Transport – The high upfront cost of new cars and relatively low fuel excise reduces the importance of fuel efficiency in the decision making process. Even fleet cars can be chosen on factors such as a preference for local manufacture or size requirements, rather than consideration of the total cost of ownership. Capital constraints and investment priorities Many emissions reduction opportunities require an upfront capital investment, which is then paid off over time through savings on operational expenses such as energy. These profitable opportunities are often not captured because businesses, organisations and families cannot access, or do not want to part with, the required upfront capital. Often the sectors with lower cost emissions reduction opportunities (buildings and transport) require higher upfront capital in relation to the energy or financial savings captured, which is a key reason they are overlooked in business-as-usual decision-making. Access to capital. The capital available to businesses and households is often limited by their other investment obligations, e.g. first home buyers do not have the additional upfront capital to invest in more expensive energy efficient appliances or higher levels of insulation even though the investment will pay for itself in energy savings. Much of the capital spent on energy efficiency projects is not transferable once invested (e.g. a bank cannot easily remove or re-use light fittings, insulation or tailored machine parts), meaning there is little collateral if the borrower defaults. This in turn can drive up the cost of capital and increase the stringency of lending standards for emissions reduction projects, particularly for small to medium businesses. Accessing grants and subsidies from the Government is also more difficult for smaller business, primarily because of the time commitment to research, apply and report on projects relative to the size of the grant required. Smaller businesses can also be overlooked in favour of projects with higher profit outcomes. Industry – Implementing emissions reduction opportunities such as installation of sub- metering or cogeneration plants can come at a high upfront cost. Competition for capital is intense and energy efficiency improvements or emissions reductions are often a low priority as they are not core business activities, offer lower rates of return and are perceived as riskier than other potential investments.
Transport – The high upfront cost of new cars and relatively low fuel excise reduces the importance of fuel efficiency in the decision making process. Even fleet cars can be chosen on factors such as a preference for local manufacture or size requirements, rather than consideration of the total cost of ownership. Capital constraints and investment priorities Many emissions reduction opportunities require an upfront capital investment, which is then paid off over time through savings on operational expenses such as energy. These profitable opportunities are often not captured because businesses, organisations and families cannot access, or do not want to part with, the required upfront capital. Often the sectors with lower cost emissions reduction opportunities (buildings and transport) require higher upfront capital in relation to the energy or financial savings captured, which is a key reason they are overlooked in business-as-usual decision-making. Access to capital. The capital available to businesses and households is often limited by their other investment obligations, e.g. first home buyers do not have the additional upfront capital to invest in more expensive energy efficient appliances or higher levels of insulation even though the investment will pay for itself in energy savings. Much of the capital spent on energy efficiency projects is not transferable once invested (e.g. a bank cannot easily remove or re-use light fittings, insulation or tailored machine parts), meaning there is little collateral if the borrower defaults. This in turn can drive up the cost of capital and increase the stringency of lending standards for emissions reduction projects, particularly for small to medium businesses. Accessing grants and subsidies from the Government is also more difficult for smaller business, primarily because of the time commitment to research, apply and report on projects relative to the size of the grant required. Smaller businesses can also be overlooked in favour of projects with higher profit outcomes. Industry – Implementing emissions reduction opportunities such as installation of sub- metering or cogeneration plants can come at a high upfront cost. Competition for capital is intense and energy efficiency improvements or emissions reductions are often a low priority as they are not core business activities, offer lower rates of return and are perceived as riskier than other potential investments.
8d39c33d3316893-Geelong%20LCGP%20ClimateWorks%20report%20-%20FINAL.docx