Interview: Can Aussie businesses actually get to net zero?

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Jennifer Duke: Welcome to the Fear and Greed Daily Interview. I’m Jennifer Duke.

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Jennifer Duke: When the Federal Government legislated Australia’s emissions reduction target of 43%

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Jennifer Duke: by 2030, and net- zero emissions by 2050, businesses were

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Jennifer Duke: given something they really needed, certainty. They now know the

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Jennifer Duke: target and everyone is working towards the same goal. But

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Jennifer Duke: it’s one thing to set a target, it’s entirely another

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Jennifer Duke: to actually achieve it. Today we’re going to take a

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Jennifer Duke: closer look at some of the challenges businesses face in

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Jennifer Duke: the net- zero transition. NRG- ONE is an energy services

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Jennifer Duke: company working with Australian businesses to transition to net- zero.

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Jennifer Duke: Its parent company NRG Services has been responsible for major

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Jennifer Duke: sustainability projects in Queensland, including the largest battery energy storage

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Jennifer Duke: system of its type in Australia. Carl Duncan is the

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Jennifer Duke: CEO of NRG-ONE. Carl, welcome to Fear and Greed.

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Carl Duncan: Hey Jennifer, thanks for having me on.

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Jennifer Duke: So I want to get right into the big question. Firstly, do you

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Jennifer Duke: think that we can hit the target of 43% emissions

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Jennifer Duke: reduction by 2030?

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Carl Duncan: Yeah, it’s a big question isn’t it? And it is

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Carl Duncan: a big goal, but I think goal being the important

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Carl Duncan: thing and to have a plan and flesh things out, and

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Carl Duncan: like you discussed at the start, having certainty is such

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Carl Duncan: an important thing for business leaders all to get rallied around.

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Carl Duncan: And so look, I think it’s not going to be childsplay.

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Carl Duncan: It’s going to be a challenge for sure, and it’s

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Carl Duncan: going to be more difficult for some than others. But

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Carl Duncan: I think what we see now is just really exciting.

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Carl Duncan: Everyone’s just after years of talking about things and reporting

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Carl Duncan: and gearing up, we are now just seeing this really

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Carl Duncan: big heave-ho. Business leaders are wrapping their arms around it.

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Carl Duncan: Lots of the businesses we’re talking to are getting after

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Carl Duncan: it and just getting things done. So yeah, it’s exciting times.

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Jennifer Duke: I absolutely love the optimism. I am keen to know

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Jennifer Duke: if there are particular types of businesses or sectors that

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Jennifer Duke: you think might struggle more through this transition than others?

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Carl Duncan: Yeah, that’s a big question. Actually, if I can just

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Carl Duncan: flip that, I think I’d probably talk to some of

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Carl Duncan: the examples of businesses and sectors that probably are less

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Carl Duncan: challenged because of the approach that they’re taking. If I

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Carl Duncan: point to examples, like the red meat sector for example,

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Carl Duncan: they’ve set out an ambitious goal to be carbon-neutral by 2030.

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Carl Duncan: And by doing that, whilst that is a big BHAG of

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Carl Duncan: a goal, big hairy audacious goal, it’s driven a whole

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Carl Duncan: bunch of research and development, a whole bunch of planning.

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Carl Duncan: It’s driven investment and focus and expertise to come into

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Carl Duncan: the sector. And so by having that North Star, everyone

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Carl Duncan: gets rallied around it and starts to take a really good

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Carl Duncan: review of their own businesses and how they can align

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Carl Duncan: with those goals, start planning and then more importantly, start

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Carl Duncan: doing the things that make sense today. So I think that’s

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Carl Duncan: a good example of where having that foresight, that direction,

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Carl Duncan: that North Star, is super important. But to come back

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Carl Duncan: to your question, question around what sectors I think might be challenged,

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Carl Duncan: obviously sectors where heavily into say fossil fuels, for example,

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Carl Duncan: where there may not be technologies today that can get

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Carl Duncan: them to net-zero, then sure that’s obviously a lot more challenging.

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Carl Duncan: Or where the investment is just such that it doesn’t

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Carl Duncan: make economic sense or there’s not something viable today they

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Carl Duncan: can get into, then that creates longer, more difficult challenges,

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Carl Duncan: which lots of people around the world are working really,

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Carl Duncan: really hard to solve.

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Jennifer Duke: Definitely. And I love that reframing at the beginning of

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Jennifer Duke: your answer there about how it’s not just necessarily about

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Jennifer Duke: a broad brush stroke about a sector, but it’s about

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Jennifer Duke: their approach to it. And clearly there isn’t really some

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Jennifer Duke: sort of one size fits all solution for businesses. So

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Jennifer Duke: how complex is it for a business to come up with

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Jennifer Duke: that pathway?

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Carl Duncan: Like anything, I think it’s about setting a North Star,

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Carl Duncan: setting a goal, taking a step back, being strategic about it.

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Carl Duncan: So I don’t think any executive or CEO or management

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Carl Duncan: team ever set out to grow a company without any

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Carl Duncan: growth goals or any aspirations. They always set where they’re

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Carl Duncan: trying to get to and rally around it. And this

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Carl Duncan: is no different. It’s about taking a step back, getting

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Carl Duncan: experts in where it makes sense, looking at your emission stack,

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Carl Duncan: looking at what technologies are available to you depending on

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Carl Duncan: the type of business, and then setting a plan out

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Carl Duncan: around it, making sure that it’s resourced, making sure you’ve

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Carl Duncan: got capital or making sure that there’s appropriate business models

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Carl Duncan: there that can be leveraged to get towards net-zero.

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Jennifer Duke: So when you are working with businesses at the moment,

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Jennifer Duke: what are some of those big stumbling blocks that you

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Jennifer Duke: are working through with businesses?

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Carl Duncan: Yeah, first of all, we obviously start with an assessment process and try

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Carl Duncan: to get our customers closer to understanding what makes sense

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Carl Duncan: for them here and now, what they can do today.

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Carl Duncan: And get those results and see how that drives benefit

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Carl Duncan: for their businesses. But yeah, definitely stumbling blocks, I think

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Carl Duncan: a lot of people just don’t know where to start,

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Carl Duncan: especially a lot of the noise and things like that

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Carl Duncan: that go around with net- zero can sometimes make it

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Carl Duncan: seem over complicated. We generally find the most consistent thing

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Carl Duncan: throughout the economy is energy supply. And so typically starting

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Carl Duncan: with that, usually we’ll walk into a facility and pretty

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Carl Duncan: quickly we’ll be able to identify the opportunities that make sense

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Carl Duncan: here and now and what technologies make sense for that business.

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Jennifer Duke: Stay with me, Carl, we’ll be back in a minute.

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Jennifer Duke: My guest this morning is Carl Duncan, the CEO of NRG-

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Jennifer Duke: ONE. Is there still a cost premium attached to greener

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Jennifer Duke: energy and does that make it harder to sell to

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Jennifer Duke: businesses who are already under financial pressure?

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Carl Duncan: Yeah, it’s two- sided and the first part of your

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Carl Duncan: question there rings home. So with those soaring prices also

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Carl Duncan: means that the investment time or the investment is stronger

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Carl Duncan: in things like energy efficiency and renewables. What we see

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Carl Duncan: though is very much a tailoring. What we apply is

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Carl Duncan: very much a tailoring approach. We’re a customer-centric energy services

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Carl Duncan: business at NRG-ONE. And so we’ll always start with things

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Carl Duncan: like behind the meter or renewables that makes sense on

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Carl Duncan: our customer sites first coupled and integrated with energy efficiency

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Carl Duncan: because chances are that’s going to give the best bang

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Carl Duncan: for buck day one, as opposed to those much, much

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Carl Duncan: bigger things like purchasing green energy, for example, off the

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Carl Duncan: grid as part of a long-term agreement. It really is horses

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Carl Duncan: for courses though. So it’s about understanding that particular business

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Carl Duncan: and what makes sense. And often it’s cheaper so there

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Carl Duncan: doesn’t have to be a premium attached to it. We’re

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Carl Duncan: definitely seeing lots of things like people fuel switch or

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Carl Duncan: electrify processes, and chances are that’s actually cheaper than how

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Carl Duncan: they’re doing it today.

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Jennifer Duke: That actually really surprises me. Does that surprise a lot of

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Jennifer Duke: businesses as well when they’re talking to you about what

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Jennifer Duke: they can do?

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Carl Duncan: Yeah, it does sometimes. But again, I think it’s just

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Carl Duncan: like anything, right? When you get the right experts in

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Carl Duncan: that understand their field and understand it well, and you

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Carl Duncan: form a collaborative partnership with them and use that expertise

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Carl Duncan: well, then often that’ll … You turn over a few rocks

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Carl Duncan: and you start to uncover a few opportunities there that

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Carl Duncan: can really enhance your business.

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Jennifer Duke: And we discussed a little bit at the start about

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Jennifer Duke: the importance of certainty for business. How important has that

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Jennifer Duke: been for knowing the path ahead, having those goals and

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Jennifer Duke: those stepping stones in place?

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Carl Duncan: I think it really rings home. You can’t put a

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Carl Duncan: value on having certainty, particularly Australian business leaders have got

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Carl Duncan: a really good radar of what works and what’s coming

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Carl Duncan: at them. And when that position is set and it’s

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Carl Duncan: everywhere, everybody starts to get rallied around it, talks about

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Carl Duncan: it. I think everybody knows it now just makes sense.

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Carl Duncan: And so they’re really just getting into it. And so

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Carl Duncan: that business certainty as a community, as a business community, is

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Carl Duncan: a really, really powerful thing.

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Jennifer Duke: Definitely, I think that’s a big tick in the certainty

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Jennifer Duke: box, which is wonderful. Speaking still of government, is there

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Jennifer Duke: enough support though in other ways from government for businesses

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Jennifer Duke: to transition at the moment? Are there other things that

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Jennifer Duke: you’d like to see?

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Carl Duncan: Yeah, that’s a big question. I think there’s a whole

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Carl Duncan: gamut of grants and various types of funding support or

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Carl Duncan: loans equity, all sorts of mechanisms to help organisations transition

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Carl Duncan: to net-zero. And that’s a great thing. Certainly having certainty

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Carl Duncan: around where the country’s trying to get to is a

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Carl Duncan: good thing also. Probably the gap for us, there’s a

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Carl Duncan: whole bunch of effort on transitioning utility scale energy supply,

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Carl Duncan: which is great. It’s fantastic. It’ll get us some big results,

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Carl Duncan: but we probably think there’s still a bit of a

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Carl Duncan: gap around what we call DER or Distributed Energy Resources

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Carl Duncan: and energy efficiency. Those are the things we see on

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Carl Duncan: customer sites or on business sites within their own boundaries,

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Carl Duncan: that can really drive and enhance productivity for businesses specifically.

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Carl Duncan: And so yeah, we think there’s probably a bit more

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Carl Duncan: that could be done there to really turbocharge the whole

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Carl Duncan: net-zero transition and provide some real value for businesses.

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Jennifer Duke: And the other thing I was going to ask you

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Jennifer Duke: about is, I know you’ve mentioned that sometimes we are

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Jennifer Duke: seeing executives now increasingly bringing in those experts to help

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Jennifer Duke: with this transition, are you finding that boardrooms and executives,

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Jennifer Duke: they have the right skills at the moment to understand

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Jennifer Duke: what they need to do for the transition? Are they

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Jennifer Duke: bringing the experts at the right time? Have you got

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Jennifer Duke: any reflections on that?

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Carl Duncan: Yeah, getting around and talking to a few executives within

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Carl Duncan: my network, I think they’re starting to, and probably the

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Carl Duncan: conversation’s really shifted more into or being woven into sustainability strategy,

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Carl Duncan: which I think is a really clever thing. So a lot of executive C-Suite

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Carl Duncan: people I’m talking to are thinking about not just how

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Carl Duncan: can I bring the benefits forward now? How can I

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Carl Duncan: reduce my energy costs and all those sorts of productivity

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Carl Duncan: gains and good things that the net-zero transition can bring

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Carl Duncan: to their business. But they’re also going a step further

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Carl Duncan: in baking and sustainability strategy and working with organisations like NRG-ONE

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Carl Duncan: to say, okay, I’ve got this brand. How can I plug

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Carl Duncan: in a net-zero strategy? How can I make my brand

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Carl Duncan: and my product more valuable? How can I get a

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Carl Duncan: seat at the table with my customers and bring my

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Carl Duncan: sustainability A-game? And so I think that’s a really clever move,

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Carl Duncan: and we’re seeing a lot of organisations and well-known brands

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Carl Duncan: wrap their arms around that and start to bake it

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Carl Duncan: into their businesses going forward.

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Jennifer Duke: It’s absolutely fascinating, and I think this is a place

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Jennifer Duke: that we’ll be looking at very, very closely going forward.

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Jennifer Duke: But Carl, thank you very much for talking to Fear

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Jennifer Duke: and Greed.

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Carl Duncan: Oh, thanks very much, Jen. I’m a longtime listener. I

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Carl Duncan: really enjoy the podcast and enjoy doing everything you’re doing. But thanks for having me on the show.

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Jennifer Duke: And that was Carl Duncan, the CEO of NRG-ONE. This

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Jennifer Duke: is The Fear and Greed Daily Interview. Join us every

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Jennifer Duke: morning for the full episode of Fear and Greed, Australia’s

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Jennifer Duke: most popular business podcast. I’m Jennifer Duke, Economics Correspondent for

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Jennifer Duke: Capital Brief and filling in for Sean Aylmer. Have a

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Jennifer Duke: great day.