The journey to greater transport sustainability and emissions reduction also offers considerable business opportunity to astute organisations.
The arguments for a switch to greener transport options tend to focus on reducing global emissions, and with good reason. In 2020, transport was responsible for 18 per cent of Australian carbon emissions, with cars accounting for around 47 per cent of that amount. However, a switch also introduces significant opportunities.
“Incorporating smart and green technologies will bring a number of key benefits to businesses, particularly cost savings, enhanced competitiveness, operational efficiency, access to new markets and improved sustainable credentials,” says Shivani Palepu, associate principal analyst at Gartner. Investor demand is also a big part of the opportunity in potentially lowering the cost of capital for companies that can demonstrate emissions reductions and small carbon footprints.
This could be of particular interest to any company with a fleet. The New South Wales government reports that, along with reducing emissions and saving money, electrifying those fleets would help to stimulate the market for electric vehicles (EVs). However, the EV industry is still relatively undeveloped in Australia.
In May, all-electric EVs accounted for just 7.7 per cent of the Australian market compared with 16.2 per cent in the UK, 14.7 per cent in Germany, 16.8 per cent in France and the much-touted 80.7 per cent in Norway. In the US, the figure is 7.1 per cent, but this is expected to increase rapidly once the new fuel efficiency standards announced in April come into effect.
Fuel efficiency standards apply to over 85 per cent of cars sold worldwide, and Australia is on a par with Russia as one of the only OECD nations without these requirements. The Electric Vehicle Council believes that with no obligation or motivation to send their latest technology here, global vehicle manufacturers see Australia as a dumping ground for dated high-emission vehicles.
The Albanese government acknowledged the problem and recently issued The Fuel Efficiency Standard — Cleaner, Cheaper to Run Cars for Australia consultation paper with the aim of canvassing a wide range of inputs before designing a strong standard that is right for the country. More than 1500 individuals and 200 organisations provided feedback and the EV strategy, released in April, includes a commitment to release the proposed Fuel Efficiency Standard by the end of this year.
The Electric Vehicle Council’s annual State of EVs report, released in July, noted that it is expected that more than 50 per cent of all new cars sold in 2030 will need to be EVs in order for Australia to achieve its climate targets. “This means Australia will need to aim for around one million EVs on our roads by the end of 2027,” the report said.
Demand exceeds infrastructure
In many countries around the world, demand for charging infrastructure is running ahead of supply. “Many charge point operators (CPOs) need to change strategy and improve their operations, particularly when it comes to choosing the right location for public chargers,” says Pedro Pacheco, a vice-president of research at Gartner.
James Greathead agrees. As head of marketing at EVSE Australia, a leading supplier and installer of universal electric vehicle chargers, he believes heavy demand can lead some CPOs to cut corners.
“Boards should be ready to ask questions about the installation — and the follow-up service and support they can expect,” he says. “For example, load control is vital to ensure that multiple EV chargers can work at the same time as all other electrical equipment in a building without tripping circuit boards or breakers. It’s important that installations are maintained annually and management should be able to track power use and other relevant data. It’s also vital that the backbone infrastructure allows for scalability. Future- proofing the wiring and software at the outset will make it much easier and more economical to take advantage of increased speeds and other benefits as chargers get cheaper over time.”
Beyond road vehicles
Corporate transport isn’t only about cars. Atlassian has no company vehicles, but reducing transportation emissions is still high on its agenda.
“The bulk of our emissions are around our supply chain and business travel,” says Jessica Hyman, Atlassian’s San Francisco-based head of sustainability. “We set our baseline year in FY19 and then had a couple of years where no-one was travelling because of the pandemic, which meant we were well within our FY25 goal for emissions reduction. Post-COVID-19, we have a remote working program — Team Anywhere. As part of that, we bring people together for reasons including intentional togetherness. As a result, we're already seeing business travel emissions shoot right back up to that FY19 baseline. So we really need to think about how we’re going to achieve our FY25 emissions reduction goals, and then the goal of net zero by FY40, which is going to require an even greater reduction.”
Hyman believes that the transport industry must be part of the solution. “Yes, we’re going to have to change our behaviour, but part of our journey has to be engaging with the industry as a whole, and the policy around it, to make sure we're all moving together in the same direction,” she says. “I recently heard the head of sustainability at Shell talk about a collaborative initiative where the aviation sector is coming together to talk about biofuels — and also associated challenges such as the policies needed to make that transition affordable and how infrastructure around airports needs to change. This is a really big transition. I hope by setting science-based target goals — and having business travel as part of that — companies like Atlassian can signal to the market that, as a customer, we’d like them to reduce emissions. That should help to create the business case for change.”
Rail also has potential for even greater reduction in emissions in the future. In Switzerland, for example, a startup called Sun-Ways has come up with the idea of installing solar panels between railway tracks to power the surrounding infrastructure. Although in its early stages, this is just one example of the innovation taking place on a global scale, according to Palepu.
“Germany and South Korea are embedding inductive charging technology into the road surface to charge electric buses [while they are] in motion,” he says. “We’re seeing wireless charging using magnetic resonance to transfer power between a charging pad and a vehicle's battery and, in China, [bi-directional] trackless trams that are guided autonomously using optical, lidar, radar and GPS technology have been operational since 2018.”
Smart technologies can also be applied in a more widespread fashion.
“Intelligent connected infrastructure (ICI), for example, is a combination of technologies like AI, IoT and cloud, which enables seamless and quick data exchange between entities in an ecosystem, helping drivers to reduce fuel consumption by taking the most efficient routes,” says Palepu. “Intelligent traffic management solutions can also optimise traffic flows by dynamically adjusting signal timings, managing congestion and providing alternate routes with the help of IoT sensors and real-time data analytics. On the other hand, demand-responsive transportation facilitates on-demand and flexible transportation services such as ride hailing and micro-mobility services. This will reduce the dependency on private vehicles and encourage more sustainable modes of transportation.”
What directors need to know
Hyman believes that the success of emission reduction entirely depends on support from business leaders and teamwork. Atlassian’s new net zero guide for companies wanting to reduce their climate impact spells out that even if there's a general agreement within the business that a sustainability strategy is needed, no-one should underestimate the importance of getting the leadership engaged in its development.
“Ambition has to start at the very top,” says Hyman. “Having a sustainability person or team really isn't going to get you there. At Atlassian, the founders and executive team set our ambition on climate and they're really holding the company to account in terms of achieving those goals. Where this really matters is when the work you want to do requires tough trade-off decisions. You really need the leaders to be involved in those decisions. I meet with our co-founder, Mike [Cannon-Brookes] every quarter to share our progress and he always asks me what’s getting in my way or what's hard about the work, so he can help clear a path for me.”
Government initiatives to reduce transport carbon emissions
Transport is on track to become Australia’s largest emitting sector by 2030. In its bid to achieve emissions reduction targets of 43 per cent on 2005 levels by 2030 and net zero by 2050, the government is taking a number of steps to reduce emissions.
- The National Electric Vehicle Strategy sets out three key objectives
- Increase the supply of affordable and accessible EVs
- Establish the resources, systems and infrastructure to enable rapid EV uptake
- Encourage increased EV demand.
- The planned Fuel Efficiency Standard for Australia will set an average carbon emissions limit that decreases over time for all new light vehicles.
- The Department of Climate Change, Energy, the Environment and Water is supporting the uptake of EVs with a $500m Driving The Nation Fund.
- $39.3m has been allocated to help deliver 117 EV chargers on key highway routes across Australia as part of the national EV charging network.
- The Hydrogen Highways project includes up to $80m co-invested with state and territory governments to roll out hydrogen refuelling networks on key freight routes.
- The Australian Renewable Energy Agency has allocated over $130m to co-fund initiatives that will reduce Australia’s road transport emissions.
- The electric car FBT exemption is making EVs cheaper by exempting eligible EVs from fringe benefits tax and import tariffs.
- Under the Clean Energy Regulator’s Emissions Reduction Fund, businesses earn carbon credits by:
- Changing to lower-emissions vehicles
- Changing fuel sources
- Improving vehicle fuel efficiency.
This article first appeared under the headline 'Getting the Green Light’ in the October 2023 issue of Company Director magazine.
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