Opportunities for Low Carbon Growth in South East Melbourne

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1 Opportunities for Low Carbon Growth in South East Melbourne 2012

2 South East Melbourne is an industrial and commercial hub that has the potential to reduce emissions and reap the financial benefits. South East Melbourne is a vibrant economic region, producing $142.5 billion on gross revenue each year 1. It covers 2237 square kilometres and seven local council areas: from Monash, Knox and Kingston, to Greater Dandenong, Frankston, Cardinia and Casey. More than 1 million Victorians % of Victoria s total population - make their home in the region 2. The region has a strong local economy, with almost 80% of people employed in the region living locally. It seats almost half (44%) of Victoria s manufacturing, with high-end growth industries in chemicals, manufacturing and equipment, polymers, transport, metal fabrication, pharmaceuticals, automotive, health, warehouse and storage, and construction. It also offers strategic niche industries such as tertiary education - housing two Monash University campuses and two Institutes of TAFE. Sectors such as the aged care and housing industries are projected to grow as priority employers in coming years. The region is also focusing on building a reputation for innovation and technology. ECONOMIC PROFILE GROSS REVENUE $142.5 billion per annum PEOPLE EMPLOYED 437,220 people CORE INDUSTRIES Manufacturing, Retail Trade, Health Care and Social Assistance, Construction, Wholesale Trade BUSINESSES WITH 100+ EMPLOYEES SMALL BUSINESSES 73,520 TOTAL BUSINESSES 87,711 TOTAL POPULATION 1,081, Exhibit 1: South East Melbourne s industries by share of employment Administrative and Support Services Public Administration and Safety 3% Financial and Insurance Services 4% Manufacturing Transport, Postal and Warehousing 4% 4% 18% Accommodation and Food Services 5% Professional Services 6% 13% Other services Education and Training 6% Wholesale Trade 7% 13% Retail Trade 8% Construction 9% Health Care and Social Assistance 1. Regional Economic Strategy for Melbourne s South East ( ) 2. iv ABS Census 2010; Victorian Population Bulletin ABS Census, 2006

3 Businesses and householders in the region could save around $280 million a year by 2020 by reducing emissions by almost 4 million tonnes. THE OPPORTUNITIES FOR BUSINESS By 2020 South East Melbourne can save around $280 million annually across its manufacturing, commercial, residential, and transport sectors by reducing its emissions by almost 4 million tonnes. Emissions in the region are mostly generated from electricity used in the manufacturing industry, by fuel used in transport, and by energy consumed in commercial and residential buildings. Businesses in South East Melbourne can capitalise on several opportunities for reducing their emissions, outlined below: Industry can save around $68 million annually by 2020 by making the most of the following opportunities: Industrial Energy Efficiency Businesses stand to save up to 10% of energy used 4 through energy efficiency measures. These include improving control systems and processes, reducing duplicate or oversized equipment, upgrading motor systems, decreasing energy losses in boilers and steam distribution systems, and recovering waste heat for pre-heating or other uses. These types of measures would allow manufacturers to save around $30 million by 2020 and reduce emissions by over 430,000 tonnes annually. Cogeneration With the presence of chemical and pharmaceutical industries in the region, cogeneration offers South East Melbourne businesses a good opportunity to generate electricity and thermal energy through a single integrated system. This opportunity could save around $85,000 annually by 2020 across the region and reduce emissions by approximately 180,000 tonnes a year. Freight Improving the fuel efficiency of articulated trucks can save around $36 million by 2020 and reduce around 109,000 tonnes annually. Improving commercial buildings in the region could save owners and occupiers around $110 million annually by 2020: Building efficiency can be improved through retrofitting There is a significant opportunity for existing commercial buildings in the region to reduce emissions through commercial retrofits. This includes upgrading to more energy efficient appliances and equipment. Building insulation can also be improved, and energy loss decreased by reducing open refrigeration. Other opportunities include upgrading control systems for lighting and heating, ventilation and air-condition (HVAC) systems, and replacing water heaters with gas or solar power systems. Retrofitting HVAC systems alone could save over $25 million annually and reduce greenhouse emissions by around 210,000 tonnes a year by Energy waste can be reduced The cheapest opportunity for commercial buildings in the region is to reduce energy waste. This could save up to 10% in energy with very little capital expenditure required. Energy waste can be reduced by getting rid of oversized or unnecessary equipment and managing existing control systems better. Combined these actions can save the commercial buildings sector $42 million annually by New buildings can be made more efficient South East Melbourne is developing into a vibrant industrial hub, and promoting itself as a precinct for innovation and technology. So there is ample opportunity to reduce emissions by making new buildings more energy efficient. Design and orientation of new buildings can be improved and insulation and air-tightness maximised. Other improvements include using materials that deliver increased thermal efficiency and installing more efficient HVAC and water heating systems. This could save over $1 million a year by 2020 and reduce emissions by approximately 200,000 tonnes per annum. Cogeneration Cogeneration provides energy savings by creating heat and electricity through the same fuel source. This is particularly attractive for large shopping centres and universities. The retail sector employs the second largest number of employees in South East Melbourne and houses large shopping centres such as those in Greater Dandenong. Combined, this opportunity could save the region around $740,000 per annum and reduce emissions by approximately 500,000 tonnes a year by v 4. Low Carbon Growth Plan for Australia, March 2010

4 Householders in the region could pocket around $102 million annually by 2020 by improving energy efficiency at home and purchasing more fuel efficient vehicles. TOTAL OPPORTUNITIES AVAILABLE IN SOUTH EAST MELBOURNE Exhibit 2: South East Melbourne Emissions Reduction Cost Curve (2020) Cost to investor A$/tCO 2 e 100 Hybrid/electric Vehicle Efficiency Cogeneration Energy Efficiency Residential building envelope New Builds Bus and rigid truck efficiency improvement Commercial retrofit insulation Electric cars Industry cogeneration Commercial cogeneration Commercial new builds Commercial retrofit water heating Residential new builds ,400 2,100 2,800 3,500 Residential HVAC Emissions reduction potential ktco 2 e per year Commercial retrofit lighting Industrial energy efficiency Commercial elevators and appliances Residential lighting Commercial retrofit energy waste reduction Commercial retrofit HVAC Residential appliances and electronics Hybrid cars Large articulated truck efficiency improvement Car and light commercial vehicle efficiency improvement THE OPPORTUNITY FOR HOUSEHOLDERS Most South East Melbourne residents live in separate, stand-alone houses. Only 11% of residents live in apartments, townhouses or units. As there is more floor space available per person, household energy use in the region is estimated to be 1.6 times the level of the average Australian household. With Victoria s reliance on coal fired electricity, South East Melbourne residents also emit more greenhouse gas emissions per household than the national average. Reducing energy use in households will not only create financial savings for South East Melbourne residents, but also aid in reducing emissions and demand. Low cost opportunities include: upgrading appliances and electronics to a higher-star rating, upgrading from compact fluorescent lamps (CFLs) to light emitting diodes (LEDs), and increasing insulation systems in existing homes. Simply upgrading appliances and electronics to the most energy efficient of their type can generate net savings of around $20 million a year across the region by Building new homes to higher efficiency standards also makes good economic sense as the investment will pay itself back over the life of the home and save money. Householders also stand to gain by purchasing more fuel efficient vehicles. This can significantly reduce the cost of ownership over the life of the vehicle, potentially saving householders in the region up to $57 million a year by 2020 and reducing emissions by around 150,000 tonnes per annum. vi

5 THE LOW CARBON GROWTH PLAN FOR AUSTRALIA Scientists advise that to avoid the worst impacts of climate change, Australia needs to reduce its emissions by at least 25% below 2000 levels by The Low Carbon Growth Plan for Australia, released in 2010, identifies exactly how we can do that while still growing Australia s low-carbon economy. The Plan identifies 62 different opportunities to reduce greenhouse emissions across the Australian economy. When added up, these solutions get us to the minimum 25% reduction scientists say we need. The Plan uses the emissions reduction cost curve tool to rank the opportunities identified in order of cost. Each opportunity is measured by how much it will cost and the level of greenhouse gas emissions it is estimated to save. Exhibit 3: Low Carbon Growth Plan for Australia Emissions Reduction Cost Curve Emissions reduction cost to an investor A$/tCO 2 e PROFITABLE MODERATE COST HIGHER COST energy efficiency land cleaner power Emissions reduction potential MtCO 2 e per year Buildings Industry Transport Agriculture Forestry Power HOW TO READ AN EMISSIONS REDUCTION COST CURVE The width of each box represents how many tonnes of emissions can be reduced if there is reasonable uptake of the opportunities across the economy. The height represents the average cost of abating one tonne of CO 2 e (carbon dioxide equivalent) in 2020 by implementing that opportunity. Opportunities that fall below the horizontal axis in the cost curve offer financial savings to businesses and households - even after factoring in the upfront capital costs over the life of the new equipment. The methodology used to develop the Low Carbon Growth Plan includes only opportunities for which technology is commercially available or expected to be by It excludes opportunities that would occur under business-asusual (measured just before the introduction of the Federal Government s carbon price policy package). i

6 TAKE THE NEXT STEP There are many support programs available for those who want to capitalise on the opportunities available to save money and reduce emissions: SUPPORT PROGRAMS FOR BUSINESS Funding under the Clean Energy Future Package National s Victorian s Clean Technology Investment Small Business Instant Asset Write-Off Threshold Change Clean Technology Focus for Supply Chains Clean Energy Finance Corporation Clean Technology Innovation Community Energy Efficiency Tax breaks for Green Buildings Clean Energy Skills Low Carbon Australia Enterprise Connect CitySwitch Green Office National Australia Built Environment Rating System (NABERS - the star rating system for buildings) Greener Government Buildings Improved Local Infrastructure as part of the Putting Locals First Backing Green Business Innovation Through Clusters SUPPORT PROGRAMS FOR HOUSEHOLDS National s Victorian s Small-scale Renewable Energy Scheme LPG Vehicle Scheme National Energy Savings Initiative (NESI) (proposed) Home Energy Incentives (part of VEET scheme) Vic Gov Warmer Winter Discount Registration Discount for Low Emissions Vehicles Standard Feed-in Tariff Renewable Energy Bonus Scheme - Solar Hot Water Rebate Gas Hot Water Rebate For more information on the above programs and to download a Low Carbon Growth Plan training pack, visit ABOUT CLIMATEWORKS AUSTRALIA ClimateWorks Australia is an independent not-for-profit organisation, founded by The Myer Foundation and Monash University. Our mission is to catalyse action to substantially reduce Australia s greenhouse emissions. ClimateWorks Australia Monash University Building 74, Wellington Road, Clayton VIC 3800 Ph: ABOUT THIS PROGRAM This fact sheet has been produced as part of the Empower, which is funded by the Department of Climate Change and Energy Efficiency. The program aims to raise awareness and inspire Australia s business community and households to capitalise on the opportunities available in the Low Carbon Growth Plan for Australia. This fact sheet is based on the Low Carbon Growth Plan for Australia and has been developed using supplemental desktop research. The figures in this document are indicative only. ii

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