Pathways to decarbonisation in the water sector

There are a variety of challenges facing the water sector, not least of which is dealing with climate change. Net zero emission targets for 2050 are now in place in five Australian states and territories, with related regulation in the water sector likely to increase. Setting targets in line with the latest science is an effective way to ensure that your organisation stays ahead of the curve.

Setting the scene

According to the World Economic Forum’s Global Risks 2018 report, water crises are identified as one of the top five global risks. Half of the top 10 risks are water related, including failure of climate change mitigation and adaptation, water crises, food crises and extreme weather risks. This requires innovation and investment in technology and processes that maximise value creation, while mitigating future risks and uncertainties. Here, we outline some of the significant trends and challenges faced by the Australian water sector.

Climate change

Today, we are seeing a rise in uncertainty around future water supplies, which is exacerbated by the risks of the physical impacts of climate change. The millennium drought was a reminder of Australia’s vulnerability to the risk of water shortages. Transitioning to a low carbon economy is becoming more and more accepted as an imperative rather than a nicety. It is also being driven by increased regulation of greenhouse gas (GHG) emissions.

Infrastructure

At our current rate of population growth, Melbourne and Sydney will hit eight million in the middle of this century. Already, essential infrastructure is groaning under the strains of population growth, ageing infrastructure, and maintaining water security and quality. While the government’s recent National Water Infrastructure Development Fund will be helpful to some water utilities, accessing finance continues to be a challenge.

Performance and reliability

Regulators have been moving to better incentivise water utilities to maximise customer outcomes including management of reliability, risk and performance. In Victoria, the regulator determines a water utility’s financial returns depending on whether the utility’s business cases are viewed to be ‘leading’, ‘ambitious’, ‘standard’ or ‘basic’. This includes considering how GHG emissions and physical risks to assets will be managed.

Technology

Smart water networks and big data analytics can facilitate the management of complex processes and supply chains, offering breakthroughs to use less energy, cleaner energy, scrutinise pricing, and reduce carbon and water footprints. A challenge for water utilities is to move beyond business as usual to embrace innovation and change.

The water services industry has significant opportunities for reducing energy intensity, particularly through innovative wastewater process technology and utilising sewerage for renewable energy generation.

Cost of energy

The water sector is a major consumer of energy and generator of greenhouse gas emissions. Energy is often one of the largest utility operating costs, along with labour. This has been emphasised by rising energy costs in Australia, driven largely by the provision of drinking water and treatment of wastewater. Carbon price-related costs are a future consideration, whether driven by new regulation or by an internal, voluntary adopted carbon pricing.

Affordability

Affordability of water services is a growing issue. Infrastructure Australia forecasts that a typical residential water and sewerage bill is estimated to increase by 50% from $1226 to $1827 over 2017–2027¹. We also face an ageing population with changes in the ways that water is used, and increased sensitivity with water affordability.

National carbon target

Australia has established a 26–28% GHG emission reduction target on 2000 levels by 2030. The aim of the Paris Agreement is to limit a global temperature increase to ‘well below’ 2°C, and to attempt to achieve a limit of 1.5°C warming above pre-industrial levels. The urgency is highlighted with Australia last year averaging 1°C warmer than the long-term average, according to the Bureau of Meteorology². Yet, Australia appears to be lagging. The United Nations Emissions Gap Report for 2017 states that Australia is ‘likely to require further action’ to achieve its 2030 goals, with government emission projections sitting at 30% lower than required.

State carbon targets

A review of state-based carbon and renewables targets is presented below. Many states have zero net emission targets in place for 2050 and now need to drive action to achieve them.

State/Territory	Zero net emissions target	Renewable energy target
Queensland	By 2050	50% renewables by 2030
Victoria	By 2050	20% by 2020 and 40% by 2025
South Australia	By 2050	50% by 2025
ACT	By 2050	100% by 2020
New South Wales	By 2050	Former national target of 20% by 2020
Northern Territory	No target	50% by 2030
Western Australia	No target	Former national target of 20% by 2020
Tasmania	Proposed target by 2050	100% by 2022, aided by hydroelectricity

Science-based targets

As major energy users, water utilities have an important role to play in the transition to a low-carbon economy. Companies have conventionally set GHG emissions reduction targets in response to regulations or benchmarks. In contrast, science-based targets start from the premise that emitters must limit emissions within a certain cumulative threshold to mitigate the worst effects of climate change. Science-based targets are defined according to a share of the global emissions limit allocated to companies based on factors such as the company’s economic productivity, carbon intensity or a combination of both.

Origin Energy has science-based emissions targets, with a commitment to halve emission by 2032 in line with the Paris 2°C goal.

	Conventional targets	Science-based targets
Basis for target	Regulations, past performance, peer performance, industry benchmarks, economic opportunities, what seems reasonably achievable	Equitable share of GHG emissions reductions required globally, based on thresholds identified by climate science (eg, 2°C warming limit, 450 ppm atmospheric CO2)
Time frame	Often 5–10 years	5+ years; medium- (2030) and long-term (2050) recommended
Outcome	May fall short of global reductions required to mitigate climate change	Designed to limit global warming to 2°C and prevent the worst aspects of climate change

Characteristics of conventional and science-based targets.

Setting science-based targets

By setting ambitious science-based targets, businesses can benefit from achieving emissions reductions ahead of future requirements.

1. Gather information

Setting science-based targets typically requires several company-specific baseline inputs, including: annual GHG emissions, activity level (a measure of output) and projected changes over time. Gathering information on baseline emissions would include:

• Water supplied, wastewater flows and loads treated, equivalent population (EP) serviced, recycled water produced, etc.
• Data for each of the water treatment plants and wastewater management facilities, other emission sources and their related technology such as aerobic and anaerobic digestion processes.
   

An example of emissions sources for a water utility in regional Victoria.

There is an opportunity for the water services industry to work together to form a Sectoral Decarbonisation Approach, agreeing on reporting scope and metrics for target setting. The activity level could be measured by metrics of supply (eg, volume of water supplied) or treatment (eg, loads from equivalent population treated). In addition to baseline information, several methodologies require that companies define the sectors they work in and/or state their contribution to national or global gross domestic product. This information helps to determine the share of the global emissions capacity — the carbon budget — that should be allocated to each company in proportion to its economic productivity. Many methodologies use economic intensity metrics as a basis for targets that seek to grow the economy while shrinking carbon emissions. For example, targets can be based on metrics of GHG emissions per unit of economic value added (eg, gCO₂e/$).

2. Set targets and commit

To set targets, the first step is to select a methodology for calculating a carbon budget. Several methodologies have been developed, including:

• The Sectoral Decarbonisation Approach, based on the water sector’s contribution to global GHG footprint and your company’s contribution to the sector
• The Context-Based Carbon Metrics calculator
• Climate stabilisation intensity target — based on reducing emissions by 80% by 2050 from a 1990 baseline
• The 3% Solution calculator, which includes use of an online tool to calculate the target.
   

Take note of your business goals and characteristics against the available methodologies and select the one that is most relevant to your business.

Some companies have developed their own target-setting methodologies based on climate science. This requires considering emissions thresholds or changes identified by the International Panel for Climate Change and others, then translating them into company-specific metrics and magnitudes of change over time. For water utilities, this might include reporting in kgCO₂e/L and related financial metrics.

When setting a science-based target, give some thought to:

• Scope — the emissions sources included
• Time frame — the duration of the target period and immediate, medium- and long-term actions
• Ambition — the slope of the reduction curve
• Type — whether to set absolute targets, intensity targets, or both.

3. Report and review

Science-based targets should be reviewed on an annual basis to track progress relative to the anticipated emissions reduction path, and to make adjustments and restatements as necessary. Effectively communicating this information to audiences including decision-makers in your business is important.

Opportunity action planning

Alongside setting a ‘top down’ science-based target, it can be useful to form a ‘bottom up’ view of how you might achieve a carbon target, and any gaps that will require addressing.

To achieve this, you will need to:

• Identify a list of relevant potential carbon mitigation opportunities
• Assess the opportunities against a set of criteria (emissions savings, financial impact, time frame, collaborative solutions, business capacity/resourcing, risks, etc)
• Forecast the emissions scenarios
• Prioritise the opportunities to be pursued
• Focus on more cost-effective initiatives first, such as energy efficiency programs.
   

An expanded version of this would be a carbon neutral strategy, for which emissions data would be collected, mitigation opportunities assessed and emissions trajectories identified for the business as usual against emission reduction scenarios.

It makes sense to begin by looking at existing opportunities that have already been identified, or else understanding potential barriers.

Collaboration can provide valuable sources of ideas, especially the ones already demonstrated by other water utilities. Sharing experiences helps to share the costs and risks of bringing new technology into practice.

Community collaborations can be explored such as for community scale and joint power purchasing agreements. Private sector collaborations can also be important, including understanding the needs of major energy and water using companies and collaborating on opportunities.

Conclusion

Now is the time to be planning for your organisation’s approach to managing GHG emissions. Whether it is a net zero/carbon neutral or science-based target methodology, a structured approach will help to mitigate risks and maximise your opportunities.

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Deborationisation initiatives in the water sector include:

• Energy efficiency measures
  • Alternative water treatment processes eg, mechanical primary sedimentation, anaerobic sludge digestion, thermal hydrolysis sludge treatment
  • Efficient pumping (including inverters and controls)
  • Efficient buildings (LED lighting, air conditioning, etc)
  • Efficient treatment plant blowers and aerators
  • Waste heat recovery
  • Considering Energy Performance Contracting as a delivery and financing vehicle
  • Transport for biosolids disposal and other vehicle fleets
     
• Renewable energy (including self-supply and purchase options)
  • Co-generation ie, from anaerobic sludge digestion process
  • Small scale hydro power and solar PV
  • Offsite options eg, through Power Purchase Agreements
     
• Scope 1 reductions
  • Wastewater treatment fugitives, biosolids management, biogas and fleet
  • Addressing the long-term challenges of fugitive emissions
     
• Carbon sequestration
  • Including use of existing or unused land as a carbon sink
     
• Utilisation of existing agricultural land to utilise treated wastewater
   
• Utilisation of the ‘air-space’ over wastewater lagoons
  • Floating solar on water reservoirs
  • Options such as methane capture to power generation
  • Power generation from bio gases

References

1. Infrastructure Australia, June 2017, ‘Urban water sector: future cost and affordability analysis’, http://infrastructureaustralia.gov.au/policy-publications/publications/files/Aither_Future_Cost_and_Affordabilty_Analysis.pdf

2. BOM, 2018, ‘Australia’s climate in 2017’, http://www.bom.gov.au/climate/current/annual/aus/

The author would also like to acknowledge Michelle Brownlie, Associate – Sustainability for her contribution.

Image credit: ©stock.adobe.com/au/fotoXS