The Council won the Sustainable Cities Efficient Energy Award (a Victorian Government initiative) in late 2010 for its EcoChallenge program, which was responsible for several of these initiatives. Planning for the future With a commitment to zero net emissions by 2020, there is much more to do. As part of this, the City is in the planning stage of a number of carbon abatement initiatives including installation of a cogeneration system at Splashdown Aquatic Centre, development of a sustainable community at Armstrong Creek, and the rollout of energy efficient street lighting throughout the municipality. Local business sector demonstrating climate commitment Businesses across Greater Geelong are taking positive steps to reduce their contribution to climate change and advocate for emissions reduction within their customer bases, supply chains and community networks. Barwon Water: Early adoption leads to dramatic change Barwon Water provides water, sewerage and recycled water to the city of Geelong and has a significant carbon footprint. They are an example of a forward-thinking organisation that is benefitting from early adoption of emissions-reduction strategies. The organisation is embedding carbon accounting in decision making to ensure new infrastructure is as energy efficient as possible. Improved understanding of the energy efficiency of water and sewerage networks has enabled the business to save over 1,000 tonnes of greenhouse gas emissions per year by replacing pumps and process equipment. They also own and operate the Breamlea wind turbine, one of the first installed in Victoria. They have also installed a mini-hydro power plant which has a capacity to produce up to 1000MW of renewable energy. Alcoa: Plans for new geothermal renewable energy project Alcoa, one of Geelong’s largest employers, is working hard to reduce the emissions intensity of its smelting processes, reducing greenhouse gas emissions by more than 60 per cent since 1990. Alcoa also continues to partner with Greening Australia on forestry offset projects. More recently, the company has signed a Memorandum of Intent with Greenearth Energy to purchase electricity generated from the demonstration stage of the Geelong Geothermal Power Project. La Madre Bakery: Social responsibility and financial savings too Baking consumes its own share of energy, with constant use of electric ovens and regular delivery of freshly baked goodness to cafés, restaurants and stores. So when La Madre Bakery in Bell Park decided to take steps to reduce their energy use, they saw it not only as part of their social responsibility, but as a way to nurture the source of the natural ingredients they use in their breads. Upgrades included installation of a heat shifter
Exhibit 12 - Industry energy savings through energy efficiency by sub-sector Source: ClimateWorks team analysis, derived from Exhibit 11 Typically, these improvements in energy efficiency are captured through improving control systems and processes, reducing duplicated or oversized equipment, upgrading motor systems, decreasing energy losses in boilers and steam distribution systems, waste heat recovery for pre-heating or other uses, and improved building utilities. The value of capturing these energy savings to Greater Geelong is more than $7 million per year through reduced energy bills. Cogeneration (also called combined heat and power or CHP). Cogeneration provides energy savings by creating heat and electricity from the same fuel source. Because natural gas is used, it also produces less greenhouse gas emissions than electricity sourced from the grid. If the cogeneration opportunities identified for Industry were fully implemented by 2020, they could reduce Greater Geelong’s emissions by 237,600 tonnes of CO2e each year. This is expected to come at an average cost of $47 per tonne of emissions reduced ($30 per MWh). The high upfront cost of installing cogeneration plants means that they are often not prioritised ahead of other investments focused on maintaining core business operations. The introduction of a price on carbon would improve the financial attractiveness of cogeneration, as would opportunities to partner with third party investors to on-sell either the energy or heat produced from the cogeneration process. Medium scale solar PV. Solar PV generates electricity onsite by converting solar radiation into direct current electricity via solar panels typically installed on the roof or walls of a building. Although there is no clear definition, for the purposes of this report medium scale
Transport – The high upfront cost of new cars and relatively low fuel excise reduces the importance of fuel efficiency in the decision making process. Even fleet cars can be chosen on factors such as a preference for local manufacture or size requirements, rather than consideration of the total cost of ownership. Capital constraints and investment priorities Many emissions reduction opportunities require an upfront capital investment, which is then paid off over time through savings on operational expenses such as energy. These profitable opportunities are often not captured because businesses, organisations and families cannot access, or do not want to part with, the required upfront capital. Often the sectors with lower cost emissions reduction opportunities (buildings and transport) require higher upfront capital in relation to the energy or financial savings captured, which is a key reason they are overlooked in business-as-usual decision-making. Access to capital. The capital available to businesses and households is often limited by their other investment obligations, e.g. first home buyers do not have the additional upfront capital to invest in more expensive energy efficient appliances or higher levels of insulation even though the investment will pay for itself in energy savings. Much of the capital spent on energy efficiency projects is not transferable once invested (e.g. a bank cannot easily remove or re-use light fittings, insulation or tailored machine parts), meaning there is little collateral if the borrower defaults. This in turn can drive up the cost of capital and increase the stringency of lending standards for emissions reduction projects, particularly for small to medium businesses. Accessing grants and subsidies from the Government is also more difficult for smaller business, primarily because of the time commitment to research, apply and report on projects relative to the size of the grant required. Smaller businesses can also be overlooked in favour of projects with higher profit outcomes. Industry – Implementing emissions reduction opportunities such as installation of sub- metering or cogeneration plants can come at a high upfront cost. Competition for capital is intense and energy efficiency improvements or emissions reductions are often a low priority as they are not core business activities, offer lower rates of return and are perceived as riskier than other potential investments.
Medium scale solar Installation of solar photovoltaic panels on a range of industrial rooftops to a total capacity of 1,000 kW. business owners Investmen 1,285 183 $171 $2,407/MW h p.a. Capital constraints Investment priorities
Opportunity Action required to realise opportunity Capex Barriers37 Alignment with strategic priorities Assumptions Assume lifespan of 25 years Victorian solar resource of 1375 kWh per kW per annum Operating costs of $8.6/MWh Assume no RECs are earned in 2020 Chemicals processes Improve chemical techniques such as process intensification, continuous processes, improved process control, preventative maintenance, increased burner and heater efficiency, logistical improvements. Catalyst optimisation (process and direct energy emissions decrease) such as improved chemical structure of catalysts, design to lower reaction temperatures, and chain reaction improvements. Assumptions Assumes lifespan of process improvements is ~20 years Chemicals manufacturers 2,907 379 $77 $1,325/ MWh saved p.a. Capital constraints Process improvements do not achieve financial payback with current electricity price forecasts. 77
Opportunity Action required to realise opportunity Capex Barriers40 Alignment with strategic priorities Commercial retrofit energy waste reduction Experience shows that significant savings can be achieved with minimal capital investment by getting rid of or downsizing unnecessary equipment. Assumptions Energy savings in 2020 estimated to be 10% across all end uses. Building owner Tenant 46,800 -187 -$4.3 $3.6/m2 Lack of information Investment priorities Non-market electricity pricing Cogeneration – Armstrong Creek Build cogeneration plants to supply 2,500 MWh to new commercial buildings in Armstrong Creek. Based on Sustainability Victoria’s Armstrong Creek Development: Sustainable Alternative Energy Supply and Demand Options Analysis Assumptions Lifespan: 15 years Operating hours/year: 2,500 Operating and maintenance costs: $6/MWh Building owner 2,338 -$132 n/a $2.1 million in total Capital constraints Investment priorities Regulatory constraints Split incentives Commercial electronics & appliances Replace traditional electronics, appliances, elevators/escalators and kitchen equipment with high efficiency equipment to reduce energy consumption. Assumptions: Energy savings in 2020 estimated to be: Offices – 26, Non-food retail – 23%, Education – 18%, Wholesale – 24%, Community – 21%, Accommodation – 20%, Food retail – 14%, Health – 20%, Food service – 15%, Other – 22% In new builds, energy savings in 2020 estimated to be 28%. Average lifespan estimated to be 18 years. Building owner Tenant 64,567 -100 -$2.3 $10.4/m2 Capital constraints Investment priorities Decision process
Residential buildings – opportunity assumptions General assumptions Cost of capital 12.7% 2020 electricity price $198/MWh43 2020 gas price $150/MWh Average floor space per household 193m2 Total Greater Geelong households in 2020 111,348 Opportunity Action required to realise opportunity Capex Barriers44 Alignment with strategic priorities Residential building envelope (basic) Basic retrofit to improve building insulation including sealing areas of air leakage, weather stripping doors and windows, insulating attic and wall cavities. Assumptions HVAC energy savings of ~15% can be achieved Average lifespan of insulating materials assumed to be 25 years. Assume 12% penetration rate above BAU. Home owner 3,243 -270 -$0.4 $8/m2 Split incentive Upfront capital Low energy prices Residential building envelope (advanced) Retrofit to ‘passive’ standard at time of regular building renovations. Includes installing high efficiency windows and doors; increasing outer wall, roof, and basement ceiling insulation; mechanical ventilation with heat recovery, basic passive solar principles. Assumptions HVAC energy savings of ~70% can be achieved. Homeowner 38,436 -196 -$1.4 $64//m2 Split incentive Upfront capital Low energy prices Long payback 43 Based on an adjustment to the average retail price projections (sourced from MMA’s Report to Federal Treasury: Impacts of the Carbon Pollution Reduction Scheme on Australia’s Electricity Markets).
Power – opportunity assumptions Opportunity Action required to realise opportunity Capex Barriers45 Alignment with strategic priorities Waste-to-energy Installation of a ‘grate-type’ waste-to-energy facility with capacity to process 1,000 tonnes per day, including industrial waste. Assumptions: Uptime 330 days per year Lifespan 40 years Fixed costs $45/kW Variable costs $4/MWh Waste-to-energy facility investor 191,300 27 $25 $11,300/kW Capital constraints Investment priorities Lack of carbon price Geothermal Build Demonstration plant of Geelong Geothermal Power Plant with capacity of 12 MW. Assumptions: Uptime: 95% Lifespan: 30 years Fixed maintenance cost in 2020: A$83/kW per annum Variable maintenance cost in 2020: A$3/MWh Grid maintenance/upgrade cost in 2020: A$40/MWh Wholesale electricity price earned in 2020 $35/MWh Price of RECs earned in 2020 $33.5/MWh Greenearth Energy 93,377 60 $56 $6,025/kW Capital constraints Investment priorities Lack of carbon price 45 A range of policies and programs that can be used to assist in overcoming barriers can be found on the Future Proofing Geelong website via 85
Petrol car and light commercial vehicle efficiency improvement New vehicle purchases of traditional petrol internal combustion engine passenger and commercial vehicles are highest efficiency in their class. Efficiency improvements can be grouped into 4 bundles: Bundle 1 – Variable valve control, mild engine friction reduction, low rolling resistance tyres, tyre pressure control system, mild weight reduction (1.5%) Bundle 2 (additional to bundle 1) – medium down-sizing, medium weight reduction, electrification (steering, pumps), optimised gearbox ratio, improved aerodynamic efficiency, stop-start system with regenerative braking Bundle 3 (additional to bundle 2) – strong additional displacement, air conditioning modification, improved aerodynamic efficiency, start- stop system with regenerative braking Bundle 4 (additional to bundle 3) – direct pressure injection strong weight reduction, optimised transmission Assumptions: 20 year average life of vehicles Fuel economy of 9.6 litres per 100 km in 2020 before efficiency improvements. Fuel economy of bundle 1 is 8.3 litres per 100 km, bundle 2 is 7.2 litres per 100 km, bundle 3 is 6.6 litres per 100 km, bundle 4 is 5.9 litres per 100 km Vehicle owner 24,600 -212 Incremental capital cost in 2020: $525 for bundle 1, +$1,197 for bundle 2, +$1,147 for bundle 3, +$827 for bundle 4 Insufficient vehicle efficiency standards Lack of information Relatively cheap fuel prices Upfront capital Large articulated truck efficiency improvement New vehicle purchases of large articulated trucks are highest efficiency in their class. Efficiency improvements can be grouped into 4 bundles: Bundle 1 – rolling resistance reduction. Bundle 2 – rolling resistance reduction, aerodynamic improvement Bundle 3 – rolling resistance reduction, conventional ICE improvement Bundle 4 – rolling resistance reduction, aerodynamics improvement, conventional ICE improvements. Assumptions: 20 year average life of vehicles Fuel economy of 54L/100 km in 2020 before efficiency improvements. Fuel economy of bundle 1 is 51 L/ 100 km, bundle 2 is 50L/100 km, bundle 3 is 49L/100 km, bundle 4 is 47 L/100 km. Vehicle owner 3,825 -188 Incremental capex in 2020: $2,122 for bundle 1 +$3,396 for bundle 2 +$9,551 for bundle 3 +$10,824 for bundle 4 Insufficient minimum standards Long payback Low fuel prices
Petrol Car Hybrids New petrol hybrid cars (full hybrid or plug-in) replace 8.3% of new petrol internal combustion car purchases by 2020. Assumptions: Under business-as-usual, petrol hybrid cars will replace 1.7% of new petrol vehicles purchased. Full hybrid petrol cars achieve 22% efficiency compared to internal combustion engines; plug-in hybrids achieve 17% efficiency. Vehicle owners 2,947 -22 Incremental capex in 2020: $2,855 for full hybrid, $9,335 for plug-in hybrid Capital constraints Low fuel prices Electric vehicles By 2020, electric vehicles replace 1% of all new petrol vehicle purchases in Greater Geelong. Assumptions: It is assumed that electric vehicles are powered by 100% renewables (additional to the RET). A REC cost of $34/MWh has been included. It is assumed that electric vehicles are taken up predominately by commuters and fleets and drive an average of 25,000km per year Infrastructure cost of $500 per vehicle for installation of connection Vehicle owners 1,282 18 Incremental capex in 2020: $5,833 per vehicle Capital constraints Lack of infrastructure Bus and rigid truck efficiency improvement Efficiency improvements to traditional diesel ICE bus and rigid trucks, grouped into 4 bundles: Bundle 1 – rolling resistance reduction. Bundle 2 – rolling resistance reduction, aerodynamic improvement. Bundle 3 – rolling resistance reduction, conventional ICE improvement Bundle 4 – rolling resistance reduction, aerodynamics improvement, conventional ICE improvements. Assumptions: Assume 20 year lifespan of vehicles Fuel economy of 28 litres per 100 km in 2020 before efficiency improvements. Fuel economy of bundle 1 is 27 litres per 100 km, bundle 2 is 27 litres per 100 km, bundle 3 is 26 litres per 100 km, bundle 4 is 25 litres per 100 km. Vehicle owners Vehicle owner 1,435 273 Incremental capex in 2020: $7,130 for bundle 1, +$3,190 for bundle 2, +$5,096 for bundle 3, +$5,421for bundle 4 Capital constraints Long payback period
Forestry - opportunity assumptions General assumptions Cost of capital 9.2% Total agricultural land available for afforestation 10% of less productive farmland 2% of productive farmland (in line with best practice farming) Total hectares available for afforestation by 2020 3,500 Opportunity Action required to realise opportunity Capex Barriers49 Alignment with strategic priorities Reforestation of less-productive land with timber plantation Plant timber for harvest on less productive land. Assumptions: 15% of less productive farmland land available for afforestation is planted with timber for harvest (292 hectares). Management and monitoring cost $92/ha/year Rental cost of land (opportunity cost) $32/ha/year Revenue from selling timber $276/ha/year Land owners 1,286 7 Planting cost $2,249/ha Uncertainty of carbon sequestration potential Labour constraints Investment priorities Lack of a carbon price Opportunity cost
Strategic reforestation of productive farmland with environmental forest Plant small tree stands/forests selectively on productive land to create wind breaks, shade and erosion protection on waterways, in line with best practice. Assumptions: 2% of productive farmland (1,555 hectares) is planted with environmental forest Management and monitoring cost $53/ha/year Rental cost of land (opportunity cost) $89/ha/year Land owners 7779 26 Planting cost $1,050/ha Labour constraints Investment priorities Reforestation of less-productive land with environmental forest Plant forests that are not for harvest on less-productive land. Assumptions: 85% of less productive farmland land available for afforestation is planted with timber for harvest (1,653 hectares). Management and monitoring cost $49/ha/year Rental cost of land (opportunity cost) $34/ha/year Land owners 5785 28 Planting cost $1,050/ha Labour constraints Investment priorities Lack of a carbon price Opportunity cost Non Kyoto reforestation of less-productive land with environmental forest Plant forests that are not for harvest on less-productive land that is non- Kyoto compliant. Assumptions: Total non-Kyoto land reforested by 2020 is 510 hectares Management and monitoring cost $49/ha/year Rental cost of land (opportunity cost) $34/ha/year Land owners 3570 28 Planting cost $1,050/ha Labour constraints Investment priorities Lack of a carbon price Opportunity cost Improved forest management Increase amount of woody growth in forests by the removal of weeds such as lantana and blackberry that limit native woody vegetation growth. Removal of feral animal species and insect/plant pest control to promote tree growth. Increased fire control. Assumptions: By 2020, an additional 8,295 hectares of forest is brought under improved forest management Improvement cost $43/ha/year Land owners 4148 52 One-off improveme nt cost $97/ha Labour constraints Investment priorities