The release of New Zealand’s first Emissions Reduction Plan sets new urgency around our country’s transition to a carbon-zero future and means slashing 11.5 million tonnes of carbon equivalent off our emissions by 2025.
The plan reveals how the Government will meet New Zealand’s first emissions budget of 72.4 million tonnes a year and underlines the fact that there is no more time for business as usual when it comes to decarbonisation. And if greenhouse emissions and tonnes of carbon don’t mean a lot to you, picture this; 1 tonne of CO2 would fill 1 large hot air balloon (almost 3,000 cubic metres in volume), and to capture 1 tonne of CO2 emissions, approximately 50 trees must grow for one year. The challenge is real.
Strategic urgency for decarbonisation
During the last 12 months, the conversation has shifted from decarbonisation being a tactical compliance thing for businesses – to having real strategic urgency. As Total Utilities Director, Chris Hargreaves explains, “Addressing carbon is becoming a business problem and not an optional extra.”“Creating a low carbon economy requires considerable planning,” says Chris. “Businesses will need to be adaptable and flexible to meet the Government’s emission budgets and reduction plan and they will need to have a plan to mitigate risks associated with it. “Carbon units will become more expensive over time, increasing the cost of goods and services with high carbon intensity.”
Protect your brand & reputation
The benefits for businesses that address carbon now are huge. Think of the cost savings of needing less energy to run your business and reducing your energy requirements now to mitigate future cost increases.Decarbonisation also means protecting your brand and reputation as more customers turn to sustainable companies.
Furthermore, it gives you a head start in bidding for contracts, with many businesses now asking for details on approaches to sustainability and emission reduction before awarding contracts. And front of centre of it all, of course, is the environmental imperative to reduce emissions. Science tells us we need net zero emissions to limit temperature rises to 1.5°C, and the race to get there by 2050 has started.So why aren’t businesses moving faster?Chris says that clients who come to him for advice know they need to do something but often don’t know what to do or where to start.
Total Utilities can help…
This is where Total Utilities comes in. Having worked in New Zealand’s energy market for well over 20 years, we specialise in assisting companies with the decarbonisation process and putting together carbon reduction plans.“We can help you baseline greenhouse gas emissions from across all your operations, so you know where to start,” says Chris.“We then use science-based methodologies to come up with your pathway towards net zero, ensuring a stakeholder lead approach. We can reduce your business risk by adhering to today’s environmental regulations and preparing you for any future legislation.”
Funding challenges are also often a significant roadblock to businesses taking action, explains Chris, but the benefits of future proofing your business and the cost savings over time help offset this. “Furthermore, we can identify cost savings and revenue opportunitiesthat will have a positive effect on your productivity, profits and performance,” he adds.
It’s cheap, it’s reliable and it’s not running out anytime soon. So the burning question remains – why isn’t commercial solar as hot as… well, the sun?
Today, the business case for solar is becoming more and more compelling when it comes to commercial use. It’s not only good for the environment – it’s also good for your bottom line.
With electricity prices going through the roof, solar represents a cheap alternative to cut ongoing power costs and hedge against future electricity price increases.
Indeed, solar gets more viable by the day when you consider the gains you receive in terms of ensuring budget stability with predictable, self-generated solar costs. Then there’s the add-on benefit of being able to more accurately forecast operating power expenses.
So, what’s holding businesses back?
Total Utilities Director, Chris Hargreaves, believes it could be down to the perception that the return on investment is too long.
But Chris explains Total Utilities can provide various funding options which make the transition cost neutral, so it doesn’t have to add to overall business debt. And over time of course, you have the ongoing benefit of cheap and sustainable solar.
More viable and better value for money
“Return on investment is now under seven years for a commercial solar array, so it’s becoming much more viable and better value for money for business use,” he says. “Even in the last 12 months, conditions have changed with electricity prices going up and the cost of solar coming down.”
“Reducing your reliance on the grid and generating your own electricity onsite, gives you a strategic advantage and means you can become master of your own destiny, mitigating against energy price volatility.”
Smart with solar
Chris explains that solar users can also get smart with how they use their self-generated power. For example, they can discharge their solar battery at peak times to avoid peak grid rates, as well as generate revenue by selling excess solar energy back to the grid.
Other major benefits include solar being an easily maintainable, consistent power source – providing uninterrupted supply during power cuts. It’s conveniently scalable too, so you can further reduce up front costs by growing your system with your business over time.
Goodwill of going green
And you can’t underestimate the goodwill generated by being perceived as a ‘green’ business as more and more customers turn to companies putting sustainability at the heart of their operations.
Indeed, when it comes to bidding for contracts, sustainability is becoming central to doing business in many sectors, with clients giving considerable weight to sustainability credentials when it comes to awarding contracts.
So, it seems the jury is no longer out when it comes to solar. It’s time to bask in its uninterrupted glory.
With the list of benefits including cost saving, controlling utility costs, reducing your carbon footprint, providing uninterrupted power and being easily maintained and scalable – all at the same time as showcasing your eco-friendly creds – only one question remains…
When are you going to join the new power generation?
Download this guide for the benefits and how we can have solar plan for you!
Today’s Earth Hour (Saturday 26 March, 8.30 – 9.30pm NZ time) again puts climate action into the spotlight – but a recent MYOB survey highlights that while there’s strong support for climate action among SMEs, many are confused about how to progress.
Earth Hour, which started in 2007 as a symbolic lights-out event, is now held around the world on the last Saturday of March each year to promote action on climate change and to ensure a brighter future for people and the planet. So, what better time to explore results from the latest MYOB small and medium-sized enterprises (SME) snapshot survey regarding attitudes to climate change?
The survey captured responses from more than 500 local SME business owners and decision makers and results showed 82% of SMEs are concerned about the impact of climate change, with more than 43% very or extremely concerned. Only 18% said climate change was not a concern.
Carbon footprint confusion
The survey also pointed to the fact that more than 69% didn’t know how to measure their carbon footprint – just 21% knew how to measure it and 10% were unsure. Many didn’t know how to begin the process, couldn’t find the best initiatives to fit their business, felt it would be too costly or had a lack of free time and lack of information.
While many SMEs said they need help to map out their plans, the level of willingness to change is positive – though nearly a third (32%) said their business was not currently carbon zero or carbon neutral, they did have plans to be.
Total Utilities can help!
At Total Utilities, we have dramatically pivoted our business model over the past few years from supporting businesses to monitor and reduce their utilities overheads from gas, water, electricity and cloud consumption – to using that data to measure your carbon footprint and support a sustainable transition.
With our comprehensive energy consultancy services that assess, identify, improve and manage your energy usage and efficiency, we can not only help you measure your carbon footprint, but also assist in your journey towards decarbonisation. We have all the knowledge, skills and experience to help you achieve savings, improved efficiency and a more sustainable business model.
Sustainability essential to doing business
Total Utilities Sustainability Director, David Spratt explained that on top of the gains that can be achieved by decarbonisation, businesses also have to consider their employer brand in view of today’s skills shortages. People are looking for employers whose values align with theirs, and in many cases, who are actively demonstrating their progress on sustainability and decarbonisation.
Consumers are also demanding more from companies in terms of sustainable practices. A recent Colmar Brunton poll revealed almost half of New Zealanders say they have switched to brands that are more sustainable. “You have to consider the cost to your business of not transforming,” added David.
Need help measuring your carbon footprint? We’re here to help! Contact us at Total Utilities.
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Staying ahead in business is often about being the first, being the best or doing something that no-one else has thought about.
But being the best demands an ability to gather accurate, independent and reliable information in an increasingly complex world.
Total Utilities Market Commentary will help provide you with all the insights and tools you need to take immediate steps to get the very best deal on your utility prices, while simultaneously leading the way with sustainability best practice. We collate market research and trends to help you navigate volatile energy markets and make better, more informed decisions.
As an independent voice in the market, we strive to deliver holistic insights and advice so that you are better equipped to deal with the changing environment in which we operate.
‘The purpose of information is not knowledge. It is being able to take the right actions.’
Peter F. Drucker
So says founding father of modern business, Peter F. Drucker. Total Utilities Market Commentary helps ensure you have the right information to support the right actions now. We continuously track utility prices in relation to prevailing market conditions so that armed with this knowledge, you can take immediate action to optimise your energy procurement strategy.
No vested interests
As an independent voice in the market, we have no vested interests other than to strive to deliver comprehensive insights and advice. We have been tracking price trends in the energy market since deregulation began and have a comprehensive understanding of the various drivers in the market. We also keep fully abreast of policy and regulation changes to ensure we pass on all the strategic advantages from our independent analysis
As with all things in life, the right actions are not necessarily the easiest or the most straightforward. But we are passionate about providing you with the knowledge to not only leverage the best deals with your utilities, but also to take action now to assist you with decarbonisation and reducing greenhouse gas emissions.
Cleaner, greener business
Paritutu Rock in New Plymouth, New Zealand
At the COP26 summit in 2021, NZ signed up to an agreement to reduce emissions by 50% at 2030 compared to 2005 levels, meaning decarbonisation is no longer a ‘nice to have’ – but critical to future proofing your business.
Sustainable business is about more than just reducing your impact on the environment. Businesses who can create circular economies – i.e., those who save money by eliminating waste and reinvesting in further savings activities – can achieve deep sustainability and lay the foundations for long-term success.
With expertise and guidance provided by our Market Commentary, you can ensure you are reading the latest information regarding competitive energy pricing and make savings to help fund your decarbonisation journey.
And that is most certainly the right action.
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The COP26 summit brought governments together in Sept 2021 to discuss accelerated actions towards the goals of the Paris Agreement (2015), which is an international treaty signed by 196 participating member states at COP21 in Paris, 2015. It aims to keep the global average temperature at ‘well below’ 2 degrees above pre-industrial levels, ideally 1.5 degrees, to strengthen the ability to adapt to climate change, and build resilience; align all finance flows with, ‘a pathway towards low greenhouse gas emissions, and climate-resilient development’.
New Zealand has signed up to United Nations Framework Convention on Climate Change (UNFCCC) and as a signatory to the agreement we have to commit Nationally Determined Contributions (NDC) to climate action. Our first NDC saw us committed to reducing greenhouse gas emissions to 30% below 2005 levels by 2030. However this was refreshed at the summit to increase our commitment to reduce emissions by 50% at 2030, compared to 2005 levels.
One of COP26 objectives is to phase out coal. The current Government has already committed to removing coal as a fuel source from our economy. A ban on new coal boilers used in manufacturing and production will come into effect by 31st December 2021 and phasing out existing coal boilers by 2027.
A further option proposed is to prohibit other new fossil fuel boilers (gas, LPG) where suitable alternative technology exists and is economically viable.
The key instrument that will be used to foster a move to a low carbon economy will be the emissions trading scheme (ETS), and a series of changing emissions budgets. An emissions budget seeks to limit greenhouse gases that can be emitted over a period of time.These changing budgets are spread over three key periods: 2022-2025, 2026-2030 and 2031-2035. This will reduce the quantity of Government-issued New Zealand Carbon Units. As these quantities reduce, the cost of carbon will be increased.
When the emissions trading scheme (ETS) was first introduced, the price of carbon was fixed at $25 per tonne; however, there was a 2 for one surrender ratio meaning that for every tonne emitted, only half a tonne was surrendered, making the effective price $12.50/tonne.
Over time the market caps have been lifted, and emitters have moved to a one for one surrender ratio. In the last two years, the Government introduced a floor and ceiling in the market: $20 floor and $50 ceiling. This year, prices were raised to make the minimum price $30/tonne and ceiling price $70/tonne. The ceiling will be increased by 10% per year plus inflation.
The below table covers current carbon spot pricing and New Zealand Unit (NZU) future pricing with a view on where carbon prices could go out to in 2030. This is the cost that relates to the gas field producing natural gas or the electricity generator producing electricity. For gas customers who are Time of Use (TOU) metered, this cost is passed through as a line item on each invoice. For small commercial gas consumers and all electricity customers, the cost of the ETS is built into the energy tariff. You can see the change from 12 months ago where the carbon price has nearly doubled. In November 2018, it was priced at around $25/tonne.
Energy companies within NZ will have to look at their generational assets and search for alternative solutions in a fast and least disruptive way to avoid shortages and payment of increased ETS costs.
Transitioning the economy’s energy needs to electricity requires much more than just new generation, the national grid operator and local electricity network distributors will need to invest billions to get things moving.
Whatever is done, NZ needs to sort out its energy policy and fast to ensure the security of supply, the ability for manufacturing to thrive in NZ (by avoiding having to outsource our emissions), and keep prices as low as possible.
