11 November 2009,
CARS and electricity – two inventions that propelled the world into the modern age, but with finite resources and growing concerns over climate change, they are also destroying the planet. As part of this month’s eco feature, Brisbane Business News profiles two companies driving the current change to help reduce pollution from fuel and energy.
From their dad’s backyard shed in Brisbane’s south-west, two brothers worked for four years on a battery that now has the potential to change renewable energy as we know it. As climate change rose on the agenda like the Pacific Ocean just might, society cottoned on that solar and wind power could be a solution out of the distant doldrums.
But the catch is that as an energy source they are far too intermittent – what happens in a bout of cloudcover, or if the wind stops?
The answer? Storage, which is exactly what brothers Chris and Alex Winter have achieved through their company Redflow, with a zinc bromide battery that is now used by Ergon Energy. It is a product with global potential to harness renewable energy while catering to growing peak electricity demands.
Redflow CEO Chris Winter points out that people complain about growing electricity prices, but the spike is largely from their own doing as at peak times we are using more and more electricity by the day.
“Electricity demand is growing so quickly – before you’d install a fan but now you have air conditioners, and instead of having a small TV people want big screen TVs – you have electronic photo frames for instance, and that’s all very nice, but it all contributes to consumption,” says Winter.
“And people are putting on their TVs all at the same time, there’s peak hour demand and once that happens everything slows down – it’s like a traffic jam on the road. So if you can secure a way to feed in that peak demand, then the utilities have to build less infrastructure and costs go down.”
This is the gap Redflow aims to fill. The start up began in 2001 and with the help of State Government grants it was able to commercialise in 2005, before securing a deal with Ergon in 2008. At the moment the 17 Mile Rocks business is in discussions with several other large utilities in Australia and the US, with plans to partner with renewable energy companies as well.
With revenue of $1 million over the last 12 months, Winter plans to quadruple Redflow’s revenue in the next year, hire 20 more staff and build a new plant. The company currently has 25 staff, but 18 months ago there were just four.
Within the next five years Winter foresees annual revenues of $100 million and if all goes exceptionally well, that figure could rise to $500 million – but it’s all speculation.
“You think that 10 years ago it was all coal power stations, but climate change has meant renewable resources are now in the market – it’s a big positive and 20 years or so from now we’ll see a lot more of it and if we work effectively to use the technology now, we’ll benefit as a country.”
Winter points out that Redflow’s patented batteries are the only ones of their kind in the world, with a few other companies working on similar inventions, but without success to date. The last major player to develop the basics of zinc bromide batteries was Exxon in the 1970s as they sought to develop electric car technology, but as the oil shock subsided they went back to business as usual.
Though any oil in a car will produce carbon emissions, the vision of Brisbane-based Freedom Fuels is to reduce the extent and damage through its ethanol and biodiesel products – it is this tenet that has driven the company from 11 stores in 2001 to 57 this year, with an annual turnover of $780 million and almost 700 staff.
Freedom Fuels managing director Matthew Morland has a goal to reduce carbon emissions by a million tonnes per annum within the next five to 10 years through customers buying his products.
“Through biodiesel and ethanol-based petrol in June we reduced 6121 tonnes of carbon emissions, in July it was 10,287 tonnes and in August it was 11,590 – it’s come about through an increase in sales and growing penetration of our renewable fuels,” says Morland.
“At the end of last year we commenced to sell only ethanol blends or biodiesel and within two months we will do the same in Victoria, so our total network will only sell renewable fuels — we’ll choose the sandpit we want to be in.”
Morland says it takes a game man to claim he doesn’t need to act now and that he can live the same way he has for the last 100 years – times are changing and business is too, with a string of large companies signing up to source from Freedom Fuels.
“The most successful companies are those with people who want to make a difference. You don’t have to be an extremist to make a contribution and we’re finding that today a lot of people want to make a difference to the environment, but some just don’t know how to do it,” he says.
The ethanol industry has copped its fair share of flak as part of the ‘food before fuel’ campaign, which asserts the food industry is being deprived of its products in favour of ethanol production. While this has been the case in many places around the world, Morland makes reference to the CSIRO’s conclusion that Australia’s situation is different.
“There has been a campaign over the last couple of years by people with deep pockets who are not interested in success for our type of business – for instance some are from the food manufacturing game, the oil industry, they don’t want this to be a success,” he says.
“The interesting thing is that all commodity prices rose steeply in 07 and 08 and prices went through the roof. But commodities now have halved in price, but grocery prices haven’t gone down with them.
“The food before fuel campaign goes back to corn in America, but we’re not in America. Our ethanol uses molasses which is a by-product of sugar cane and not fit for human consumption, sorghum grain which is predominantly used in cattle feed so it’s not competing with Weet-bix, and we use starch and by-products from making glutton — effectively a waste product.”
Morland believes that people were apprehensive towards ethanol petrol at first, but his business is de-risking itself as products enter the mainstream. While E10 is the current standard with 10 per cent ethanol in the fuel, he looks forward to the use of E85 and flexifuel cars that are developed with it.
“We’ve got to crawl before we can walk, but we’re getting there - every new vehicle has a cap that says the car can use E10, which is bringing people on board knowing that it’s safe and viable,” he says.
“E85 will be available to a restricted amount of people in the next 12 months – it takes on average 13 years to replace all cars, but I think because of people’s growing carbon reduction needs it will become mainstream in that time.”
Morland is clearly optimistic about the future and applies sustainability to environmentally-friendly practices in the shop as well as the bowser, with a move to use biodegradable shopping bags. It all relates to a company-wide and global desire for change.
CPRS as big as GST
“A lot of clients don’t have to comply with new legislation but some larger businesses like NAB and Telstra are asking explanations from businesses about what they do towards being carbon neutral and their carbon management plans – so in a way we are seeing indirect legislation,” says Croston.
“There are three critical areas – there are the major customers, companies that have to deal with the legislation, the next if a company is exporting to the UK, Europe or Japan, as well as those who provide services to the government, who are increasingly asking whether their clients are sustainable.
“As accountants we believe the CPRS is at least as relevant as the GST in it’s implication in business, so companies need to look for areas where they are energy efficient.”
Croston says that the legislation will lead to a lot of turmoil in its first five years as businesses struggle to cope, so companies need to be proactive now to plan their costs if they want to perform.
“Don’t just focus on the GFC because the CPRS is just around the corner and could have more bite. With current indicators, going forward we expect costs will rise and will result in big business passing on the costs of permits,” he says.
“For those who have no idea, come 2011 their costs will go up and they wouldn’t have factored those costs into account.”
He cites the main industries at risk as mining, transport, construction or any businesses that exports.
And as businesses prepare for the impacts of new legislation, many are doing what they can to support their own green credentials and help solve the problem where they can. It is for this reason that Queensland Minister for Climate Change and Sustainability Kate Jones has been supportive of initiatives like Little Green Genie, where companies and individuals can pay for carbon offsets on their computer usage.
“What’s often lost in the climate change debate is that one of the biggest threats we have to our biodiversity here in Queensland is climate change,” says Jones.
“We want Queensland to lead the way so that we actually offset more computers here in Queensland than the other states – it only comes to about $10 per person.”
So financially the CPRS legislation may be as big as the GST, but there are many small ways the Brisbane businesses can get involved and go ‘green’. People complained when the GST was introduced but now it is just a way of life, so if history is anything to go by then Brisbane’s budding business class will adapt to this next hurdle too.Sometimes it only takes a few small steps and some clever ideas to move forward.