ACR 2022 Fall Environmental Forum Recap
ACR’s 2022 Fall Environmental Forum Speakers Panel: Olexander Vasetsky (left), Rhonda Rudnitski (middle), Jerry Demchuck (Right)
Rhonda Rudnitski VP ESG Secure Energy
SECURE is an energy services company with a diverse suite of customer-driven solutions with 95 midstream infrastructure and waste management facilities.
From an ESG perspective, Secure's business is focused on achieving internal ESG objectives and externally focused on their customers’ ESG objectives. As an example, in 2021, Secure spent $10.5 million with 89 Indigenous businesses, and reduced their Scope 1 and 2 emissions by 9% while recovering 250,000 m3 of crude oil, and recycling 197,000 tonnes of steel from customer waste.
Rhonda Rudnitski, Secure’s VP ESG, provided an informative discussion on building an ESG program that recognizes current organizational accomplishments while establishing short, medium, and long-term ESG objectives. She stressed that ESG is vitally important to drive ethical and resilient business practices, meet stakeholder expectations, and blend a company's social value with its market value. Rhonda highlighted Secure’s three foundational building blocks of a strong ESG program; (1) establish a foundation, (2) create a culture, and (3) institute accountability.
Establishing a foundation is a step-by-step process beginning with a materiality assessment that identifies the most important ESG pillars for your company. Policies and guidelines must then be updated or developed to support the pillars. You should then build and budget for a plan that fits your business, drives improvement, aligns with strategic objectives, and is measured.
Ms. Rudnitski strongly suggested that ESG education and awareness will generate momentum, foster inclusion, and encourage "buy-in.” You need to have a mindset that ESG is a journey, supported by senior leaders, with opportunities for all employees to participate. Communicate early and often; share wins, learn from losses, tell your story internally and communicate externally through all avenues possible.
Finally, the executive leadership group must be accountable for the delivery of ESG performance. Setting targets, monitoring progress, course correcting, and being transparent in all stages will help advance your company's ESG program. Linking ESG performance to compensation will further motivate employees. Verification and auditing will add credibility to the program and will be required where performance is tied to compensation and investment.
“True ESG is consistent with a judicious, well-considered strategy that advances a company’s purpose and business model”
Dan Carrocci President Sunset Renewables
SUNSET Renewable Asset Management Inc. is a sustainable solutions company with a focus on circular economy for the renewable energy industry. Mr. Carrocci gave a thought-provoking presentation on the challenges ahead of the renewable energy industry in managing end-of-life materials from wind, solar, and batteries.
Most photovoltaic (PV) solar panels have a lifespan of around 25 years, and this can be adversely impacted by catastrophic weather events such as hurricanes. By 2030, PV waste could be as high as 15,000 tonnes per year in Canada and landfilling is the primary option for end of life due to the limited options for recycling.
Solar panel recycling is also challenging; it is difficult to separate raw materials such as glass, aluminum, and other materials. Government regulation and incentives are needed to drive the circular economy associated with the panels. As first generation lower watt panels are being upgraded to higher watt panels, Sunset is looking at repurposing/reusing the first generation panels, for example at small farms for irrigation where a farmer can generate their own energy.
For wind turbines, most of the steel, copper wire, electronics, and gearing can be recycled or reused but fiberglass blades remain difficult to dispose of. With some blades as long as a football field, big rigs can only carry one at a time, making transportation costs prohibitive for long-distance hauls. Research and efforts are being made to separate resins from fibers or to break them up to produce pellets that can be incorporated into aggregates. There is also a need to be able to recover metals such as lithium, nickel, and cadmium, for both wind and solar batteries. The ability to recover these metals may reduce the volume of mining required to manufacture new batteries.
Olexandr Vasetsky Director of The Electric and Gas Distribution Group Alberta Utilities Commission
What the AUC does:
· Conduct evidence-based regulatory reviews in a fair and open process to consider what is in the public interest
· Balance the requirement to ensure safe and reliable service at just and reasonable rates
· Regulate investor-owned natural gas, electric, and water utilities and certain municipally owned electric utilities
· Ensure electric facilities are built, operated, and decommissioned in an efficient and environmentally responsible way.
· Provide regulatory oversight of the wholesale electricity market and retail gas and electricity markets in Alberta.
Mr. Vasetsky spoke about the growth of Distributed Energy Resources (DERs). On the supply side, DERs generate electricity and supply it to distribution customers, either for a customer’s own use through behind-the-meter generation (self-supply), distribution-connected generation (export only), or a combination of the two (self-supply with export). On the demand side, DERs are load-shedding and/or load-shifting technologies (e.g., energy efficiency, smart appliances, demand response, and electric vehicles). They also include technologies that allow energy to be stored and used later, such as batteries and pumped hydro.
Alberta has seen a sharp increase in DERs < 5 MW since 2015. As a result, the AUC commissioned an inquiry to understand how technology will affect the grid and incumbent distribution utilities, and how regulators and incumbent electrical distribution utilities will need to respond. The inquiry also sought to determine what rate structures and price signals are needed to encourage utilities, consumers, producers, prosumers, and alternative technology providers to use the grid and related resources in an efficient, cost-effective way.
The inquiry highlighted several benefits and challenges of a modernized grid that accommodates DERs. Some of the benefits include more choices for residential and commercial consumers, more cost competitiveness, customized retail products for consumers, a broader range of services for providers, and alternatives for residential and commercial property developers.
Modernizing the grid for DERs can be very costly if not managed properly, there is a potential for inefficient outcomes including an uneconomic bypass of costs, prosumers having a skewed view of grid cost avoidance, uncertain regulatory framework, and data privacy and security.
As an example, to manage the costs of modernizing the grid, EPCOR did a study with the U of A, showing that as few as one or two EVs using a Level 2 charger (7.2 kW) on a single 37.5 kVA transformer could potentially overload a single transformer servicing 12 households. Transformer replacements and capacity upgrades on a single residential feeder would cost approximately $20 million in capital upgrades (assuming the feeder has approximately 300 37.5 kVA transformers, each servicing 12 households, of which there are three households with EV charging). Alternatively, utilities could install advanced metering infrastructure (AMI) enables targeted pricing (time-variant rates, demand charges), which may incent charging at non-peak times to postpone or eliminate the need for upgrades.
In summary, Mr. Vasetsky highlighted three requirements to accommodate DERs with grid modernization; (1) advanced metering infrastructure (AMI) supplemented with consumer information, and targeted/variable pricing, (2) regulatory framework that supports the benefits of DERs, (3) and education for prosumers that have skewed expectations of grid cost avoidance through DERs. Some of these issues can be managed through the AUC’s existing processes while others will require legislative changes. Proactive, collaborative, and coordinated efforts amongst all stakeholders will support a cost-effective modernized grid for Albertans.
Jerry Demchuck ESG Advisory Services Director SLR Consulting
SLR is a global leader in environmental and advisory solutions, focused on helping clients achieve their sustainability goals. Mr. Demchuk’s presentation examined how ESG risk has become a significant component of the corporate risk profile and outlined the strategies required to effectively manage ESG risks and opportunities.
Mr. Demchuk stressed that ESG is about risk management and that no single set of metrics covers all sectors or organizations. It is incumbent upon organizations to identify risks and opportunities that drive long-term value for all stakeholders. The key steps to develop an ESG strategy were very similar to the steps highlighted by Secure in their presentation; (1) Define your ESG objectives and vision, (2) complete an ESG materiality assessment, (3) break down material ESG issues into individual risks and opportunities, (4) establish ESG baselines, KPI’s, targets and execution strategies, (5) integrate your ESG objectives with your corporate strategy, (6) develop a disclosure roadmap, and (7) monitor ongoing performance. Companies that are successful continuously review and course correct where needed.
Mr. Demchuk walked through some informative figures demonstrating the importance of ESG strategy, and the new risk paradigm with ESG as a driver. Another important figure illustrated the crossover between all three components of ESG materiality and the four components of Corporate Enterprise Risk Management (ERM); (1) operational risk, (2) business risk, (3) reputational risk, (4) and cyber risk.
An in-depth look at what is forming up to be the “ESG Battlefield” within many companies was then discussed. There are several dynamics within companies that are contributing to this with multiple groups and individuals wanting to own ESG or companies trying to manage it through narrow silos. SLR had some good advice on how to combat some of these pitfalls. The primary advice given was to embrace a cross-functional ESG team structure that enables a cradle-to-grave approach to manage ESG risk. This approach should be led by someone who has a strong cross-functional background and understands not only the ESG landscape but how to operationalize ESG targets and KPIs.
Mr. Demchuk then gave a real-life example of a renewable energy, battery metals company. The issue was that their sustainability program and internal risk analysis were not comprehensive and didn't adequately capture and integrate ESG risks. The challenges in front of them were to build an integrated risk registry that incorporates all material ESG risks. Additionally, they needed to improve internal structure and communication to manage expectations from all stakeholders, establish ESG accountability, and enhance cross-functional team performance. The solution was to:
1. Define Corporate commitment to developing a comprehensive internal ESG management platform
2. Define integrated ESG risk management team
3. Complete a materiality assessment to identify all ESG risks and opportunities
4. Develop corporate targets and KPIs.
5. Create an active risk registry to track specific KPIs
6. Integrate ESG risk evaluation into the existing corporate strategy
7. Develop the ESG Disclosure strategy
The Forum wrapped up with an engaging panel discussion covering topics such as: the pathways to net zero by 2050; Alberta’s infrastructure for energy transition to power and electrification; consequences and benefits to the consumer; lifecycle and maintenance considerations; how to document success; how to receive acceptance from regulators; movement towards standardized and mandated ESG reporting in Canada; lessons learned.
Author: Greg Dickie - November 2022
