Carbon pricing should catalyse the Australian university sector to become more businesslike about the way it manages the resources, capital and infrastructure devoted to the use and management of energy.
Australia’s universities are bracing for sharp rises in electricity
costs and price increases on goods and services as the prospect of a
legislated carbon tax begins to hit home.
Pricing carbon will also bring complexity and urgency to
universities’ financial performance, reputation, procurement, facilities
management, and corporate governance.
Vice Chancellors and their senior executives will therefore need
greater visibility into their institutions’ broader sustainability
performance, especially big-ticket items such as electricity, gas,
water, supply chain, waste, property and infrastructure.
They will also need new expertise and tools for assessing the carbon
component of these items so they can make informed decisions about
investing in more cost efficient energy and supply chains, and whether
they can transparently absorb or pass on additional costs.
Pricing carbon: how it works and who’s affected
According to the clean energy carbon-pricing bills currently before federal parliament,
corporations operating facilities that emit more than 25,000 tonnes of
carbon dioxide per annum will pay a fixed price for emissions above the
carbon cap. The scheme also extends to emissions of methane, nitrous
oxide and perfluorocarbons as part of the national commitment to the
A fixed price for emissions will be in effect for three years from
July 2012 before we move to a flexible, market-based pricing mechanism
from July 2015. The scheme covers direct ‘Scope 1’ emissions from
stationary energy, non-legacy waste, rail, domestic aviation and
shipping, industrial processes and fugitive emissions, capturing some
500 liable entities from 2012.
By far the biggest impact of pricing carbon will be its indirect
impacts on the price of many goods and services, higher electricity
prices – power generators will incur a direct carbon tax liability – and
higher supply chain costs. Treasury has estimated that carbon pricing
will initially raise electricity prices by 10 per cent, and a further 16
per cent over the next five years.
Pricing carbon will hasten and reward capital investment in renewable
and less carbon intensive forms of energy. In principle, this reform
should hasten wider adoption of energy efficiency behaviours and
programs that will reduce Australia’s greenhouse emissions and make our
economy more internationally competitive in a global trading environment
where carbon embedded products and services will become less price
Challenges and opportunities for the university sector
Eighty per cent of a typical university’s carbon footprint arises
from electricity consumption. The carbon tax could add $20 million to
the university sector’s electricity bill, according to Adelaide
University’s head of services and resources, Jonathan Pheasant, who says
he expects the new tax to add $1m to the university’s annual $4.5m
has therefore set itself a carbon reduction target of 20 per cent for
electricity, paper and water by 2012 and is adopting co-generation or
tri-generation technology across its properties, as one of its key
The University of Queensland
is also reducing its exposure to expensive coal fired power costs by
building what is believed to be Australia’s largest installation of
photovoltaic panels at its St Lucia campus. The system generates 1.22
megawatts of power from the sun, harvested from some 5,000 panels on the
rooftops of four of UQ’s biggest buildings.
uses geothermal and tri-generation energy – the simultaneous production
of electricity, heating and cooling – in its air-conditioning cooling
towers. About 15 per cent of Macquarie’s electricity supply comes from
the alternative sources, and it is looking to generate more of its own
power. The university will spend $140m in an effort to cut its
greenhouse gas emissions by some 40 per cent over the next two decades.
Carbon pricing should catalyse the Australian university sector to
become smarter and more efficient about the way it manages the
resources, capital and infrastructure devoted to the use and management
Many of our universities publish their performance metrics for
energy, water, waste and carbon emissions as part of their
sustainability performance and annual reporting – or because they’re
obliged to by federal and/or state compliance reporting regimes. This
will become a new imperative in tertiary education as stakeholders such
as governments, governing councils, private sector funders, staff and
students take greater interest in carbon and energy pricing.
Integrated sustainability reporting
will increasingly become the subject of review and audit – making the
governance and oversight of carbon and energy management key issues for
university executives. Carbon pricing will also raise the bar for CFOs
and corporate governance because emissions will determine a financial
liability for all universities.
Energy management imperative
Universities that act now to establish responsibility and business
systems to track and manage the impacts of carbon pricing will be well
positioned to offset risks to their costs, reputations and compliance
This will be new terrain for many universities – or a familiar source
of pain. Measuring and reporting sustainability performance can be
costly, complex, and time consuming, especially for those that don’t
have the requisite staff and technology.
Many universities are managing their energy and carbon performance
with spreadsheets and other legacy systems. This will soon become
untenable, as greater accountability and assurance demand more rigour
and transparency in the way the higher education sector accounts for and
manages energy and carbon pricing flow-ons.
A handful of universities have adopted enterprise sustainability
software systems to streamline and automate the capture of utility and
supply chain data. This technology captures granular data from any
source, including smart meters, supplier reports, and internal business
This shift is becoming commonplace around the globe as corporations
seek to raise their ability to track and manage their energy performance
and make sound data-driven investments in sustainability. Critically,
these systems allow corporate budget holders like CFOs to assess the
impact, payback period and return on investment of their energy
efficiency and carbon abatement programs.
Dan Gaffney is media manager at CarbonSystems.