DRAFT CARBON Enmmissions Paper

8/8/2019 DRAFT CARBON Enmmissions Paper

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PRINCIPLESEPA DISCUSSIOn PAPER

Climate change is a critical issue that can only beaddressed through innovation and collaboration. We allhave a role to play. Increasingly EPA Victoria is findingthat businesses are eager to act. Many companies areapproaching EPA for support and advice on how tomanage this emerging issue, especially in thearea of becoming a carbon neutral organisation.In order to provide practical support to these companies,we knew that EPA needed to experience the challenges ofgoing carbon neutral first hand. We sought best practicefor our carbon neutral plan, and soon found that therewere multiple definitions and protocols than could beused and that we neededto develop a new decision framework to guide ourapproach.We captured and expressed this framework in a set ofdraft Carbon Management Principles. Companies havebeen telling us that they are looking to learn from theexperience of others and that such a framework is useful.We have therefore developed this discussion paper onthe Principles that can serve as a guide to helporganisations in and beyond the Pacific region topractically and strategically manage their carbonemissions.by assessing their value and applying them to your

business. We invite you to provide feedback on the draftprinciples so that we can publish a finalized version of thediscussion paper later in the year. Already, we havereceived valuable feedback from businesses on theprinciples and have incorporated their suggestions intothis discussion paper. We would also like to hear from you


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if there are other types of guidance or tools that wouldassist your company in reducing its greenhouseimpacts.To facilitate this we have established a CarbonInnovators Network aimed at two-way communication

between EPA and members on carbon managementissues. Companies such as City West Water, OriginEnergy, the Plastics and Chemicals Industries Associationand Pilkington (Australia) are alreadyparticipating. We encourage you to join us.MICK BOURKEChairman, EPA Victoria

ForewordMick Bourke, Chairman EPA Victoria

Table of Contents1. Introduction 1Why use the Principles? 1What are the benefits of using the Principles? 1

2. Carbon Management Principles 41. Measure 52. Set objectives 63. Avoid 74. Reduce 84.1 Modify 84.2 Recover 95 Review 10

5.1 Renew 105.2 Switch 116. Sequester 126.1 Natural carbon sequestration 126.2 Artificial carbon sequestration 127. Assess 13


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8. Offset 149. Review 153. Consultation 16DRAFT CARBON MANAGEMENT PRINCIPLES E ii PA

DISCUSSION PAPERDRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPERPart 1Introduction

This discussion paper outlines draft Carbon ManagementPrinciples (the Principles) that EPA Victoria (EPA) isdeveloping to help businesses identify and assess

strategies to reduce their greenhouse gas (GHG)footprint.

Why use the Princip les?With the impacts of climate change continuing tointensify, we need to take immediate and significantaction to reduce GHG emissions. As the pressure foraction grows so too does the range of programs,

products and technologies aimed at engaging society toreduce our greenhouse footprint. In this context it is oftendifficult to decide how to prioritise actions and to assesswhich approaches provide the best environmental andfinancial outcomes.

The Principles provide a step-by-step framework thatorganisations can use to maximise environmentaloutcomes and drive business benefit in relation to energy

and greenhouse management. The Principles reflect acontinuous improvement model, given the ongoingnature of carbon management and the opportunity toiterate management strategies to optimise environmentaland financial outcomes.


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The Principles should be applied to decision-makingprocesses having regard to the specific economic,technological and social considerations of each situation.In many cases the environmental, social and economic

benefits will coincide. Each organization will have its owncriteria for assessing business value, and EPA is lookingto work with businesses to evaluate how the Principlescan assist in maximising outcomes fromcarbon management strategies.

What are the benefit s of using thePrinciples?

The Principles set out actions that provide the basis for arobust carbon management strategy when applied inorder. The Principles prompt you to assess your strategyand respond to new opportunities and technologies asthey occur. Considering the options in order will drive

best environmental outcomes, and best business value.The Principles can help companies optimise actions,irrespective of whether the goal is modest emissionsreductions or achieving carbon neutrality.

The Principles can assist in developing carbonmanagement strategies that provide a range ofenvironmental, financial and social benefits to businessesand the community and provide a framework to maximise

where these benefits coincide.

The Principles can be used to drive improved businessvalue by:


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Reducing input costs: Avoiding or minimising energy use (and the associatedGHG emissions) can reducebusiness costs. In addition, some processes that captureand store GHG emissionsare resource intensive and incur costs in themselves. Focusing on process efficiency can drive materials,water and energy efficiency, savemoney and drive internal business improvements.Carbon neutral is a concept where entities measuretheir full carbon footprint and then implement measuressuch as energy

efficiency, sourcing renewable energy and offsettingresidual GHG emissions so that their net greenhouseimpact is zero. Products, events and households can allgo carbonneutral.DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER

Building reputation: Caring for the environment by reducing emissions. Demonstrating a low carbon footprint and reducedassociated environmentalimpacts. Ensuring GHG emissions are reduced in a sustainableway (e.g., credibility of your carbon managementstrategy can be enhanced by utilising a robust approach

to reducing GHG emissions). Taking direct responsibility for reducing GHG emissionswhere practicable, rather than outsourcing this throughoffsetting schemes (acknowledging that some offsettingis likely to be part of any carbon neutral strategy).


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Reducing non-greenhouse environmental impacts (e.g.,reducing fuel use can reduce emissions of other airpollutants).

Reduci ng cost through reduced energyEPA has been successfully working with business toreduce GHG emissions under the Industry GreenhouseProgram.Businesses were required to measure emissions, conductan energy audit and develop an action plan to reducetheir energy use and GHG emissions. Any actions with apayback period of three years or less were required to be

implemented.Through the identification of reduction actions, industry isexpected to achieve annual savings of $34 million andGHG emission reductions of 1.1 million tonnes.For more information on this and other greenhouseprograms go to www.epa.vic.gov.au/greenhouse.

Improving market opportunity: Building capacity to succeed in a low carbon economy,(e.g., businesspositioning as a carbon credit provider in a tradingmarket will provide

new business opportunities). Increasing market share and customer loyalty byreducing life-cycle GHG impacts ofproducts and in particular GHG emissions during the useof products.

Reducing business risk:
http://www.epa.vic.gov.au/greenhousehttp://www.epa.vic.gov.au/greenhouse


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Reducing exposure to increasing energy costs, possiblefuture carbon prices,and future regulation; Maximising the permanence of GHG abatement

measures (e.g., avoiding generationof GHGs results is a permanent outcome, whereassequestration options require careful management toavoid subsequent release to the atmosphere). Reducing risk and uncertainty associated with off-sitecarbon management (e.g., could the failure of a companyproviding carbon offsets impact on the carbonmanagement strategy) by focusing on onsite reductions

first.The Principles are intended to assist businesses in sounddecision-making to reduce GHGs. The Principles can beapplied as a continuous review and improvementframework, consistent with other business strategies. Asenergy costs and technologychange, further avoidance or minimisation options maybecome practicable or new market opportunities may

arise.We couldnt find anywhere around the world abasis to judge the different options.

Terry AHearn, Director of SustainableDevelopment EPA Victoria. The Business Age,12 February 2007, p.2.On 12 February 2007, EPA announced that ithad gone carbon neutral for the 200506

financial year. In becoming carbon neutral, EPAdevelopedand used the draft Carbon Management Principles toensure that it was seeking the best environmentaloutcome and gaining


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long term business value. Examples of the decisions wemade on each of the action items are highlighted in thisdocument. For more information on our carbon neutralstrategy go to www.epa.vic.gov.au/greenhouse.

Question 1Do you have any examples from your ownbusiness practices that follow thePrinciples approach? We welcome anybusiness case studies that provide anexample of good carbon management.

DRAFT CARBON MANAGEMENT PRINCIPLES EPA

DISCUSSION PAPER

How the principles reduce business riskBy prioritising avoidance and reduction measures, anumber of business risks can be decreased. Mostavoidance and reduction measures focus on improvingonsite processes, which can lower operating costs.Avoiding or reducing emissions can also reduce business

exposure to future carbon costs and other types ofregulatory risk. Even where avoidance or reductionmeasures are not immediately implemented, getting inthe practice of considering these measures will helpbusinesses identify more cost effective measures in thefuture.In contrast, sequestration and offsetting measures do notreduce onsite GHG emissions and do not provide the

financial benefit of avoidance and reduction.Further, sequestering and offsetting emissions involvestransactions in which there is currently limited regulatoryoversight and possibly some technological risk. While theregulatory environment and understanding of technologywill


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become clearer over time, at present, businesses face agreater risk that reductions will not be seen as credible inthe current voluntary marketplace or that they will not berecognised in future regulatory regimes. There is

uncertainty about the permanence of sequestration andoffsetting, especially where long term responsibility andcontrol of these activities is not clear. Action in this areais important; however, it requires the appropriatesafeguards.

Delivering sustainable business growthThrough a Sustainability Covenant with EPA,

Sustainability Victoria and the Australian Industry Group,Pilkington (Australia) will invest $130 million to upgradeits Victorian manufacturing plant to enable the productionof world-class, energy-efficient glass. This glass acts asan insulator, reducing the need for air conditioning andthereby reducing the cost and environmental impact ofenergy. Through this initiative, Pilkington isdifferentiating itself from competitors and setting itself up

to thrive in a business environment where there will be arapidly increasing global demand for energy-efficientproducts.For more information on this partnership go towww.epa.vic.gov.au/bus/sustainability_covenants/

Question 2Is the rationale for the Principles clear?

DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER Part 2

Carbon ManagementPrinciples

The Principles set out a framework for measuring GHGemissions. Some businesses will


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find that the majority of their emissions may be fromenergy sources and therefore the applicability of someoptions (for example sequester) will be limited. Theframework

should therefore be applied on a case-by-case basis.Wherever possible, the steps set out in the CarbonManagement Principles should be considered in order toensure that opportunities for reducing GHG emissions andincreasing business value aremaximised.In practice, the Principles can be best applied through aniterative process. Depending on how far advanced your

organisation is in managing carbon, the first cyclethrough the Principles may just enable identification ofopportunities. The second cycle can then be used toconfirm objectives and develop a strategy that optimisesoutcomes.Detailed guidance on each of these action items including practical tips and case studies is provided inthe following pages.

Question 3How clear is the order in which it issuggested each step be considered?SET OBJECTIVESSEQUESTERASSESSWhat do you want to achieve?What are you emitting?

Can you offset your residual GHG emissions?What are your residual GHG emissions?Can you avoid generating emissions?REDUCE MODIFYRECOVERMEASURECarbon Management Principles


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Can you change your activities to reduceemissions?Can you switch energy sources so they are lessgreenhouse intensive?

SWITCH RENEWEXCHANGEWhat options are available to sequester emissions?DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER

1. MEASUREYou cant manage what you cant measureIt is important to know the quantity and source of yourGHG emissions.Depending on how robust an inventory you require thismay be as simple as looking at your energy bills or ascomprehensive as stationary combustion source (e.g., boilers, powergeneration)

transportation source (e.g., cars, boats, planes) process emission source (e.g., refrigeration, landfillmethane).At a minimum your emissions profile should include GHGemissions directly produced on site (such as fuels forboilers and vehicles) and indirect emissions frompurchased electricity, heat or steam. The inclusion ofother indirect emissions, such as from

commercial air travel and emissions associated withpurchased materials should be evaluated on a case-by-case basis.

The most commonly used international standard is theGreenhouse Gas Protocol Corporate Accounting andReporting Standard (GHG Protocol). It provides guidance


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on which emissions sources to include in a corporateinventory and how to quantify these emissions(www.ghgprotocol.org).Companies may wish to get their inventory independently

verified to ensure accuracy and enhance credibility.Once you have measured you carbon footprint, it isimportant to monitor your emissions regularly and keepaccurate records to track progress against yourobjectives.

EPAs Emi ssions MeasurementsEPAs 200506 GHG inventory was developed inaccordance with the WRI/WBCSDGHG Protocol (www.ghgprotocol.org) and externallyassured by Net Balance Management Group. It will beupdated and externally verified on an annual basis.

A summary of our current emissions inventory, includingdesign principles, is available on EPAs website.Question 4

What assistance do you require tomeasure emissions?

2. SET OBJECTIVES

What do you want to achieve?As with any business strategy, it is important to set clearobjectives.


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When setting carbon management objectives it is worthconsidering short and long term goals. If the overall goalis to go carbon neutral, then intermediate GHG reductiontargets will help to keep you on track and ensure that

early reductions are achieved.Deciding on appropriate objectives for your company willdepend on a number of factors. For example, if yourcompany has reduced emissions in the past, there maybe fewer opportunities available compared to a companythat has never had an energy or carbon managementstrategy. If your company is unsure about what isachievable, it may help to research best practice in your

industry to see what others are achieving or to undertakean opportunities assessment (audit) to assist in thedecision.Setting objectives may also mean establishing criteria fordetermining whether to implement identified actions. Forexample, are you going to implement everything with aspecific financial rate of return? Are you going to setaside a specific budget to reduce your GHG emissions?

Will the preferred strategy optimisevalue against your established business criteria (e.g.,environmental, financial, market, reputation)?

EPAs Objectiv es Be carbon neutral each year. 10 per cent reduction on our 200506 energy-relatedGHG emissions by 2010.

At a minimum, implement any measures with a 4-yearpayback or less. Green power for all electricity GHG emissions.


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DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER We are not expecting a significantcostincrease at all through this, in fact we have a little side

ambition that it is a zero net greenhouse at zero netadditional cost thatis very much our focus.Anne Barker, Managing DirectorofCity West Water Authority speaking about the authoritysannouncement to be carbon neutral by 30 June 2007.The Age, Business Day, Mathew Murphy, 26 March 2007,p.1.

Murray Goulburn achieves massive savings Underthe EPA Industry Greenhouse Program,Murray Goulburnhas identified significantenergy savings across its sixmain plants.Significant savings have been achievedthrough changes such as installing variable speed driveson equipment, recovering wasteheat and installinginsulation.Murray Goulburn is continuing to identifycost-effective actions at all its plants and, in 2007, it will

install steam turbines and invest in co-generation tofurther improve efficiency.For more information on what MurrayGoulburn and other companies have donego to www.epa.vic.gov.au/greenhouse.

Key achievements

55,000-tonne reduction in greenhouse gas

emissions per year- equivalent to taking 13,000 cars off the roadpermanently. Over $6 million dollars saved per year onenergy bills.


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Only $5.5 million in implementation costs. 8 per cent reduction in greenhouse gas emissionsfrom energy since 2003.

Financial payback period is less than11 months.Question 5Is the difference between Avoid andReduce action items clear andappropriate?

3. AVOID

Can you avoid generating emissions?The best way to reduce your carbon impact is by avoidingdirect GHG emissions and energy related indirectemissions. In addition to downsizing your carbonfootprint, avoidance leads business sustainability throughminimising other environmental impacts, reducing energyand other resource costs and minimizing exposure to apotential carbon price.

Avoiding energy use, for example, reduces the need forenergy production, whether from greenhouse intensivefossil-fuel sources or renewable sources.Avoiding fossil fuel energy sources has the benefit ofreducing direct GHG emissions, indirect emissions fromfuel transport and impacts associated with extraction ofnatural resources.

The specific avoidance activities that you can undertakewill depend on the type and magnitude of emissionssources in your . When looking for avoidanceopportunities, dont forget that many wont requirecapital outlay at all, and often will be about changingbehaviour within your business.For example:


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ensuring appliances and equipment are not idling or onstand-by shutting down production lines when not in use. If yourcurrent appliances or machinery require power between

use, factor this into your purchasing decisions in thefuture ensuring energy is not being consumed when rooms orbuildings are vacant key things to consider are lighting, heating and coolingsettings walking or riding a bike instead of driving.Otheropportunities may involve some capital outlay, but in the

long term, will more than likely result in cost savings; forexample: purchasing materials that are sourced locally to avoidemissions associated with transportation meeting via telephone or videoconferencing instead oftravelling to meet in person.

Avoid and Reduce whats the difference?

Avoid describes activities through which emissions canbe completely stopped, for example, not having a light onin a vacant room. Reduce describes measures thatdecrease the emissions intensity of essential activities,for example, makinglighting more efficient.DRAFT CARBON MANAGEMENT PRINCIPLES E PADISCUSSION PAPER

DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER

4. REDUCECan you change your activities to reduce youremissions?


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Once you have identified all the ways in which you canavoid GHG emissions, thenext best option is to reduce emissions from essentialactivities.

The preferred approach to emissions reduction willdepend on your circumstances.For simplicity, reductionactivities have been divided into two categories modifyand recover.

4.1 ModifyOptions to modify essential activities vary in terms of therequired level of effortand cost. Options range from thelow-hanging fruit of changing standard light bulbs to

compact fluorescents through to undertaking completebuilding retrofits. Some key measures include: ensuring appliance and equipment are runningefficiently; if buying new equipment,ensure it has a highefficiency rating ensuring smart building design for new buildings andretrofitting old buildings(factory, office and home).Considerations include better orientation,

materials,insulation and shading considering fuel efficiency when buying a new vehicle seewww.greenvehicleguide.gov.au.Behaviour change can also provide cost effectiveemissions reductions. For example: take public transport where possible if you are using your car, ensure it is being driven in the

most fuel efficient way.Reducing the use of other resources will also often have asignificant impact on GHGemissions. For example, more efficient use of hot watercan reduce GHG emissions, in addition to reducing waterconsumption.


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E PAs modifications

EPA has retrofitted new leased space at Wangarattaregional office according to GreenStar guidelinesdeveloped by the Green Building Council of Australia. All offices now have video conferencing equipment. A lighting audit was undertaken and motion sensorsinstalled. In 2003 EPA purchased its first hybrid vehicle. Today wehave nine hybrid vehicles and a range of low greenhouseintensity vehicles in our corporate fleet.

Reducing costs as well as emissions

Under the EPA Industry GreenhouseProgram, business found that the most cost effectiveactions were either avoidance or modification actions;for example:

installing variable-speed drives > $6 millionsaved, 1.3 year payback modifying air conditioning and heating > $2million saved, 1.0 year payback boiler upgrades and improvements > $5million saved, 1.0 year payback turning off compressed air when not in use and

fixing leaks > $2 million saved, 1.2 year payback.More industry savings are detailed atwww.epa.vic.gov.au/greenhouse.Question 6Do the action categories Modify and


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Recover merit being separate steps in thePrinciples?DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER

4.2 RecoverThere may be potential to recover energy from existingprocesses.

The three major methods of energy recovery arecogeneration, waste gas recovery and waste to energy.

CogenerationCogeneration is the production of two forms of energyfrom a single process. Most cogeneration is acombination of electricity and heat production. Intraditional operating facilities, heat produced as a by-product of electricity generation is releasedto the atmosphere through, for instance, cooling towers.Cogeneration plants capture waste heat so that it can beused in industrial processes or for domestic, commercial

or industrial space or water heating.Utilising waste heat increases the efficiency of theelectricity generation process and reduces or eliminatesthe need for additional energy production for theprocesses being supplied by the waste heat.Cogeneration provides significant financial savings forboth the supplier and the consumer, with the addedbenefit of reduced GHG emissions.

Waste gas to energyMethane is a GHG with a global warming potential 21times that of carbon dioxide.It is produced by the decomposition of organic materialsin municipal solid waste in landfills and anaerobicconditions in wastewater treatment plants.


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It is important that landfills and wastewater treatmentplants seek to reduce their emissions, but this will notcompletely eliminate GHG emissions. Capturing methaneand using it as a fuel provides the duel benefit of

dramatically reducing GHG emissionsand providing usable energy. EPA has developedEnvironmental guidelines for reducing greenhouse gasemissions from landfills and wastewater treatmentfacilities (EPApublication 722), which are available onEPAs website (www.epa.vic.gov.au).

Waste to energyThis option involves extracting the energy embedded

within waste as a way of producing energy. Energy canbe in the form of heat and steam, liquid fuel or fuel gas.A common application is the use of waste as asupplementary fuel in cement kilns, for example, usingwaste tyres as an energy source.When making a decision about whether to recover energyfrom waste, there is a need to first evaluate whetherbetter options are available in accordance with the waste

hierarchy. If the material can be recycled or reused, thisis likely to have greater environmental benefits thanenergy recovery options.It is important that in assessing each option otherenvironmental impacts are also considered. Lifecycleanalysis can help assess whether the energy harnessedfrom the waste outweighs the energy costs associatedwith processing and other

environmental impacts arising from the energy recoveryprocess.

Biomass benefits


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A project is currently under way at Hazelwood PowerStation to trial the use of biomass as alternative energysource.Dead wood is sourced from a timber plantation near

Morwell in the Latrobe Valley and is converted to mulchand co-firedwith coal.The project aims to contribute to reducingemissions intensity at the site.EcoGeneration, Issue 38, Jan/Feb 2007, p.18.10 DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER

5. SWITCHCan you switch energy source so that it is lessgreenhouse intensive?As well as opportunities to reduce your net energy enduse, there are also opportunities to ensure that theprimary energy source you are using is beingdelivered in the most GHG-efficient way. This can bedelivered through renewable sources, or by exchanging

fuel sources to minimise GHG intensity.5.1 RenewRenewable resources are not destroyed or are readilyreplenished when energy is harvested. Onsite installationor purchase of renewable forms of energy such as solar,wind, hydro and biomass reduces dependence on fossilfuels and significantly reduces GHG emissions.Using renewable energy does not always have the

immediate financial benefits that avoiding, modifying orrecovering action items can have. The payback periodsfor investments in onsitePurchasing renewable energy is currently more costlythan energy derived from fossil fuels. However, as moreis invested in renewable resources, renewable technology


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and, economies of scale will improve and the cost ofrenewable energy will decrease.Direct renewableInstalling solar panels, wind turbines or other forms of

renewable energy at your home, office or industrialfacility reduces reliance on fossil fuel based electricity.

These systems can either be stand alone, providingenergy for just your premises,or connected back to theelectricity grid. They have the added benefit of reducingdistribution losses inherent in centralised powergeneration.

Purchased renewableElectricity from renewable energy sources can bepurchased from accredited electricity retailers throughthe GreenPower scheme. Through this scheme,accredited renewable energy such as solar, wind, hydro,biomass or wave is purchased on your behalf. Every unit

of accredited GreenPower energy purchased will ensureequivalent renewable energy is supplied to the gridreducing the energy supplied from other sources. Itcomes at a small additional cost to your regularelectricity bill, but ensures that your power has very lowgreenhouse impact. Your electricity provider will beable to offer you different levels of GreenPower based onyour budget and technology preference. For more

information go to www.greenpower.com.au.DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER11

5.2 Exchange


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If you cant avoid using fossil fuels, you can still try tochoose fossil fuels with lower greenhouse intensity. Forexample, electricity generation from natural gas haslower

greenhouse intensity than coal-fired electricity. Using LPGto power your vehicle has a lower greenhouse impactthan petrol. When considering these options, it isimportant to take into account the efficiency of energysources. If the efficiency of delivery is low this can have anegative impact on the net greenhouse outcome.E PAs exchangesAs well as having nine hybrid and a number of other fuel-

efficient vehicles, EPA has increased the percentage ofLPG vehicles in its fleet to 47 per cent.

Banking sector seeing the benefits of

neutralityOn 6 December 2004, HSBC Holdings plc madea commitment to become the worlds firstmajor bank to achieve carbon neutrality. Itachieved this in 2006 by putting in place aCarbon Management Plan, which consists ofthree parts: to manage and reduce direct emissions

to reduce the carbon intensity of electricity by buyinggreen electricity where feasible to offset the remaining emissions in order to achievecarbon neutrality. The bank has committed to offsetsbeing credible,genuinely incremental and cost-effective.


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For more information visit:www.hsbc.com/carbonneutral.Recently, the National Australia Bank (nab)announced it would be carbon neutral

by 2010.nab has committed to improving energyefficiency and use across its internationaloperations and purchasing offset creditswhere emissions cant be avoided*.* National Australia Bank to becomecarbon neutral by 2010, available atwww.nab.com.au

Question 7Are the differences between Reduce andSwitch distinct?E PAs renewablesEPA has purchased accredited green power since 2000.Prior to going carbon neutral, 28 per cent of ourelectricity consumption was linked to green power.EPA has now committed to purchasing 100 per cent

accredited GreenPower for its electricity use.Biofuels are made from renewable sources and can beblended with traditional fuels to lower greenhouseintensity or used as the sole fuel source. A full life-cycleassessment should be undertaken to examine the fullgreenhouse and other environmental impactsand benefitsof this fuel source.12 DRAFT CARBON MANAGEMENT PRINCIPLES EPA

DISCUSSION PAPER

6. SEQUES TERShould you consider sequestering your emissions?

The action items prior to Sequester have focused ondecreasing the sources of GHG emissions to the


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maximum extent achievable. Another key component ofcarbon management can be to reduce atmospheric GHGconcentrations through natural orartificial GHG (usually carbon) sequestration.

6.1 Natural carbon sequestrationNaturally occurring carbon is present in forests andvegetation, soils and the ocean.If a tree is destroyed, carbon dioxide is released into theatmosphere as it burns or decays and as soil is disturbed.However, a growing tree absorbs carbon as itundergoes photosynthesis, storing it in both its mass and

in the surrounding soil.Soil contributes to the storage of carbon through thebuild-up of slowly decaying organic materials. Throughmanaging these natural carbon stores, atmospheric GHGconcentrations can be reduced.

The process of naturally storing carbon is often referredto as bio-sequestration.

The most common form is tree planting.

For most individuals and organisations there is limitedopportunity to be directly involved in reforestationprojects. Investing in bio-sequestration or forestryprojects undertaken by others as carbon offsets is morecommon (see section 7, Offsets).Farming communities and enterprises are more likely tohave opportunity to directly participate in reforestation orother bio-sequestration projects. Forest sinks can help

reduce GHG emissions and can also provide additionalrevenue streams and natural resource managementbenefits, including salinity mitigation, enhancedbiodiversity,and improved water or soil quality.A robust approach to reducing GHG emissions requiresbio-sequestration projects to


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be carefully managed, controlled and monitored inaccordance with strict standards.It is not as simple as just planting trees (see boxed textAccounting for sequestration

and offsets).

6.2 Artifici al carbon sequestrati onArtificial carbon sequestration involves direct capture ofcarbon dioxide from thecombustion of fossil fuels or from industrial processes andthe long-term storage ofthese emissions beneath the Earths surface.

Carbon capture and storage (CCS) or geo-sequestrationinvolves injection and longtermstorage of GHGs in a stable subsurface geologicalreservoir. CCS is currently being applied in overseasprojects to store emissions relating to oil and gasrecovery (for example, Sleipner in Norway). Thetechnology has not been applied commercially inAustralia to date, but it is being tested at demonstration

scale for application in the stationary energy sector.While CCS also has the potential to be developed forother industrial processes that emit GHG gases, it is likelyto have limited application in the short to medium termoutside the stationary energy sector.Otway Basin trialAustralian research group CO2CRC (theCooperative Research Centre for Greenhouse

Gas Technologies) is currently conducting thefirst carbon capture and storage (CCS) projectin Australia.

The project in Victorias Otway basin simulatesthe capture of carbon dioxide by extractingnaturally occurring carbon dioxide and


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methane from a gas well and storing itapproximately two kilometres beneath theearths surface in depleted gas reservoirs.

The project, which has been granted a

Research Demonstration and DevelopmentApproval by EPA, hopes to demonstrate thesafety, effectiveness and sustainability of thetechnology.DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER 13

7. ASSESSWhat are your residual GHG emissions?

Now that you have gone through the process of reducingyour on-site GHG concentrations you should look back onyour original objectives.If you are not meeting the objectives you set for energyuse or greenhouse gas emissions reduction, are therereduction opportunities you have not considered?Do you need to change the decision criteria for whichopportunities you implement?

Accounting for sequestration and off setsIt is important to be sure when assessing sequestrationoptions or purchasing carbon offsets that there areappropriate systems in place to ensure the integrity ofthese approaches.While many of the mechanisms and rules in this area arestill emerging, there is a range of issues that shouldgenerally be accounted for:

Baseline scenarioA baseline scenario should be in place to show whatlevel of GHG emissions would occur in the absence of theproject.Additionality


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Offset projects should meet appropriate additionalityrequirements, meaning that any reductions are additionalto what would have happened in the absenceof the project. Generally this will include being satisfied

that the project is beyond business as usual andadditional to existing legal obligations. Additionality isgenerally not an issue in sequestration.

PermanenceThe permanence of the project should be assured,meaning that that emission reductions achieved are nottemporary and will be maintained in the long term (this is

particularly important for reforestation projects).Independent verificationProjects should be independently verified by anaccredited third party in accordance with an appropriatestandard.MonitoringAny changes to emissions that take place beyond theproject boundary (leakages) should be measured and

quantified and incorporated into actual emissionsreductions achieved by the project. An appropriateregime should be in place to monitor any changes incarbon stocks, stored carbon dioxide or the operation ofemission reduction projects.Environmental impacts

The impact of the project on other environmentalparameters should be considered for example, the

projects impact on energy, water use or other pollutantsand on biological diversity.14 DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER

8. OFFSE T


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Can you offset your residual greenhouseemissions?A carbon offset is any project that indirectly reduces GHGemissions at one source by investing in GHG emissions

reductions elsewhere. Offset products most typicallyinvolve projects that invest in renewable energy, energyefficiency and reforestation.Including offsets in a carbon management strategygenerally involves purchasing GHG reduction credits froman offset scheme provider.Carbon offsets provide a legitimate means of reducingthe net impact of energy use and GHG emissions,

provided that they form part of a broader greenhousemanagement strategy and are derived from verifiedprojects that create actual emissions reductions. Offsetsare the last in the order of carbon management actionbecause of the importance of first considering at-sourceoptions for reducing energy use and GHG emissions, andnot because they should be considered the worst option.Indeed, for those wanting to become carbon neutral in

their operations,offsetting will in most cases form a necessary componentin an integrated carbon management strategy.An ever-increasing range of carbon offset products areentering a largely unregulated market. It is important thatanyone planning to purchase carbon offsets conductsappropriate research to ensure that products have beenappropriately verified to deliver the net environmental

outcomes claimed. For futher guidance on purchasingoffsets go to www.epa.vic.gov.au/greenhouse.

EPAs off setsEPAs primary approach to carbon management is toimplement cost-effective,direct emission reductionprojects in our operation.


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For 200506, EPAs vehicle emissions were offsetthrough a range of energy efficiency and afforestationschemes managed by the Victorian Department ofSustainability and Environment. We neutralised the

remaining emissions by investing in a diverse portfolio ofproducts, including composting and energy efficiencyupgrade projects. We purchased additional credits tocover any possible uncertainty in the offsetting productspurchased.

Question 8Is the reasoning for offsets being the lastaction step clear?159. REVIEWWhat can you do differently?Carbon management is not a static process. Regularreview is essential to ensure you make the most of new

practices and technologies as they emerge over time.Energy and other costs (including the cost of offsets) willchange over time, necessitatingregular review and optimisation of the carbonmanagement strategy.As the implementation of avoidance and reductionactions increases, the need to sequester or offset youremissions should decrease, increasing environmental and

broad business benefits over time.EPAs staff involvementEPA is keen to engage staff in identifying emissionsreduction opportunities.


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This is being achieved through a cross-organisationalGreenStars committee as well as a new incentive schemeto encourage staff to identify carbon reduction measures.The real change for me is when the annual

report is the sustainability report, not aseparate report.Paul Tebo, environmental sustainability leader.The Age, Business News, Peter Hannam5 March 2007, p.2.

Question 9

How does the continuous improvement

model fit with your other business decisionmaking?DRAFT CARBON MANAGEMENT PRINCIPLES EPADISCUSSION PAPER16Part 3Consultation

EPA invites comments on this discussion paper. Our aimin developing these Principles is to assist businesses todevelop strategies to reduce their GHG emissions.Feedback on the Principles and their application istherefore important to help EPA in further developing thePrinciples and associated tools to assist business.We have included questions through the paper to promptdiscussion; however, we welcome feedback on anyaspect of the paper, including the concepts andapplicability of the Principles, the order of action itemsand the description of individual actionitems.EPA will also be working with companies in 2010 throughthe Carbon Innovators Network and other forums to


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develop further guidance and tools to help businessesimplement the Principles and optimise carbonmanagement strategies. We would welcome feedback onwhere your company may benefit from EPA developing

further guidance. For more information on the Network orto be kept informed ofdevelopments please email:[email protected].

To provide comments on the discussion paper pleasesend your comments [email protected] by Friday, 26 October2007.

DRAFT CARBON MANAGEMENT PRINCIPLESDISCUSSION PAPEREPA Victoria40 City Road, SouthbankVictoria 3006 AUSTRALIAAugust 2007Publication 1154 EPA Victoria 2007

DRAFT CARBON Enmmissions Paper

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