Questions to Viva
Question to Viva
Response from Viva
As a company with operations across Australia, we advocate for a nationally consistent approach to important matters of energy policy, including in relation to emissions reductions. We did participate in the consultation with the Victorian Government when they developed their interim emissions reduction targets including making a submission to that process.
Viva Energy supports government action that will help Australia meet its carbon reduction commitments in a sustainable way. As a manufacturer and supplier of hydrocarbon derived products, we recognise that we have an important role to play in this action to reduce our own emissions and to help our customers in their sustainability journeys.
From our perspective we are working hard across the company and with our customers with a number of key initiatives underway such as:
- Our partnership with Hyzon Motors, a leading global supplier of zero-emissions hydrogen fuel cell powered commercial vehicles including heavy-duty trucks, buses and coaches
- Exploring hydrogen opportunities, particularly for transport fleets, and electric vehicle opportunities
- Continuing to identify opportunities to procure energy from sustainable and renewable production, such as our wind power purchasing agreement (PPA) with Acciona to supply around a third of the refinery’s energy needs. The agreement has helped us to reduce our energy costs as well as supporting a local renewable energy supply.
- Our broader ambition is to support the energy transition here in Victoria through the development of an energy hub at our refinery site in Geelong. Projects we are looking at include the gas terminal and a solar energy farm, and opportunities for alternative energies such as renewables and hydrogen.
Date: 20 October 2021
As you state "As a company with operations across Australia, we advocate for a nationally consistent approach to important matters of energy policy, including in relation to emissions reductions."
We don't have a nationally consistent approach and nor do we have a national energy policy. However, we do have ambitious approaches from several of our state governments, and so is it more important to Viva to have a nationally consistent approach rather than an approach that addresses the emissions problem?
The science is clear; to avoid the catastrophic impacts of climate change we must at least halve greenhouse gas emissions by 2030 – and drop to net-zero by 2050.
I agree with Viva that a nationally consistent approach is important but this has been made very difficult through misinformation, ideology, lobbying, private interests and other factors. It certainly hasn't been made problematic by climate science or by concerned communities.
In the AFR (3 Sep 2019) Angela Macdonald-Smith writes:
"One of the refinery owners, Viva Energy, noted in its submission on Victoria’s interim emissions reduction targets that they are 'significantly more ambitious' than the federal government’s commitments under the Paris climate accord ... 'has the potential to create competitiveness and compliance burden distortions for our Geelong refinery both locally and internationally, subject to policy design', it said, calling for targets aligned with national policies and international commitments."
This is broadly consistent with your response, but it also states that Viva will be burdened by Victoria's emissions reductions targets.
I can only assume therefore that Viva does not support Victoria's emissions reductions targets for 2025 and 2030. If you believe I am making the wrong assumption then I'm happy to discuss this further.
Question to Viva
Response from Viva
Our gas terminal is intended to replace existing supply as local gas fields decline rather than supporting increased gas use.
We are basing our business case and the need for the terminal on projections by the Australian Energy Market Operator (AEMO) and other energy market experts. These market experts have forecast continued demand for gas over the next few decades, as the energy market undergoes a major transition. Industrial and residential use remains relatively flat (with a fall in gas demand due to efficiencies and electrification - such as replacing gas heaters with electric - offset by population growth), while the use of gas for power generation is expected to grow in line with the increased use of renewables in the electricity system. This is illustrated in the AEMO graph below.
As you state: "Our gas terminal is intended to replace existing supply as local gas fields decline rather than supporting increased gas use".
While this is a better outcome than increasing demand for gas, does Viva support reduced gas use in Victoria if we can reduce consumption by Victorian households, businesses and industries?
You also state: "These [AEMO] market experts have forecast continued demand for gas over the next few decades, as the energy market undergoes a major transition. Industrial and residential use remains relatively flat (with a fall in gas demand due to efficiencies and electrification - such as replacing gas heaters with electric - offset by population growth), while the use of gas for power generation is expected to grow in line with the increased use of renewables in the electricity system. This is illustrated in the AEMO graph below."
I could not see your Figure 6 in AEMO's 2021 GSOO report so you may be referring to a different report or an older GSOO report. Is that the case?
From the latest 2021 report.
"Industrial demand for natural gas is not forecast to grow in the next 20 years, and could potentially reduce significantly as industrial users in the gas sector start to decarbonise. With an increase in variable renewable energy (VRE), [Gas-powered generation of electricity] GPG demand may become more ‘peaky’. - Surveyed industrial users indicated their demand is unlikely to increase, even if prices fall.", and
"Gas is expected to continue to play a critical role in the electricity sector particular during periods of low VRE generation or prolonged coal-fired generation outages. While the volume of gas consumed for generating electricity is forecast to decline in all scenarios, the value of that generation is expected to increase in line with the growth of VRE and the retirement of coal generation."
So, the most likely outcome seems to be a reduction in the volume of gas needed rather than remaining steady. Again, if you believe I am drawing the wrong conclusions then I'm happy to discuss further.
Question to Viva
Date: 23 October 2021
Despite my email and your acknowledgment to "take care to accurately reflect the time frames in future communications", Viva has again ignored (or at the very least given lower priority to) the fact that the transition to a lower carbon economy is a short to medium-term priority and goal.
From your advertorial (16/10/21) at Viva's CEO said:
“This confidence supports our vision to transition the refinery site to multiple sources of energy as we participate in the longer-term goal of energy transition to a lower carbon economy”
Again, does Viva agree that the energy transition needs to be a high priority for the company in the short and medium term, including the next five years?
If not, then please clarify what you mean by longer-term and noting that you define these terms in your 2020 Sustainability report.
Response from Viva
Date: 26 October 2021
Thanks again for taking the time to share your views.
By longer term, we don’t mean that the lower carbon energy transition can be put off until the long-term, but rather that it is required to meet the long-term climate goals of the global Paris Agreement.
We acknowledge that the energy transition needs to gain momentum in the short term - in fact it is already happening, and it already is a strategic priority for Viva as evidenced by the opportunities we are already exploring.
Our statements around the energy transition reflect our view that the transition to a low-carbon or “net zero” economy is a fundamental shift that can’t happen overnight. As we transition to a low-carbon economy, Victoria’s (and Australia’s) energy system will need to be completely reconfigured, relying on a mix of traditional energies (coal, gas, fuels) and newer, emerging technologies (renewables, hydrogen, EV).
We will need new fuels, new infrastructure and new technology to support the transition. Traditional fuels will still play an important role in our energy system and providing energy security, over the coming decades. Viva Energy has an important role to keep supplying the Australian economy, and the Geelong refinery has a critical role as one of Australia’s two refineries to provide a reliable supply of transport fuels. We believe that gas also has an important role to play, as a lower-emissions energy source.
We are taking action across our operations to improve efficiency and reduce emissions, including short (< 5 years) and medium term strategies. In support of the transition to a lower-carbon future – opportunities which will take longer to develop- we are looking at alternate fuels and energy sources, as well as new technologies and business opportunities.
In response to your earlier email (20/10), thank you and your comments are noted. You are correct that the chart I shared was from an earlier GSOO (2019) –I like it as it is simple and clear, and this particular chart was not repeated in subsequent years. The more recent graphs do support the same message – despite some ups and downs, total gas demand stays “steady” out to 2040, i.e. we will continue to need gas for many years to come. I like this one too, which shows gas demand forecasts even without any new household connections. You may not accept our interpretation of the forecasts, which are after all simply forecasts, based on a wide variety of assumptions – and I respect your right to do so. However we have formed a view which we feel is strongly backed up by the AEMO data, and which we are relying on to build the business case for our investment.
Refer AEMO report "Gas Statement of Opportunities" 2021, page 63, figure 34.
There is not much more I can add at this time in response to your reflection on my comments. Viva Energy is genuine in its endeavours to improve efficiency and reduce emissions across our operations, including actively seeking out opportunities to minimise the footprint of the new gas terminal, and we are looking at new opportunities in support of the transition to a lower-carbon future. We will have more to say on this in coming months.
Viva has not answered the question: "does Viva agree that the energy transition needs to be a high priority for the company in the short and medium term, including the next five years?"
Question to Viva
Date: 24 September 2021
I recently read Viva’s Geelong Energy Hub Update, 31 Aug 2021
I would be grateful if you removed the term “long term” from your statement below. The Victorian Government's interim emissions reduction target, for the period 2026–2030, is for emissions to reduce 45–50% below 2005 levels by the end of 2030. Hence large emissions reductions will be needed in the short-to-medium term and your statement misrepresents the state's plan and aims.
Response from Viva
Date: 30 September 2021
We recognise that a collective approach to climate change is required. There are a range of plans at all government levels, community groups and businesses.
We do not refute the fact that there are short-to-medium term emissions targets, and did not intend to imply otherwise. We recognise that this will be a long journey that will play out over the coming decades. I hope this provides context.
Thanks for your feedback, we will take care to accurately reflect the time frames in future communications.