Channel Infrastructure releases Sustainability Report
Our
transition to
a sustainable
future
Sustainability Report 2021
Our reporting
Channel Infrastructure NZ Limited’s (Channel
Infrastructure) 2021 environmental, social, and
governance (ESG) disclosures comprise this Sustainability
Report (Report), the 2021 Annual Report, and its
Governance Statement. These documents form an
integrated suite of reports and should be read in
conjunction with each other, and where possible, we
have drawn links between each. They are all available
for download at: www.channelnz.com, alongside
several underlying documents and policies referred to
throughout this Report.
This report
While Refining NZ has reported on ESG issues since 1996,
this is the Company’s first standalone Sustainability
Report and the first report published as our new business:
Channel Infrastructure.
This Report provides an overview of our approach,
progress and performance in relation to Channel
Infrastructure’s most material ESG issues. This report
is provided for the benefit of all our stakeholders
as a clear and concise summary of Channel
Infrastructure’s sustainability performance during
the reporting period and our objectives for the
year ahead. This Report discloses performance
information for the year ending 31 December 2021.
The data presented in this report is unaudited,
however, in the case of Scope 1 and 2 emissions,
is subject to review by the Ministry of Environment
under our Negotiated Greenhouse Agreement.
We intend to continue this reporting on an annual basis.
We are committed to continuous improvement of our
ESG reporting practices and value our stakeholder
perspectives. We welcome feedback on this Report
and our performance. To do so, please email us at
investorrelations@channelnz.com.
Alignment with reporting standards
As a pioneer in New Zealand’s climate transition, Channel
Infrastructure is also committed to being a leader in
climate disclosure and reporting. In September 2020,
the New Zealand Government announced that climate-
related financial disclosures, based on the Taskforce
on Climate-related Financial Disclosures (TCFD)
recommendations, will be mandatory for all publicly
listed companies and expected to apply for years
starting from 2023 onwards.
In 2022, Channel Infrastructure has published its first
Sustainability Report, aligned with the recommendations
of the TCFD, more than a year ahead of mandatory
reporting in 2023. We have done this to signal our
ongoing commitment to climate action, and to ensure a
long-term sustainable future for our business. We intend
to continue improving our climate-related financial
disclosures and to monitor and respond to evolving and
emerging domestic and international ESG reporting
standards and industry best practice as they develop.
This Report has been prepared in consideration
of relevant climate and ESG reporting standards,
including the TCFD recommendations and the Global
Reporting Initiative Standard (GRI): Core Option (which
the Company has reported against since 2017). It is
also prepared in compliance with the NZX Corporate
Governance Code and ESG Guidance Note.
About this reportContents
01 About Channel Infrastructure 6
02 Message from the CEO 8
Refining NZ to Channel Infrastructure:
Our Transition Journey
13
03 Our Climate Change Position Statement 14
04 Our Transition Pathway 16
Context 17
Our Transition 18
The Role of Channel Infrastructure
in the Climate Transition 20
Our Transition Roadmap 22
Our Targets 24
Transition & ESG Reporting 25
05 Sustainability Management & Governance 26
2021 Sustainability Highlights 27
Identifying Our Most Material
Sustainability Issues 28
Corporate Governance 31
06 Climate Change and TCFD 34
Governance 36
Strategy 37
Risk Management 47
Metrics and Targets 47
07 Environmental Performance 48
08 People, Diversity & Community 54
Health, Safety and Wellbeing 55
Diversity & Community 59
09 Annexure 64
3Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20212
Keeping the economy of
Aotearoa moving through
an era of change
Marsden Point
Import Terminal
54Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 2021
Channel Infrastructure is
New Zealand’s leading fuel
infrastructure company and
builds upon the proud 60-year
history of Refining NZ, and our
operations at Marsden Point.
Following a Strategic Review to determine the most
viable way forward for our business, we have ceased
refining operations in 2022 and our core business is
now the operation of the fuel import terminal. Channel
Infrastructure imports, stores, tests and distributes fuel
owned by our customers.
Channel Infrastructure utilises Marsden Point’s deep-
water harbour and jetty infrastructure, 280-million litres
of storage tanks and the 170-kilometre Marsden Point to
Auckland Pipeline to distribute fuel to the Auckland and
Northland regions.
Our transition from New Zealand’s only oil refinery has
meant a big change to how we keep New Zealand
moving. We have a proud 60-year history of operating
our heavy industrial site safely and efficiently, and we
have a long-term commitment to continuing operations
on our site in a way that brings benefit to our wider
community.
In addition to the terminal business, Channel
Infrastructure is well positioned to support New Zealand’s
changing future fuel needs.
We are here to keep Aotearoa New Zealand’s economy
moving through an era of change, and as New Zealand
moves towards a lower-carbon future, our infrastructure
will be essential as New Zealand’s fuel and energy
needs evolve.
New Zealand’s leading fuel infrastructure company
OUR VISION
OUR STRATEGIC PRIORITIES
Safe, reliable, low
cost operations
High performance
culture
Competitive cost
of capital
Realise
infrastructure
value
Support lower
carbon fuels
transition
Grow and
diversify
Strong safety
systems and
culture
Continuous
improvement
Asset
management
Strong
performance
management
Change-ready
Future focused
More reliable
dividend payout
Diversify access to
capital markets
Leverage the
balance sheet
Realise value
of existing
infrastructure
through import
terminal
conversion
Leverage existing
infrastructure
Marsden Point
energy hub
Strategic storage
Repurposing
Marsden Point site
Supply chain
optimisation
Leverage existing capabilitiesTransform to deliver valuePosition for future growth
Channel Infrastructure NZ Limited
Energy to keep things moving
01
—
About
Channel
Infrastructure
76Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 2021
We know that the world is warming and that carbon
emissions from human activity, including transport, are
contributing to this. We are all seeking new and more
efficient energy solutions, which are lower-carbon,
affordable and available when we need it. Infrastructure
has a critical role to play as we work together to find
these solutions.
Channel Infrastructure is already contributing, delivering
fuel to New Zealand’s largest population centre,
Auckland, via the Marsden Point to Auckland Pipeline,
with one tenth of the emissions of the equivalent delivery
of fuel via road. But we know there is more we can – and
will – do to support New Zealand’s transition towards a
lower-carbon economy.
Our business is in a period of huge change, as we
recently shifted from operating New Zealand’s only oil
refinery, a role we proudly held for almost 60-years, to
become a fuels import terminal, and provider of critical
energy infrastructure. This change in our operations has
established a strong base for long-term sustainable
operations at Marsden Point, and we hope this will also
support a change in New Zealand’s long-run fuel mix and
the decarbonisation of the transport sector.
We have been proud to support New Zealand’s transport
needs for the past six decades, and we’re looking
forward to working with our stakeholders, our community
and our government for many more as a partner in
New Zealand’s energy transition and a critical
infrastructure provider to keep Aotearoa moving.
Our climate commitment
Since the Paris Agreement came into force in 2016,
the international community has coalesced around
a common goal to limit global warming. Channel
Infrastructure is committed to doing our part to
align with the targets set under the Paris Agreement
to keep warming well below 2 degrees and to
pursue efforts to limit the temperature increase to
1.5 degrees. This commitment reflects the latest
science and is aligned with the New Zealand
Government’s ambitions in the Zero Carbon Act,
which itself informs our local operating environment.
We recognise that fuel and the transport sector
significantly contribute to climate change. Emissions
from transportation, which is still largely powered by
fossil fuels, make up around 21 per cent of New Zealand’s
annual greenhouse gas emissions. Supporting New
Zealanders to transition to low carbon transport options
is therefore essential.
Channel Infrastructure not only takes responsibility
for, and commits to reducing our direct greenhouse
gas emissions, but also recognises our responsibility in
enabling decarbonisation beyond our operations and
across New Zealand’s transport sector. It is therefore our
ambition to keep Aotearoa moving towards a greener
future, and to play an enabling role in this future by
utilising the full potential of our infrastructure and the
Marsden Point site to support decarbonisation efforts.
Naomi James
Chief Executive Officer
It is with great pleasure that I present
the first Sustainability Report for Channel
Infrastructure, New Zealand’s leading
fuel infrastructure company.
02
—
Message
from the CEO
Channel Infrastructure NZ | Sustainability Report 202198Channel Infrastructure NZ | Sustainability Report 2021
jobs or retraining within six months. As we complete this
transition, our focus will shift to addressing our remaining
direct emissions, being our Scope 2 emissions from
electricity consumption. We see opportunity to move to
fully renewable energy supply through our Maranga Rā
solar project, with other solar projects and batteries also
being planned for the Northland region.
Over the longer term, our ambition is to explore how
we can use our infrastructure to help address customer
emissions from the transport sector across the value
chain, with opportunities to use our Marsden Point
infrastructure to support the biofuels mandate due
to come into effect in 2023 and to support the future
transition to Sustainable Aviation Fuel (SAF).
We are also looking at the potential for alternate forms
of energy to be produced or stored at Marsden Point;
with Fortescue Future Industries (FFI), undertaking a
study into industrial scale green hydrogen production
at Marsden Point.
Marsden Point has much potential, with a long-term
site resource consent in place, deep harbour and jetty
access, industrial electricity and gas connections, and
proximity to the largest population base in New Zealand.
The future is hard to predict, but with these fundamentals
and investments in low carbon energy opportunities,
Marsden Point will always have an important role to play
in the New Zealand energy system.
In addition to setting targets for our mitigation actions,
we have been undertaking further work to assess the
potential financial and physical risks of climate change
to our business. While demand for petrol and diesel is
expected to start to decline by the end of this decade,
jet fuel demand is expected to continue to grow and,
in the future, our infrastructure has the potential to play
a key role in the transition to SAF. We also have further
work planned this year to develop the adaptation
measures that might be required to ensure our Marsden
Point site remains resilient to rising sea levels.
Our commitments as a
responsible operator
We have proudly been a part of the Northland
community for over 60 years, and our commitment to
being a responsible operator and corporate citizen
remains unchanged.
We have partnered with tangata whenua who have
mana whenua over the land and sea upon which we
operate. We have a commitment to recognising the
intergenerational impact our operations have had on iwi
cultural values.
Working with our iwi partners, and the wider community,
we are committed to maintaining and enhancing (where
possible) the environment in which we operate. We have
a 35-year resource consent to continue operating a
heavy-industrial site at Marsden Point. The conditions
of our consent include strict protections to maintain
the environmental standards that we have in place at
Marsden Point, and the length of this consent underlines
our commitment to remaining a part of this community
for generations to come.
The safety of our people remains our number one priority,
and in everything that we do, now and in the future, we
have strong safety protocols and procedures in place to
ensure that each and every member of our team can go
home safely every day. We are proud of our record, as
we recently passed the significant milestone of two years
without a recordable injury on site.
As we look to the future of our new business, we do
so with a clear plan and a commitment to the role we
will play – both in our business transition and through
the contribution we will make to New Zealand’s energy
transition.
As the world transitions to a low carbon economy, we will
be increasingly exposed to a suite of climate transition
risks – from increasing carbon prices to reduced fuel
demand caused by an uptake in electric vehicles and
the challenge of keeping transport energy affordable
and available to everyone. We see these challenges
as opportunities for leadership, inclusive growth, and
adaptation. It is our hope that Channel Infrastructure’s
transition, and how we execute this transition, will set
industry best practice for an effective and just transition.
Our transition journey
Refining NZ has been a leader in investment in
decarbonisation in New Zealand over the last two
decades, being the first company to sign a Negotiated
Greenhouse Agreement in 2003 and delivering a 120,000
tonne reduction in CO2 emissions per annum through the
Te Mahi Hou project in 2015.
Through our change from refinery to import terminal
operations in early 2022, our Scope 1 and 2 emissions are
reducing by 98 per cent or over 1 million tonnes of CO2
per annum,
1
contributing approximately one-third of
New Zealand’s first five-year Emissions Reduction Plan.
2
Initially, direct Scope 1 and some indirect Scope 2
emissions will move upstream in our value chain.
However, our throughput volumes will fall, and we expect
the intensity of the emissions associated with the fuel
passing through our infrastructure will decrease with the
opportunity for our customers to source fuel from larger,
more energy efficient refineries in Asia. As such, even as
the position of our value chain emissions changes, we
anticipate that due to the above efficiencies and volume
changes, the overall emissions relevant to our value chain
will fall. We are committed to actively working with our
customers to measure and monitor Scope 3 emissions
and to mitigate these to the best of our abilities,
including by pursuing the use of our facilities to support
biofuel consumption in New Zealand.
Our transition is also reducing the broader environmental
impact of our operations, with reduced demand for
electricity and water, no requirement for gas, and
reductions in other emissions from our site. Our reduced
demand for electricity and gas should lower demand
for thermal generated electricity, particularly coal-fired
electricity generation in New Zealand. This should also
benefit New Zealanders by providing relief from the
supply shortages present in electricity and gas markets.
While our transition will have very little impact for most
New Zealanders, it involves significant change for our
workforce and local community. We are focused on
playing our role in a just transition, by supporting our
workforce with retraining and finding new jobs, looking
for growth opportunities at our site which can create new
jobs and working with our local community to attract
new opportunities to the Northland region. We know that
many families have been a part of the Refining NZ story
over generations, and this year we are acknowledging
and celebrating the proud legacy of Marsden Point,
which is on display at our Visitor Centre – open to the
public from April to June 2022.
Our plans for the future
As we transition to our new business model as a provider
of critical energy infrastructure, we are focused on
establishing a strong base for the future sustainability
and growth of our business.
A key part of this work is the release of this Sustainability
Report which includes our first TCFD disclosure and
decarbonisation targets. Our targets are focused on
those areas where our actions can have the greatest
impact in mitigating the risks and realising the
opportunities from climate change for our business.
Our immediate focus is on supporting those impacted
by the change from refinery to terminal operations,
setting ourselves a target in 2022 to have at least 90
per cent of people impacted by the changes in new
1
Compared to 2019 CO2 emissions.
2
This figure has been calculated with reference to the New Zealand Government’s proposed carbon budgets for 2022-25
(https://environment.govt.nz/assets/publications/Emissions-reduction-plan-discussion-document.pdf).
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20211110
Refining NZ
to Channel
Infrastructure:
Our transition
journey
1312Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 2021
03
—
Our Climate
Change
Position
Statement
Our Position
Channel Infrastructure is committed to doing its part to
align with the Paris Agreement target to keep warming
well below 2 degrees and to pursue efforts to limit the
temperature increase to 1.5 degrees. This commitment
reflects the latest science and is aligned with the New
Zealand Government’s ambitions in the Zero Carbon Act,
which itself informs our local operating environment.
We recognise that fuel and the transport sector
significantly contribute to climate change.
Climate change will impact our company, the local
community, New Zealand and the planet, including
through rising sea levels, temperature change and
unpredictable weather patterns. Climate change
presents operational and financial risks to the company,
as well as opportunities.
Our Approach
Our approach to climate change considers both the
risks and opportunities arising from climate change and
the necessary transition to a low carbon economy. We
consider these activities to be core to our business as
part of our strategic objective to deliver continued value
to our shareholders and our customers.
Our role is to keep Aotearoa New Zealand moving. We
believe infrastructure has a critical role to play in finding
solutions which deliver low-carbon transport energy
which is affordable and available when we need it.
We will seek to reduce our carbon footprint, build
resilience to the physical and transition risks related
to climate change, and contribute responsibly to the
achievement of New Zealand’s decarbonisation goals.
We will also seek to utilise our strategic infrastructure
to support others, particularly through innovation in the
energy and fuels sector, to reduce carbon emissions.
Our Commitments
Channel Infrastructure is committed to:
• Identifying, assessing and managing material physical
and transition related climate driven risks to the
long-term sustainability of our business;
• Setting and publishing meaningful short, medium
and long-term targets to encourage innovation and
drive reductions in our Scope 1 and 2 greenhouse
gas emissions;
• Exploring opportunities to reduce customer Scope 3
emissions and contribute to the decarbonisation of the
New Zealand transport sector by enabling the supply
of low-carbon fuels and zero-carbon fuels to
New Zealand;
• Working with customers, suppliers, Government,
and our local community on a just transition to a
low-carbon economy; and
• Annually reporting on our climate approach,
progress and performance in alignment with
the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD).
Ongoing review
The Board commits to annually reviewing this Climate
Change Position Statement and the company’s
performance in delivering on the commitments in
this Statement.
Channel Infrastructure NZ | Sustainability Report 20211514Channel Infrastructure NZ | Sustainability Report 2021
Refining NZ had a long history of working with the New
Zealand Government to reduce emissions, and a proud
history of investing to ensure we remain leaders in this
area. Refining NZ was the first company to agree a
Negotiated Greenhouse Agreement (NGA) with the
Crown in 2003. Between 2003 and 2019, the refinery
increased its capacity to process crude oil. Despite
the increase in volumes, energy intensity reduced by
12 per cent and the Te Mahi Hou project delivered
CO2
emissions reductions of 120,000 tonnes per annum.
In 2021, we made the decision to transition from
refinery to import terminal operations. The decision
followed an 18-month Strategic Review, involving
extensive engagement with a range of stakeholders
including customers and the Government. The Strategic
Review was undertaken in the context of historically
low levels of refining margins exacerbated by the
impacts of COVID-19, and structural challenges to the
competitiveness of the refinery due to the relatively small
scale and higher cost of operating in New Zealand, when
compared to newer Asian refineries, including significant
increases in electricity and gas costs.
In addition, we have been conscious of the global
movement towards, and New Zealand’s focus on,
reducing carbon emissions, with the emergence of new
challenges and opportunities expected in the transition
to low-carbon transport fuels over time. Following the
introduction of New Zealand’s national 2050 target to
reach net zero greenhouse emissions (excluding biogenic
methane), we identified that our existing business model
would have been increasingly exposed to cost pressures
presented by the national Emissions Trading Scheme.
We also expect change in the future of transport fuels.
Prior to the COVID-19 impacts on jet fuel demand, our
supply to Auckland and Northland comprised c. 30%
petrol, c.30% diesel and c.40% jet fuel. The Climate
Change Commission (CCC)’s advice to Government
suggests that light vehicles are likely to decarbonise via
electrification over the next 30 years, while biofuels and
hydrogen-based solutions, are expected to be the main
solution used in heavy transport, aviation, and shipping.
3
Although there are a range of potential scenarios, most
forecasts (including those we use) predict a decline in
petrol followed by diesel demand due to the uptake of
electric vehicles commencing sometime in the coming
decade, but an increase in jet fuel demand over time.
Channel Infrastructure has the opportunity to support
and provide for these changing transport fuel needs.
Increasing New Zealand’s biofuel supply is one example.
In December 2021, the Ministry of Business, Innovation
and Employment (MBIE) and the Ministry of Transport
(MoT) released the final policy design for the Sustainable
Biofuels Mandate,
4
which encourages increased biofuel
uptake of land transport fuels in New Zealand.
5
MBIE
and Air New Zealand are currently partnering to explore
options for Sustainable Aviation Fuel (SAF) in New
Zealand, with Air New Zealand setting a 10 per cent
target for use of SAF by 2030. Production at Marsden
Point is one option being considered.
Our Marsden Point infrastructure will be able to support
increasing imports of biofuels. Our Marsden Point
to Auckland pipeline, which can transport second-
generation fuels, can deliver these fuels to market at
one-tenth of the emissions of equivalent transport
by road.
6
As a key part of the transport fuels supply
chain into New Zealand’s largest market (Auckland),
Channel Infrastructure’s import terminal infrastructure
is well placed to benefit from the increasing volumes
of low-carbon transport fuels that will be needed
to keep New Zealand moving in the future.
04
—
Our
Transition
Pathway
We are undertaking our transition in a rapidly
moving policy environment which is supporting
changes in our operations and driving change in
our customers’ needs and behaviours.
3
CCC budgets include a near-term focus on increased electrification of passenger vehicles, and a target for biofuel production of 270 million litres by
2035 (c.3.5% of forecast total liquid fuel demand including international transport).
4
The proposal is for reduction beginning at 1.2% p.a. Greenhouse Gas (GHG) emissions in 2023, ramping up to approximately 9% GHG emissions
reductions p.a. by 2035 (https://www.mbie.govt.nz/dmsdocument/18366-sustainable-biofuels-mandate-final-policy-design-proactiverelease-pdf).
5
Excludes aviation fuel.
6
While second-generation biofuels are suitable for use on the multi-product Marsden Point to Auckland pipeline, first-generation fuels such as ethanol-
blends are not.
Context
Channel Infrastructure NZ | Sustainability Report 20211716Channel Infrastructure NZ | Sustainability Report 2021
Our Transition
Our business is undergoing a major change as depicted in the following info-graphic:
SCOPE 3
Keeping
Aotearoa
moving
SCOPE 1 & 2SCOPE 3
Marsden Point to
Auckland Pipeline
Marsden Point to Auckland Pipeline
reduction in electricity
consumption and no
natural gas requirements
Power supply from
the grid
Refined into
multiple products
at Marsden Point
Our direct refining emissions will initially move upstream in our
supply chain. Our throughput volumes will fall as we focus on the
Auckland and Northland markets and we expect energy intensity
to also decrease through supply from larger more efficient
refineries in Asia.
Potential opportunity to supply biofuels, hydrogen
and other sustainable fuels to customers. The lifetime
emissions intensity of the fuel we provide will fall with
changes in transport modes and larger scale production.
Potential opportunities
for increased fuel supply
through the Marsden Point
to Auckland pipeline to
new customers.
Fuel, biofuels and next-generation sustainable fuels imported by Channel Infrastructure’s customers
Downstream customers’ emissions including
end-user Scope 3 emissions.
Channel Infrastructure
85%
Refining NZ
reduction in Scope 1 and
Scope 2 CO2 emissions
(over 1 million tonnes
per annum)
98%
Crude oil imported
by Refining NZ’s
customers
Product imported by
Channel Infrastructure’s
customers
Product refined offshore
END-USER EMMISSIONSOPERATIONSSUPPLY CHAIN EMISSIONS
CUSTOMER:CUSTOMER:CHANNEL INFRASTRUCTURE:
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20211918
3. ENABLE DECARBONISATION
OF NEW ZEALAND’S
TRANSPORT SECTOR
We use our strategic
infrastructure to facilitate the use
of low-carbon future fuels which
are affordable and available
when we need them.
1. KEEP AOTEAROA MOVING
We receive, store, test and
distribute transport fuels safely,
reliably, and efficiently to the
Northland and Auckland markets.
The role of Channel Infrastructure
in the climate transition
Channel Infrastructure supports a just transition to a
resilient, low-carbon economy. We believe that we can
play an essential role in the transition as New Zealand’s
leading independent fuel infrastructure company.
Refining NZ’s transformation from an oil refinery to
Channel Infrastructure, not only supports the transition of
New Zealand’s transport system but puts us in a position
to enable low-carbon reliable transport energy.
Channel Infrastructure has ‘switched off’ Refining NZ’s
oil refinery and we are now an import terminal for the
fuel needed to keep New Zealand’s economy moving.
On behalf of our customers, we receive, store, test and
distribute transport fuels safely, reliably, and efficiently
to the Northland and Auckland markets. We utilise the
deep-water harbour and jetty infrastructure of Marsden
Point and the Marsden Point to Auckland Pipeline to
deliver fuel direct to where it is needed most. Our import
terminal is expected to handle between 3 and 3.5 billion
litres of transport fuels annually, supplying the Auckland
and Northland regions which make up approximately
40 per cent of New Zealand fuel demand.
In some respects, this transformation will be world
leading. While we follow in the footsteps of other oil
refineries across the globe transitioning to import
terminals, how we execute this transition is what
sets us apart. Channel Infrastructure is strongly
committed to our people, our community and our
iwi partners, our environment, and our economy. As
part of our transition plan, we are not only committed
to transitioning our business, but also ensuring that
our workforce have transition pathways open to
them. We hope that our transition can be a proof
of concept demonstrating that a just, low-carbon
transition is not only possible, but sustainable and
fair for local communities and other businesses.
This transformation is a small part of a much bigger
transition for New Zealand. Fossil fuels have a role to
play in keeping Kiwis and the New Zealand economy
moving for many years to come. However, in the
medium and longer term, Channel Infrastructure’s highly
strategic assets and transport energy infrastructure
can also support New Zealand’s changing energy
needs. The ‘Transition Roadmap’ set out on page
22, represents the start of Channel Infrastructure’s
low-carbon journey but is also part of the journey for
New Zealand. The Marsden Point import terminal is
the core of our business, however there are exciting
opportunities for us to diversify what we do, as we look
to build an energy hub for the North of New Zealand.
We are looking at how we can repurpose, diversify, and
capitalise on our strategic assets and infrastructure,
in a way that supports decarbonisation across New
Zealand’s transport sector, supports the growth of our
business, and reduces our customers’ emissions over
time. We believe we can support the introduction of
biofuels, including SAF, and contribute to ensuring a
secure, reliable, and affordable supply chain for the mix
of future fuel options that New Zealand will require.
Channel Infrastructure builds on Refining NZ’s proud
history as a reliable, responsible, and effective operator in
New Zealand’s transport system, by having a long-term
plan for the business and our stakeholders and outlining
the role we can play in an inclusive low carbon future.
2. CHAMPION A JUST
TRANSITION
We support our workforce, local
community, iwi partners, and
New Zealand’s economy to
prosper through our transition.
While we follow in the footsteps
of other oil refineries across the
globe transitioning to import
terminals, how we execute this
execute is what sets us apart.
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20212120
Our Transition Roadmap
Channel Infrastructure’s Transition Roadmap is our plan to keep New Zealand moving in a low-carbon future.
This Transition Roadmap sets out our ambition, commitments, and actions to reduce direct and indirect
emissions across our value chain and help support New Zealand’s transition to a low-carbon future.
• Refining NZ has played an essential role in New
Zealand’s energy supply chain providing nearly all jet
fuel and the majority of diesel and petrol.
• Refining NZ faced historically low refining margins
exacerbated by COVID-19, and structural challenges
to the competitiveness of the refinery compared to
newer Asian refineries. It also faced higher costs of
operating in New Zealand, increasing exposure to the
NZ Emissions Trading Scheme, climate regulation, high
energy costs, and decreased access to capital.
• Following the conversion of our refinery to an import
terminal, Channel Infrastructure will continue to have
some residual Scope 1 and Scope 2 emissions primarily
from electricity consumption.
• Demand for petrol and diesel is expected to peak and
begin to decline as electric and hybrid cars increase
and biofuel demand grows.
• Jet fuel demand is expected to continue to grow and
Sustainable Aviation Fuel to enter the fuel mix.
• New Zealand will still need diesel, petrol and jet fuel to
keep moving and Channel Infrastructure, through its
infrastructure, will continue to provide fuel to Kiwis to
satisfy their transport needs.
• The New Zealand Government is introducing measures
to protect New Zealand’s fuel security and increase the
use of biofuels, which will require infrastructure.
• Customer Scope 3 emissions which largely represent
the emissions of end users in the transport sector,
will continue until more sustainable fuel solutions
become available.
• Hydrogen is expected to become commercially viable
in the long-term, and Sustainable Aviation Fuels use
more widespread.
2003 - Refining NZ was the first New Zealand company
to enter into a Negotiated Greenhouse Agreement (NGA)
with the Crown, putting us on a path towards managing
our greenhouse gas emissions.
2015 – Commissioned a Continuous Catalyst
Regeneration unit which improved refinery processing
efficiency and reduced
CO2 emissions by c.120,000
tonnes per year.
2020 – Refining NZ undertook a Strategic Review to
determine the best future operating model for our
business in the face of a difficult operating environment.
2021 – Our shareholders (with 99 per cent in favour) voted
to transition NZ’s only oil refinery to an import terminal,
with a name change to Channel Infrastructure.
2021 – We undertook an initial assessment of the range
of repurposing options for the Marsden Point site and
signed an Memorandum of Understanding (MOU) with
Fortescue Future Industries to undertake a study of the
potential for hydrogen production at Marsden Point.
2025+ – We are already exploring opportunities to
develop renewable energy supply through our Maranga
Rā solar project, with other solar projects and batteries
also being planned for the Northland region. These will
help reduce Channel Infrastructure’s Scope 2 emissions.
2025+ – Channel Infrastructure will continue operating
as an import terminal and will seek opportunities to
utilise its strategic infrastructure to support the supply
of biofuels, including Sustainable Aviation Fuel, to the
New Zealand market.
2022 – The Marsden Point oil refinery has closed and
Channel Infrastructure is now operating as an import
terminal – this will result in a 98 per cent reduction in
Scope 1 and 2 emissions (versus 2019 baseline).
2022 – Channel Infrastructure releases its first
Sustainability Report, including TCFD reporting.
2022 – Channel Infrastructure has committed to
supporting its workforce impacted by the change in
operations to find new roles or retraining within six
months. This goal is reflected in our Company Scorecard.
2022 – Channel Infrastructure has developed private
storage arrangements with customers which will enable
increased fuel storage capacity at Marsden Point.
2023 – Channel Infrastructure will undertake an extensive
materiality assessment alongside its changing internal
and external stakeholder make-up to identify its new
material issues going forward.
2035+ – Channel Infrastructure will continue to explore
opportunities to produce or store alternate forms of
energy (such as hydrogen and second-generation
biofuels). Work is already underway with Fortescue Future
Industries to undertake a study into the potential for
hydrogen production at Marsden Point.
PAST
1962 — 2022
HORIZON 1
Present — 2025
HORIZON 2
2025 — 2035
HORIZON 3
2035 +
Refining NZChannel Infrastructure
ACTIONS
OUTLOOK
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20212322
Our Targets
To hold ourselves to account and ensure we focus our efforts on where we can make the most impact along
our Transition Roadmap, we have set a range of transition targets.
JUST TRANSITION
At least 90 per cent
of employees seeking
new employment
find new roles or are
retraining within
six months
• While conversion from refinery to import terminal operations will deliver a 98 per
cent reduction in Scope 1 and 2 emissions, it will also have a significant impact on
our workforce.
• We are committed to supporting our workforce impacted by these changes through
their own personal transition. We are doing this by providing 1:1 career counselling,
access to training and development, support to set up their own businesses or in
finding a new job.
• We are creating time and space to do this by providing at least six months’ notice
and at least six months’ redundancy pay.
• This commitment will be a measure of our success through our transition and forms
a part of our 2022 Company Scorecard.
NET ZERO
Net zero Scope 1 and
2 emissions by 2030
• After transition, our remaining direct emissions will come primarily from our electricity
use and the use of some diesel for vehicles and pumps on our site.
• We will seek to eliminate our residual Scope 1 and 2 emissions through operational
improvements, renewable electricity supply and the use of high quality offsets,
where emissions reductions are not otherwise accessible.
• We see opportunity to move to renewable electricity supply through our Maranga
Rā solar project and the potential to develop solar and battery capacity in the
region in partnership with others.
CUSTOMER SCOPE 3
Our infrastructure is
utilised to support
the decarbonisation
of New Zealand’s
transport sector and
facilitate customer
Scope 3 emissions
reduction by 2030
• Customer emissions, including end-user Scope 3 emissions, will make up the
majority of Channel Infrastructure’s supply chain emissions profile in the future.
• Channel Infrastructure has a critical role to play in finding solutions to deliver
transport fuel which is low-carbon, affordable and available when we need it.
• Our goal is to ensure that our existing infrastructure is utilised to support the
decarbonisation of New Zealand’s transport sector through the use of biofuels
and Sustainable Aviation Fuel.
• We are committed to working with customers to measure and manage
Scope 3 emissions.
Transition &
ESG reporting
25Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 202124
05
—
Sustainability
Management
& Governance
2021 Sustainability Highlights
Transitioning from Refining NZ to
Channel Infrastructure, and closing
our refinery operations, will eliminate
98 per cent of our Scope 1 and 2 CO2
emissions,
9
representing a reduction of
approximately 1 million tonnes of CO2
per annum.
Our electricity usage will reduce by
circa 85 per cent and we will have no
requirement for natural gas.
This will reduce New Zealand’s emissions
overall - contributing to approximately
one-third of New Zealand’s first
Emissions Reduction Plan.
10
7
Tier 1 Process Safety Event: An unplanned or uncontrolled release of any material, including non-toxic and non-flammable, from a process which results
in one or more of the following: a Lost Time Injury (LTI) and/or fatality; a fire or explosion resulting in greater than or equal to $100,000 of direct cost to the
Company; a release of material greater than the threshold quantities given in Table 1 of API 754 in any one-hour period; an officially declared community
evacuation or community shelter-in-place.
8
Tier 2 Process Safety Event: An unplanned or uncontrolled release of any material, including non-toxic and non-flammable, from a process which results
in one or more of the following: a recordable injury; a fire or explosion resulting in greater than or equal to $2,500 of direct cost to the Company; a release
of material greater than the threshold.
9
Compared to 2019 CO2 emissions.
10
This figure has been calculated against the New Zealand Government’s proposed carbon budgets for 2022-25
(https://environment.govt.nz/assets/publications/Emissions-reduction-plan-discussion-document.pdf).
WOMEN
REPRESENT:
CORPORATE LEADERSHIP TEAM:
UNDER
RECORDABLE AND LOST TIME INJURY FREQUENCY RATES:
PROCESS SAFETY INCIDENTS:
LOOKING
FORWARD:
29
%
50
%
0
20
38
%
18
%
of Board
of workforce
of Corporate Leadership Team
of the Corporate Leadership
Team is under 50 years of age
per 200,000 hours worked for the
second consecutive year
tier-1 process
safety incidents
7
tier-2 process
safety incidents
8
Direct CO2 emissions intensity
(kgCO2/t of product)
244.0
Direct CO2 emissions
(Scope 1) (tCO2)
857,042
Indirect CO2 emissions
(Scope 2) (tCO2)
141,940
Flare (Amount of flare as
mass % of feedstock)
0.06
Total fuel usage (petajoule)
11.6
Electricity usage (petajoule)
0.96
Water usage (million tonnes)
1.46
Sulphur dioxide emission
(tonnes)
3,341
Channel Infrastructure NZ | Sustainability Report 20212726Channel Infrastructure NZ | Sustainability Report 2021
Channel Infrastructure closely considers the impact
we have on the community and the environment in
which we operate. We use an assessment of materiality
to frame the Company’s approach to ESG risk
management, performance, and reporting. Our last
materiality assessment was conducted in 2018 (see
page 15 of Refining NZ’s 2020 Annual Report). Given the
change in our business, we saw value in a review of our
impacts, particularly with a view on recent changes in
the regulatory environment in New Zealand. As such,
Channel Infrastructure revisited the materiality analysis
in early 2022 to ensure it was relevant to better guide our
sustainability priorities as we look to the future of our
new business.
The first step in our materiality review process was
to assess Channel Infrastructure’s current and future
organisational context. This was a natural extension of
our Strategic Review initiated in 2020 and the extensive
stakeholder engagement which was involved throughout
this period.
We then identified Channel Infrastructure’s actual and
potential impacts by reviewing all issues identified in the
previous assessment and adding new issues that are
relevant to our changed business. We consulted a wide
range of sources including relevant reference material
from the Global Reporting Initiative (GRI) and the
Sustainability Accounting Standards Board (SASB) and
engaged external sustainability advisors.
11
We considered
a large group of relevant issues, including long and
short-term issues, those stemming from high and low-
likelihood events, and those affecting a diverse range
of stakeholders both inside and outside the company.
Our next step was to assess the significance of
each impact from a variety of stakeholder angles.
Through an expert-facilitated workshop, we assessed
the severity of each impact using considerations
of scale and scope, and reversibility with a team
from across our business. The process built upon
the extensive stakeholder engagement effort which
informed the Company’s Strategic Review and
transition planning, and included consultation with
employees, iwi partners, investors, customers, suppliers,
neighbours, and local and national government.
The final step we undertook to complete our materiality
review was to prioritise the Company’s most significant
impacts for ongoing management and reporting. Issues
were categorised into three overarching categories:
environmental performance; people and community;
and governance and financial performance. Each issue
within the different categories was arranged from most
to least significant, and a threshold of significance was
determined. From this, an updated and relevant list of
Channel Infrastructure’s material sustainability issues was
determined and approved by the Board of Directors in
February 2022.
We are committed to going through this process
in greater depth following the completion of the
Company’s transition in 2023.
Channel Infrastructure’s Board of Directors are
responsible for the oversight and governance of
our material sustainability issues, while day-to-day
management is the responsibility of the Chief Executive
Officer and is further delegated accordingly. The
three material issue categories noted above allow for
the streamlined management and reporting of our
ESG impacts. The following sections of this Report
use this categorisation, but mostly omit elements
related to financial performance as these are covered
extensively in the Company’s Annual Report 2021.
11
Consulted reference material at this stage included: GRI 11 Oil and Gas Sector 2021; SASB Infrastructure Sector Standards; and SASB Oil &
Gas Sector Standards
Regulation & Policy
Circularity
Supply chain
due diligence
Contribution to
regional economy
Culture & diversity
Community
engagement
Transparency
& disclosure
Workforce transition
People &
process safety
Operational
decarbonisation
Iwi partnerships
Health & wellbeing
Access to skills
Electricity supply
Access to capital
Land, air, waste &
water management
Governance
transition
Future fuels & energy
industry transition
Security &
quality of supply
Figure 1 – ESG Materiality Matrix
Importance to Channel Infrastructure
Importance to stakeholders
Medium
High
High
Environmental performancePeople & communityGovernance & financial performance
Identifying our most material
sustainability issues
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20212928
ENVIRONMENTAL
PERFORMANCE
PEOPLE &
COMMUNITY
GOVERNANCE
& FINANCIAL
PERFORMANCE
Operational decarbonisation
Addressing carbon emissions from our
business operations, business travel, and
purchased goods and services to reduce
our impact on climate change
Future fuels and energy industry
transition
Enabling and participating in
New Zealand’s transition to more
sustainable future fuels and energy
Land, air, waste & water management
Minimising operational impacts on land,
water and air while managing existing
site contamination to reduce it over
time. Working with our partners to
enhance biodiversity
Circularity
Increasing material and operational
efficiency to, where possible, attain zero
waste and divert from landfills back into
our supply chain
Workforce transition
Conducting an ethical and just
transition to an import terminal that
minimises negative impact on our
people and the community
People & process safety
Maintaining focus on people and
process safety that surpass
regulatory expectations
Health & wellbeing
Cultivating and maintaining a
healthy working environment which
values employee wellbeing
Iwi partnerships
Recognising Iwi responsibilities as
Mana whenua and kaitiaki over
Poupouwhenua and partnering to
maintain and enhance the cultural
health of our operational site and the
surrounding coast, and informing our
partners of potential changes and
accounting for their views
Access to skills
Maintaining access to skilled labour
for our industry and bridging capability
gaps through training
Culture & diversity
Attracting, supporting, and maintaining
a diverse workforce and healthy
working culture
Community engagement
Engaging our local community to
partner in impactful ways and to
continue as a responsible corporate
citizen and neighbour
Contribution to regional economy
Making an impactful and sustainable
contribution to the regional economy
in which we work, as well as to
New Zealand more broadly
Supply chain due diligence
Increasing transparency throughout
our supply chain to promote a high
standard of human rights
Security and quality of supply
Ensuring our services support the
delivery of reliable, high-quality
fuel supply for our customers to
accommodate their changing needs
and maintain their competitiveness
Governance transition
Conducting an orderly, timely and
seamless transition of our governance
systems and processes to the new
terminal business
Access to capital
Maintaining access to lending and
financial capital amid changing
stakeholder expectations for an
environmental and social license
to operate
Electricity supply
Supporting affordable and reliable
access to electricity for our business
Transparency & disclosure
Providing accurate and timely
information about our sustainability
impacts and performance
Regulation & policy
Complying with, supporting and
anticipating future regulations
and policy
Table 1 – Material ESG Issues and Framework
Board responsibilities and its committees
Channel Infrastructure’s Corporate Governance
framework sets out our governance practices and
processes to provide accountability to our diverse array
of stakeholders, including on the environmental, social,
and governance aspects of sustainability. Channel
Infrastructure is listed on New Zealand Stock Exchange’s
(“NZX”) Main Board as CHI and is subject to regulatory
control and monitoring by both the NZX and the Financial
Markets Authority (“FMA”).
A complete suite of Channel Infrastructure’s governance
documents can be publicly viewed within the “Investor
Centre” of our website (www.channelnz.com), which
includes detailed reporting against the NZX Corporate
Governance Code, board and committee governance
documents, and our suite of policies, including those
which govern sustainability.
The Board is responsible for setting the Company’s
strategic direction and for providing oversight of the
management of the Company, with the aim of increasing
shareholder value and ensuring the obligations of the
Company are properly met. This includes the Company’s
full scope of sustainability impacts identified as material
in Figure 1 on page 29, and any impacts identified as
material in the future. Day-to-day management of the
Company is delegated to the Chief Executive Officer.
The Board uses committees to address specific issues
which require detailed consideration by members of the
Board who have specialist knowledge and experience.
The Board retains ultimate responsibility for the functions
of its committees and determines their responsibilities.
The sub-committees are as follows:
• Audit, Risk and Finance Committee;
• People, Nominations and Remuneration Committee;
• Independent Directors Committee;
• Health, Safety, Environment and Operations
Committee; and
• Transition Committee which was formed in 2021
to assist the Board with the transition of the
Company from a refinery (“Refining NZ”) to a
fuels import terminal/infrastructure business
(“Channel Infrastructure”).
Channel Infrastructure takes its role as a
responsible operator seriously. We have a
number of sustainability governance measures
and structures in place in order to ensure
that we identify, manage and respond to
environmental, social and governance issues
effectively, and that we can continue to operate
in a sustainable and responsible manner,
including through our transition.
Corporate governance
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20213130
The respective roles of the Board, its Committees
and Management (the Corporate Lead Team) are set
out in the Board and relevant Committees’ Charters.
Committees annually evaluate their own performance,
processes and procedures to ensure that they are
appropriate to assist the Board in effectively fulfilling its
role and meeting its duties.
Independence of Directors
The Board currently consists of a majority of
independent directors.
Independence of our directors is assessed in accordance
with the NZX Main Board Listing Rules criteria.
In addition to being major shareholders of the Company,
bp, ExxonMobil and Z Energy are also customers,
either directly or through wholly owned subsidiaries,
and currently have representation on the Board which
could lead to a conflict of interest. Clause 8.16.1 of the
Constitution allows for the Independent Directors to
act as the Board in respect of matters that pose a
conflict of interest if raised at the full Board. The role of
the Independent Directors also includes acting as the
Board where all other Directors have a disqualifying
interest, and to act as a Committee in relation to matters
concerning the major customers and any other conflicts
of interest to ensure transparency.
Governance of Sustainability
The Board’s responsibility for setting the Company’s
strategic direction and overseeing management includes
setting the strategic direction for sustainability. The
Board approves the material sustainability impacts
for Channel Infrastructure as well as all corresponding
targets to ensure they are achieved. This includes
approval of sustainability reports, including this Report.
To assist the Board, strategic direction and oversight
of sustainability is delegated to four sub-committees
according to relevance of topic. Below we include the
breakdown of sustainability-related responsibilities by
subcommittee.
• Audit, Risk and Finance Committee: Supervises the
integrity of our sustainability reporting and the internal
control systems for ESG data and performance, as well
as working with company management to exercise
due diligence on material risks, including those driven
by climate change and other sustainability impacts;
• People, Nominations, and Remuneration Committee:
Supervises the social aspects of sustainability,
including people, diversity and inclusion, community
engagement, and human rights;
• Health, Safety, Environment, and Operations
Committee: Supervises the environmental aspects
of sustainability, as well as various elements around
health, safety, and operational quality.
• Transition Committee: Considers climate change and
other sustainability drivers in its review and feedback
on transition strategies and plans.
The Corporate Lead Team also closely considers
sustainability issues and is responsible for proposing
targets to the Board and then achieving those that
are approved. The Corporate Lead Team approves
the portfolio of sustainability programmes to achieve
targets, and assigns management accountability
for implementation. This includes the day-to-day
responsibility for implementing the Company’s
commitments to addressing climate change. The
primary point of responsibility for sustainability within
the Corporate Lead Team is the Chief Executive Officer,
but additional climate change and sustainability
responsibilities are held by the Chief Financial Officer,
General Manager Operations, Business Development
Manager, Environmental, Health and Safety Manager,
and several others.
Sustainability priorities are galvanised within Channel
Infrastructure’s governance, by a remuneration plan which
includes key performance indicators specifically linked
to climate change, sustainability, and our just transition
for employees and the community. For example, our
CEO’s KPIs are linked to future sustainability and growth
(50 per cent) and the company-wide scorecard (50 per
cent) which include issues such as transitioning to import
terminal operations and successfully implementing a just
transition for our stakeholders.
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20213332
06
—
Climate
Change
and TCFD
The Taskforce on Climate-related Financial Disclosures
was formed by the Financial Stability Board. Its
recommendations proposed a disclosure framework to
encourage transparent, consistent reporting on relevant
climate change impacts facing companies (with an
emphasis on financial impacts) and how these matters
are managed through governance, strategic planning,
risk management and target-setting activities.
The TCFD reporting framework has been widely
accepted by businesses since its release and is
understood to be a preferred form of reporting for use by
investors. In line with Channel Infrastructure’s commitment
to leadership, we have accelerated our efforts to align
with the recommendations of the TCFD ahead of the
New Zealand Government’s mandatory reporting
requirements. We anticipate that the release of the final
reporting guidance will prompt further development in
our approach and reporting, and we are committed to
deepening our reporting in line with best practice as this
develops over time.
The following sections provide our disclosures against
the four key pillars of the TCFD’s reporting framework,
as shown in Figure 2.
Figure 2 – TCFD Recommendations and Supporting Recommended Disclosures
GOVERNANCESTRATEGYRISK MANAGEMENTMETRICS AND TARGETS
Disclose the company’s
governance around climate-
related risks and opportunities.
Disclose the actual and
potential impacts of
climate-related risks
and opportunities on the
company’s businesses,
strategy, and financial
planning where such
information is material.
Disclose how the company
identifies, assesses and
manages climate-related
risks.
Disclose the metrics and
targets used to assess and
manage relevant climate-
related risks and opportunities
where such information
is material.
Operational decarbonisation
Future fuels and energy industry transition
Governance transition
Transparency and disclosure
Security and quality of supply
Regulation and policy
Channel Infrastructure NZ | Sustainability Report 20213534Channel Infrastructure NZ | Sustainability Report 2021
As noted above, the Board is responsible for setting
the company’s strategic direction and overseeing
company management. It’s aim is to increase
shareholder value and ensuring the obligations of the
company are properly met. This includes assessment
and management of climate change related risks and
related matters, noting that these are highly relevant to
the day-to-day operations of Channel Infrastructure
as an energy infrastructure company embedded in an
emissions-intensive supply chain.
To assist the Board, the Audit, Risk and Finance
Committee works with company management to
exercise due diligence and care in material financial
risks, including those driven by climate change (more
information is provided in the Risk Management section
on page 38 of this report). In addition, a Transition
Committee was established in 2021 to assist the Board
with the transition of the Company from a refinery
(Refining NZ) to a terminal/infrastructure business
(Channel Infrastructure). This Committee also considers
climate change drivers in its review and feedback on
transition strategies and plans.
During 2021, the Board was briefed on a number of
climate change related matters, particularly to review
and endorse the Marsden Point site repurposing plan.
This included discussions on fuel demand outlooks under
various climate policy and technology scenarios, options
to decarbonise electricity supply, and the potential role
of low-carbon fuels in the company’s future plans.
Channel Infrastructure’s Corporate Lead Team
also consider climate change matters in ongoing
optimisation of financial and operational performance
as well as forward planning for the company’s
transition. The Chief Executive Officer, Chief Financial
Officer, General Manager Operations and Business
Development Manager all hold responsibilities which
necessarily require an understanding and oversight of
climate-related risks and opportunities. These include
consideration of energy demand and price forecasts,
impacts of climate policy developments such as carbon
pricing, and consideration of the physical impacts of
climate change on operational safety and continuity.
The Corporate Lead Team also holds day-to-day
responsibility for the implementation of the company’s
commitments to addressing climate change.
At the operational level, the company’s General Manager
Operations and supporting team members oversee
ongoing activities on-site, including climate-related
issues including efficiencies to minimise input costs such
as fuel and electricity, and appropriate responses to
extreme weather events. The Environmental, Health and
Safety Manager is responsible for relevant reporting and
compliance obligations.
To reflect the strategic importance of climate-related
risks and opportunities to the business, our 2022
remuneration plans include key performance metrics
which address our priorities in this area. Specifically, our
CEO’s KPIs linking to future sustainability and growth (50
per cent weighting) include supporting the transition
to lower carbon fuels as one of six explicit strategic
priorities set out in Channel Infrastructure’s strategic
frame. Consideration of climate-related drivers are
also indirectly referenced in other strategic priorities,
including growth and diversification. Our company-wide
scorecard, which applies to employees (and constitutes
the remaining 50 per cent of our CEO’s KPIs), also
includes an explicit measure to support a just transition
for employees leaving the business, representing a 10 per
cent weighting across the scorecard.
In the past two years, our company has undertaken
a comprehensive Strategic Review to determine
the optimal business model and capital structure
to maximise shareholder returns and deliver secure,
competitive fuel supply to New Zealand. As an oil refinery
operation for the last 60 years, our Strategic Review
necessitated deep, strategic consideration of the climate
change-related risks and opportunities associated with
future business model options.
The shareholder endorsed outcome of the Strategic
Review to convert Refining NZ’s Marsden Point site into
a dedicated fuel import terminal was based on several
fundamental drivers. Climate change considerations
were directly linked to two of these drivers:
• the substantial mitigation of growing exposures to
compliance costs under the New Zealand policy
changes including the New Zealand Emissions Trading
Scheme (NZ ETS), as well as electricity and gas costs
and supply uncertainty, and
• the strong position the company would be in to
participate in emerging opportunities as the
New Zealand energy market decarbonises.
Moving forward through the operational transition at
Marsden Point and beyond, we recognise the need to
maintain a strong understanding of the climate change
driven impacts relevant to our financial and strategic-
planning. These include the transition impacts from
decarbonisation of the transport fuel and broader
energy sector, as well as the foreseeable physical
impacts from unavoidable climate change over the life of
our infrastructure and assets. To articulate our approach
and priorities, we have developed a Climate Change
Position Statement on page 15, with core commitments in
place to steer our progress.
In line with TCFD Recommendations, we have
summarised the climate-related risks and opportunities
considered relevant to our business in Table 2 below.
This table builds on information previously disclosed in
our Annual Reports, and The Marsden Point conversion
Proposal - Explanatory Booklet (released on 5 July 2021
and located under the ticker ‘CHI’ on www.nzx.com).
Risks and opportunities have been considered across
three future time horizons (consistent with our transition
roadmap outlined on page 22 of this Report), as
summarised below:
• Short term time horizon – Present to 2025: Period
during which New Zealand is still expected to
need diesel and petrol to keep moving. Channel
Infrastructure, through its infrastructure, will continue
to provide fuels to Kiwis to satisfy their transport
needs. The New Zealand Government is introducing
measures to protect fuel security and increase the
use of biofuels, which will require infrastructure such as
Channel Infrastructure’s.
• Medium term time horizon - 2025 to 2035: Period
during which demand for diesel and petrol is expected
to peak and begin to decline as electric and hybrid
cars increase and biofuel use grows. Jet fuel demand
is expected to continue to grow and Sustainable
Aviation Fuel will enter the fuel mix. Channel
Infrastructure will continue to operate as an import
terminal and will continue to have some residual Scope
2 emissions from electricity consumption.
• Long-term time horizon – Beyond 2035: Period during
which hydrogen is expected to become commercially
viable, and Sustainable Aviation Fuels’ use more
widespread. Channel Infrastructure’s customer
emissions, including end-user Scope 3 emissions,
will make up the majority of supply chain emissions
in the future until more sustainable fuel solutions
become available.
GovernanceStrategy
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20213736
TOPICDESCRIPTION OF RISK/OPPORTUNITY MANAGEMENT ACTIONS AND PLANS
Policy
Risks – Short term: New Zealand’s Climate Change
Response (Zero Carbon) Amendment Act passed in
2019, setting a legislated target to reduce net emissions
of all greenhouse gases (except biogenic methane)
to zero by 2050. The New Zealand Emissions Trading
Scheme (NZ ETS) is a key policy lever in the achievement
of the 2050 target, based on forecast emissions
budgets which will inform the allocation of NZ carbon
credits to industry and through other mechanisms.
Refining NZ was scheduled to join the NZ ETS from
January 2023 as an Emissions-Intensive Trade-Exposed
(EITE) business, with an industrial allocation of units
based on a prior year baseline which would gradually
be reduced towards 2030. Due to the conversion to an
import terminal, Channel Infrastructure is substantially
less exposed due to much lower Scope 1 and Scope 2
emissions (98 per cent reduction on a 2019 baseline).
The remaining direct exposure is associated with
Scope 2 emissions from electricity consumption with
the cost reflected in the wholesale electricity price,
noting electricity consumption will also decrease (by
approximately 85 per cent) following conversion.
Direct exposure to national climate policy is
substantially lower following the Marsden Point
conversion on the basis that direct (Scope 1 and 2)
emissions are significantly lower. To further mitigate
our carbon pricing risk exposure, we will continue to
explore opportunities to develop renewable energy
supply through our Maranga Rā solar project and
other battery/solar projects planned for the region -
either on a standalone basis or with partners.
Climate risks and opportunities
TOPICDESCRIPTION OF RISK/OPPORTUNITY MANAGEMENT ACTIONS AND PLANS
Policy cont.Risks – Medium term: Following conversion, our direct
Scope 1 and some indirect Scope 2 emissions will move
upstream in our value chain, increasing upstream
emissions in the shift. We would expect supply chain
emissions intensity (i.e. per unit of product used by
customers) to decrease over time with the opportunity
to source fuel from larger, more energy efficient refineries
in Asia. Our large storage capacity at Marsden Point has
the capacity to support larger shipping vessels, providing
opportunity for further improvement in emissions efficiency
of delivered fuel and lower upstream emissions intensity.
Our business will, however, still be engaged in distributing
refined oil products. As the NZ ETS increases pressure on
emissions-intensive businesses, unpredictable carbon
price impacts may result along our value chain (linked
to customer emissions). These include the potential for
indirect impacts if our customers in the fossil fuel sector
experience financial stress.
Different pacing of policy development in New Zealand
compared to other regions may also result in volatile
supply/demand dynamics across the transport fuel sector
more broadly. In an extreme case, these dynamics may
negatively influence the affordability of fuel and consumer
purchasing decisions in New Zealand.
We have a long history of working with the New
Zealand Government to reduce emissions, and
continue to advocate for effective policy design
and implementation. Our intent is to work with the
Government to support and facilitate the objectives
of climate change policy while considering the need
for a smooth and fair transition for emissions-
intensive industries.
We have submitted our considered feedback
to recent Government consultation processes in
this area, including New Zealand’s first emissions
reduction plan as well as the Sustainable Biofuels
Mandate. We will continue to closely monitor the
policy environment to understand implications for our
sector and customers and, where appropriate, work
with officials on supporting policy design.
In addition, we are committed to actively working
with our partners to measure and monitor
customer Scope 3 emissions and to mitigate
these to the best of our abilities, including by
pursuing the use of our facilities to support
biofuel consumption in New Zealand by 2030.
Opportunities: The fuel and the transport sector
significantly contribute to climate change. In New
Zealand, emissions from transportation (still mostly
powered by fossil fuels) make up 21 per cent of the
country’s annual greenhouse gas emissions. The
New Zealand Climate Change Commission’s official
2021 carbon budgets highlighted that the transport
sector must electrify and increase its use of biofuels,
recommending a near-term focus on electric light
vehicle uptake and decarbonisation of heavy transport
and aviation fuels over a longer period of time. A
Sustainable Biofuels Mandate subsequently released by
the Government in December 2021 requires transport fuel
suppliers (excluding aviation fuels) to reduce greenhouse
gas emissions by a set percentage annually through the
supply of biofuels. A separate mandate is planned for
Sustainable Aviation Fuel in the future.
For Channel Infrastructure, the conversion from an oil
refinery to an import terminal operation provides strong
opportunities to support New Zealand’s decarbonisation
policies. Our strategic location and existing infrastructure
assets can readily be used to import, store and distribute
biofuel quantities across our primary Auckland and
Northland markets. Longer term, opportunities may
also exist for the company to be involved in direct
manufacture of these fuels, should this be viable.
As discussed in detail in Our Transition Pathway from
page 16, our Marsden Point conversion plan includes
a strategic focus on supporting New Zealand’s
transition to a lower-carbon economy. To this end, we
will investigate medium-term opportunities including
the import, storage and production of second-
generation biofuels (including Sustainable Aviation
Fuels). Longer-term opportunities being explored
include production or storage of new energy sources
such as hydrogen.
Please see the ‘Business Planning’ on page 43 for
further information on the fuel demand models used
to underpin our valuation and planning.
Table 2
Channel Infrastructure NZ | Sustainability Report 20213938Channel Infrastructure NZ | Sustainability Report 2021
TOPICDESCRIPTION OF RISK/OPPORTUNITY MANAGEMENT ACTIONS AND PLANS
MarketsRisks – Short, medium and long term: Uncertainty in
some market signals may affect our business planning
following the conversion of Marsden Point into a fuels
import terminal. For example, electric vehicle uptake
rates, market adoption of biofuels and use of hydrogen
in transport and other applications will all influence
the volumes and types of fuel commodities imported,
distributed and potentially manufactured by our business
over time.
First generation biofuels, which can only be blended in
small volumes, cannot be distributed via the pipeline
to Auckland due to the risk of contamination of jet
fuel supply, meaning that these fuels will need to be
distributed via truck/road to the Auckland market,
potentially by-passing our infrastructure.
As announced in November 2021, Channel
Infrastructure successfully entered into long-term
agreements with our three existing customers (bp,
Mobil and Z Energy) for the provision of import
terminal services. Long-term agreements have also
been executed with customers to provide dedicated
private storage. These agreements provide security
for our business to navigate near term changes in
supply and demand of different fuel commodities
while exploring future opportunities to import/store
and potentially manufacture lower carbon fuels,
and in support of our customers’ needs for fuel
stockholdings to be held onshore.
Please see the ‘Use of scenarios section’ on page 43
for further information on the fuel demand models
used to underpin our valuation and planning.
Opportunities: As New Zealand tackles the challenge of
decarbonisation, new markets for low/zero carbon fuels
and associated storage and infrastructure requirements
are expected to evolve and grow in response to policy
drivers (as discussed above). In practice, decreasing costs
and shifting customer preferences towards these fuels
may further accelerate market growth, presenting strong
opportunities to diversify Channel Infrastructure’s core
business services and products.
Second-generation biofuels (including Sustainable
Aviation Fuel), which can be blended in much higher
volumes, are suitable for distribution via the pipeline to
Auckland, at one tenth of the emissions of equivalent
road transport.
As discussed in detail in Our Transition Pathway from
page 16, our Marsden Point conversion plan includes
a strategic focus on supporting New Zealand’s
transition to a lower-carbon economy. Please refer to
the management actions summarised in the Policy
topic above for more information.
LegalRisks – Short, medium and long term: Channel
Infrastructure has on-going responsibilities to disclose
and manage foreseeable risks, including climate change.
Recent years have also seen an increase in climate-
related litigation claims by parties including climate
activist groups and shareholders. For example, Refining NZ
was one of seven defendants in High Court proceedings
brought by a Northland climate change activist in 2020
attempting to legally force a reduction in greenhouse
gas emissions (the claim was struck out, which the
applicant has appealed). Execution of the Marsden
Point conversion is expected to significantly reduce
the risk of similar direct litigation in future, however
we will continue to be linked to the fossil fuel supply
chain more broadly in the short to medium term.
As detailed in the Governance section of this Report
on page 36, our Board is regularly briefed on climate
change-related issues, including detailed discussions
pertaining to the substantive Strategic Review and
resulting plan to convert the Marsden Point site.
The Board’s oversight is also reflected in the
endorsement of the company’s Climate Change
Position Statement (published on page 15 of this
Report and on our website). This Sustainability
Report, including climate disclosures, align with the
recommendations of the TCFD.
We also continue to monitor climate change litigation
in our sector to ensure awareness of potential indirect
impacts on our business.
TOPICDESCRIPTION OF RISK/OPPORTUNITY MANAGEMENT ACTIONS AND PLANS
Reputation
and social
licence
Risks – Short to medium term: Investors and other
stakeholders (including our workforce and local
communities) take an active interest in our approach
to managing climate-change related risks to, and
opportunities for, the business. This is of particular
relevance as the company undertakes a substantial
transition to move away from fossil fuel refining to a
more flexible import terminal system, aligned with
New Zealand’s decarbonisation goals. In particular,
the expected reduction of Refining NZ’s workforce from
around 300 to approximately 70 employees during the
Marsden Point conversion, has the potential to affect our
social licence within the local and broader community if
not executed with care.
Channel Infrastructure will still be engaged in storing and
distributing refined oil products post conversion; as such
some exposure also remains to negative public attitude
towards fossil fuels. Among other impacts, this could
affect our ability to attract and retain talent.
We work closely with our investors, iwi, local
community, and other stakeholders to ensure we
understand and meet their expectations on climate
change-related matters. The strong shareholder
endorsement of the Marsden Point conversion
Proposal indicated alignment on fundamental
strategic direction of the business, including
acknowledgement of key climate-related issues.
We will continue to proactively disclose our approach
and progress on climate change-related risks and
opportunities, including periodic reviews and updates
to this Report.
Our immediate focus is on supporting those impacted
by the change from refinery to terminal operations this
year, setting ourselves a target to have at least 90 per
cent of people impacted by the changes either in new
jobs (those who want new jobs) or retraining within six
months. Other key commitments, discussed in full in Our
Transition Pathway from page 16, include a minimum
six month notice period and six months’ redundancy
pay, as well as access to a broad range of training and
placement programmes.
Opportunities: The changes Channel Infrastructure will
be undertaking over the coming years provide a valuable
opportunity to enhance our reach and reputation by
designing and executing an industry best-practice and
just transition for our people. By demonstrating leadership,
inclusive growth and adaptation, we can ensure our social
licence is maintained and reputation is strengthened,
putting us in a strong position to execute a successful
transition and implement future growth strategies.
We see further opportunities to strengthen our reputation
through active involvement in the provision of low-carbon
fuels to the New Zealand market in the medium to
long term.
As discussed above, we have made a number of
commitments and investments to prioritise a just
transition for those affected by the conversion of the
Marsden Point operation.
To further support our business-wide commitment
to a just transition, our 90 per cent target for
employees finding a new role or retraining within six
months (described above) has been integrated into
remuneration for all employees via inclusion in the
Company Scorecard.
TechnologyOpportunities: Technological advancements in the
manufacture, transport and end-uses of low carbon
fuels may accelerate their uptake across the New
Zealand economy. This represents a sustainable growth
opportunity for Channel Infrastructure to diversify our role
as a provider of critical energy services to the economy.
During 2021, we completed a comprehensive review
of opportunities for repurposing components of the
Marsden Point site following the conversion. This
included careful consideration of technological
feasibility and maturity of different options, with
extensive consultation undertaken across subject
matter experts, potential partners and international
refineries.
This review has identified a number of prospective
options across the three future time horizons
considered. These will be explored further over the
coming year, with a view to undertake feasibility
studies where appropriate.
In addition, we continue to monitor domestic and
international technology developments which may
represent commercially attractive opportunities for
our business.
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20214140
TOPICDESCRIPTION OF RISK/OPPORTUNITY MANAGEMENT ACTIONS AND PLANS
Physical
– acute/
chronic
Risks – Short, medium and long term (flooding
disruptions): Channel Infrastructure’s Marsden Point
operation is located on the east coast of New Zealand,
at the entrance to Whangarei Harbour and about
140 kilometres north of Auckland. Following the
conversion, the terminal will import, store, and distribute
refined transport fuels on behalf of customers (primarily to
Auckland and Northland markets) via either the Marsden
Point to Auckland Pipeline to Wiri or a short pipeline to a
truck loading facility adjacent to the site for distribution
by road.
Due to the location of the refinery and import terminal at
the entrance to the Whangarei harbour, the operation
is vulnerable to extreme (acute) weather events such as
storm surge or storm tide events. These may increase in
frequency and severity over time, due to climate change.
Subsequent flooding of the site could result in asset
damage and business disruption including impacts along
the supply chain.
In addition, chronic impacts such as rising sea levels may
reduce future effectiveness of the natural fore-dune barrier
(between 6-12 metres) protecting the Marsden Point site,
which is situated 4.3 metres above mean sea level.
To date, storm surge events have been prepared for
and managed using existing operational processes
and business continuity plans.
We maintain Material Damage and Business
Interruption insurance for property damage and
consequential business interruption as a financial
mitigation of these risks. On conversion from the
existing refinery to import terminal operations, the
scope of cover will be adjusted to reflect that of the
terminal business.
We also continue to monitor Climate Change
Projections for New Zealand prepared by the Ministry
for the Environment (which draw on climate model
simulations from the Intergovernmental Panel on
Climate Change).
Risks – Short, medium and long term (erosion impacts):
Increasing frequency and severity of extreme weather
events increase the risk of significant one-off erosion
events at the Marsden Point site, noting that existing
coastal processes have already been observed to be
causing ongoing erosion issues.
In addition, climate change induced sea level rise over
time will increase erosion related risks.
A coastal erosion hazard management strategy has
been in place for the site since 2013. The plan was
prepared with consideration of the adapted risk-
based framework of the Ministry for the Environments
(MfE) Coastal Hazards and Climate Change
Guidance Manual (2008).
Surveys of the coastal foreshore around the location
are undertaken regularly, with the next planned for
this coming year. Information collected is used to
inform and manage the risks from coastal erosion,
integrated with the latest inundation maps and
predicted coastal erosion lines from the local
Northland Regional Council.
The company hold consents to undertake further
coastal erosion protection works if required.
Business Planning
Business planning including scenario analysis has been
an important tool for us as we have assessed options
through our Strategic Review process and planned and
navigated our transition. We have been undertaking
scenario analysis for fourteen years now, and these
exercises centrally informed our decision to transition
from a refinery to an import terminal.
Our scenario analysis has focused on the fuel passing
through our infrastructure, as in our view this is the most
material climate transition impact for our business.
Channel Infrastructure uses fuel demand forecasts
formulated by third party oil and gas market experts,
Hale & Twomey, for its business planning, with base
planning scenarios presented in the charts set out on
page 44. The Business New Zealand Energy Council
(BEC) has recently issued updated energy scenarios
(TIMES-NZ 2.019),
12
with the Tui scenario representing
a future in which climate change is one of several
competing priorities and the Kea scenario representing
a future in which climate change is seen as the most
pressing issue and in which the New Zealand economy
is largely decarbonised by 2040. These scenarios are
shown in the chart set out on page 44 as a comparison
against the Hale & Twomey forecast volumes. The BEC
scenarios indicate the range of potential views on the
rate of decarbonisation of transport fuels, with the Hale
& Twomey forecasts used by Channel Infrastructure more
closely aligned with the BEC Kea scenario.
According to the Hale & Twomey forecast demand
outlook, petrol and diesel demand will start declining
from circa 2025 and circa 2030, respectively and
continue to decline through to 2050. While there is
significant uncertainty in relation to future demand and
demand peaks, this outlook is largely in line with the
Climate Change Commission’s report on New Zealand’s
carbon budget issued in June 2021. This report
contemplates a 1.5 degree aligned pathway for
New Zealand.
Jet fuel demand forecasts have a wide range due to
uncertainty around the recovery from COVID-19 impacts
and viable alternative sources of energy for air travel.
Expert forecasts expect New Zealand jet fuel demand to
continue to grow through to the 2040s before declining
based on expected technology improvements and
possible fuel substitution (potentially electric, Sustainable
Aviation Fuels or hydrogen fuel cells). SAF has been
identified as the primary solution for decarbonising long-
haul flights which drives the majority of jet fuel demand
and has not yet been included in these forecasts. Any
SAF imported into, or manufactured at, Marsden Point,
would likely utilise the same terminal infrastructure as
fossil jet fuel i.e. jetties, tanks and pipeline.
In line with this, national pathway assessment efforts
undertaken by the Climate Change Commission have
identified that road transport fuel is the primary site of
change for New Zealand’s transport system in a Paris
Agreement consistent world, with few alternatives in
place for long-haul air borne transport other than
SAF. Our existing business planning assumptions have
reflected these conclusions, assessing declines in petrol
and diesel demand and growth in jet fuel demand, in
line with the identified impacts of a national 1.5 degree
scenario.
12
BusinessNZ Energy Council energy scenarios published in 2021: bec.org.nz/our-work/scenarios/times-nz-2.0.
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20214342
Channel Infrastructure’s import terminal assets were
recently revalued at fair value by an independent valuer
at $793 million, using the Hale & Twomey fuel demand
forecasts (refer to note 11 of the Consolidated Financial
Statements for the year ended 31 December 2021). The
actual rate of future fuel transition remains uncertain,
and may occur faster or slower than these forecasts
assume. For this reason, we have included a sensitivity
to this valuation in our financial statements, which shows
the impact on asset value if fuel volumes through our
import terminal facilities were to be 10% higher or 10%
lower than assumed in the forecasts. The sensitivity of
the fair value assessment of our import terminal assets to
such a change is +$55 million and -$52 million.
Scenario analysis will continue to form part of our
strategic toolkit, and we anticipate that our approach
will develop over time, including as best practice for
TCFD disclosures in our region develops. Areas for further
investigation include jet fuel forecasts as the feasibility
of SAF is demonstrated. These also include physical risk,
as although we have undertaken specific assessment of
event risk for storm surges and inundation at the site, we
have yet to undertake a broader scenario analysis for
physical climate risk.
Fuel demand projections for New Zealand
New Zealand Product Demand (million litres)
Fuel demand projections for markets supplied by Channel Infrastructure (Auckland and Northland)
Auckland + Northland Product Demand (million litres)
2021 2022 2023 2024 2025 202t6 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jet (H&T Jan-2021)Petrol (H&T Jan-2021)Diesel (H&T Jan-2021)
Tui (BEC May-2021)Kea (BEC May-2021)
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
3,500
3,000
2,500
2,000
1,500
1,000
500
0
JetPetrolDiesel
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20214544
The Channel Infrastructure Board is responsible for
reviewing and managing risks, including those related
to climate change, as outlined in our Governance
Statement (available on our website). Day-to-day risk
management is delegated to the Chief Executive Officer,
with risk assessments conducted by the Corporate
Lead Team.
We have an enterprise-wide risk management system
in place, covering preventative/recovery or mitigating
barriers or controls. As at January 2022, three risks linked
to climate change are recorded and managed in this
Enterprise Risk Register. An audit programme is also in
place to verify that operational controls (barriers) are
functioning as documented and to assess the efficiency
and effectiveness of internal controls. The Corporate
Lead Team and the Board obtain additional assurance
of the adequacy of the Company’s management
system from detailed operational reports and monitoring
controls covering both leading and lagging indicators
as well as independent risk assessments carried out by
independent third parties.
Metrics and Targets
Our direct emissions in 2021 totalled 998,982 tonnes
CO2-equivalent (tCO2e), with 857,042 tCO2e arising
from direct (Scope 1) emissions sources and 141,940
tCO2e arising indirectly (Scope 2) through consumption
of electricity generated offsite. This represented a
small (1.6 per cent) increase on 2020 levels, reflecting
the impact of COVID-19 on 2020 production levels,
and a larger 20 per cent reduction on 2019 levels.
Further historical data is provided in the environmental
performance section of this report on page 48.
Following conversion, emissions from direct (Scope 1)
sources are expected to be minimal, arising from small
quantities of fuel combustion in vehicles, off road
equipment, boilers, pumps and generators, as well as
some ongoing fugitive emissions from tanks, valves
and flanges. Scope 2 emissions are also expected to
decrease by 85 per cent as electricity demands for the
import terminal and storage operations are expected
to be significantly lower than the more energy intensive
refinery operations. Some of these Scope 1 and Scope 2
emissions will move upstream in our value chain,
increasing upstream supply chain emissions in the shift.
Nonetheless, the emissions intensity of the fuel we
provide to customers is expected to decrease over time
as discussed in Our Transition Roadmap and Table 2 on
page 38. We are committed to working with customers
to identify opportunities to utilise our infrastructure to
support the decarbonisation of New Zealand’s transport
sector, including by pursuing the use of our facility to
support biofuel consumption in New Zealand by 2030.
In this context, we have set the following emissions
reduction targets for our business to drive progress and
set clear commitments to our stakeholders. These are
described in full in Our Transition Pathway (Our Targets
section).
• Net Zero – Net zero Scope 1 and 2 emissions by 2030.
• Customer Scope 3 – Target: Our infrastructure is
utilised to support the decarbonisation of
New Zealand’s transport sector and facilitate
customer Scope 3 emissions reduction by 2030.
Case Study – Repurposing
Opportunities at Marsden Point
Our transition from New Zealand’s only oil refinery means
a big change to how we keep New Zealand moving, but
as we make this change, there are exciting opportunities
for us to diversify what we do, beyond our core business
of operating the import terminal.
We are talking to a range of parties about options to
utilise the highly strategic assets we have at Marsden
Point. We have a long-term resource consent to operate,
deep harbour and jetty access, industrial electricity and
gas connections, and proximity to the largest population
base in New Zealand. We have near-term, and longer-
term plans, all of which are underpinned by our long-
term commitment to operating at Marsden Point.
We are exploring options to progress the
Maranga Rā solar project, which in combination
with battery storage, has the potential to
eliminate remaining Scope 2 emissions and fully
decarbonise Marsden Point terminal operations.
We are actively talking with customers about
opportunities to decarbonise their Scope 3 emissions,
through infrastructure support for the biofuels mandate
and we are involved in the Air New Zealand-led
Sustainable Aviation Fuel feasibility study.
Discussions are underway to explore the import and
storage of other bulk liquids at Marsden Point, and we
expect the findings of the Fortescue Future Industries
study looking at green hydrogen production on our site,
to be delivered later in 2022.
Our transition from
New Zealand’s only oil refinery
means a big change to how we
keep New Zealand moving.
Risk management
Channel Infrastructure NZ | Sustainability Report 20214746Channel Infrastructure NZ | Sustainability Report 2021
07
—
Environmental
performance
Channel Infrastructure is committed to maintaining
the highest standard of environmental performance
and protecting the unique environment in which we
operate. We take these commitments very seriously,
as we also live and work at Marsden Point and the
surrounding community.
As noted above, Channel Infrastructure seeks to reduce
our carbon footprint, build resilience to climate change
risks, and responsibly contribute to achieving New
Zealand and global decarbonisation targets. We seek
to do this while acting as responsible managers of
the land and sea upon which we operate. Moreover,
our environmental commitments extend beyond
carbon emissions to include waste, wastewater, land
contamination and erosion, all of which must be
managed responsibly.
We are conscious of our responsibility for minimising
the impact of our operations on the surrounding
environment. This has been underpinned by a ‘no spill’
policy and our previous c.$25 million investment in site
cleaning, preventing hydrocarbons leaving the site,
and bolstering the resilience of our water treatment
systems. Our transition to import terminal operations will
reduce the impact of our operations on the surrounding
environment and we will be maintaining our focus on
reducing legacy hydrocarbon impacts to groundwater
through the ongoing operation of our network of
groundwater monitoring and recovery wells.
Our Marsden Point site was recently granted by the
Northland Regional Council a Resource Consent to
operate for another 35-year term, based upon a
detailed environmental impact assessment of our
processes, and operations. This assessment reviewed
our operations’ effects on the harbour, land, air quality
and the surrounding community. As a condition of
the resource consent, we have committed to strict
protections to maintaining the current level of high
environmental standards, and to ensure any current and
future operations that take place on our site do so in a
responsible manner.
Our environmental management systems include
monitoring of our discharges to air and water, soil and
groundwater management, awareness and permit to
work controls, as well as cleaning and remediation of all
leaks or spillage. More information on our environmental
management systems can be attained on the
Environment section of our website.
Greenhouse Gas emissions: Following closure of the
refinery in 2022, we expect our Scope 1 and 2 greenhouse
gas emissions will decline by 98 per cent from 2019 levels,
a reduction of over 1 million tonnes of carbon dioxide
per annum. The closure of the refinery alone will deliver
upon one third of Aotearoa New Zealand’s first emissions
reduction budget. We anticipate an approximate 85
per cent reduction in electricity consumption, and
no natural gas requirements following this transition.
It will open significant opportunities to participate
in decarbonisation of New Zealand’s transport fuels
and energy through our existing infrastructure and
repurposing of the Marsden Point site.
Our emissions intensity increased in 2021 to 244 (kgCO2/t
of product) since the prior year where it was 218.4. This
was reflective of higher production levels compared to
2020 (when we shut the refinery down for six weeks),
Operational decarbonisation
Future fuels and energy industry transition
Land, air, waste & water management
Circularity
Channel Infrastructure NZ | Sustainability Report 20214948Channel Infrastructure NZ | Sustainability Report 2021
as well as a less efficient mode of operating the plant
with lower production levels than would be optimal,
given the ongoing impacts of COVID-19. Our Scope 1
emissions increased marginally from 2020 to 857,042
tCO2 but remained below the 2019 level of 1,080,041
tCO2. Our Scope 1 largely comprised of emissions from
process furnaces, industrial processes, and fugitive
emissions. The 2021 emissions increase should be seen in
the longer-term context as a minor change ahead of a
wholesale decline of Scopes 1 and 2 emissions expected
in 2022. Gas usage in 2021 was lower than in 2020 due to
the unavailability of gas supply in New Zealand at levels
required to optimally run the refinery, increasing use of
refinery produced fuel.
Our Scope 2 emissions also increased slightly to 141,940
tCO2, up from 134,927 for the previous reporting year.
14
Going forward, our emissions profile will predominantly
comprise of Scope 2 emissions. We are investigating
pathways for further reduction beyond the expected
98 per cent
15
in 2022, including via the use of process
improvements and renewable electricity.
Waste: Steel, aluminium, paper and other waste from
the refinery is recycled responsibly. As part of our waste
management programme, we recycle more than 190
tonnes of material, including steel, aluminium and paper
every year.
Releases outside consent: The Company recorded
unauthorised releases outside of consent in 2021 when
non-compliant firefighting foam was used during fire
training exercises. Our testing indicates a low risk to
the surrounding environment from these releases. The
Company has taken action to mitigate the effects of the
discharge and to further strengthen on-site controls, with
on-going testing to determine if any further treatment or
remediation is required.
Wastewater: All wastewater from process units,
stormwater, the effluent water treatment plant and
the groundwater recovery system is collected in our
stormwater basin prior to discharge to the Whangarei
Harbour. Our discharge is continually monitored to ensure
it remains within the strict quality limits of our resource
consent. In recent years, we have invested c.$25 million
in improving our wastewater collection and treatment
systems to ensure they remain robust, particularly during
heavy weather events.
Erosion management strategy: Recent studies have
observed and confirmed evidence of erosion at the site
boundary, and identified the future possibility of ongoing
erosion events, such as storms and tsunami aggravated
by sea level rise and changing weather patterns
because of climate change. Our erosion management
strategy aims to manage the dynamic coastal
environment in which we operate in a way that provides
resilience to our nationally significant infrastructure while
appropriately recognising its wider social, cultural, and
environmental values.
We have identified key assets that may be at risk in
future years and corresponding responses, including
options for at-risk assets. We are also considering
a range of short and long-term coastal erosion
management options since much of the infrastructure
at the site cannot be easily relocated. To manage
these environmental risks, we have developed a
strategic erosion management framework which
includes monitoring, thresholds, and a decision-
making matrix to determine appropriate responses.
14
Correction: in our 2020 Annual Report on Page 18 we incorrectly cited our 2020 Indirect Scope 2 emissions at 56,100 tCO2, this number should be 134,927
tCO2, as cited in this Report.
15
Compared to 2019 CO2 emissions.
Case Study – Erosion Management
As a coastal site, we are subject to a range of
environmental impacts which are increasing as our
climate changes.
In 2013, the site experienced significant coastal erosion
events, to the point that the beach surrounding the site
eroded right back to our fence in one location, which
was subsequently washed away. As the seasons change,
and prevailing wind and storm direction shifts, this kind of
significant event is becoming more common.
In the immediate aftermath of the 2013 ‘washout’,
we undertook coastal works to build a buried seawall,
re-establish the beach and dunes over the seawall, and
develop a comprehensive Coastal Erosion Management
Strategy. The strategy includes monitoring of the dunes
of the coastal foreshore to track movement or recession
over time. Our mapping, along with information from the
Northland Regional Council, has been used to predict
and track expected retreat of the dunes over the next
35 to 50 years so that we can make the necessary
investments now to manage the potential retreat from
land that is most at risk of weather-related impacts over
this time period.
Periodically, when required, we also undertake proactive
dune planting to shore up the dunes and reinforce
natural protection barriers.
We are currently developing a coastal landscape
Management Plan with iwi which will, among other
things, include dune planting to improve dune resilience
to erosion events.
51Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 202150
244.010
141,940857,042
0.06
1.9
11.69. 8
0.96
3,3411.46
Table 3 – Emissions Data Table 4 – Resource Usage
RELEASES OUTSIDE CONSENTTOTAL FUEL USAGEDIRECT CO2 EMISSIONS INTENSITYEX-CRUDE (REFINERY PRODUCED FUEL)
PetajoulekgCO2/t of productPetajoule
PetajouletCO2tCO2
Million tonnes
Amount of flare as
mass % of feedstock
Tonnes
Petajoule
DIRECT CO2 EMISSIONS (SCOPE 1)NATURAL GAS USAGEINDIRECT CO2 EMISSIONS (SCOPE 2)ELECTRICITY USAGE
FLAREWATER USAGESULPHUR DIOXIDE EMISSIONS
2020: 52019: 12018: 52017: 42020: 11.22019: 14.32018: 13.22017: 14.22020: 218.4 2019: 206.1 2018: 195.9 2017: 199.42020: 8.82019: 10.72018: 9.82017: 11.4
2020: 848,6212019: 1,080,0412018: 972,0182017: 1,045,5952020: 2.42019: 3.52018: 3.42017: 2.82020: 134,9272019: 177,1322018: 162,7532017: 175,7882020: 0.922019: 1.232018: 1.142017: 1.22
2020: 0.172019: 0.02)2018: 0.052017: 0.022020: 1.492019: 1.682018: 1.652017: 1.72020: 3,3452019: 4,3292018: 3,4042017: 3,695
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20215352
The safety of our workplace and the health and
wellbeing of our people are core company values,
at the heart of the on-site culture.
We see safety as inclusive of the physical, mental, and
social aspects to the issue. We have a responsibility
to provide safe and healthy working conditions for
all employees and contractors working for us. This
responsibility is a core aspect of our business and is
grounded in the United Nations Guiding Principles
on Business and Human Rights (UNGP) and the
UN SDG 3 Good Health and SDG 8 Descent Work
and Economic Growth.
We maintain our commitment of ‘Everyone Safely
Home Every Day’ and actively value and protect the
physical and mental health and safety of our employees
and contractors. We acknowledge this is a critical
responsibility and that our operations contribute to the
welfare of our people and the surrounding communities.
We also acknowledge the International Labour
Organization (ILO) and United Nations Guiding Principles
on Business and Human Rights (UNGP) definitions for
workplace health and safety
16
, as well as the link to a
universal human right to work safely.
Our transition from a refinery to an import terminal has
created change and uncertainty for many of our people;
supporting them through this period, not just in future
employment opportunities but in their mental health,
has been a huge focus for the business. Our workforce
is incredibly diverse, so ensuring we have a broad range
of mental health support services available was, and
continues to be, key to contributing to the wellbeing of
our staff. We developed the E Tū Tangata safety culture
programme, which continues to have a strong impact
on our health, safety and wellbeing culture today, and is
explained further in the case study on page 57.
Alongside E Tū Tangata, we have the ‘Care’ framework.
This framework provides key support services to ensure
all employees have options available if they ever need
assistance with their mental health. The Care framework
includes the Manaaki team, a group of people from
across the business whose mahi (work) is focused on
supporting anyone at any time, providing kanohi-ki-
te-kanohi (face-to-face) support, as well as online and
physical resources. Care also includes our ‘Grow Hub’
which provides ongoing transition support in the form
of workshops, coaching and, lunch and learns. Our
Wellbeing Workshops are designed to help our people
16
The ILO considers health, safety, and wellbeing in the workplace — often referred to as occupational health and safety (OHS) as the “discipline
dealing with the prevention of work-related injuries and diseases, as well as the protection and promotion of the health of workers”. The UNGP defines
occupational safety and health as the improvement of working conditions and working environments for workers to ensure their safety and health
are maintained while working and provide compensation if a work-related injury occurs. These international instruments are grounded in the Universal
Declaration of Human Rights Article 3, which states “everyone has the right to life, liberty and security of person”.
08
—
People,
Diversity &
Community
Health, Safety and Wellbeing
Health and wellbeing
People and process safety
Access to skills
Channel Infrastructure NZ | Sustainability Report 20215554Channel Infrastructure NZ | Sustainability Report 2021
learn tools to manage their mental health through
times of change and uncertainty, and so far these have
achieved high participation with over 160 employees
attending. Free counselling services have been made
available to our employees over the transition period
with dedicated counsellors available to support staff
and Employee Assistance Program (EAP) support services
providing 24/7 confidential, one-to-one counselling.
As we operate a high hazard facility, we work within a
system of stringent safety policies and controls to comply
with New Zealand’s Health and Safety at Work Act 2015.
To demonstrate our ability to operate safely with control
over potential hazards, we developed a comprehensive
Safety Case which was accepted in 2020 by WorkSafe.
We continue to update the Safety Case as we transition
to import terminal operations, whilst continuing to
progress identified risk reduction projects.
The acceptance by WorkSafe of our Safety Case in early
2020 marked a significant milestone for our business and
our safety journey. The Safety Case details the hazards
that, left unchecked, could result in major incidents;
along with the measures used to prevent such incidents
occurring and the emergency response systems to
reduce consequences should an incident occur. We
are proud of our team and the work that has gone into
developing the Safety Case, which further strengthens
the effectiveness of personal and process safety
management at Channel Infrastructure. For more detail,
refer to our Safety Case Summary available on
our website.
Underpinning the safety initiatives and structures are
our Hauora Hikoi (Safety Walks) and Hauora Kōrero
(Safety Talks), which are undertaken by people across
the business. This programme won the Engagement
category of the NZ Workplace Health & Safety Awards
for 2020 and remains something we are proud of today.
The programme is being adapted and improved as we
transition into our new business model.
Our personal safety performance in 2021 was strong,
with recordable and lost time injury frequency rates
being zero per 200,000 hours worked for the second
consecutive year (0 TRCFR, 0 LTIFR)
17 18
. We consider
the above to be very significant achievements by our
employees and contractors working on site considering
that we operate in an environment requiring constant
vigilance regarding hazards, and have achieved these
results through a period of significant change and
uncertainty.
We had in 2021 two Tier 1 and zero Tier 2 process safety
incidents, an increase of two from the last two years.
7 8
These incidents have been closely investigated to
ensure we put in place measures to address their causes
and strengthen our existing controls. We strive for zero
incidents and know that we can achieve this, even during
an ongoing global pandemic and complex structural
changes to our business.
We conducted 14 major emergency exercises in 2021, a
decrease from the 16 conducted in 2020. This decrease
mostly resulted from the ongoing impacts of COVID-19
and the associated medical guidance which limited
our ability to gather safely in groups. We plan to assess
our major emergency exercises in 2022 in accordance
with the prevailing medical advice and our own risk
assessments.
To operate through an ongoing pandemic while
undertaking a wholesale transition from a refinery to an
import terminal, and to do so safely, was an outstanding
achievement and a testament to the capability and
commitment of our people.
17
TRCFR (Total Recordable Case Frequency Rate): The number of lost time incidents, restricted work cases, medical treatment cases and fatalities per
two hundred thousand manhours worked.
18
LTIFR (Lost Time Injury Frequency Rate): The sum of work-related injury cases per 200,000 hours worked, where the injured person is deemed medically
unfit for any work as a result of the injury.
Cory Abraham accepting, on behalf of the Company, the NZ Workplace Health & Safety Awards, Engagement category.
Case Study - E Tū Tangata, safety
culture in practise
To support the Company’s focus on safety and mental
wellbeing across site, we developed the E Tū Tangata
(Stand in the Gap) safety culture programme. This
employee-led initiative incorporates values from Te
Ao Māori into the culture strategy and celebrates
diversity, which has contributed greatly to improved
safety performance. The programme was recognised
for its effectiveness when it won the ‘Best initiative to
encourage worker involvement in health and safety’
in the Safeguard New Zealand Workplace Health and
Safety Awards in 2020.
E Tū Tangata is a call for all workers across site to own
our safety culture and to stand as one to be the voice for
safety and wellbeing. As a high-hazard site, making sure
every one of our people gets home safely every day is
our number one priority. The group, all of whom volunteer
to be involved, champion safety initiatives, and lead by
example in their day-to-day work.
This includes organising themselves into the Manaaki
group, to provide wellbeing support to colleagues which
has been critical during ongoing COVID-19 disruptions
and the business transition to an import terminal. The
Manaaki team has also been recognised for their tactile
approach to well-being support for the wider team at
Refining NZ. They are finalists for the NIB New Zealand
Best Emerging Programme Award in the national
Headfit awards.
E Tū Tangata is celebrated each quarter through the
Kaihautū (Leader) safety awards which aims to empower
front-line workers to take ownership of themselves and
their teams’ safety, and recognises a member of the
team who has had a tangible impact on safety across
the site.
The transition of Refining NZ to Channel Infrastructure
represents a big change for our people, but through the
E Tū Tangata programme, they have supported each
other to stay safe and take care through this time.
57Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 202156
2020: 162019: 222018: 262017: 172016: 13
Table 5 – Safety Performance
Diversity and inclusion are important aspects of our
business culture at Channel Infrastructure and were
identified by our materiality assessment as impactful
to the Company. We value diverse backgrounds
and experience as a source of strength, which is
particularly relevant now during our transition to Channel
Infrastructure and the many associated challenges
that come from such a major change to our business.
We recognise the importance of adaptability and are
committed to improving the ways we respect, connect
with, and empower, our diverse workforce to improve the
Company as a whole.
Our commitments to a diverse and inclusive work culture
contribute to UN SDG 5 Gender Equality and should be
considered with reference to international instruments
including the UN Convention on Discrimination Against
Women and the UN LGBTI Standards of Conduct for
Business. Channel Infrastructure’s specific values and
commitments are detailed in our Diversity and Inclusion
Policy (available on the website under Governance),
noting that the Company commits to four core
diversity principles:
• Diversity will be pervasive and evident throughout
all levels of the organisation,
• We will gain and retain top talent by attracting a
diverse candidate pool,
• Our decision making will be enhanced by the richness
of the experiences and backgrounds of our people,
• The way we lead and the way we behave will
demonstrate the value we place on diversity.
These diversity principles practically manifest through
our recruitment, talent management, inclusive
communication, performance management, corporate
culture programmes, and succession planning.
The Diversity and Inclusion Policy also states the
Company’s definition of diversity, and details what
metrics are captured and monitored.
19
These metrics
are recommended to the Board by the Corporate
Lead Team with the Board annually assessing progress
towards diversity objectives while also making any
required updates or revisions to the policy. Our 2021
diversity and inclusion metrics are depicted in the data
table in this section and referenced in our annual report.
2021 saw various areas of progress towards increasing
diversity within the Company. 38 per cent of our
Corporate Leadership Team identify as female with
50 per cent of that team under 50 years old. We are
proud that at the end of the year, Channel Infrastructure
had employees from 13 different countries and a variety
of ethnicities working at the Marsden Point site.
19
Channel Infrastructure’s Diversity and Inclusion Policy defines diversity to include gender, gender identity, disability, sexual orientation, religion, age,
ethnicity, backgrounds, cultures, and worldly experiences.
2
00
0
14
TOTAL RECORDABLE CASE FREQUENCY RATE (TRCFR)/
200,000 HOURS
LONG-TERM INJURY FREQUENCY RATE (LTIFR)/
200,000 HOURS
TIER 1 PROCESS SAFETY INCIDENTSTIER 2 PROCESS SAFETY INCIDENTS
NUMBER OF EMERGENCY EXERCISES
2020: 02019: 0.272018: 0.762017: 0.892016: 0.512020: 02019: 0.132018: 0.482017: 0.132016: 0.48
2020: 02019: 02018: 22017: 02016: 12020: 02019: 02018: 32017: 42016: 0
Diversity & community
Workforce transition
Culture & diversity
Community engagement
Iwi partnerships
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20215958
Two female board members, together with our CEO
Naomi James, CFO Denise Jensen and Chief People
Officer, Caz Jackson, played key parts in the Company’s
Strategic Review and the Transition Committee
throughout 2021. They provided integral leadership
and guidance during one of the most challenging
periods in the Company’s history. We believe that
amidst organisational transitions and other challenging
times are when strong diversity pays dividends by
improving problem solving and expanding the range of
considerations used to make and execute on strategic
decisions. We are proud of the gender diversity across
our Board and senior leadership and our commitment to
prioritising this advantage into the future.
Channel Infrastructure is committed to pay-equity,
already taking steps to ensure equity for all employees.
Channel Infrastructure will continue to review and
monitor pay-equity into the future.
Most of the changes in our diversity and inclusion
metrics stem from a higher-than usual degree of
change resulting from our strategic transition to an
import terminal, which is resulting in a significant draw-
down of our employee and contractor size. Once the
transition is complete, we expect to be able to draw new
base-year data, reset our targets, and begin making
marked improvement towards becoming as diverse as
possible, which we believe is an important pillar of any
organisation’s long-term strategic sustainability.
Stakeholder and community engagement is an essential
aspect of how we work and was identified by the
Company’s materiality assessment as impactful. We
are committed to creating benefits for our people, their
families, our neighbouring iwi partners, local communities,
and all other relevant stakeholders. Our transition to an
import terminal and future operations are built around
international human rights standards, as our refinery
operations have been for the past 60 years.
Our commitment to the communities and the people
we interact with contributes to UN SDG 8 Decent work
and Economic Growth and should be considered with
reference to the UN Guiding Principles on Business
and Human Rights as well as the International Trade
Union Confederation’s Just Transition Centre. See
more information and examples of our community
engagement and iwi partnerships on our website
under Community and Sustainability.
Stakeholder and community engagement in 2021 has
most clearly manifested through our ongoing focus
on a just transition as Refining NZ becomes Channel
Infrastructure. For context, a Just Transition secures the
future and livelihoods of workers and their communities in
the transition to a low-carbon economy.
20
From the start of the Company’s Strategic Review, our
Corporate Leadership Team has committed to treating
everyone with respect and dignity, as we worked through
what changes might be required in the future plans for
our business. As an interim step, in 2021 we simplified our
refinery operations to create time to develop plans for
a long-term sustainable future and obtain the required
stakeholder support for these plans. We used this initial
change as an opportunity to work on how we would help
those leaving the company to find new jobs or begin
training, recognising a much larger change was ahead
of us. We set ourselves the target of supporting all of
our people impacted by the simplified refinery changes
seeking employment to be in new jobs or undertaking
retraining within six months of leaving the Company.
By the end of 2021, we were at about 96 per cent of our
re-employment/retraining target for people impacted by
the refinery simplification changes. Progress was largely
due to various initiatives and collaborations organised
as part of our comprehensive Transition Support
Programme. We partnered with local support providers
including: the Ministry of Social Development to help
employees write CVs and master interviewing skills; with
the Whangarei Budgeting Services to run workshops on
best-practice management of redundancy payouts;
with Vitae to increase their onsite presence as part of
our continued Employee Assistance Programme; and
through the Northland Refinery Transition Working
Group to attract new opportunities to the region for our
people. We also organised a Careers Expo with some
20 employers with relevant vacancies to fill. We have
taken our learnings from supporting workforce transition
through the simplified refinery changes forward as we
prepare for the much larger change that will occur in
2022 as we transition from refinery to terminal operations.
We maintained close engagement and communication
channels with our employees throughout the 2021
organisational changes. We launched a pulse survey
in late 2020 called ‘Your Voice’ focused on safety and
wellbeing, simplification, communication, leadership,
accountability, development, energy and values. This
survey continued regularly throughout 2021 and will be
used again in 2022. The Company also established the
Manaaki group under the broader health and safety
programme E Tū Tangata to specifically support mental
health and wellbeing around the transition. Manaaki was
provided with training in psychological first aid, learning
some of the key elements in this process – Look, Listen
and Link – supporting our people and leaders through
the change.
While the Company is conducting this transition with
great care and concern for our stakeholders, it has not
been easy, and we do not take the departures from our
dedicated workforce lightly. As part of our transition
beginning in late 2020, we have reduced our workforce
by around 23 per cent from 382 people down to 294
people in December 2021. In total over the restructure,
we have had some 90 employees leaving the Company
either through redundancies, retirements or resignations.
Contractor numbers also reduced from 264 to 109 over
that same period. Employee numbers will reduce again
through 2022, and we will report on the workforce
transition from refinery to import terminal operations in
our next Sustainability Report.
In 2020, the Northland Refinery Transition Working Group
was established to assist with assessing and mitigating
the impact of terminal conversion on refinery employees,
and the regional economy. The scope of works is varied
and includes identifying opportunities around regional
and national redeployment, training, and regional
economic plans. The group is made up of local Councils,
community leaders, iwi, Government agencies, and unions.
Channel Infrastructure remained dedicated throughout
2021 to the community in which we operate through
ongoing engagement and communication. We partner
with local stakeholders on long-term projects supporting
the environmental, health, safety, and education of
the surrounding area. For example, we partner with
Patuharakeke Trust Board around environmental and
educational projects. We also regularly engage our
neighbours via our Facebook page and the Marsden
Point Liaison Committee, and our CEO regularly speaks
to different community groups and meetings across the
district to keep them informed of any relevant activities
or changes that could affect them. The community
knows who to contact within the Company if they have
critical safety concerns, if a hazardous event occurs, or
if they have questions about our Safety Case summary
which is publicly available on our website.
20
Just Transition Centre, ituc-csi.org/just-transition-centre
We believe that in challenging
times and periods of
significant organisational
change strong diversity pays
dividends, by improving
problem solving and expanding
the range of considerations
used to make and implement
strategic decisions.
Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 20216160
Case Study – Partnering with
mana whenua
Channel Infrastructure has strong and enduring
partnership with the kaitiaki over the land upon which
we operate, and we are proud of our work to understand
and acknowledge iwi perspectives because we
recognise the intergenerational impact our business has
had on tangata whenua from our region.
We are proud to have formal relationship agreements
with two of our nearest iwi partners. This mechanism
means we have a way to recognise our differences and
to provide the framework to allow us to work together in
a positive way as we move forward. We are committed
to upholding the principles of Te Tiriti o Waitangi, as we
manage the impact of our operations on the site, and
harbour, at Marsden Point
Our strong and enduring relationship agreement
with Patuharakeke as ahi kā is a testament to this
commitment. It is our formal agreement to consult and
discuss changes we are planning on site, and while we
do not always agree, we respect each other’s position.
Wherever possible, we look to consider the impact of
any changes on mana whenua of the site on which
we operate.
Our iwi partners are committed to the protection of our
environment and their responsibility as kaitiaki, and we
recognise our obligations as well. We are working closely
with our community and local iwi to ensure we minimise
our impacts on the coastline and land upon which we
operate, through active environmental management
plans, and a firm understanding of how we can mitigate
the risks of operating our consented heavy-industrial site.
We have also committed to ongoing consultation and
open and honest communication between Channel
Infrastructure and iwi partners, to ensure they are
informed of any activities on site that may have an
impact on them as kaitiaki.
For many of our team based at Marsden Point, this
is their community too, so we have a strong personal
commitment to preserving and protecting the taonga
that surrounds us.
Table 6 – Staff And Contractor Data
20212020
BOARDCORPORATE
LEAD TEAM
WORKFORCEBOARDCORPORATE
LEAD TEAM
WORKFORCE
No.%No.%No.%No.%No.%No.%
GENDER
Male571%562%23482%571%457%28084%
Female229%338%5218%229%343%5716%
Other
21
------------
ETHNICITY
NZ European/
Pākeha457%675%17360%571%571%19357%
Other European343%225%4315%229%229%5817%
Māori & NZ
European----166%----227%
Māori----166%----227%
Asian----93%----103%
Other
22
----2910%----329%
NATIONALITY
TOTAL
New Zealand----23377%----27177%
United Kingdom----124%----145%
Australia----124%----134%
South Africa----82%----123%
Other----3412%----257%
Information not
provided----21%----164%
AGE
Under 30 ----124%----237%
30-50 229%450%16457%343%457%19356%
Over 50 571%450%11039%457%343%12135%
Table 7 – Diversity Data
21
Other, for the purpose of gender diversity, includes: transgender, non-binary, agender, genderfluid, polygender, and any other form of gender
identification.
22
Other, for the purpose of ethnic diversity, includes Māori & Other Ethnicity, Pacific Islander, Pacific Islander & Other Ethnicity, African, Indian,
Middle Easterner, Pakistani, Sri Lankan, South American, North American, and Information not provided.
294109
NUMBER OF STAFFNUMBER OF CONTRACTORS
2020: 3442019: 4122018: 3442017: 3442016: 3382020: 1052019: 2512018: 2652017: 2692016: 174
Channel Infrastructure NZ | Sustainability Report 20216362Channel Infrastructure NZ | Sustainability Report 2021
09
—
Annexure
GRI Standard Disclosure 2021 Sustainability Report (SR)
2021 Annual Report (AR)
GRI 2: General
Disclosures 2021
2-1 Organizational details2, 9 AR
2-2 Entities included in the organization’s sustainability reporting35 AR
2-3 Reporting period, frequency and contact point1 Jan 2021 to 31 Dec 2021;
Annual reporting period;
communications@channelnz.com
35, 84, AR
2-4 Restatements of information50 SR
2-5 External assuranceNone
2-6 Activities, value chain and other business relationships17-19 SR
2-7 Employees54-63 SR
2-8 Workers who are not employees54-63 SR
2-9 Governance structure and composition35-36 SR
10 AR
2-10 Nomination and selection of the highest governance body10 AR
2-11 Chair of the highest governance body10 AR
2-12 Role of the highest governance body in overseeing the
management of impacts
31-33 SR
2-13 Delegation of responsibility for managing impacts31 SR
2-14 Role of the highest governance body in sustainability reporting31-33 SR
2-15 Conflicts of interest32 SR
2-16 Communication of critical concerns28-30 SR
2-17 Collective knowledge of the highest governance body10 AR
2-18 Evaluation of the performance of the highest governance body10 AR
2-20 Process to determine remuneration31-33 SR
13 AR
2-21 Annual total compensation ratio17 AR
2-22 Statement on sustainable development strategy15, 17, 24, 35, 43 SR
2-23 Policy commitments15 SR
2-24 Embedding policy commitments15, 17 SR
2-25 Processes to remediate negative impacts31-33 SR
2-26 Mechanisms for seeking advice and raising concerns61 SR
2-27 Compliance with laws and regulations2, 9 SR
35 AR
2-28 Membership associationsBusiness and Parliament Trust,
Business NZ, Hugo Group, Institute
of Directors, Northland Chamber
of Commerce, Petroleum Skills
Association, Business Leaders,
Health and Safety Forum,
The New Zealand Initiative
GRI Index
Statement of use:
Channel Infrastructure has reported the information cited in this GRI content index for the period 1 January 2021 to 31 December 2021
with reference to the GRI Standards
GRI 1 used | GRI 1: Foundation 2021
6564Channel Infrastructure NZ | Sustainability Report 2021
GRI Standard Disclosure 2021 Sustainability Report (SR)
2021 Annual Report (AR)
GRI 2: General
Disclosures 2021
(continued)
2-29 Approach to stakeholder engagement28-30 SR
61 AR
2-30 Collective bargaining agreementsNot reported
GRI 3: Material
Topics 2021
3-1 Process to determine material topics28-29 SR
3-2 List of material topics28-30 SR
3-3 Management of material topics31-33 SR
GRI 302: Energy
2016
302-1 Energy consumption within the organisation53 SR
302-3 Energy intensity17 SR
302-4 Reduction of energy consumption10-11, 17-18 SR
GRI 303: Water
and Effluents 2018
303-1 Interactions with water as a shared resource6, 20, 46 SR
303-5 Water consumption27, 53 SR
GRI 305: Emissions
2016
305-1 Direct (Scope 1) GHG emissions27, 47, 49, 52 SR
305-2 Energy indirect (Scope 2) GHG emissions27, 47, 49, 52 SR
305-4 GHG emissions intensity27, 50, 52 SR
305-5 Reduction of GHG emissions10-11, 18, 52 SR
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other
significant air emissions
53 SR
GRI 401:
Employment 2016
401-1 New employee hires and employee turnover63 SR
GRI 403:
Occupational
Health and Safety
2018
403-1 Occupational health and safety management system55-56 SR
403-2 Hazard identification, risk assessment, and incident
investigation
55-56 SR
403-3 Occupational health services55-56 SR
403-4 Worker participation, consultation, and communication on
occupational health and safety
55-56 SR
403-6 Promotion of worker health55-56 SR
403-9 Work-related injuries58 SR
GRI 404: Training
and Education
2016
404-2 Programmes for upgrading employee skills and transition
assistance programmes
41 SR
GRI 405: Diversity
and Equal
Opportunity 2016
405-1 Diversity of governance bodies and employees59 SR
Channel Infrastructure is
the essential connection in
New Zealand’s energy network.
67Channel Infrastructure NZ | Sustainability Report 2021Channel Infrastructure NZ | Sustainability Report 202166
---
Port Marsden Highway, Ruakaka, Northland 0171 +64 9 432 8311 corporate@channelnz.com channelnz.com
Private Bag 9024, Whangarei 0148, New Zealand
6 April 2022
Dear Shareholder
I am pleased to confirm that we have now commenced operations as a dedicated fuels import terminal, and the
New Zealand Refining Company formally changed its name to Channel Infrastructure NZ Limited on 1 April 2022.
This is a significant milestone for the Company. After 60-years of operations as New Zealand’s only oil refinery, we
look back on our past with pride, but, because of this change, we can now also look to the future with confidence
that we have a sustainable business that will continue to contribute to our community, and New Zealand, long into
the future.
Channel Infrastructure’s vision is to be New Zealand’s leading independent fuel infrastructure company,
and we have strong aspirations for growth.
The transition to Channel Infrastructure provides earnings stability enabling us to focus on the return to payment of
dividends to you. Our business is now in a strong position with:
1. Ownership of critical infrastructure, supplying the Northland and Auckland markets, which makes
up 40% of New Zealand’s fuel demand and all of the jet fuel to Auckland International Airport, underpinning
long-term asset utilization. The shared terminal storage capacity of 180 million litres, combined with an
additional 100 million litres of private storage capacity, makes Marsden Point the largest import terminal in
New Zealand.
2. Long-term contracts in place with our customers, with fixed and minimum fee components which
incentivize utilisation of our infrastructure; the higher take or pay commitments over the first six years
of these contracts supports the funding of conversion costs and allows time for a recovery in jet demand
from COVID impacts to occur. Importantly, both the Terminal Services Agreements and the private
storage fees are subject to PPI based indexation, which will provide strong protection for our earnings in an
inflationary environment.
3. These contracts, together with the $400-450 million of tax losses we expect to have following
conversion, provide our business with projected stable earnings and cash flow. The Board’s current
expectation is that Channel Infrastructure will commence the payment of dividends within 1-2 years from
conversion
1
.
4. The conversion of the refinery delivers a significant carbon reduction for New Zealand– around one
third of New Zealand’s first emissions reduction budget - and our infrastructure will remain relevant as New
Zealand’s fuel requirements shift to lower-carbon fuels in the future, with jet fuel demand underpinning
long-term asset utilization and our pipeline delivering fuel to Auckland at one tenth of the emissions
compared to transport by road.
5. A focused growth strategy, which we are already delivering on with the additional private storage
contracts executed, and further opportunities at the Marsden Point site, including additional fuel storage to
support fuel security, renewable electricity supply through the Maranga Ra solar project and work
underway with customers and partners on biofuel and hydrogen opportunities.
I would encourage shareholders to visit the new website at www.channelnz.com which showcases our new brand
and additional information about our new business and the priorities for the year ahead.
1
The Board reserves the right to adjust the payout ratio or expected timing for the recommencement of dividends.
Port Marsden Highway, Ruakaka, Northland 0171 +64 9 432 8311 corporate@channelnz.com channelnz.com
Private Bag 9024, Whangarei 0148, New Zealand
Sustainability Report
On behalf of your Board, I am also pleased to provide shareholders with the Company’s first Sustainability Report.
This report sets out how our business will contribute to New Zealand’s energy transition in the years ahead, and
how our business plans to make the most of the opportunities before us. This report is provided for the benefit of
all our stakeholders as a summary of our sustainability performance to date, and targets for the future.
The report also outlines how we plan to support a just transition for our workforce and local community, impacted
by the Company’s transition to an import terminal business. We believe that a just transition for people is not an
added extra, it is a central part of how the global community must ensure that the impacts of the lower-carbon
future are not unfairly borne by a single community. We are focused on supporting our people with retraining and
finding new jobs, looking for growth opportunities at our site which can create new jobs and working with our local
community to attract new opportunities to the Northland region.
As a pioneer in New Zealand’s climate transition, Channel Infrastructure has also committed to being a leader in
climate disclosure and reporting, and has published its first Sustainability Report, aligned with the
recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), more than a year ahead of
mandatory reporting in 2023. We have done this to signal our on-going commitment to climate action, and to
ensure a long-term sustainable future for our business.
We will continue this reporting on an annual basis and are committed to continuous improvement, so we would
value your feedback. To do so, please email us at investorrelations@channelnz.com or talk to us in person at the
Annual Shareholders Meeting.
FY21 Annual Report
We recently released our FY21 Annual Report, which reflects the last full year of refining operations at Marsden
Point.
Annual Shareholders Meeting
Our first Annual Shareholders Meeting (ASM) as Channel Infrastructure will be held at 2.00pm on Tuesday 10 May
2022 at Eden Park and virtually. Further details can be found in the Notice of Meeting and Proxy form enclosed.
Shareholders attending the meeting virtually will be given the opportunity to raise questions. Shareholders may
also submit written questions. The main themes will be aggregated and responded to at the ASM. Written
questions should be sent by post to the Company Secretary, Channel Infrastructure NZ Limited, Private Bag 9024,
Whangarei 0148, or by email to investorrelations@channelnz.com so as to be received by the close of business on
8 May 2022.
We thank you for your support and look forward to your continued involvement with Channel Infrastructure.
Yours sincerely,
Simon Allen
Chair
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channelnz.com
NZX RELEASE
6 April 2022
Channel Infrastructure releases its inaugural Sustainability
Report
Channel Infrastructure (CHI), New Zealand’s largest fuel import terminal based at Marsden Point in
Northland, has today released its inaugural Sustainability Report: Our Transition to a Sustainable Future.
The report outlines the company’s response to the impacts of Climate Change on our business, as well as
the opportunities and risks we see from the energy transition that is taking place in New Zealand.
CEO Naomi James said:
“We know the world is warming and that carbon emissions from human activity, including transport, is
contributing to this. As a business that forms a critical part of New Zealand’s’ energy supply chain, we have
a role to play in responding to this challenge and playing our part to support New Zealand’s shift to a lower-
carbon economy. And that is exactly what we plan to do.”
On 1 April, the company completed the shutdown of New Zealand’s only oil refinery and shifted to an import
terminal; we have now received the first shipments of imported refined fuel products to our Marsden Point
site. The transition to Channel Infrastructure means we can now look at the future with confidence and we
have a sustainable business that will continue to contribute to our community, and New Zealand, long into
the future.
Ms. James added:
“We have chosen to be part of the broader energy transition in New Zealand and leaned into the changes
that were necessary for our business. There is never an ideal moment to transition, especially when
people’s jobs are at stake. But we have also been clear from the start: the way we respond to climate
change is about more than just bringing down emissions. It is about supporting people who are affected and
doing our part to mitigate the impact on individuals, and our community.”
“At the same time, we must keep fuel affordable and available for everyone, throughout the energy transition.
As a country, we can’t pursue an ‘at any cost’ commitment to lower carbon energy, especially when energy
costs are already at peak levels. We need to be doing more to ensure that in the future there is a mix of fuel
options to meet the differing needs and choices of consumers, which keeps fuel affordable and available for
everyone.”
“Channel Infrastructure is committed to using Marsden Point’s highly strategic assets and infrastructure to
support New Zealand’s shift to a lower-carbon economy. With our change to an import terminal, our
customers can now access lower-carbon sources of fuel, from newer, larger and more efficient refineries,
and lower carbon shipping options – opening up more choice for how we reduce transport fuel emissions.”
Channel Infrastructure has strong aspirations for growth and is well positioned to support New Zealand’s
changing future fuel needs. Growth opportunities at the Marsden Point site include additional fuel storage to
support fuel security, renewable electricity supply through the Maranga Ra solar project and work underway
with customers and partners on biofuel and hydrogen opportunities.
channelnz.com
Attached are a copy of the Sustainability Report and a letter from Board Chairman, Simon Allen, which are
both being sent to shareholders today along with the Notice of Meeting and Proxy Form for the forthcoming
Annual Shareholders Meeting.
- ENDS -
Authorised by:
Chris Bougen
General Counsel and Company Secretary
Investor Relations contact
Anna Bonney
investorrelations@channelnz.com
Media contact
Laura Malcolm
communications@channelnz.com
+6421 02363 297
About Channel Infrastructure NZ
Channel Infrastructure is New Zealand’s leading fuel infrastructure company.
Channel Infrastructure owns critical infrastructure, supplying the Northland and Auckland markets, which
make up 40% of New Zealand’s fuel demand and all of the jet fuel to the Auckland International
Airport. Utilising the deep-water harbour and jetty infrastructure at Marsden Point, as well as 280 million
litres of storage tanks, and the 170-kilometre pipeline from Marsden Point to Auckland we import, store, test
and distribute fuel owned by our customers. Channel Infrastructure’s wholly-owned subsidiary, Independent
Petroleum Laboratories, provides quality fuel testing services at Marsden Point and around New Zealand.
Channel Infrastructure is well positioned to support New Zealand’s changing future fuel needs, with growth
opportunities at the Marsden Point site including additional fuel storage to support fuel security, renewable
electricity supply through the Maranga Ra solar project and work underway with customers and partners on
biofuel and hydrogen opportunities.
For more information on Channel Infrastructure, please visit: www.channelnz.com
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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