Parlimentary Inquiry Tackling Climate Change in Victorian Communities Submission

27 August 2019

The Committee Manager
Legislative Assembly, Environment and Planning Committee
Parliament House, Spring Street
EAST MELBOURNE VIC 3002

Dear Committee Members

Re: Inquiry into Tackling Climate Change in Victorian Communities

Thank you for the opportunity to respond to the Parliamentary Inquiry into Tackling Climate Change in Victorian Communities. VicWater is the peak body of the Victorian water industry with its membership comprising Victoria’s 19 statutory water corporations. They are responsible for the provision of urban water and wastewater services, rural water supply including irrigation and related drainage services.

Tackling climate change is naturally a core priority for the water industry. Water corporations’ focus on this challenge has three distinct dimensions:

• Climate change impacts are already significantly affecting water supplies, and impacts will be exacerbated in the future. Water corporations are on the front line of climate change adaptation, undertaking strategic planning for a range of climate change scenarios
• Water corporation activities, particularly wastewater treatment and pumping water are historically responsible for a significant portion of Victoria’s of greenhouse gas emissions
• Water corporations have embarked on major renewable energy programs and are now leaders in the state’s renewable energy sector.

This Inquiry’s Terms of Reference necessarily focus attention on the Victorian Government’s role to assist communities to tackle climate change. The core contention of this submission is that the water industry is uniquely capable of promoting community action to tackle climate change. By supporting our members with a clear mandate and efficient regulatory framework, government can maximise their impact – for the benefit of Victorian communities.

It is the water industry’s natural role to lead community action to tackle climate change, to adopt renewable energy and to showcase Victoria’s skills and innovation in renewable energy:

1. Water corporations combine skills in science, engineering, commercial, project management and community engagement,
2. they are large regional employers,
3. they have strong links within their communities and with business, and
4. they have a track record of delivering complex infrastructure on time and on budget.

This submission will focus on how the water industry is working with, and on behalf of, Victorian communities to expand the state’s renewable energy sector, and tackle climate change, by directly lowering emissions. It will also describe aspects of the regulatory framework that are key to empowering our members to perform that role. A separate, online, compendium of water industry initiatives is provided for detailed reference.

Water for Victoria

The Victorian water industry’s enthusiastic adoption of renewable energy would not be possible without the joint efforts of water corporations and the Department of Environment, Land, Water and Planning (DELWP), as part of the Victorian Governments Water for Victoria Strategy. Water for Victoria set an ambitious new policy for the Victorian water industry to become carbon neutral. This policy was welcomed by water corporations, many of which had already taken steps in that direction, including by investing in renewable energy, improving energy efficiency, and enhancing process efficiencies.

VicWater worked closely with DELWP to implement a robust policy framework for water corporations to transition to carbon neutrality and invest directly in renewable energy. In particular, the framework provided flexibility for water corporations’ different context and baseline emission intensity, and it clearly integrated with the economic regulatory framework, providing certainty for investment and outcomes. This allowed water corporations to just get on with ‘the doing’.

The precise result of this collaboration was of the Water Industry Statement of Obligations (Emission Reduction), which was signed by Water Minister Neville in March 2018. The Emission Reduction SoO sets out clear ground rules for achieving carbon neutrality such as calculating emissions and provides water corporations a mechanism to independently set interim targets.
The joint process that gave rise to the Emission Reduction SoO has been a high point for cooperative policy development between the water industry and DELWP. It laid the foundation for the subsequent rapid rollout of emission-cutting infrastructure, innovations and community-based initiatives, with minimal impact on water prices, which are featured herein.

The success of our members’ ongoing transition to carbon neutrality provides a case study in how a clear mandate and an efficient regulatory framework can underpin an expanded role for the water industry in Victorian communities. These lessons can equally be applied to other policy areas such as liveability, recreation, environmental management and the circular economy.

Outcomes

To accompany this submission, VicWater has prepared a compendium of information on ways the Victorian water industry is tackling climate change. These case studies fall into four categories: joint water industry initiatives, behind the meter renewable energy generation, water and energy efficient housing development, community engagement, and customer-centric initiatives.

Joint water industry initiatives

The Victorian water industry is highly agile and prepared to adopt innovative commercial strategies to achieve outcomes. Intelligent Water Networks (IWN) is a water industry and DELWP collaboration vehicle for investigating new technologies and innovations to meet common challenges in a manner more efficient than acting individually. The IWN Largescale Renewables Project recognises that, for single corporations, some on-site renewable energy generation projects can be too expensive, complex or small to be viable. And that water corporations’ commitment to carbon neutrality should not force otherwise uneconomic projects to proceed. By jointly investing in a Large Scale Renewable Energy Project, water corporations can achieve long-term price certainty, reduce their operational risk and complexity, and eliminate emissions.

Under this project, 13 water corporations are participating in the joint Power Purchase Agreement process for more than 78 GWh/year. A new organisation called Zero Emissions Water Ltd (ZEW) was established to manage the contract over the next 10 years on behalf of the Corporations involved. This project makes a critical contribution to ensuring the lowest community cost for water corporations’ transition to carbon neutrality, by setting a baseline against which other projects can be benchmarked. The scale of this project is such that it will provide a huge boost to the Victorian renewables industry in its own right, underpinning a larger Victorian renewable energy sector that will create more jobs in the future.

Behind the meter renewable energy generation

Water corporations have the technical, engineering and project management skills to implement virtually any type of renewable energy solution that is cost-effective and fit-for-purpose. The VicWater online compendium of water industry initiatives includes numerous examples of the following:

• A major roll out of solar photovoltaics at wastewater treatment plants, offices and pump stations
• Waste-to-energy facilities generate biogas from food waste and sewerage which is burned to power treatment plant operations as well as returning power to the grid
• Large-scale adoption of battery storage to make greater use of power generated on site, or to return power to the grid during price spikes
• The construction (by one of the water corporations) of a 48m-diameter wind turbine that will produce more than two gigawatt hours of renewable energy each year
• Optimised plant operation to reduce power consumption spikes, including via operational changes and system modifications, thus making more effective use of energy generated onsite
• Taking the opportunity to utilise wastewater treatment plants, which often have high capacity electricity connectors and are well-suited to provide renewable electricity, generated onsite, back to the grid.

Water and energy efficient housing development

Our members are increasingly adopting a long-term, community and environment-focused approach to redeveloping surplus land. Historically, surplus land would be disposed of in a purely commercial transaction and water corporations would play no further role. As they have become more community-centric in other respects, water corporations have taken greater interest in ensuring that surplus land is repurposed in a way that provides a higher quality built environment for future residents and communities. It also provides an opportunity to promote broader objectives such as energy efficiency, the circular economy, liveability and lower cost of living.

The Aquarevo, Salt Torquay and Riverwalk developments showcase a new approach where the water corporation takes a central role in the land redevelopment process. Outcomes include: achieving 7.5 star water and energy efficiency design standards, making greater use of renewable energy, recycled water and stormwater on-site, planning for future suburb-scale micro-grids, ensuring high quality construction standards, and maximising integrated water management and green space.

Community engagement and customer-centric initiatives

Victorian communities play a key role in all water industry actions to tackle climate change. All the successes discussed herein are ultimately built on the trust and licence to operate, granted by Victorians to their local water corporation. Communities’ trust and licence to operate is nurtured by water corporations through a genuine commitment to community engagement and transparency.

Community engagement is an important feature of all long-term planning and new investment decisions. However, when it comes to the shared need to tackle climate change, it also provides a licence to explore new and innovative solutions. A purely transactional approach to carbon neutrality (for example, by simply buying certificates or offsets) would miss the opportunity to deliver broader benefits, such as: grow the Victorian renewables industry, generate more local jobs, leverage additional climate action in communities, and achieve long-term lower water and power bills.

Water corporations are strong supporters of community initiatives to tackle climate change. The online compendium of water industry climate initiatives includes information on Totally Renewable Yackandandah and the Port Fairy Smart Energy Precinct, which are community initiatives taking collective action on climate change and achieving greater energy independence. Water corporations are enthusiastic partners to these community-based initiatives, contributing scale, credibility and technical know-how on which other community and business climate change action can grow.

Conclusions

The core objective of this submission is to demonstrate the unique capability of Victoria’s water industry in promoting community action to tackle climate change. By supporting our members with a clear mandate and efficient regulatory framework, government can maximise their impact – for the benefit of Victorian communities. The VicWater online compendium of water industry climate initiatives includes information on a range initiatives that are delivering far broader benefits than simply achieving carbon neutrality. Although many of these projects are long-term and involve some risks, their complexity is well within the skills of the water industry to manage and the overall benefits of this approach are clear.

Yours sincerely
Peter Morison
Chief Executive Officer