Kobacker and Cronan in new sustainability advisory venture
Willow Aliento | 10 May 2016
Former Clean Energy Corporation director James Cronan and sustainable design expert Marlon Kobacker have started a new enterprise, the Sustainable Future Group.
Mr Kobacker was recently a principal of the sustainability advisory team for CEC, and previously also a sustainability advisor for EarthRight International, Transurban and AECOM.
The company is providing a suite of services including deep energy audits, energy efficiency planning and implementation, technology provision, sustainability planning, solar energy and carbon neutral certification parcelled up with finance packages in conjunction with major banks and financial institutions.
Mr Cronan said there was also interest from private equity looking to invest in projects of $10 million or greater, such as a tranche of shopping centre solar installations.
Super funds are also looking to invest in these types of projects, he said, and a considerable number of listed funds are already investing in utility-scale renewable projects.
Another good example of private equity’s appetite is the $1 billion of private equity that partnered with NAB to invest in rooftop solar, he said.
He said the company already has a number of clients on the books, including several that are intending to undertake the full suite of services through to carbon neutrality.
“We are targeting business organisations that are looking to achieve energy bill reductions with a sustainability focus,” he said.
Mr Cronan said he did not consider that solar alone was the whole solution for businesses in terms of achieving a low-carbon operation.
If simple changes like retrofitting LED lighting, improving the efficiency of heating, ventilation, airconditioning and refrigeration were undertaken, and bundled into a finance solution along with solar installations, then the payback for solar dropped from around nine years to four or five years, he said.
For ASX-listed firms, Mr Cronan said one of the keys to making finance packages work as a cashflow positive proposition was sun cover insurance. This de-risked solar in terms of insufficient power generation due to prolonged heavy cloud cover.
Becoming certified under the National Carbon Offset Standard was becoming a “very big thing” for some companies, he said. Sectors he and Mr Kobacker are looking to for business in this area include agribusiness and furniture manufacturers.
For agribusiness firms, there is a market advantage in having NCOS certification, he said, as more companies look to ensure their supply chain matches their own sustainability goals.
Furniture manufacturers can also achieve an advantage, for example, if a state government puts out a tender for suppliers and is willing to pay more if the products are certified carbon-neutral. The big banks are also looking at carbon neutrality in their supply chains, he said.
The company is accessing carbon offsets for clients through South Pole Carbon, which trades offsets from projects around the world, including Asia and South America.
He said one client based in the UK that has 15 sites across the Asia-Pacific region is looking to hold a carbon neutral event in the near future. The client also aims for this event to lead into looking at energy efficiency across all its assets.
Mr Cronan said the carbon offset challenge is that the client wants offsets for the event to be obtained from projects involving land types that are similar to the 15 different sites.
He said the major banks were all at “different stages” in terms of providing finance for energy efficiency and renewable energy projects. The issue is one of risk appetite.
It is hard for companies to obtain finance for energy efficiency at 3.5-4 per cent interest, he said.
There is some traction starting to happen however, and one major institution is looking at developing an operating lease product.
The company has also formed a working partnership with ANZ Agribusiness. Mr Kobacker will be presenting with ANZ at a forum for agribusinesses and commercial enterprises on energy, water and waste efficiency in Albury in conjunction with the local Chamber of Commerce next week.
“Anyone that’s a listed business should have a mandate to regard sustainability as an investment not as an expense,” Mr Cronan said.
He said the sector was getting to a “maturity point” and that it is now the financial markets that need to come to the table.