Accelerating corporate Australia’s transition to net zero John Pickhaver Co-Head of Macquarie Capital Australia and New Zealand
Australia’s largest corporations are making ambitious commitments to decarbonise, with many announcing plans to become carbon neutral by 2050. The pathways to achieving these goals are likely to be varied and multi-faceted. In the short term, companies can consider procuring renewable sourced energy or purchasing offsets and increasing energy efficiencies, but there are some hard-to-abate areas that will require longer-term solutions. At least one-fifth of the world’s 2,000 largest public companies have made some form of commitment to net zero1. A large proportion of retail shareholders, institutional investors including superannuation funds and sovereign wealth funds, as well as lenders, want to see change. This means there is an increasing amount of capital available to companies that are prepared to take practical steps towards meeting their ambitions, and transitioning to a net zero future. As the scale of the challenge and the immediacy of the impacts of climate change are growing clearer, the pressure is on corporates to fast-track creative, yet practical, solutions to decarbonise.
Power purchase agreements reaching further into corporate Australia One of the main ways corporate Australia is already decarbonising is through clean power purchase power agreements (PPAs). PPAs are a mechanism through which a company agrees to buy electricity from a renewable source, such as a wind farm or solar plant. Because the energy user enters into an agreement for a set period of time, they receive a level of price certainty that makes switching to renewables attractive. In return, infrastructure developers and investors get the certainty they need to finance and develop a project. Lal Lal is a 2,100-hectare wind farm that Macquarie Capital developed and owns with Northleaf Capital Partners and InfraRed Capital Partners2. The wind farm was made viable via a PPA to supply the Victoria-based packaging company Orora with renewable energy. However, even those corporates with more moderate energy needs can benefit from PPAs by grouping together in a consortium. ANZ Bank, Coca-Cola Amatil and the University of
1. Black, R., Cullen, K., Fay, B. et al., ‘Taking Stock: A global assessment of net zero targets’, Energy & Climate Intelligence Unit and Oxford Net Zero, 2021, https://eciu.net/ 2. ‘Macquarie Capital closes project financing and innovative commercial arrangement for Lal Lal Wind Farms’, Macquarie, 19 June 2018, https://www.macquarie.com/
PA R TN E R S H IP S 2 0 2 1
5
