Water Journal : Water Journal November 2012-1
refereed paper carbon footprint water NOVEMBER 2012 77 with specific data on individual processes where available. This enables a sufficiently accurate estimate to be calculated using a simple, cost-effective data collection method. Studies have estimated that the uncertainties associated with organisation level footprint calculations using this method are substantially lower than other analysis methods, which ignore up to 50% of impacts further up the supply chain (Lenzen, 2000). The EEIOA methodology is consistent with the international Greenhouse Gas Protocol that recognises the inherent uncertainty in supply chain emission estimation (WRI and WBCSD, 2011). Data input The main input data required for the footprint calculation was the annual financial accounts (for past years) or budget forecasts for operational and capital expenditure (for future years). This required a detailed analysis of our accounts data and expert knowledge from our finance division to allocate the accounts to Australian economic sectors in the footprint tool. Data on Sydney Water’s direct emissions and electricity consumption was also input. We obtained this data from our annual National Greenhouse and Energy Report (NGER). Carbon price considerations Sydney Water applied a number of assumptions to convert a detailed analysis of the footprint tool results into carbon price impacts. A carbon price of $23 a tonne in 2012–13, rising by 2.5% in real terms each year, was applied for the first three years of the fixed price period. Sydney Water used the Federal Treasury’s projection of a price of $29 a tonne (nominal) for 2015–16, the first year of emissions trading. We also considered the impact should carbon prices fall to the $15 floor price. Liability for direct emissions Liable entities under the carbon price will be required to purchase and surrender one carbon permit for every tonne of CO2-e produced by facilities under their operational control with emissions over the threshold of 25,000 t CO2-e a year. Sydney Water has since determined that it has multiple facilities, each of which is below the threshold. Our original carbon price estimates were on the basis that all of our on-site emissions of methane and nitrous oxide from our wastewater treatment facilities were liable for the carbon price. Sydney Water has collected and reported its emissions under the National Greenhouse and Energy Reporting (NGER) Act 2007 since 2008–09 . This system forms the accounting system for the carbon price. Nitrous oxide emissions from effluent disposal were adjusted using the methodology adopted by the Federal Department of Climate Change and Energy Efficiency (to apply from 2011– 12). Forecast emissions were estimated using projections of wastewater flows. Sydney Water’s direct liability covers approximately 63% of our direct emissions. This is due to the exclusion of emissions from the combustion of biogas from the carbon price and the separate treatment of Scope 1 emissions from fuel use. Costs have increased for non- transport fuel used in plant operations and equipment as an equivalent carbon price will be applied through reduced fuel tax credits, or will be the responsibility of the retailer (for natural gas). While fuel used by light vehicles is excluded from the carbon price, heavy on-road vehicle fuel costs may increase from 1 July 2014. Impacts of a carbon price on electricity use Sydney Water’s most significant single contract exposure risk from a legislated carbon price is its electricity supply contract. Sydney Water’s electricity contract does not preclude pass-through of carbon costs. Sydney Water has assumed that retailers will pass through in full (subject to current and future contracts) any costs arising from the introduction of the carbon price. The Sydney Desalination Plant’s electricity use is fully offset with renewable energy and has no carbon cost. Electricity emissions have been estimated by applying the National Greenhouse Accounts (NGA) emissions factors to forecasts (Department of Climate Change and Energy Efficiency, 2011). The legislation does not expressly specify the treatment of Scope 3 emissions. Until further clarification, Sydney Water has based its estimates on the full fuel cycle emissions factor of 1.06 t CO2-e / MWh for NSW electricity (Scope 2 and 3). Current electricity market pass- through of carbon costs is slightly lower. We have assumed that the grid electricity emission factors will remain relatively constant over the short term. However, grid factors are expected to decrease in the longer term as the national renewable energy target and the legislated price on carbon will promote cleaner forms of generation. Due to the closure of the NSW Greenhouse Gas Abatement Scheme (GGAS) on 1 July 2012, electricity cost increases due to the carbon price are partly offset by the equivalent value of NSW Greenhouse Gas Abatement Certificates (NGACs), previously allowed for in our electricity pricing. Estimating supply chain carbon price liability A significant proportion of Sydney Water’s functions are outsourced to third parties. There are challenges in estimating the potential exposure of suppliers to a carbon price and the likelihood of these being passed through to Sydney Water. The footprint tool has a ‘path exchange’ capability where input-output derived results can be replaced with specific emissions data obtained from suppliers or databases. This hybrid approach has enabled Sydney Water to improve the accuracy of its footprint estimates by substituting footprint tool results with actual data from suppliers. Sydney Water has assumed full pass-through of electricity carbon costs from the Sydney Catchment Authority (SCA) and ‘Build Own Operate’ water and wastewater treatment plants. These were calculated from data obtained for 2009–10 using water supply forecasts. The SCA’s electricity consumption dropped in 2009–10 due to the end of drought transfers from the Shoalhaven River. This significantly reduced Sydney Water’s carbon footprint from previous years (Figure 1). The extent of carbon cost pass-through is limited to those suppliers that are liable for their emissions under the carbon price but could vary depending on the transitional assistance that industries may receive and their ability to pass on costs. The footprint tool allows detailed analysis of the emissions produced by specific industry sectors in the supply chain, including identifying emissions from the 0 400,000 800,000 1,200,000 1,600,000 2006-07 2007-08 2008-09 2009-10 2010-11 Tonnescarbondioxideequivalent(tCO2-e) Capital works indirect emissions (Scope 3) Operations indirect emissions (Scope 3) Electricity emissions (Scope 2) Direct emissions (Scope 1) Figure 1. Sydney Water’s carbon footprint trends 2007–2011.
Water Journal December 2012
Water Journal September 2012-1