In 2022, the Australian Government enshrined in law our nation’s commitment to achieving Net Zero by 2050.
The climate change legislation sets aggressive targets for reducing carbon emissions by 2030 and realising Net Zero by 2050, with the government’s Long Term Emissions Reduction Plan detailing Australia’s planned approach.
Billions of dollars are being allocated to support the transition, and forward-thinking organisations within the energy and resources sector will be in a prime position to take advantage.
The scale and complexity of change will be enormous, as a recent report by Net Zero Australia found. The report was a culmination of several years of research, and takes a deep dive into the pathways Australia will need to take to achieve its emissions goals by 2050 and support export markets to do the same by 2060.
All in all, the report proves the immensity of the undertaking as our nation moves to completely transform the domestic economy via the replacement of fossil fuels with clean energy alternatives. From renewable energy sources to electric cars, rail and hydrogen strategies, there is no shortage of opportunities for pioneering organisations to explore.
Managing risk in times of great change
It’s important for any business that is developing strategic and risk management plans to distinguish between actual change and planned change in the current environment.
For example, hydrogen has excellent and undeniable potential as a new clean energy source. However, the level of investment and time needed to build out the infrastructure for such a capability means this avenue is likely still a fair way off.
As it stands now, wind and solar projects are increasing the amount of available renewable energy to power homes and businesses – yet it’s still relatively unreliable. As we’ve seen in the US and even locally, bad weather or surges in demand can completely disrupt the energy supply from renewables, and this is something that will take time to address before we find a clear path forward. There is still a need for renewable dispatchable electricity generation in our grid, such as Hydro and Battery Storage to support the transition away from fossil fuels.
For now, businesses looking to develop risk management plans for the short to mid-term should maintain focus on the inevitable: decarbonisation, emerging regulation, operational resilience in a transitioning energy market.
With the establishment of the International Sustainability Standards Board and similar such entities, in addition to Australia’s climate change legislation, it’s safe to say that new regulation is just around the corner.
For this reason, all businesses need to be taking steps to understand their carbon footprint and have strategies to reduce it. Supply chain due diligence will also come to the forefront, so businesses will need to know what’s happening within their supply chains to gain assurance of their impact in a wider context.
When it comes to long term planning, sound risk management will inevitably involve strategies that prioritise innovation and agility – ultimately ensuring you are well placed to adapt regardless of the change that unfolds.
Maximising opportunity in times of change
It’s no secret that both the public and private sectors are looking to invest heavily in clean energy and sustainability. Be it investor interest, low interest bank loans for sustainability projects, or government spending to reach Net Zero targets, the opportunities for innovators in the energy and resources space is (and will continue to be) abundant.
Into the future, this will be especially true for projects that provide jobs for Australians in regional towns that have long relied on traditional mining activities.
For a business still laden with heavy manual processes, now is the time to embrace technology and automation so you can free up staff to get creative. From a single part in a piece of machinery to a unique solution for rail, energy storage systems or even protective equipment – there really is no limit to ideas on how to secure a piece of the pie in the new clean energy market.
When it comes to accessing funding to develop innovations, there are a range of viable options such as:
- the R&D tax incentive
- government grants
- renewable energy certificates
- private investors
- green loans
Sustainable finance is particularly exciting as its sole purpose is to support investment in projects associated with sustainability, mitigating climate change, and contributing to a more environmentally friendly and socially responsible future. Businesses in the energy sector can benefit from these financial initiatives in several ways, such as securing more favourable terms and interest rates with longer repayment periods, as well as driving innovation and competitive advantage as the world transitions towards a low-carbon economy.
In addition, Australia’s latest federal budget includes a $4 billion investment into renewable energy projects – a commitment that will undoubtedly see an array of grants awarded to businesses that invest in the cutting edge of renewable energy research and development.
Be supported to manage risk and maximise opportunity
As we learned during COVID, situations can indeed shift rapidly – and businesses that are well equipped to manage change (i.e.: those that had already invested in cloud technologies and remote working) often come out on top.
The same applies to this new energy paradigm and the risks and opportunities that stem from the transition, and ultimately inform planning to strategically take advantage of opportunities and mitigate future risks.
Working with a consultant who specialises in energy and resources, and has a deep understanding of sustainability, ESG (environmental, social and governance) and emerging technologies, will make it easier to navigate the current landscape and position your business for success.
This includes determining short and long term risks (as they apply to your business), understanding your carbon footprint and how you will reduce it, and limiting your exposure as new regulations are announced.
RSM’s risk advisory division is home to specialists in the energy and resources sector who have extensive knowledge in sustainability and ESG-related issues.
We can work with you to:
- understand risks and opportunities
- benchmark current practices
- assess supply chain vulnerabilities
- develop a practical roadmap
- evaluate the feasibility of new ideas
- ascertain avenues for funding
We can also leverage our extensive network to connect you with complementary experts, such as a grant specialist who can help you find and apply for relevant state or territory government grants.
In times of change, it’s critical to surround yourself with trusted, reliable and knowledgeable sources of support. You don’t have to navigate this alone, and we are here if you need our help to ready your organisation to be a leader in the energy and resources sector of the future.
FOR MORE INFORMATION
For a confidential discussion, please contact our specialist Energy and Resources Risk Advisory team on (07) 3225 7819.