Industry News

Business as usual approach won?t cut it long-term

There’s been plenty of debate about Australia’s energy grid since the release of the Independent Review into the Future Security of the National Electricity Market. That report has advocated Australia set a clean energy target that compels electricity generators to provide a percentage of their power from renewable energy sources.

Of course, the panel’s advice will be ignored because of politicians’ decade-old enmities about clean energy. Some of the same old dinosaurs are arguing that there is no need for infrastructure reform.

However, as Australia’s Chief Scientist Alan Finkel AO explained, the common sentiment of stakeholders (eg energy companies, industry groups, consumers) is that “business as usual [is] not an option”. After a century of “technological sameness”, Finkel said, the electricity market cannot rely forever on traditional electricity sources. Consumer demand and disruptive technologies have produced more efficient, inexpensive and sustainable ways of energy delivery (eg wind, solar, battery capacity). Finkel said the report seeks to co-optimise four outcomes in the national electricity market: reliability, security, lower emissions and low consumer costs.

A similar argument could apply to the extractive industry. It’s been “business as usual” for more than a century but the industry must prepare now for disruptors in the decades ahead. Despite population growth and a ravenous demand for more infrastructure, aggregate producers will face uphill battles to open greenfield sites or expand brownfield operations.

Lack of grassroots support, populist politicians with “green” agendas, heavier regulation, “untouchable” resources and skilled labour shortages will impact the industry. As long as the extractive sector relies on the grid, it stands to reason that pressures on the electricity market will trickle down to other industries. There may even be an expectation by regulators, if not an outright requirement, that quarries invest in renewables – whether that be adopting solar panels, wind turbines or biogas to power processing circuits, replacing diesel-driven fleets with hybrid or all-electric vehicles and producing percentages of their output from recycled aggregates.

Quarries may have to diversify. Indeed, some businesses are already anticipating the factors outlined above, eg they are diversifying into landfill management and construction and demolition (C&D) recycling. I visited a medium-sized operation just last month that is treading this path. Boral has its own recycling arm which, in partnership with Delta Group, recycles more than one million tonnes of C&D materials annually. In Victoria, the company’s landfill business produces a low emission biogas that generates renewable electricity for the grid. Further, recyclers like Alex Fraser have developed successful business models for the processing, promotion and sale of recycled aggregates.

Even plant and equipment manufacturers are embracing cleaner technologies. Volvo CE is trialling one of the world’s first all-electric quarry sites in Sweden. It features concept hybrid vehicles powered by wheel-mounted electric drive motors. Volvo CE’s competitors have spent years developing and promoting fuel-efficient hybrid machines and other designs, some powered by cleaner, low emission fuel alternatives. As these technologies become more cost-efficient and reliable, they will replace today’s diesel guzzlers.

Extractive businesses, regardless of size and resource, must consider diversifying their services and investing in new technologies now so that they are not caught out by sweeping changes to regulation 10 to 20 years away. Our politicians may lack the political will now to embark upon radical reform but they will switch direction with generational change. Good businesses cannot afford to be caught out.

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