounds a bit of an oxymoron does it not?

Maybe the whole game is to discourage and to make it too hard, or is it just a ruse to confuse? If you want to be confused even further try reading the Business Spectator article: 7 August 2014, it was said “Finally, and perhaps more important than all the other arguments, future private owners of the networks in NSW and Queensland are likely to welcome asset write-downs, if it’s done before they put their money on the table.” The author does seem to suggest it is a plausible argument to suggest brown paper bags work best to influence an outcome? But, if so – won’t there be an inquiry?

Let us read through that story a little more: Why the power networks are wrong about writedowns,     BRUCE MOUNTAIN , 7 Aug 2014. If we select the key phrases:

“The Energy Networks Association has recently released some modelling that suggests consumers will be worse off if stranded network assets are written off. The gist of its argument is that such revaluations are perceived negatively by investors, who then demand a higher rate of return on their investment to compensate them for the risk.

The ENA’s argument seems fallible in a number of respects. Firstly, we need to question its assumption that networks investors have not already been compensated to bear asset-stranding risk. The regulatory calculation of the return on assets is based on an external ‘benchmark’. It is not based on the firms’ actual cost of equity and debt.

Prospective private investors, governments, consumer advocates, retailers (and the Energy Networks Association) might usefully focus on these questions. Better to get with the times than to try to hold back the tide. “

What concerns Co2land org about all this is the need to concentrate on networks as ’the investment problem’? We can understand that others might not be so convinced that we should merely think of networks being a commodity rather than a service. Even if you think of them as commodities – is it right to say – like the energy market can be fixed of its shortcomings, and then quote UK examples of why the problems will continue? Terribly confusing is it not old chap!

CO2Land org and our partners are prepared to accept that it is not solely the networks at fault. We feel certain parallels could be drawn but not one of the solutions can be directed to one side, we need new ideas to be brought forward and resist drawing parallels that do not exist. 

There may be an argument that it is necessary for chaos to exist in regulation land, so things can sort themselves out. But, that wont happen – too easy, Human nature directs it needs to be complicated!

All that put aside: what the networks need is a model to go forward with, so inevitably some write-downs and disquiet will happen. It will not be the end of networks providing they have strategies to move forward in partnership with renewables. Why else would the politicians being expressing they might change their mind, it cannot be all tactics to disrupt and detract progress – could it!