As the trucking industry heads into the New Year, there is a degree of uncertainty over when legislation will be delivered and what it means for operators.
But while some might appreciate that the climate change agenda and the cost increases it will bring have been stalled, Queensland-based Rocky’s Own Transport is getting proactive.
It’s taking advantage of the lull in activity to position itself for the inevitable switch to a greener economy.
“We’re not paying a carbon tax but we know we will. It’s no good taking the ostrich approach, it’s coming,” Rocky’s Own CEO Bryan Smith says.
“That’s why we said: ‘what do we do? Do we sit back and roll with this or do we have a look at things outside the square?’”
Like other large transporters with a significant carbon footprint, Rocky’s Own is registered with the federal National Greenhouse and Energy Reporting Scheme (NGERS).
The scheme requires companies to report emissions if they purchase more than 2.59 million litres of diesel.
Working on a carbon price of $60 a tonne, Rocky’s Own has used the NGERS to understand the cost of complying with climate change legislation.
So when the company decided to work out ways of reducing its exposure, Chief Financial Officer John Bryant began digging into the NGERS and came up with an interesting result.
“He’s an amazing guy. He grabbed onto it like a dog with a bone,” Smith says.
EFFICIENCY DRIVE
In an industry where profit margins are normally around 3 percent, getting the biggest bang for your buck is vital.
Under the NGERS, companies can choose to use one of four reporting methods to record their emissions. The default method, used up until recently by Rocky’s Own, calculates emissions based on averages.
But as Bryant discovered, the averages were far from accurate.
Smith says the CFO looked beyond the reporting standards and found that the NGERS relied upon emissions standards of the European trucking industry.
“It proved this default standard is just not accurate for the industry. When you look at the size and scale of the industry it’s quite profound,” Smith says.
Armed with this, Rocky’s Own approached Central Queensland University (CQU) to delve into the NGERS and look at options the company could pursue to reduce its emissions.
Dr Susan Kinnear, Adam Rose and John Rolfe from CQU released their report in September corroborating Bryant’s findings.
“Most of the original methodology on emissions from road transport has been developed from international research conducted in Europe and the United States,” the report says.
“The average distances and tripe lengths undertaken in Australia have little in common in those of European nations.”
The report went on to say the lack of Australian-specific information could lead to inconsistencies due to the different driving conditions, trip types and fuel characteristics between Europe and Australia.
Rather than rely on averages, Rocky’s Own was urged to adopt the second reporting method under the NGERS which allows companies to calculate their own emissions based closely on the fuel use.
By doing so, the report estimated Rocky’s Own could save between 1.43 and 3.03 percent on its fuel use, which is expected to exceed 10 million litres by 2015.
“At a yearly consumption of 10 million litres and a carbon price of $60/tonne, this represents an annual saving of up to $48,600,” the report says.
The results surprised Smith, who says operators using the NGERS default reporting method will be overcharged if the scheme is linked to a carbon tax.
“There’s a chance that every company that accepts the default position are going to be paying somewhere in the vicinity of 3 to 7 percent more than what they should,” Smith says.
“The poor buggers are going to pay through the nose.”
Since the university handed Rocky’s Own the report, the company has begun using the second reporting method. But it’s already looking to go one better.
Smith plans to link devices to truck exhausts to directly measure emissions, giving Rocky’s Own real-world data and improving reporting accuracy.
According to the report, measurement devices can monitor emissions from driving speed, acceleration, cruising and deceleration.
“I’d like to think sometime next year we’d be monitoring our stack emissions to determine where we do sit and whether we can reduce our exposure even more,” Smith says.
STAYING AHEAD OF THE PACK
Rocky’s Own’s work with the university is only one part of its push to cut emissions.
Smith says the company, like others in the industry, are paying more attention to biofuels to reduce their running costs in anticipation of a carbon price.
“We had quite a long meeting with a biodiesel mob. I think most in the industry are looking at those guys,” he says.
“If we get a carbon tax everyone is going to be looking toward biodiesel.”
The operator is already using the latest Euro technology, with Smith saying Rocky’s Own turns its fleet over every four years.
“By doing that, every four years we’re applying the latest technology and reducing emissions significantly,” he says.
But it comes at a cost.
“By reducing those emissions, usually you will lose your fuel economy. The newer technology motors, the Euro standards, they’re emitting less. But the payoff to achieve that is a loss of fuel economy,” Smith says.
It’s where he sees a potential policy problem for governments under climate change legislation.
“If you’re going to have a tax based on use of fuel, the people that are trying to do the right thing by using the newer cleaner technology are actually being disadvantaged.”
The trade-off is that more and more freight customers are looking at trucking companies with green credentials. And Rocky’s Own is poised to take advantage of its
“A lot of transport companies now are having their larger customers say, ‘What are you doing to be greener? What are you doing to mitigate the exposure here?’”
“All major corporations want to be greener and they are aware also that there is going to be a cost of not being greener.”
About one year from now, Smith will front a select audience gathered to recognise innovative transport companies.
Each year Orica, a major customer of Rocky’s Own, runs a transport awards night built around a key theme.
“This year the environment is the project. In 12 months time I will have to stand up and give a half hour presentation on what we’ve done,” Smith says.
Thirty minutes might not be enough.