2023 Sustainability Report
Resilient
infrastructure for
a decarbonising
world
Sustainability
Report
2023
Welcome to this report
Our reporting
Channel Infrastructure NZ Limited (Channel Infrastructure)
is pr
oud to present the company's 2023 environmental,
social, and governance (ESG) performance, which
comprise this Sustainability Report (report), the 2023
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.
In this report, references to “Channel”, “Channel
Infr
astructure”, the “Company”, the “Group”, “we”, “us”
and “our” refer to Channel Infrastructure NZ Limited
(NZX:CHI), unless otherwise stated. All dollar figures are
in New Zealand (NZ) dollars unless otherwise stated.
This report
This report has been prepared in compliance with Part
7
A of the Financial Markets Conduct Act 2013 (FMCA
2013), The New Zealand External Reporting Board's (XRB)
Aotearoa New Zealand Climate Standards (NZ CS),
including the use of adoption provisions 1, 2, 4, 5, 6, and 7
(refer to Appendix 5: CRD disclosure index (see page 117)
for more details).
Channel Infrastructure is listed on the Main Board of
the NZX S
tock Exchange (NZX) as CHI and is subject
to regulatory control and monitoring by both the NZX
(through NZ RegCo) and the Financial Markets Authority
(FMA). This report has been prepared in accordance with
the NZX Corporate Governance Code; and the NZX ESG
Guidance Note (refer to www.nzx.com).
A complete suite of Channel Infrastructure's governance
document
s can be publicly viewed at the “Investor
Centre” on 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 our approach to ESG matters.
This report is also prepared in accordance with
the Global R
eporting Initiative Standard (GRI): Core
Option and references selected United Nations'
Sustainable Development Goals (SDGs), where relevant
in Channel's circumstances.
This Sustainability Report provides an updated overview
o
f our approach, progress and performance in relation to
material ESG issues. This report is provided for the benefit
of all our stakeholders as a clear and concise summary
of Channel Infrastructure's ESG performance during the
reporting period and our objectives for the year ahead.
The data presented in this report is unaudited. This
Sus
tainability Report also contains forward-looking
information, or forward-looking statements. Please see
“Forward-looking Information”, Appendix 7 on page 120
of this report.
Directors' statement
The Directors are pleased to present Channel
Infr
astructure NZ Limited’s Sustainability Report for the
year ended 31 December 2023. This report is dated
28 February 2024 and is signed on behalf of the
Board by:
JB Miller
Chair of the
Board
PA Zealand
Chair,
H
SEO Committee
AM Molloy
Chair, AFC
C
ommittee
Feedback
We are committed to continuous improvement of our
ES
G reporting practices and value our stakeholders'
perspectives. We welcome feedback on this report
and our performance. To do so, please email us
at
investorrelations@channelnz.com.
Front Cover Imagery: Looking beyond the geodesic roof
on a newly converted jet storage tank at Marsden Point,
to Mount Manaia in the distance.
2
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Contents
Introduction
4
Channel at a glance6
Performance metrics8
Message from our Board10
ESG framework and 2024 metrics and targets14
Governance
16
Board of Directors17
Management's role20
Our management system22
Strategy
24
Engaging with our key stakeholders25
Identifying material issues29
Our refreshed strategy32
Climate change36
Current context37
Climate change scenarios38
Business Planning56
Roadmap for our role in New Zealand's
energy transition
58
Risk Management
60
Reporting on risk61
Our reporting structure64
Climate change risks and opportunities65
Our 2023 performance
72
Environment74
People and community86
Governance and
finance96
Appendices
102
Appendix 1:
Our performance in detail103
Appendix 2: Summary data tables110
Appendix 3: Climate change & GHG emissions112
Appendix 4: GRI disclosure index115
Appendix 5: CRD disclosure index117
Appendix 6: Forward-looking statements120
Appendix 7:
Definitions and abbreviations121
Directory124
3
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Introduction
4
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Infrastructure to fuel NZ’s future
to 2050 and beyond
5
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Channel at a Glance
Capacity to Expand
c. 400ML of additional tank
capacity available to support
fuel security
40% of NZ’s Transport
Fuel Demand
Receive, store, test and distribute
transport fuels owned by our
customers to the Northland
and Auckland markets
3
NZ’s Largest Terminal
c. 280 ML
2
of storage
3.3 - 3.6 BL of transport
fuels throughput per annum.
Two ISO accredited fuels
testing laboratories
Strong and Stable
Cashflows
Long-term contracts with
NZ’s largest fuel companies
(bp, Mobil and Z Energy)
Positioned to support
the transition
Infrastructure can accommodate
lower carbon liquid fuels
1
Critical Infrastructure
Deep water harbour and jetties
capable of receiving refined
product ships amongst the
largest in the world
80% NZ’s Jet
Fuel Demand
Key supply route for jet fuel to
Auckland International Airport
NZX 50
CHI
79% owned by
institutional and
retail investors
Capability
and Connection
c. 100 employees with
strong technical capability
and community connection
1
Including second generation biofuels and Sustainable Aviation fuel
2
Excludes additional storage which is commercially sensitive
3
Northland and Auckland markets make up c.40% of New Zealand’s transport fuel demand
6
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
WIRI
TERMINAL
MARSDEN POINT
TO AUCKLAND
PIPELINE
AUCKLAND
INTERNATIONAL
AIRPORT
MARSDEN POINT
170km
Pipeline
Lowest-carbon supply
route for transport
fuels to Auckand
7
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
4,037
t CO
2
E
Total Scope 1&2
emissions in FY23
(Refer page 77)
1.15
t CO
2
E/ML
Emissions
Intensity
1,099
Tonnes
of metals sent
for recycling
98%
Reliability
of our Marsden Point
Groundwater
Network
Safely
completed
Permanent
decommissioning
of the refinery
process plant
Resilience
to weather
events
Uninterrupted supply
through Cyclone
Gabrielle
Import terminal
First full financial year
of operations
NZ climate
reporting standards
First report issued by Channel
ESG framework
Developed to underpin
refreshed Company Strategy
A YEAR OF FIRSTS
Performance
metrics
For year ended 31 December 2023
8
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
32%
Identify as Female
as at 31 December 2023
(up 9% from 2022)
45ML
Of additional jet fuel storage
(More than doubling on-site jet fuel storage through
the import terminal conversion programme)
0.9
TRCF per 200,000 hours
(2022: 1.8)
1
(2022: 0)
Diverse workforceSafely Commissioned
Safely home everydayTier 1 and 2 Process safety incidents
9
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Message from our Board
Channel's vision is to be a world-class energy infrastructure
company with a purpose of delivering resilient infrastructure
solutions to meet changing fuel and energy needs.
Our 2023 Sustainability Report
reflects a year of firsts: our
first full financial year of import terminal operations, our
first disclosure prepared in accordance with the Aotearoa
New Zealand Climate Standards and the publication
of our first Environmental, Social and Governance (ESG)
framework. We have chosen to report our climate related
disclosures as part of our broader sustainability reporting,
recognising the interrelated nature of climate change
risks, impacts to, and opportunities for, our business within
our broader sustainability goals.
“Resilient infrastructure for a decarbonising world” is
the theme w
e have chosen for our 2023 Sustainability
Report. This reflects the challenge and opportunity
of climate change for our business, with infrastructure
resilience a key focus to help ensure a reliable and secure
supply of transport fuels for all New Zealanders.
Strategic Refresh
Channel Infrastructure is a business that has undergone
a tr
ansformational change, and it is firmly focused on the
role that it can play to help New Zealand's transition to a
lower carbon economy. Through the change, which was
initiated back in 2021, we made significant progress on
the thr
ee transition and climate related targets that we
set ourselves:
Just transition
While we followed in the footsteps of many other
refineries around the world that have closed down, our
priorit
y was to ensure our people were supported during
this period of change. We are pleased to report that
99% of our people impacted by the change since 2022,
were supported into their next opportunity within six
months of leaving the business, exceeding our ambitious
90% target. We will continue to provide support for the
remaining two employees who will leave the company in
the coming months.
Goal of Net Zero Scope 1 and 2 emissions by 2030
We are well on target to achieve our goal of Net Zero
S
cope 1 and 2 emissions by 2030
1
(refer to page 77).
In FY23, our Scope 1 and 2 Greenhouse Gas emissions
were 4,037 tCO
2
e. In practical terms, this means that
we have gone from being one of the largest emissions
intensive businesses listed on the New Zealand Stock
Exchange (with emissions of over c.1.2 million tCO
2
e as
a refinery), to accounting for less than 0.1% of Scope
1 and 2 CO
2
emissions on the NZX50 in FY23. We
continue to prioritise efforts to reduce our emissions and,
in 2023, we entered into a long-term contract for the
supply of renewable electricity from January 2024 with
Energy Attribute Certificates attached. For further detail,
please see Case Study: Greenhouse Gas Emissions (see
page 106).
Customer Scope 3 emissions
Our critical infrastructure is capable of handling
lo
wer carbon fuels, including second-generation bio
and Sustainable Aviation Fuels (SAF). We want to
see our critical infrastructure used to support the
decarbonisation of the transport sector and to help
ensure supply chain resilience. The transition to lower
carbon fuels will take time; it will be largely driven by the
change in end user preferences, the availability of lower
carbon fuels in the quantities required and/or regulatory
change. We are committed to playing our part. This
includes, among other things, continuing to work with
Fortescue Limited to evaluate the potential to produce
synthetic SAF, or eSAF, at Marsden Point. For further
detail, please see Case Study: Sustainable aviation fuel
(see page
104).
1
The Net Zero Scope 1 and 2 emissions target is based on the market based approach for the calculation of emissions.
10
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Materiality assessment
With the
refinery conversion project largely behind us,
in 2023 Channel completed a materiality assessment to
deepen our understanding of what is important to our
stakeholders and to help frame the Company's strategic
priorities, approach to risk management, performance,
and reporting.
The insights from the materiality assessment were
int
egrated into our thinking and are reflected in our
refreshed company Strategy, as we aim to deliver value
for all of our stakeholders and to continuously improve
the overall performance of the company.
The new strategy, which shareholders and other
s
takeholders can read more about on page 32 of
this Report (together with the Annual Report), outlines
the strategic priorities that the company will pursue to
support delivery on issues material to our stakeholders.
Sustainability Framework
Supporting our Strategy, is an Environmental, Social and
Go
vernance (ESG) Framework (refer page 14) which
w
as developed in 2023, to assess and measure our
performance across all aspects of our business, aligning
activities to the Company strategy.
We add definition to our Strategic Pillar, “A more
s
ustainable future”, with the commitment to caring for
our people, the environment, and the community in which
we operate, focusing on sustainable practices to improve
environmental, social and governance performance,
alongside maintaining disciplined capital management
to support the business.
We have set 2024 targets against each material issue
and will r
eport on our performance next year. Over
time, we will refine our targets to reflect our longer-term
aspirations. To ensure that there is alignment across the
organisation, a selection of these targets have been
incorporated into the scorecard which will be used to
determine short-term incentive payments for our people
in 2024.
Climate Reporting Disclosures
As a Climate Reporting Entity, 2023 is the first year
Channel has been r
equired to report in accordance with
the Aotearoa New Zealand Climate Standards, although
since 2021, we have taken account of the Taskforce on
Climate-Related Financial Disclosures (TCFD), which the
Climate Standards have been based upon.
Channel has completed a
specific climate change
physical and transition risk assessment, in conjunction
with an impacts and opportunities assessment, to
further consider our climate-related impacts and the
risks climate change could reasonably pose to Channel
Infr
astructure's people, operations, and service.
Our physical risk assessment, refer to Climate change
risks and opportunities
(see page 65), illustrates that
the Marsden Point site is generally safe from coastal
erosion and inundation risks, with a variety of longer-term
mitigation options available, such as the installation of
flood gate protections.
From a transition risk perspective, decarbonisation of
the tr
ansport sector will largely be dependent on the
uptake of Electric Vehicles (EV's) for the light vehicle
fleet; the development of alternative technologies (such
as hydrogen (H2), biofuels and SAF) and improved
technologies leading to fuel efficiencies for carbon
consumptive transports such as heavy transport and
air travel.
We think that traditional transport fuels are going to
hav
e a role to play in keeping the economy moving
throughout the energy transition and a growing range
of transport fuels and energy choices will require
infrastructure (such as ours) to support lower emission,
secure energy transport.
We therefore see opportunity for the Company to grow
and div
ersify, while at the same time, contributing to
New Zealand's wider decarbonisation efforts under a
range of scenarios, refer to Climate change scenarios
(see page 38), as we help fuel New Zealand's future to
2050 and beyond.
Security of supply is critical to
Ne
w Zealand
It is imperative that New Zealand's import supply chain is
s
ecure and reliable. This means that we must operate our
critical infrastructure to standards that are world-class,
safe, and reliable while helping to keep transport energy
available when New Zealanders need it.
As we look to deliver resilient infrastructure solutions to
mee
t New Zealand's changing fuel and energy needs,
Channel will continue to pursue opportunities at Marsden
Point which help support increased resilience for New
Zealand's fuel supply chain.
In 2023, the Company commissioned an additional
45 million litr
es of jet fuel storage, completing a more
than doubling of on-site jet fuel storage through the
import terminal conversion programme. This was not
only a growth opportunity for the Company, but an
investment that helps to provide supply chain resilience,
with increased domestic stock-holdings underpinning
security of supply. It is also aligned with potential for
the future introduction of SAF into the New Zealand fuel
supply chain as a "drop in" fuel.
11
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
We will continue to invest to support the long-term
r
esilience of our infrastructure and to be a supply partner
of choice, committed to playing our part, through the
addition of increased in-country fuel storage options for
our customers, and the NZ Government. We are well
positioned with our c.400 million litres of storage tanks
that can be repurposed and c.120
1
hectares of land that
is available for development on the Marsden Point site.
Looking to the future
wit
h confidence
The decarbonisation of the New Zealand fuels supply
chain pr
esents an exciting longer-term opportunity
for Channel Infrastructure under a range of climate
change scenarios.
Our business has undergone transformational change in
the pas
t year, to set it on a path for a long-term, more
sustainable future. However, we know we are only at
the beginning of New Zealand's energy transition journey.
We will continue to work hard alongside our customers,
community, and the Government to both facilitate the
transition, and deliver for our many stakeholders.
1
The Marsden Point site c.180 hectares of which only one-third is currently in use.
12
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
13
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
World-class energy infrastructure company
Delivering resilient infrastructure solutions
to meet changing fuel and energy needs
A more sustainable future
We are committed to caring for our people, the environment and the community in which we operate, focusing on sustainable
practices to improve environmental, social and governance performance, delivering for all stakeholders.
ESG Framework
ESG PILLAR, OBJECTIVES, AND SDG ALIGNMENT
MATERIAL ISSUES
FIGURE 1: ESG FRAMEWORK AND 2024 METRICS AND TARGETS
EnvironmentPeople & CommunityGovernance & Finance
Protect the environment in which we
operate
Reduce our carbon footprint and build
resilience to climate change risks
Responsibly contribute to achieving
NZ’s decarbonisation goals
Everyone “safely home, everyday”
Be a good neighbour and c
orporate
citizen, including contributing to regional
development
Partner with local iwi, mana whenua
and community in impactful ways
Attract, support, and maintain a diverse
workforce and a healthy working culture
Open and transparent reporting
Disciplined capital management
Support our customers to provide a
resilient fuel and energy supply chain
for New Zealand
Operate our critical infrastructure
safely and reliably
Climate Change
Land, waste & water
One TeamHonestyInnovationCare
Health, safety & wellbeing
Iwi & community partnerships
Equity, diversity & inclusion
Infrastructure resilience
and security of supply
Asset & lifecycle management
Transparency & Financial discipline
OUR VISION, PURPOSE AND VALUES
14
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
AREA
STRATEGIC
PILLARGOALMEASUREUNIT
2024
TARGET
Climate
Change
Net Zero Scope
1 and 2 by 2030
1
Reduce Scope
1 & 2 emissions
%
change
50%
lower
2
Land, waste
and water
Protect our
environment
Tier 1 and 2 process
safety incidents
# paZero
Health, safety
& wellbeing
Safely home
everyday
Lost time injuries# paZero
Equity,
diversity
& inclusion
Diverse and
engaged team
Lift in employee
engagement score
%
change
+4
percentage
points
2
Customer, Iwi
& community
partnerships
Meaningful
relationships
Customer
assessment of CHI
performance based
on survey against key
performance criteria
%
change
+10%
2
Infrastructure
resilience and
security of
supply
Reliable
infrastructure
Pipeline reliability% pa> 98%
Asset and
lifecycle
management
Supply
resilience
Contract new
storage volume
%
change
+10%
2
Transparency
and Financial
discipline
Financial
discipline
Deliver 2024 plan
and meet EBITDA
guidance
$mEBITDA
Guidance
$91 to $95
million
People and
Community
Governance
and Finance
Environment
NZ’s infrastructure partner of choice
Grow through supporting the energy transition
More sustainable future
Our 2024 metrics and targets
1
Refer to page 81
2
Compared to FY23
15
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Governance
16
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Board of Directors
Channel Infrastructure takes its role as a responsible operator
s
eriously. We have many governance measures and structures in
place to identify, manage and respond to environmental, social
and governance issues effectively, so that we can continue to
operate in a more sustainable and responsible manner.
Channel Infrastructure's Corporate Governance
fr
amework, as depicted in Figure 2, sets out our
governance practices and processes to provide
accountability to our diverse range of stakeholders.
The Board is responsible for setting the Company's
s
trategic 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
review and approval of the Company's environmental,
social, and governance (ESG) strategy, including the
consideration of entity-specific climate-related risks,
impacts, and opportunities.
Day-to-day management of the Company is delegated
t
o 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.
As outlined in the Risk Management section of this report
(r
efer to page 60), the Board is responsible for reviewing
and managing risks (including climate change risks).
To continue to develop our sustainability and
climat
e change competency as the Aotearoa New
Zealand Climate Standards (NZCS1-3) mature, Channel
Infrastructure's Corporate Lead Team has undertaken
a climate-related disclosures upskilling session in
June 2023. Facilitated by an external provider, the
session was structured to assist in the preparation of
broader climate-related information for Board decision-
making purposes.
Our Board is committed to growing expertise and
compe
tency for oversight of climate-related risks and
opportunities and, in conjunction with a general
environmental, social, and governance update in 2024,
will undertake a refresh on the maturing landscape for
climate-related disclosures in New Zealand.
The Board maintains a skills matrix setting out the
mix o
f skills and diversity of the Board. The skills
matrix is used to evaluate whether the collective skills,
compe
tencies and experience of the Directors meet
Channel Infrastructure's requirements both currently and
into the future. For further information, please refer to the
2023 Governance Statement available on the company's
website (www.channelnz.com).
Director spotlight: Sustainability and
climat
e change
Andrew Holmes
Independent Director
Appointed 4th April 2022
In addition to a career as a senior leader in supply chain
management and operations in bp, Andrew Holmes
brings a wealth of expertise to our Board, having deep
knowledge within the emerging global Hydrogen industry
and energy transition space.
His experience includes:
• Chair of Scaling Green Hydrogen cooperative research
cons
ortium bid (Australia) which included 80 business
partners and 16 universities
• Chair of Urban Analytica – Australian start up
compan
y delivering driver behaviour tracking and
transitioning to carbon tracking
• Sponsorship of bp’s initial involvement in Fulcrum
Bioener
gy (US) – a waste to Sustainable Aviation
Fuel producer
17
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
The Board
Is responsible for overseeing the performance and operations of the Company
Board Committees
Assist the Board to discharge its responsibilities in relation to:
Climate Working
Group
Comprised of senior
leaders and subject
matter experts,
responsible for
providing a Corporate
representation
of climate-related
risks, impacts,
and opportunities
to the Board,
by consolidating
inputs from each
sub-committee.
The CEO is responsible
for instilling a culture
that aligns with
Channel’s values
Management under the leadership of the CEO
Are responsible for delivering the strategic direction
and goals approved by the Board
Channel Infrastructure’s Management System
Company policies, operating procedures, including the
Risk Management Framework
People and
Culture
Oversees remuneration
framework, people and culture
strategies including diversity
and inclusion, community
engagement and human rights
Audit and Finance
Committee
Oversees risk management
framework, internal audit,
financial reporting and
the integrity of our
sustainability reporting
Health, Safety,
Environment and
Operations
Oversees the environmental
aspects of sustainability as
well as health, safety and
operational quality
FIGURE 2: GOVERNANCE STRUCTURE
18
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Governance of sustainability and
climat
e change
The direction and oversight of sustainability and climate
change is delegat
ed to three sub-committees according
to relevance of topic.
The Board considers and (where applicable) approves
the as
sessment of material sustainability impacts for
Channel Infrastructure, as well as all corresponding
targets to monitor performance. This includes approval
of sustainability reports, including this report.
The respective roles of the Board, its committees
and Management (the C
orporate Lead Team) are set
out in the Board and relevant committees’ charters.
Committees annually evaluate their own performance,
processes and procedures against their charter
obligations, to assist the Board in effectively fulfilling its
role and meeting its duties. The Board also periodically
reviews its own performance as a board. A third-
party independent organisation undertakes performance
evaluations on a bi-yearly basis; the next review is
expected to be completed in quarter four of 2024.
Audit & Finance Committee (AFC)
The AFC reviews our corporate
financial matters,
including reporting and treasury risk management. In
FY23, the AFC reviewed pre-assurance of Greenhouse
Gas (GHG) emissions and the company's climate change
scenarios. From FY24 onwards, the AFC will review
the external annual assurance of GHG emissions and
the financial impacts (both current and anticipated)
of reasonably expected climate-related risks and
opportunities. Meetings between management and the
AFC provide oversight and feedback of information on
an annual basis supplemented by additional reviews
where relevant.
Health, Safety, Operations & Environment
C
ommittee (HSEO)
The HSEO Committee reviews and manages our
Health, S
afety, Environment, and Operations risks
and responsibilities. This includes the evaluation of
our environmental hazards, physical risks, including
climate-related operational risks. Meetings between
management and the HSEO committee provides
oversight and feedback of information and that includes
a deep dive on the non-financial climate-related risks to
and of Channel's business, their impacts and associated
opportunities where relevant, on an annual basis.
People & Culture Committee (P&C)
P&C reviews our Company's People and Culture
S
trategy including organisation structure, the capability
and development strategy and succession planning
processes (including succession planning for executive
roles, culture, diversity, pay equity, inclusiveness and well-
being initiatives). This includes the review and approval
of remuneration and performance policies as they relate
to climate-linked targets and performance. Meetings
between management and the P&C Committee
provide oversight and feedback of information on
an annual basis, supplemented by additional reviews
where relevant.
Climate Working Group (CWG)
A climate working group was established in 2024,
compris
ing of senior leaders and subject matter experts,
to meet the Aotearoa New Zealand Climate Standards.
The CWG is responsible for providing a corporate
representation of climate-related risks, impacts, and
opportunities to the Board, by consolidating inputs
from each sub-committee (i.e. AFC, HSEO and P&C) for
consideration by the full Board. This working group will
review and consolidate climate-related information to
provide a Corporate view of risks, up to four times a year.
19
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Management's role
Channel Infrastructure's management closely considers climate
change and s
ustainability issues in the ongoing optimisation
of financial and operational performance, as well as planning
for future growth and diversification of the Company's business
through the decarbonisation of New Zealand's economy.
The primary point of responsibility for sustainability and
climat
e change within the Corporate Lead Team is the
Chief Executive Officer, and additional climate change,
sustainability, and management of people responsibilities
are held by the Chief Financial Officer, General
Manager - Operations and the Business Development
Manager. These positions are also members of our
Climate Working Group (CWG). Each of these
positions requires an understanding and oversight of
climate-related risks and opportunities. These include
consideration of the fuel demand forecasts, impacts of
climate policy developments such as carbon pricing,
consideration of the physical impacts of climate change
on operational safety and continuity, and workforce and
community impacts.
At the operational level, the Company's General
Manager - Operations and supporting team
members oversee ongoing activities on-site, including
environmental and climate-related issues such as
identifying and implementing opportunities for efficiency
gains through minimising input costs such as fuel
and electricity, and appropriate responses to extreme
weather events. The Risk and Compliance Manager
maintains the Enterprise Risk Register, including
the identification and monitoring of risks and the
Environment, Health and Safety Manager is responsible
for relevant reporting and compliance obligations.
The relevant reporting lines are depicted in Figure 3.
FIGURE 3: ORGANISATIONAL CHART
20
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Remuneration links to
climat
e performance
To
reflect the strategic importance of climate-related
risks and opportunities to the business, our remuneration
policy allows for the setting of climate-related key
performance metrics. We acknowledge the consideration
of climate-linked performance and remuneration within
our People and Culture Committee Charter with the
intention to further explore related performance targets
in upcoming disclosures.
Our CEO's 2023 KPI's included a metric on securing a
long-
term electricity supply at a lower cost and a lower
emissions intensity. This was achieved with the securing of
a Fixed Price Variable Volume (FPVV) contract at a lower
rate, and the bundling of Energy Attribute Certificates (or
renewable energy certificates) from 1 January 2024. Our
climate-linked performance metrics are reviewed on an
annual basis.
Terminal operators monitoring tank movements and pipeline operations from the control room
21
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our management system
The Management System applies to all of Channel's people and
e
stablishes the requirements for how we do business across our
operations and support teams.
It is designed to protect our people, the community, the environment, and the economic value of our assets,
oper
ations and activities. The Management System comprises:
• Policies and Code of Conduct (channelnz.com/who-we-are/corporate-governance/)
• Management processes explaining the minimum standards of “what” the business must achieve
• Procedures, technical standards, processes and tools (forms and records) explaining the expectations and practices
f
or “how” business activities should be undertaken.
FIGURE 4: MANAGEMENT SYSTEM STRUCTURE - HIERARCHY OF APPROVALS
22
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
23
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Strategy
24
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Engaging with our key stakeholders
Building quality, long-term relationships with our stakeholders
enable
s us to become a better neighbour, employer, partner and
provider of critical infrastructure to reliably keep Aotearoa New
Zealand moving through an era of change.
This requires open and clear communication; we engage with our key stakeholders outlined in Figure 5 on a regular
bas
is and aim to meet face-to-face as much as possible.
FIGURE 5: OUR KEY STAKEHOLDERS
The following table illustrates how we engage with individual stakeholder groups, with the “issues of interest” reflecting
the topics most commonly raised by these stakeholders through our established channels in 2023. The t
ype and
frequency of engagement varies depending on the needs of each individual group.
25
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
TABLE 1: ENGAGING WITH OUR STAKEHOLDERS
STAKEHOLDER GROUPHOW WE ENGAGEPARTICULAR AREAS OF INTEREST 2023
Financial markets
(e.g. shareholders,
bondholder
s,
banks)
Annual Meeting of Shareholders
Analyst days and site tours
NZX releases
Investor meetings and conference calls
Investor presentations
Annual and Sustainability Reports
Financial performance, strategy,
dividends
, growth and
capital structure
Environmental, Social and
Go
vernance (ESG) goals, policies
and performance
Customers
Relationship meetings
Customer surveys
Teleconference and face-to-
f
ace meetings
Quarterly operational
perf
ormance meetings
Multi-customer forum
On-site visits
Terminal performance
Fuel industry changes, including
Go
vernment policy developments
Jet fuel supply chain resilience
Product quality
Hapu/iwi
Mana Whenua Roopu
(Quarterly meetings)
Kanohi ki te kanohi (face-to-face) hui on-
s
ite and at local marae
Relationship agreements
Relationship and governance meetings
Working together on relevant
en
vironmental projects
Local economic impacts of
Channel Infr
astructure
Improving economic well-being
Workforce diversity
Shared interest in
en
vironmental outcomes
Future use of site (including
w
ater requirements)
Marine and Coastal Area
Act process
26
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
STAKEHOLDER GROUPHOW WE ENGAGESELECT AREAS OF INTEREST 2023
Employees
and contr
actors
On-site staff communications channels
Toolbox meetings before shift work starts
f
ocused on safety
‘Cascade’ newsletter
"All-up" team meetings
Employee engagement surveys
Site Hangi
Environmental, health and safety
Workplace changes
Workforce diversity
Business development
activitie
s -potential additional
storage contracts, SAF
project development
Business strategy update
Collective bargaining
Central
go
vernment
Engagement with key officials across
relevant departments
Engagement with Ministers and
P
arliamentary Advisors
Site visits as requested
Policy issues including domestic
fuel s
ecurity and the development
of a New Zealand Energy Plan
Submission of tender
t
o Government strategic
diesel storage
Auckland fuel supply
chain r
esilience
Responding to information requests
as a r
esult of coalition
agreement to investigate re-
opening the refinery
Local government
and r
egulators
Formal, scheduled meetings
Ad hoc outreach to key regulators
1
Site visits
Site inspections
Audits
Performance reporting
Local economic impacts of
Channel Infr
astructure
Compliance with consents
Environmental management and
r
emediation in accordance
with consents
Future use of site (including
w
ater requirements) and
growth opportunities
Environmental, health and
safety performance
1
Including: WorkSafe, Maritime NZ, Fire and Emergency New Zealand (FENZ), Electricity Authority, Civil Aviation Authority (CAA), Northland Regional
C
ouncil (NRC), Environmental Protection Agency (EPA), Whangarei District Council (WDC)
27
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
STAKEHOLDER GROUPHOW WE ENGAGESELECT AREAS OF INTEREST 2023
Neighbours,
communit
y
Attendance at community meetings
and events
Social media outreach
Letters and fact-sheets
Harbour Safety Group Meetings
Local impact of Channel business
including r
esource consent activity
Terminal Safety Case
Growth and business
de
velopment opportunities
Environmental management and
s
ite remediation
Regional issues
Harbour safety
Suppliers
Contract tender processes
Ad hoc engagement as required due to
bus
iness needs
Supplier/contractor relationship
management/perf
ormance meetings
Site visits as requested
HSE and on-site protocols
Business-related issues
Environmental, health and
s
afety performance
28
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Identifying material issues
At the heart of the relationship that we have with each of
our s
takeholders is an understanding of the material issues for
each stakeholder or those that matter most, as well as for
the Company.
Channel Infrastructure closely considers the impact
w
e have on the community and the environment in
which we operate. In 2023, following the transition
to import terminal operations, we completed a new
materiality assessment to deepen our understanding
of what is important to stakeholders and to frame
the Company's approach to ESG risk management,
performance, and reporting.
Our materiality assessment included a workshop with
our C
orporate Lead Team to understand our stakeholder
universe, exploring a wide range of relevant industry and
sector topics from the SASB
1
Standards and taking into
account the Global Reporting Initiative (GRI) Standards,
to then assess Channel Infrastructure's key material issues
in respect of their importance to Channel and their
importance to our stakeholder network.
We then conducted a series of stakeholder interviews
acr
oss samples of each of our stakeholder groups via
an external third party to better understand the internal
and external views against our internal materiality
mapping results. The 16 material issues identified with
our stakeholders are shown in Figure 6, with the "highest
impacts" material issues reflected in the top right-
hand quadrant.
The material issues were then grouped into three
o
verarching categories: environmental performance;
people and community; and governance and financial
performance as set out in Table 2.
1
The Sustainability Accounting Standards Board – SASB materiality standards are now operated by the IFRS Foundation
29
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
30
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
TABLE 2: MATERIAL ESG ISSUES AND FRAMEWORK
Environmental performancePeople and communityGovernance and
financial
performance
Greenhouse Gas (GHG) Emissions
Management of regulatory risks,
en
vironmental compliance, and
reputational risks and opportunities
as they relate to Scope 1, 2 and 3
GHG emissions
Water and
wastewater management
Efficiency of water resource usage
and management o
f waste water
treatment, and managing existing
site contamination to reduce this
over time
Ecological impacts
Management of impacts on
eco
systems and biodiversity through
operational land use, project
development and construction
Circularity
Increasing material and operational
efficiency
to, where possible and
over the longer term, attain zero
waste and divert from landfills back
into the supply chain
Physical impacts of climate change
Ability to manage risks and
oppor
tunities associated with direct
exposure to actual or potential
physical impacts of climate change
Health, safety and well-being
Creating and maintaining a safe
and health
y workplace that reflects
regulatory expectations and values
employee & contractor well-being
Iwi partnerships
Recognising iwi responsibilities as
mana whenua and k
aitiaki over
poupouwhenua, the land upon which
we stand, partnering to maintain and
enhance the cultural health of our
operational site and the surrounding
coast, informing our partners of
potential changes and considering
their views
Employee diversity, equity
& inclusion
Attracting, supporting, and
maint
aining a diverse workforce and
healthy working culture
Contribution to regional economy
Working towards an impactful and
s
ustainable contribution to the
regional economy in which we work,
as well as to Aotearoa New Zealand
more broadly
Human rights and
community engagement
Engaging our local community to
s
eek partnerships in impactful ways
and to continue as a responsible
corporate citizen and neighbour.
Upholding labour standards and
increasing transparency throughout
our supply chain to promote a high
standard of human rights
Infrastructure resilience
A focus on infrastructure
r
esilience to environmental and
specification changes
Security and quality of supply
Supporting the delivery of
r
eliable, high-quality fuel by
our customers to accommodate
changing needs and to help
maintain their competitiveness
Transparency and disclosure
Ethical conduct of business and
pr
oviding accurate and timely
information about our sustainability
impacts and performance
Asset and life-cycle management
Ability to manage infrastructure and
oper
ational asset life-cycle risks
Business model
resilience (infrastructure)
Incorporating social, environmental
and political tr
ansitions into long-
term business model planning and
responding to the transition to a low-
carbon economy
Regulation and policy
Complying with, supporting and
anticipating futur
e regulations
and policy
31
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our refreshed strategy
In 2023, following the
effective completion of the
import terminal conversion, we undertook a strategy
refresh, realigning our vision to be a world-class energy
infrastructure company with a purpose of delivering
resilient infrastructure solutions to meet changing fuel
and energy needs.
Material issues are integrated into our thinking and
reflected
in the "refreshed" company strategy, as we aim
to deliver value for our stakeholders and to continuously
improve the overall performance of the business. As part
of our strategy refresh, we listened to “what matters
most” to our stakeholders and reflected the strategic
priority to address those concerns.
The Company's Strategic Framework, set out on page 33,
outline
s the way that we will achieve our purpose, and
vision, underlined by three key strategic pillars – being
New Zealand's infrastructure partner of choice, growing
through supporting the energy transition and focusing on
a more sustainable future.
New Zealand's infrastructure partner
o
f choice
Our
first pillar, to become a world-class operator,
recognises that our customers operate globally and
interact with terminal businesses all over the world, so
they know what good looks like. Being a world-class
operator is key to being a partner of choice for our
existing and new customers and therefore to the long-
term success of our business. It is also critical to unlocking
our growth strategy.
A high-performance culture is core to everything
w
e do and will mean attracting, supporting and
maintaining a diverse and engaged workforce, having
a clear succession and talent management plan and
maintaining an agile and resilient workforce with a focus
on well-being.
Grow through supporting the
ener
gy transition
Our second strategic priority is to grow through
s
upporting the energy transition. We will work hard
to execute brownfield opportunities at Marsden Point,
such as the additional private storage that has been
delivered for our customers, as well as consolidating
fuels infrastructure more broadly in New Zealand to help
provide resilience in the supply chain. We also see an
opportunity to help optimise the supply chain for our
customers and deliver lowest cost, resilient fuel supply for
New Zealanders.
We will also play our part in supporting the liquid fuels
ener
gy transition which will provide our business with
long term growth opportunity and business resiliency.
For Channel, this means investigating ways we can
repurpose unutilised land at Marsden Point and leverage
our strategic assets to support the energy transition. For
example, the potential to produce eSAF at Marsden
Point, is an opportunity we are currently exploring
with Fortescue.
Sustainable aviation fuel
Refer to case study in Appendix 1 on page
104
Channel will also look at other energy opportunities to
s
upport the transition and leverage our strategic assets
such as electricity storage and solar, and longer term the
opportunity for our Marsden Point site to be a strategic
energy storage hub to support New Zealand's energy
transition and intermittent renewables development.
A more sustainable future
The third strategic pillar focuses on our stakeholders –
s
hareholders, our neighbours and broader stakeholders.
It is imperative that Channel continues to have
dis
ciplined capital management. We are committed
to targeting a shadow BBB+ credit rating, delivering
above WACC returns, maintaining a disciplined cost
management focus and delivering stable dividends to
shareholders over the long term.
To execute our strategy, we understand the importance
o
f being a good neighbour and corporate citizen and
that means focusing on reducing our environmental
impact and engaging with our Northland community and
Iwi partners.
Channel's commitment to acknowledging the role that
climat
e and sustainability impacts continue to have on
the business, to provide open and transparent reporting
of climate-related disclosures builds on the proud history
we have of taking actions to reduce our impact, as
outlined in Figure 8.
32
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
World-class energy infrastructure company
Delivering resilient infrastructure solutions
to meet changing fuel and energy needs
OUR VISION
OUR PURPOSE
OUR STRATEGIC PRIORITIES
OUR VALUES
World-class
Operator
High Performance
Culture
Disciplined
Capital
Management
Good Neighbour,
Good Citizen
Strong safety
systems and culture
Resilient
infrastructure
Long-term asset
management
Customer focused
People and
capability
development
Future focused
Continuous
Improvement
Adaptive
Target credit
metrics consistent
with a BBB+ shadow
credit rating
Deliver above
WACC returns
Cost management
Stable dividends
Reducing
environmental
impacts
Community
engagement
and iwi relations
Just transition
Transparency
and disclosure
New Zealand’s Infrastructure
Partner of Choice
One TeamHonestyInnovation
Care
Grow from
the Core
Support Energy
Transition
Brownfi eld
opportunities
at Marsden Point
Consolidator of
fuels infrastructure
Supply chain
optimisation for
our customers
Repurposing
Marsden Point
Support transition
of aviation to
lower carbon fuels
Marsden Point
Energy Hub
Grow through supporting
the Energy Transition
More sustainable future
FIGURE 7: STRATEGIC FRAMEWORK
33
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
April 2003
NGA
Signed the first Negotiated
Greenhouse Agreement in NZ
with the Crown, committing
the Company to achieving
best practice energy
performance
2018
Our first materiality
survey
Under the Global Reporting
Initiative (GRI), we undertook
our first materiality survey with
our stakeholders to better
understand our stakeholder
needs in alignment with our
strategic priority
2004
First ESG reporting
In 2004 we began to measure
our performance against ESG
metrics
2014
Project Kleenex
$25 million invested from 2014
to 2018 to maintain good
environmental performance
and bolstering the resilience of
our stormwater systems
2013
Coastal Management
Strategy
Strategy developed following
observed increase in erosion
events from regular monitoring
2015
Te Mahi Hou
Commissioned the $365
million CCR, improving energy
efficiency and reducing CO2
emissions by around 120,000
tonnes per annum
2016
Coastal Erosion
Protection
130 meters of erosion
protection installed on
eastern aspect of site
2005
Future Fuels Project
The $190 million Future Fuels
Project is commissioned to
produce low sulphur Diesel
and to take benzene out
of petrol, meeting strict
Government fuel quality
regulations to reduce fuel
emissions
2008
ISO9001
Initial accreditation of Quality
Management System
2017
Improved our
resilience to major
weather events
Completed a $2.8 million
upgrade of the bio-treater,
lifting our capacity to treat
wastewater and our ability to
manage major weather events
FIGURE 8: OUR SUSTAINABILITY JOURNEY
34
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
2023
Second standalone Sustainability Report
“Delivering a Sustainable Future”, built on the 2022 report
and reported on our achievements as we transitioned to
a new business model
New materiality survey and refreshed strategy
Following our business transition, we engaged with our
stakeholders to understand their material issues; material issues
were then used to inform our 2023 strategy refresh
Climate change risks, impacts, and opportunities assessment
Conducted an assessment of climate change risks, their impacts,
and potential opportunities for our organisation
GHG inventory and Scope 3 stock take
Completed a Scope 1 and 2 inventory of emissions in readiness
for NZCS reporting, including advanced preparation for Scope 3
emissions reporting from 2024 onwards
Climate hazard assessment
Conducted an assessment of coastal hazards for our
Marsden Point site across 2050, 2100, and 2130 time horizons
Signed long term renewable electricity agreement
Effective from 1 January 2024, the contract includes Energy
Attribute Certificates.
2021
35-year Resource
Consent granted
To operate for another 35
years based upon a detailed
environmental impact
assessment of our processes
and operations
Strengthening iwi
relations
Signed relationship
agreements with local iwi to
guide our work together in
areas of mutual interest
2020
Strategic Review
initiated
Culminated in the November
2021 decision to transition
from refining to import terminal
operations, with subsequent
workforce transition
Review of
material issues
Refreshed 2018 materiality
survey to ensure it remained
a relevant guide for our
sustainability priorities as a
fuels’ infrastructure provider
2022
First standalone
Sustainability Report
Released as Channel
Infrastructure, “Our transition
to a sustainable future”
Channel
Infrastructure
Refining operations discontinued
Refining NZ
35
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Climate change
Channel recognises its role in supporting decarbonisation within
t
he fuels supply chain, by utilising its critical infrastructure to
support the transition, while keeping New Zealand moving.
Channel Infrastructure has c.280 million litr
es of fuel storage in operation at Marsden Point, with c.400 million litres of unutilised capacity available
36
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Current context
Channel Infrastructure owns and operates the Marsden
P
oint fuels terminal and the Marsden Point to Auckland
Pipeline (the Pipeline), supplying c.40% of New Zealand's
demand for transport fuels. Each year, the Company
receives, stores, tests and distributes between 3.3 and
3.6 billion litres of fuel owned by our customers.
Channel Infrastructure's wholly-owned subsidiary,
Independent P
etroleum Laboratory Limited, provides fuel
quality testing services at Marsden Point and around
New Zealand.
The Company supplies petrol and diesel into the
Nor
thland market, via the Truck Loading Facility (TLF)
(adjacent to the Marsden Point terminal), and petrol,
diesel and jet fuel into Wiri for the Auckland market via
the Pipeline.
Changing transport fuels mix
t
hrough decarbonisation
In our view, traditional transport fuels are going to have
a r
ole to play in keeping the economy moving throughout
the energy transition. Decarbonisation of transport fuels
will change the mix and quantity of liquid fuels passing
through our infrastructure. Channel has a critical role to
help keep transport energy available when it is needed.
Channel supplies all of the jet fuel to Auckland
Int
ernational Airport. At “normal” pre-covid demand,
Auckland Airport was around 80% of New Zealand's jet
fuel demand, and around 10-15% of the domestic jet
fuel demand. New Zealand's air connections play a
crucial role to the economy through both our tourism and
export industries.
Tourism is New Zealand's largest export industry and
dir
ectly employs 8.4% of New Zealand's workforce
1
, and Air
freight carries 16% of exports and 22% of New Zealand's
imports
2
, which means that Channel is inextricably linked
to these sectors and therefore indirectly impacted by
their climate change risks, including those of Auckland
International Airport.
Airlines have recognised the need to decarbonise
oper
ations, with aviation representing about 2.5% of
global emissions. IATA, the International Air Transport
Association which is the trade association for the world's
airlines representing 300 airlines and 83% of global
air traffic, has committed to a pathway to Net Zero
emissions by 2050
3
. Channel recognises that several of
the major airlines that fly out of Auckland have made
an even stronger commitment than this, pledging to
replace 10% of their fuel use with Sustainable Aviation
Fuels by 2030.
SAF as well as other second-generation renewable fuels,
s
uch as biofuels, are drop-in fuels and can be handled
through Channel's existing infrastructure. In late 2022,
we received New Zealand's first delivery of SAF into
Marsden Point for delivery to Auckland International
Airport via our pipeline. Over time, we expect the
volume of renewable fuels being handled through our
infrastructure will continue to grow and comprise an
increasing proportion of our throughput.
Current climate-related impacts
Cyclone Gabrielle, which hit New Zealand from
12-
14 February 2023, delivered 240mm of rainfall, with
the region recording over 400% of normal rainfall over
the summer period. Researchers, supported by the
Ministry for Business Innovation and Employment have
indicated that climate change played a distinct role in
the development of Cyclone Gabrielle
4
.
In addition to a brief power outage on site, a security
f
ence on the coastal boundary was damaged as
Bream Bay recorded waves of 11-12 metres. Pre-emptive
drainage (surface and sub-surface) clearing around the
pipeline and early investment to improve the waste and
storm water networks on site, including an investment
of c.$25 million in recent years, helped ensure there was
limited impact to the site infrastructure.
Infrastructure Resilience
Refer to case study on page 105
1
Pre-COVID, https://www.tourismnewzealand.com/insights/industry-insights/
2
By dollar value. Transport.govt.nz, Stats NZ
3
https://fortune.com/2023/01/26/boeings-chief-sustainability-officer-we-cant-count-on-hydrogen-powered-commercial-flights-before-2050/
4
Harrington, Dean et al. (2023) The role of climate change in extreme rainfall associated with Cyclone Gabrielle over Aotearoa New Zealand’s East Coast.
W
orld Weather Attribution Initiative Scientific report.
37
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Climate change scenarios
Approach
As outlined in
Our refreshed strategy (see page 32),
Channel has a clear strategy to be a world-class energy
infrastructure company, which will fuel New Zealand's
future to 2050 and beyond. This strategy was founded on
our longer-term Business Planning processes, as outlined
from page 56.
In 2023, in line with the requirements of NZ CS1, we
hav
e used climate change scenario analysis to “test”
the robustness of our strategy. Scenario analysis is the
process of exploring how an entity might perform under
a range of plausible and challenging futures. In a world
of uncertainty, scenario analysis is meant to challenge
“business as usual” assumptions.
Climate-related scenario analysis does not predict the
futur
e, but rather provides a range of hypothetical
outcomes to enable an entity to better assess how
physical and transition risks and opportunities associated
with climate change could impact its operations.
The Company has been using “scenario analysis” as
par
t of its business planning process for many years.
Our most recent analyses have focused on the fuel
passing through our infrastructure, as in our view, this
is the most material climate transition impact for our
business. In 2023, we built on our previous work assessing
transition risks and used the Intergovernmental Panel
for Climate Change (IPCC) data as well as a Coastal
Climate Risk Assessment Report that we commissioned
for the Marsden Point site, to assess the physical risks of
climate change.
The team at Channel has also conducted relevant
climat
e-related risk assessments in the last year and
used this information to supplement our thinking around
climate scenarios. Throughout the scenario analysis
process, our Corporate Lead Team (CLT) and relevant
environmental experts have been engaged in the
following workshops:
• Climate Change Scenario Workshop
• Physical Risk Assessment Workshop
• Transition Risk Assessment Workshop
• CLT update on Climate Related Disclosures
r
eporting, including consultation and engagement on
Climate Scenarios.
Our Board of Directors, through the Audit and Finance
s
ub-committee, have also had oversight across the
process from June 2023 and our initial gap analysis
through to the October board update, and December
Audit and Finance Committee update. In addition,
our General Counsel has been engaged across the
project so that operational processes and updates
are adequately addressed in our company policies
and structures.
•Transition risks are linked to the ability of Aotearoa
New Zealand to decarbonise transport fuels. The
decarbonisation of our economy will be dependent
on the uptake of EV’s and continued fuel efficiency
improvements for light vehicle fleet; the development
of alternative technologies (such as electric, hydrogen,
biofuels and SAF) and improved technologies leading
to fuel efficiencies for heavy transport and air travel.
•Physical risks
are directly dependent on the intensity
of global warming. We have used data provided
by the Intergovernmental Panel for Climate Change
(IPCC) in their AR5 Synthesis Report as input for the
climate component of our climate change scenarios,
with the Shared Socio-economic Pathways (SSP)
developed by the IPCC to incorporate the global
socio-economic context. Refer to Appendix 5 on
page 117 for more detail.
To read the detail on our process for identifying and
managing climat
e risks, and our identified risks for
this year, please refer to Climate change risks and
opportunities (see page 65) of this report.
Scenario methodology
Channel Infrastructure took a phased approach to
s
cenario analysis including the mapping of global and
local reference models; setting of scope boundaries;
assessing physical and transitional climate risks and
opportunities; identifying the most material drivers of
change; and finally the complete synthesis of the
climate scenarios and their narratives. In line with the
External Reporting Board (XRB) guidance on scenario
analysis, Channel has mapped a series of global
references to design our three climate scenarios and their
temperature pathways.
38
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
FIGURE 9: SCENARIO DEVELOPMENT - GLOBAL REFERENCES
Assessing our value chain and
s
etting scope boundaries
Channel completed a value chain as
sessment including
upstream and downstream activities. A scope boundaries
assessment was also completed to identify the most
material aspects of the value chain
1
. For more
information on our methods and assumptions, please see
Our performance in detail (see page 77) .
Identifying our drivers of change
Drivers of change (sometimes referred to as driving
f
orces) are critical trends or influencers that affect
how the fuels infrastructure sector operates. They are
usually large-scale, exogenous factors that impact
how climate risks and opportunities cascade through
the fuels infrastructure sector. Through a series of
workshops, comprising senior leaders and independent
advisors, we identified several drivers of change that
will affect the fuels infrastructure sector in the future.
A longlist of drivers were shortened to nine across the
XRB recommended STEEP methodology, covering: social,
technology, environmental, economic and political.
The “top six” drivers of change for Channel Infrastructure,
as a pr
ovider of liquid fuels infrastructure, are summarised
in Table 4.
1
Value chain exclusions: the exclusion of immaterial elements within the value chain were calculated by their monetary value, and their level of
influence/impact
on operations. Those with both a low monetary value and level of influence were placed outside of scope. Only our material risks and
opportunities (after a shortlist process based upon Channel's consequence matrix) were run across the three climate change scenarios.
39
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
TABLE 4: DRIVERS OF CHANGE
CATEGORYDRIVERSIGNIFICANCE
Social
Population changeThere is a strong correlation
be
tween population growth and
demand for transport fuels.
An increase/decrease in NZ’s
population could result in a
change to demand for transport
fuels and therefore utilisation
of Channel's infrastructure
(including through changes in
regional demographics)
Technology
Development/adoption of new transport
fuels t
echnology
The pace, cost and accessibility
of technological advances (e.g.
SAF, EV’s or hydrogen) could
stimulate or suppress demand
(e.g. across agricultural and
heavy transport sectors as well
as changing consumer behaviour)
impacting infrastructure utilisation.
Technological advances leading to
fuel efficiencies may also impact
demand for fossil fuels
Environmental
Physical climate change risksPhysical risks are directly
dependent on the int
ensity of
global warming. A changing
climate (from acute weather
events, or chronic changes
such as sea level rise) could
impact our operations, staff, and
supply chains. The severity and
uncertainty of climate change
drives the extent of adaptation
and mitigation required.
Economic
Availability of capitalAn increasing focus from banks,
investors and insurers to align
their lending, investment and
risk portfolios with Net Zero 2050
targets. This could stimulate or
suppress availability of capital,
depending on transition plans.
40
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
CATEGORYDRIVERSIGNIFICANCE
Economic
Demand for international air travelThere is a strong correlation
be
tween household income and
propensity to travel. It is impossible
to predict how the cost of travel
will evolve in the future. New
Zealand is a long way from
most of the world, and airlines
may be forced to pay for their
emissions, making flying expensive.
New Zealand's attractiveness as
a tourist destination may be
impacted by physical climate
change to natural assets. GDP
of New Zealand's trading partners/
countries may impact trade and
therefore air freight.
Political
Government prioritiesThe way governments (including
NZ) r
espond to climate change has
consequences for the transport
fuels sector and therefore the
utilisation of our infrastructure.
Mandates and incentives may
accelerate the transition to
alternative transport fuels and
Government support for domestic
manufacturing of alternative fuels
(including at scale, Government
mandated domestic SAF industry).
41
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Summary of time horizons and capital
deplo
yment links
As part of the analysis of Channel's climate-related
ph
ysical and transition risks and opportunities, we have
identified the time horizons over which to examine
the impacts of climate change. In doing so, we have
considered our regular planning cycles, including long-
term planning and investment time frames.
FIGURE 10: TIME HORIZONS
The
short-term horizon broadly aligns with the existing
Terminal Services Agreements that we have in place with
our customers. The initial term of the contracts is 10 years
(to 2032), with two five-year rights of renewal.
The main climate-related risks facing Channel, as a
fuels infr
astructure company, are transition risks; with
the quantity and types of fuels passing through our
infrastructure expected to change as the economy
decarbonises. Our customers are at the forefront of
these changes and will require infrastructure to meet
the changing fuel needs. Channel will invest to support
the long-term resilience of our infrastructure and to be
a supply partner of choice for our customers to meet
New Zealand's changing fuel and energy needs. Our
clear investment criteria for these growth opportunities
are to only invest in projects that generate returns
above our Weighted Average Cost of Capital and
those opportunities with contracted revenues to provide
revenue certainty.
The medium and long-term horizons align with Channel's
longer t
erm strategic planning and the lives of significant
infrastructure assets. One of the strategic priorities
underpinning our refreshed strategy, “helping fuel New
Zealand's future to 2050 and beyond”, is long-term asset
management. In 2023, we undertook work to assess
site resilience to warming scenarios to inform a range
of short and long-term coastal erosion and inundation
management options and ensure robust long-term Asset
Management Plans are in place.
42
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Summary of our scenarios
We have developed and explored three climate-
change s
cenarios:
FIGURE 11: CLIMATE CHANGE SCENARIOS
A summary of each scenario, including narrative and
me
trics are outlined from page 44. We have drawn
data from global climate change assumptions and
applied these in a New Zealand context. Channel
acknowledges the links our infrastructure services have to
the aviation and tourism industry and where appropriate,
have included relevant information from the Aotearoa
Circle, Tourism sector climate change scenarios and other
datasets
1
for technical and narrative input.
1
Our climate references and datasets have come from: IPCC International Panel on Climat
e Change (AR5, AR6), NGFS Network for the greening of the
financial s ystem, IIASA International Institute for Applied Systems Analysis. (2018), CCC Climate Change Commission (2021), TNZ Treasury New Zealand
(2022), MfE Ministry for the Environment (2018) and, where appropriate, The Aotearoa Circle Tourism Sector Climate Change Scenarios (2023).
43
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
CO
2
Global temp increase
1
by 2100, relative to
pre-industrial levels
Limit temperature rise to
1.5°C
SCENARIO INDICATORS
0.22m
NZ sea level rise
2
For 2031-50 relative
to 1995-2014
+6.0%
Rainfall intensity
2
100-yr ARI 12-hr rain
depth, 2031-2050
relative to 1986-2005
+43%
NZ Hot days
2
For 2031-2050
relative to
1986-2005
$277
NZ carbon price
3
For 2050, per tonne
An orderly scenario, including
progressive and coordinated
decarbonisation/transition.
Ambitious and aligned economic,
transformative change where policy and
social behaviors are leveraged in response
to climate change to meet a 1.5-degree
trajectory.
Renewable energy is produced at
scale across the world, associated technology
and investment increases. The physical impacts
of climate change are minimal in relation
to other warming trajectories.
Green Light
6.04M
New Zealand
Population
in 2050 (SSP1)
4
44
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Reference scenarios:
NGFS Orderly, RCP 2.6, SSP 1, CCC Tailwinds
Data sources:
1. IPCC WG1 AR5 Summary for Policymakers
2. Ministry for the Environment (2018) Climate change projections for New Zealand
3. Treasury New Zealand (2022) CBAx Tool User Guidance
4. International Institute for Applied Systems Analysis (2018) SSP Database
5. Climate Change Commission (2021) Scenarios dataset for the Commission’s
2021 Final Advice
Physical risk severityTransition risk severityPolicy reaction
MODERATEMODERATEIMMEDIATE AND SMOOTH
Technology changeBehaviour changeSocio-political instability
FASTFASTLOW - MODERATE
HIGH LEVEL DESCRIPTORS
Global temperature rise 1.5°C by 2100
NZ TOTAL FUEL DEMAND(ML) - 2021 CCC - FOSSIL FUELS ONLY
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
20352036
2037
2038
2039
2040
2041
2042
2043
2044
20452046
2047
2048
2049
2050
2021 CCC - Tailwinds
45
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
PROGRESSIVE, COORDINATED DECARBONISATION/TRANSITION
NARRATIVE
Social
The global population continues to increase at a steady and expected rate.
New Zealand is seen as an attractive place to travel to and to live.
New Zealand’s population increases as the country becomes a haven for many immigrants
across the socioeconomic spectrum. Population number is expected to reach 6.04 million
by 2050.
Health, wellbeing, and retreat impacts from climate change are considered low in relation
to the delayed and stalled transitions (due to rapid and coordinated global action to
reduce emissions).
As a result, population continues to increase but at a slower rate. Sea level rise forces some
Pacific Island residents (and other communities/nations) currently living in low lying coastal
settlements to move, contributing to limited population growth.
Channel Infrastructure commit to managing reliable and resilient infrastructure to help support
the availability of transport fuels when they are needed.
Technology
Renewable fuel technology globally is developed at scale around the world.
This gains momentum in the first half of the 2030s.
Volumes of SAF including production and technology development start increasing from the
mid-2030s in NZ, replacing conventional jet fuel. Globally, there is competition for the supply
of SAF, due to a decline in passengers willing to fly when conventional jet fuel is being used.
Green hydrogen is available from the mid-2030s in NZ, gradually replacing conventional diesel
from that point on for heavy transport.
Continued development in the performance, range, and chargeability of electric vehicles
enable mass adoption and accelerated reduction of fossil-fueled light fleet vehicles by 2035.
Auckland Airport uses Channel’s infrastructure (tanks and pipeline) for the supply of imported
SAF and/or SAF produced at Marsden Point.
Channel Infrastructure accommodates renewable fuel technology and provides infrastructure
services for SAF and hydrogen throughput, phasing out diesel and petroleum infrastructure
against transition requirements.
Green Light
46
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Markets
Global demand for fossil transport fuels declines. Demand for sustainable liquid fuels and
for green hydrogen increases to meet shifting demand. The demand for electric vehicles
increases rapidly.
The infrastructure and energy sectors globally gain confidence in making long-term
decisions and investments as the production of new technology fuels increase at scale.
The cost of capital for ‘green’ investments continues to decrease while the cost of capital for
all investments associated with fossil fuels and GHG emissions increases from the mid-2020s.
New Zealand continues to rapidly decarbonise its land transport sector, however,
New Zealand’s demand for air travel and air freight, and therefore demand for jet fuel
(SAF or fossil fuels) remains around current levels due to New Zealand’s remote location
and ensuring connection for the growing population to the rest of the world.
Channel Infrastructure continues to provide infrastructure and storage capacity to support
lower emissions/sustainable fuels and assist in a rapid transition with challenging reductions
to liquid fuel demand.
Environment
Global temperature increase is limited to below 1.7 °C by 2050 and stabilises at 1.5 °C by 2100
(Due to data availability, New Zealand impacts are assessed using RCP2.6, which projects
a slightly higher global temperature increase in the second half of the century.) Physical
impacts of climate change are considered limited/managed in comparison to other warming
trajectories. Sea-level rise in New Zealand (metres above 1986–2005 baseline) is 0.22m by 2050
and 0.46m by 2100.
There is a 43% increase in the number of hot days by 2050 and a 6% increase in the rainfall
intensity. These physical impacts of climate change are considered minimal compared to the
disorderly and hothouse scenarios and vary on location and geography across New Zealand.
Water use and wastewater products increase in the mid 2030s as the need for green
hydrogen production increases. Channel has successfully achieved Net Zero scope 1
and 2 emissions by 2030.
Channel Infrastructure implements necessary safeguards from physical coastal and
climatic impacts.
Policy
Globally, countries have adopted policies and regulation early before 2030 to support
a smooth transition. Inclusive and ambitious targets are set by government to transition
New Zealand’s energy and infrastructure needs alongside the National Adaptation Plan
and Climate Change Response Act.
The transition to low or zero emissions vehicles in New Zealand by 2035 signalled in NZ’s first
emissions reduction plan is supported by legislation, resulting in continued decline of fossil-fueled
vehicle use (being replaced by EVs and other modes of transport). This is accelerating from about
2030 as New Zealand seeks to decarbonise the transport sector as quickly as possible. The
Emissions Trading Scheme (ETS) remains in place and the carbon price signal shows a managed
transition away from fossil fuels at $277 per tonne by 2050.
Channel Infrastructure successfully meets policy and regulation changes, by transitioning
to sustainable fuels product, storage and/or distribution.
47
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Global temp increase
1
by 2100, relative to
pre-industrial levels
Limit temperature rise to
2.6°C
SCENARIO INDICATORS
0.24m
NZ sea level rise
2
For 2031-50 relative
to 1995-2014
+7. 5 %
Rainfall intensity
2
100-yr ARI 12-hr rain
depth, 2031-2050
relative to 1986-2005
+54%
NZ Hot days
2
For 2031-2050
relative to
1986-2005
$369
NZ carbon price
3
For 2050, per tonne
A disorderly scenario,
involving globally inconsistent
decarbonisation/transition.
Delayed responses to climate change globally,
governments and regulators rely on industry
to act until societal and legislative pressures
shift. Renewable energy development is initially
slow, gaining momentum closer to 2050. Global
demand for fossil transport fuels continues to
rise before declining. Economic pressures arise
from rapid decarbonisation in the 2030s.
Amber Light
5.94M
New Zealand
Population
in 2050 (SSP1)
4
CO
2
48
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Reference scenarios:
NGFS Disorderly, RCP4.5, SSP 2, CCC Headwinds
Data sources:
1. IPCC WG1 AR5 Summary for Policymakers
2. Ministry for the Environment (2018) Climate change projections for New Zealand
3. Treasury New Zealand (2022) CBAx Tool User Guidance
4. International Institute for Applied Systems Analysis (2018) SSP Database
5. Climate Change Commission (2021) Scenarios dataset for the Commission’s
2021 Final Advice
Physical risk severityTransition risk severityPolicy reaction
MODERATEHIGHDELAYED
Technology changeBehaviour changeSocio-political instability
SLOW, THEN FASTSLOW, THEN FASTMODERATE
HIGH LEVEL DESCRIPTORS
Global temperature rise 2.6°C by 2100
NZ TOTAL FUEL DEMAND(ML) - 2021 CCC - FOSSIL FUELS ONLY
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
20352036
2037
2038
2039
2040
2041
2042
2043
2044
20452046
2047
2048
2049
2050
2021 CCC - Headwinds
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
49
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
INCONSISTENT DECARBONISATION/TRANSITION GLOBALLY
NARRATIVE
Social
Global population growth is moderate and levels off in the second half of the century.
New Zealand’s population increases as immigrants, particularly climate refugees,
move to New Zealand, reaching 5.94 million by 2100.
Health and wellbeing benefits e.g. air quality, from transitioning away from fossil fuels
are delayed relative to the orderly scenario.
Severe weather events such as storm surges and heavy rain destroy arable land and
settlements forcing some Pacific Island residents (and other communities/nations) currently
living in low lying coastal settlements to move. While some move domestically, some move to
New Zealand, this happens more frequently as time passes (2040s onwards) and the
cumulative affects of physical chronic and acute climate change impacts increase.
Technology
Pace and scale of renewable fuel technology is inconsistent across the globe; gathering
momentum closer to 2050.
SAF, including production technology, is not available in significant quantities until after 2040
in New Zealand either through imports and/or local production. Conventional jet fuel continues
to be used until then.
Green hydrogen is not available in significant quantities until after 2040 in New Zealand and
is initially expensive. Diesel continues to be used until then for heavy transport.
Channel Infrastructure continues to provide infrastructure and storage of fossil based transport
fuels while renewable fuel technology is slow to develop.
Markets
Global demand for fossil transport fuels continues to rise before declining from 2030,
however the degree of change varies between countries.
Capital availability internationally does not shift markedly from current, however, there is a lack
of confidence to make long-term decisions and investments.
In New Zealand, capital is allocated to recovery from multiple, successive severe weather events
and retreat from the 2030s onwards. From the 2040s, investing in decarbonising agriculture and
transport becomes a priority. The cost of capital increases towards 2050.
Globally, demand for international travel continues to grow until the mid-2030s when travel
volume stagnates while the impacts and costs of climate change are felt more widely around
the world. In New Zealand, this has an impact on inbound tourism (until SAF is widely available
from the 2040s). However, jet fuel volumes continue to increase with the uptake of SAF due to
New Zealand’s geography and location relative to our trading partners.
Amber Light
50
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Environment
Global temperature rises 2.0 °C by 2050 and gradually increases to 2.6 °C rise by 2100.
Acute physical impacts of climate change are inconsistent and uncertain. Sea-level rise in
New Zealand (metres above 1986–2005 baseline) is 0.24m by 2050 and 0.55m by 2100. Chronic
changes continue to scale with cumulative emissions. There is a 54% increase in the number
of hot days by 2050 and a 7.5% increase in rainfall intensity. These physical impacts of climate
change vary on location and geography across New Zealand.
Water use and wastewater products are considered minimal up until a rapid decarbonisation
catalyses the need for green hydrogen production. Water scarcity and resourcing for large
scale production in some areas are limited.
Due to delayed action and need for capital investment,
Channel has achieved Net Zero scope
1 and 2 emissions
by 2035.
Channel Infrastructure implements necessary safeguards from physical
coastal and climatic
impacts which after the 2040s and 2050s stand against severe acute and chronic weather
patterns. Minimal damage and disruption to operations occurs.
Policy
No targets are set by government to transition New Zealand’s energy and infrastructure needs
until the 2030s where extreme pressures are placed on heavy emitting industry to decarbonise
quickly, resulting in continued decline of fossil fueled vehicle use (being replaced by EVs and
other modes of transport). The Emissions Trading Scheme (ETS) remains in place and stagnates
until the carbon price signal strongly enforces a transition away from fossil fuels after the 2030s
to reach $369 per tonne by 2050.
Government support in managed retreat is poorly facilitated and inconsistently implemented
across the nation.
From the 2030s, uncoordinated policies are put in place to accommodate large infrastructure
projects. The sector is targeted by government to seek low carbon options for energy
generation and distribution. Supporting government policies are introduced, including co-
investment and/or mandates.
Channel Infrastructure meets reactive policy and regulation changes from the 2030s onwards
and prioritises the transition to lower carbon storage and service to match policy effects on
customer supply.
51
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Global temp increase
1
by 2100, relative to
pre-industrial levels
Temprature rise >3°C
4.0°C
SCENARIO INDICATORS
+8.6%
Rainfall intensity
2
100-yr ARI 12-hr rain
depth, 2031-2050
relative to 1986-2005
+67%
NZ Hot days
2
For 2031-2050
relative to 1986-2005
$35
NZ carbon price
3
For 2050, per tonne
A hot house scenario, with
little to no decarbonisation/
transition; emissions grow.
Global and New Zealand efforts and policies to
decarbonise stall. Demand for transport fuels
stays similar to current levels. New Zealand
continues to use conventional jet fuel. The
global demand for fossil fuels, including oil
and natural gas, does not decline. As a result,
renewable fuel technology advances are
limited. Physical impacts of climate change are
major in relation to other warming trajectories.
Red Light
6.94M
New Zealand
Population
in 2050 (SSP1)
4
0.28m
NZ sea level rise
2
For 2031-50 relative
to 1995-2014
CO
2
52
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Reference scenarios:
NGFS Hothouse, RCP8.5, SSP 3, CCC Current Policy Reference
Data sources:
1. IPCC WG1 AR5 Summary for Policymakers
2. Ministry for the Environment (2018) Climate change projections for New Zealand
3. Treasury New Zealand (2022) CBAx Tool User Guidance
4. International Institute for Applied Systems Analysis (2018) SSP Database
5. Climate Change Commission (2021) Scenarios dataset for the Commission’s
2021 Final Advice
Physical risk severityTransition risk severityPolicy reaction
EXTREMELOW
Technology changeBehaviour changeSocio-political instability
SLOWSLOWHIGH
HIGH LEVEL DESCRIPTORS
Global temperature rise 2.2°C by 2050; 4.0°C by 2100
NZ TOTAL FUEL DEMAND(ML) - 2021 CCC - FOSSIL FUELS ONLY
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
20352036
2037
2038
2039
2040
2041
2042
2043
2044
20452046
2047
2048
2049
2050
2021 CCC - Current Policy Reference
WEAK - CURRENT POLICIES
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
53
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
NO DECARBONISATION, EMISSIONS CONTINUE TO GROW
NARRATIVE
Social
Population growth is low in industrialised and high in developing countries.
New Zealand’s population continues to increase to 6.94 million by 2050.
Severe weather events such as storm surges and heavy rain destroy arable land and
settlements forcing some Pacific Island residents (and other communities/nations) currently
living in vulnerable coastal settlements to move. While some move domestically, some move to
New Zealand. This happens more frequently as time passes (2050s onwards) in large volumes
as the cumulative affects of physical chronic and acute climate change impacts increase.
Technology
Renewable fuel technology advances are limited. SAF, green hydrogen and other renewable
fuels do not become available in significant quantities and remain largely unaffordable.
Conventional jet fuel continues to be used for aviation. Diesel continues to be used for heavy
land transport (however light transport vehicles are replaced by EVs over time).
Channel Infrastructure continues to store conventional fuels, increasing overall jet fuel storage
to meet larger population needs.
Markets
The global demand for fossil fuels does not decline, and instead continues to grow.
As per the global narrative, nationalism influences where capital is invested.
In New Zealand, significant capital is allocated to recovery from multiple, severe weather events
and retreat from 2030 onwards. Cost of capital increases from the 2030s.
Demand for land transport fuels peaks within the early 2030s and slowly declines from then
to 2100. Demand for international travel has augmented strongly due to a growing middle class
globally travelling more and away from unfavorable climatic events/seasons.
Channel Infrastructure continues to provide infrastructure and storage of national fuel reserves,
due to increasing nationalism, capital is invested to secure large quantities of domestic stock.
Environment
Global temperature rise is over 2.2 °C by 2050 and is expected to reach 4.0 °C by 2100.
Physical impacts of climate change are significant. Sea-level rise in New Zealand
(metres above 1986–2005 baseline) is 0.28m
by 2050 and 0.79m by 2100. There is
a 67% increase in the number of hot days by 2050 and an 8.5% increase in rainfall intensity.
These physical impacts of climate change are considered significant and vary on location
and geography across New Zealand.
W
ater use and wastewater products are considered minimal including low scale attempts
to diversify energy options to meet global supply chain disruption for fossil fuels.
Severe
acute and chronic climate change impacts disrupt supply chain routes and onsite
operations. Capital investment is required to remediate damage.
Red Light
54
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Policy
The transition to low or zero emissions vehicles in New Zealand by 2035 signalled in
New Zealand’s first emissions reduction plan is not supported by legislation, however,
passenger EVs are still adopted by the market. No or only low targets are set by government
to transition New Zealand’s energy supply. The Emissions Trading Scheme (ETS) remains in place,
however, the carbon price signal does not encourage a transition away from fossil fuels at $35
per tonne in 2050.
Channel Infrastructure continues to meet demand, providing infrastructure and storage
of conventional fossil fuels to current policy and regulation standards.
55
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Business Planning
Our 2023 Sustainability Report, brings together the new NZ
Climat
e Standards (NZ CS) as well as our existing work to date
on climate change analysis.
Channel Infrastructure has used scenario forecasting
in it
s traditional form, as one of many tools through
which we assess our options in our strategic reviews
and business planning. These ‘normative’ probability
scenarios are based on likelihood from local fuel
demands and have informed our business decision-
making for over 15 years. This information helps us
to mitigate and adapt to a changing climate while
continuing to provide New Zealanders with the fuel they
need to keep moving while we transition to a lower
carbon economy.
With the entry of climate change scenarios, which
e
xplore the bounds of plausibility and challenge
reasonable future states of global warming potential
(GWP) in three very different yet plausible scenarios,
Channel Infrastructure has assessed both the climate
change scenarios in a stand-alone exercise, as well
as the demand outlook prepared by Envisory
1
in early
2023 to inform our strategic refresh. The Envisory fuel
demand outlooks modelled three cases; the “Base” is the
“most expected” case while the faster represents a faster
transition and the slower is the where the transition takes
more time.
To combine our existing business planning processes with
our climat
e scenarios, we have utilised the CCC 2021
data tables (aligned with the three SSP's underpinning
our scenario analysis) to provide a trend line of
New Zealand Liquid Fossil Fuel Demand (converted
from petajoules (PJ) to million litres (ML)) across our
Envisory demand outlooks. This is to show the degree
of alignment between our existing business planning
process and the new climate change scenario analysis
processes, as outlined on the following page.
It is noted that the Envisory data includes biofuels,
wher
eas the CCC data is for fossil fuels only.
To interpret the trend line comparisons, it is important to
r
ecognise the significantly different basis upon which the
two data sets have been developed:
• The 2023 Envisory New Zealand demand outlook is
more current than the CCC's 2021 projections, and was
"built up" by detailed modelling:
– The jet demand forecast was based on the long-
term passenger number forecast developed by
international consultants DKMA for Auckland Airport
in December 2022. This passenger forecast included
flight destinations, enabling Envisory to be more
specific on fuel consumption, categorising flights
as domestic, short-haul, long-haul, and extra long-
haul (>11,500km). Air freight is a growing segment
and was modelled separately.
– For diesel, the modelling was based on
each cons
umption sector separately, including
Agriculture, Industrial, Commercial, Residential,
Transport and International shipping.
– The vehicle fleet
was split between light passenger,
light commercial, motorcycle, heavy transport and
buses; each was modelled with its own split
between new and used vehicles and turnover rates;
and different proportions of electric vehicles coming
into the fleet. This was done for each category and
for new/used vehicles over time.
– Biofuel volumes were assessed for petrol and diesel,
although no
t for jet fuel as SAF is a drop-in fuel,
fully interchangeable with jet fuel and is able to be
supplied via Channel's existing infrastructure.
• The CCC's liquid fuel demand was modelled using
the Ener
gy and Emissions in New Zealand model (ENZ)
and includes fossil fuels only, based on projected use/
mode of transport from the Ministry of Transport.
It is also important to note that the trend lines on the
char
ts also show New Zealand's total fuel demand profile,
which will be materially different to Channel's, due to the
Company having a greater exposure to jet fuel due to
the Auckland Airport - which is supplied via the pipeline
- and accounts for around 80% of New Zealand's jet
fuel consumption.
1
Envisory (formerly Hale and Twomey) provides independent strategic advice and consultancy services to the energy sector.
56
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Outlook
Jet Fuel
Diesel
Petrol
2021 CCC Headwinds
(Fossil fuels only)
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
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Base Case: NZ Fuel Demand (Million Litres)
Base Case
Base Case:
• Petrol volumes decline most rapidly due to replacement
transport options (mainly EV’s) being available,
• Diesel volumes decline, although at a slower rate, due to
some “difficult to shift” demand,
• Jet volumes (including liquid SAF) continue to increase,
due to post-covid recovery, continued demand for
international travel and difficulty of substitution.
The CCC trend line more closely follows the trend line
of total fuel decline, however this trend is observed less
aligned as the volumes approach the mid 2040s, due to
our expectation of biofuels substitution.
Outlook
Jet Fuel
Diesel
Petrol
2021 CCC Tailwinds
(Fossil fuels only)
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
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Faster Transition: NZ Fuel Demand (Million Litres)
Faster Transition
Factors influencing slower transition:
• More difficult to change people’s behaviour,
• More inertia in transition, possibly due to alternate
(cheaper) ways of meeting emissions reductions,
•
EV’
s take longer to reach cost parity,
•
Slo
wer efficiency improvement due to less efficient
vehicles coming into the fleet,
• Poorer economic conditions result in age of fleet
increasing,
•
L
ess encouragement from Government and lack of
support for net zero by 2050 (no bio-fuels obligation/
mandate).
The CCC trend line show close alignment between 2030s
to late 2040s, which then tapers away as the volume
approaches 2050.
Outlook
Jet Fuel
Diesel
Petrol
2021 CCC Current Policy
(Fossil fuels only)
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
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Slower Transition: NZ Fuel Demand (Million Litres)
Slower Transition
FIGURE 12: ENVISORY FUEL OUTLOOKS OF NEW ZEALAND TOTAL FUELS DEMAND
Factors influencing faster transition:
• Behavioural changes have more impact than expected,
• Electric Vehicles (EV’s) reach cost parity with Internal
Combustion Engine (ICE) earlier,
• Efficiency of new ICE fleet improves faster than expected,
• Better economic conditions increasing rate of fleet
turnover,
• Breakthroughs in development of alternate fuel heavy
vehicles,
• More technological breakthrough in aviation,
• Government policies: fleet efficiency targets,
bio-fuels, mandates.
The CCC trend line follows a similar rate of decline over
the short-medium term; however, the forecasted volumes
are observed to be higher from the mid 2030s, due to our
expectation of biofuels substitution.
57
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Roadmap for our role in New Zealand's
ener
gy transition
There are a range of potential market scenarios for the
decarbonisation pathway as evidenced by the scenario
work undertaken.
Most scenarios, including Envisory’s fuel demand outlook,
agr
ee that electrification of the transport sector and
improving fuel economy of the light vehicle fleet, will
result in petrol demand peaking, and starting to decline
in the near term. Diesel is expected to transition more
slowly, with a gradual increase in biofuels and the
electrification of light commercial vehicles and buses,
and the transition of heavy transport to electric and
hydrogen expected to take longer. The decarbonisation
of the aviation industry is expected to largely be driven
by the gradual substitution of petroleum jet fuel with
Sustainable Aviation Fuel (SAF).
Our infrastructure will help fuel New
Z
ealand's future to 2050 and beyond
Channel will continue to play an essential role delivering
r
esilient infrastructure solutions in the transition to a
resilient, low-carbon economy. Transition planning is a
core aspect of our refreshed strategy and our purpose.
Our role is to help keep New Zealand moving now
and into the future and to support decarbonisation of
New Zealand's transport sector. Our capital allocation
plans and consideration of climate-related risk and
opportunity are directly linked to our business planning
across our six key strategic pillars.
Channel
first published its Transition Roadmap in our 2021
Sustainability Report, and although we have provided
more
specificity through our strategic planning, it remains
largely the same. In Figure 13, we outline what the
enablers of our new strategy will be, and what Channel
will be called on to deliver and how that informs our
future strategy.
The enablers for Channel
Those unique characteristics and aspects of our business
that come t
ogether so we can make the most of the
opportunities ahead of us in the decades to come:
1. Strong and stable cash flows
Our commercial framework delivers strong and stable
cas
h flows - a core feature of our infrastructure business
and a key enabler of our ‘"go forward" strategy. Our
long-term contracts are with strong counterparties, have
take-or-pay commitments with all fees (including fixed
fees, take-or-pay commitments and private storage fees)
subject to indexation which provides protection through
inflationary cycles.
2. Strong capabilities
Channel has strong capabilities - fuels infrastructure,
pr
oject development and delivery, critical operations,
asset capability and New Zealand's leading transport
fuels testing laboratory – with an ambition to become
a world-class operator. This capability set is evidenced
by the Company's execution of the import terminal
conversion on time and on budget, delivery of additional
100 million litres of private storage and doubling our
on-site jet storage capacity increasing fuel resiliency for
New Zealand.
3. Uniquely strategic assets
Marsden Point is a uniquely strategic site in New Zealand.
The combination of the 35-year resource consent,
deep water harbour and jetty access, electricity and
gas connections and pipeline to New Zealand's largest
city and international gateway sets us apart. Marsden
Point also has a relatively low exposure to physical
climate change risks, under a range of scenarios, as
outlined in Climate change risks and opportunities (see
page 65).
4. Key supply route for Jet fuel to Auckland International Airport
With Auckland Airport accounting for 75% of New
Z
ealand's seat capacity and 80% of New Zealand jet
fuel usage, our pipeline is the safest, lowest-cost, most
efficient and lowest-emission distribution option to get
fuel t
o the airport and the broader Auckland region.
58
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
FIGURE 13: OUR STRATEGIC ENABLERS AND DELIVERY
What Channel will be called upon
t
o deliver
Under a range of plausible scenarios, we believe that
ther
e are four main things that Channel will be called
upon to deliver, identified as items 5-8 in Figure 13, which
build upon Channel's four enablers:
5. Support a stable medium term diesel outlook and resilient
tr
ansition of petrol
We expect that petrol demand will continue to decline
o
ver the next 20 years as EV’s continue to grow in the
vehicle
fleet. Our current projections also suggest stable
diesel demand until at least the end of the decade due
to demand from the difficult to abate heavy transport
and agricultural sectors. As demand for land transport
fuels changes over the next 20 years, we will continue
to provide resilience and cost-effective infrastructure
through this transition.
6. Meet expected growing jet demand
We will need to meet expected and growing jet demand
with incr
easing middle class in Asia and India and a
sector that is incredibly important to our exports and our
tourism industry.
7. Support New Zealand's reliance on long-haul air travel to
reach offshore markets
We will need to provide resilient infrastructure to support
Ne
w Zealand's reliance on long-haul air travel to reach
our offshore export markets.
8. Provide infrastructure to support a lower carbon liquid fuel
s
olution for aviation
We think the aviation sector will require a liquid fuel
s
olution, such as SAF, to support lowering emissions from
medium to long haul flights, which our infrastructure can
already accommodate.
Sustainable aviation fuel
Refer to case study on page 104.
59
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Risk
management
60
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Reporting on risk
The Channel Infrastructure Board is responsible for reviewing
and managing ent
erprise risk, including those related to
climate change. Day-to-day risk management is delegated to
the Chief Executive Officer, with risk assessments conducted
by the Corporate Lead Team facilitated by the Risk and
Compliance Manager.
The frequency of risk assessments and review and the
pr
ocess for escalation is outlined in Figure 14.
Channel Infrastructure uses the “three lines of defence”
model t
o coordinate its approach to risk and
assurance. The model, set out in Figure 15, focuses on
managing material risks, including environmental, social,
governance and climate risks, at the strategic, tactical
and operational levels.
The increasing importance of regular oversight of
climat
e-related matters is acknowledged and is now
assessed by the Board on a twice-yearly basis, aligned
to our existing enterprise risk management schedule.
Previously, the oversight of climate-related interests
has been presented to the Board on an ad-hoc
basis, as and where required. Climate-related risks
and opportunities are embedded within our existing
enterprise risk management framework, of which we
identified
six areas of potential climate-related risk within
our 2023 assessment. With the introduction of the new
Aotearoa New Zealand Climate Standards, Channel
Infrastructure has completed a physical and transition
risk assessment, in conjunction with an impacts and
opportunities assessment to further consider climate-
related risks to Channel Infrastructure's operations
and people.
Our process for identifying climate-related risks is already
embedded within our ent
erprise-wide risk management
system, covering preventative/recovery and mitigating
barriers or controls.
Following the implementation of NZ Climate Reporting
S
tandards, Channel Infrastructure engaged independent
consultants to undertake a gap analysis of existing
practices and to facilitate a more detailed assessment of
climate-related risks, impacts, and opportunities through
a series of workshops.
Climate-related risks are weighted the same as all other
ris
ks within our enterprise risk management system, with
identified risks assessed against our risk consequence
matrix to identify the top 10 enterprise risks - five of
which can be linked to climate change and are covered
by the discussion set out in the section, Climate change
risks and opportunities (see page 65). This is reflective of
our recent business transition and our understanding of
the potential risks and opportunities arising from climate
change and, more importantly, an understanding of our
role in providing critical infrastructure services which will
keep the economy of Aotearoa moving through an era
of change.
The audit, or independent assurance programme, is
de
signed 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.
61
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
FIGURE 14: RISK MANAGEMENT GOVERNANCE; REVIEW AND ESCALATION
62
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
FIGURE 15: THREE LINES OF DEFENC
E MODEL
Board of Directors
Corporate Lead Team
1st Line of Defence
Day-to-day risk management and
control
3rd Line of Defence
Independent assurance
2nd Line of Defence
Function that oversees risk
Line Management
• Functions that own and manage risks directly
• Responsible for maintaining effective internal controls,
executing risk and control procedures and ensuring
compliance on a day-to-day basis
•
Identifies, assesses, controls and mitigates risk
Independent Asssurance
• Functions that provide independent assurance that risk
management is working effectively
• Reports to Audit and Finance and Health, Safety,
Environment and Operations Committees
Risk and Compliance
• Functions that facilitate and monitor the implementation of
effective risk management and compliance practices
• Works with the line to identify and monitor new and
emerging risks
• Ensures the enterprise risk model is effectively deployed
•
R
eports primarily to the Corporate Lead Team and the
Audit and Finance and Health, Safety, Environment and
Operations Committees
Enterprise Risk
63
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our reporting structure
Channel Infrastructure's management closely considers climate
change i
ssues in ongoing optimisation of financial and
operational performance, as well as planning for future growth
and diversification of the Company's business through the
decarbonisation of New Zealand's economy.
The climate-related risks
identified through our enterprise
risk management system include mitigants and controls
that are reviewed and approved by the Corporate
Lead Team and then sent to the Board for
endorsement. The Corporate Lead Team is responsible
for proposing targets to the Board and then achieving
those that are approved. The Corporate Lead Team
approves the portfolio of climate change 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 Company has an integrated approach to business
planning and risk management in place, as outlined in
Figure 16.
Apart from our existing risk management framework,
ther
e are no specific tools through which the
Board exercise accountability for management's
implementation of climate-related policies, strategies,
and targets. We acknowledge the consideration of
climate-linked performance and remuneration within
our People and Culture Committee Charter with the
intention to further explore related performance targets
in upcoming disclosures.
FIGURE 16: INTEGRATED APPROACH TO RISK MANAGEMENT
64
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Climate change risks and opportunities
Identifying our climate risks and opportunities
In line with the Aotearoa New Zealand Climate Standards (NZCS1-3), we have summarised the climate-related risks
and oppor
tunities considered relevant to our business in Table 5 on page 66. Risks and opportunities have been
considered across three future time horizons:
• Short-term to 2030
• Medium-term to 2050, and
• Long-term to 2100.
The climate-related risks
identified through our enterprise risk management system include mitigants and controls that
are reviewed and approved by the Corporate Lead Team and then sent to the Board for review and approval. The
Board exercises accountability for management's implementation of climate-related policies, strategies, and targets
through the existing enterprise risk management framework and monthly performance reporting.
With the introduction of the new Aotearoa New Zealand Climate Standards, Channel Infrastructure has completed
a
specific climate change physical and transition risk assessment, in conjunction with an impacts and opportunities
assessment, to further consider climate-related risks to Channel Infrastructure's operations and people.
Throughout our risk assessment processes we have considered the risk (transition or physical), its potential impact,
and as
sociated business assets or activities which could be vulnerable to each risk. For our current identified impacts
pleas
e refer to current climate-related impacts on page 37.
Ship berthed at Marsden Point discharging imported cargo of transport fuels
65
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Direct physical risks
The following direct physical risks were identified through a series of workshops, leveraging an independent
cons
ultancy assessment of climate change risks to the Marsden Point site. The risk rating has been assessed, taking
into account the exposure, sensitivity, adaptive capability and consequence.
Channel also considered indirect physical risks to the business from climate related impacts. Indirect risks were ranked
bas
ed on consequence only, as exposure, sensitivity and adaptive capacity are less well understood.
TABLE 5: TOP 10 PHYSICAL RISKS (DIRECT AND INDIRECT)
66
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
In the following table, we outline the business activities undertaken to manage the physical risks identified in Table 5.
TABLE 6: BUSINESS ACTIVITIES ALIGNED TO THE MITIGATION/MANAGEMENT OF PHYSICAL RISKS
Physical RiskBusiness activities aligned to physical risks
Harm to people, assets,
and the environment
We actively plan and prepare for weather impacts on our site and assets with well-developed response
s
ystems, coastal erosion management framework and established incident management processes. In
recent years we have improved the resilience of our site to severe weather events through investments in
our storm-water management systems (including removal of sludge, as outlined on page 82) and dune
protection improvements.
Physical risks to assets
from climate change
We maintain Material Damage and Business Interruption insurance for property damage and
cons
equential business interruption as a financial mitigation of these risks.
In 2023, Channel commissioned a coastal hazards assessment by an independent expert for the Marsden
P
oint site, considering future sea-level rise under climate change warming scenarios. The assessment
included coastal erosion and inundation hazard risks, conducted in addition to our scenario analysis (refer
to Climate change scenarios (see page 38)). The results of this assessment illustrated that most assets
are safe from coastal erosion and inundation risks provided the existing rock revetment is maintained or
realigned, with a
flood gate mitigating inundation risks. The existing sand dune may require nourishment
and/or stabilisation with rock revetment.
In 2024, Channel Infrastructure will complete more detailed climate-change modelling and assessment to
under
stand the physical impacts to the Pipeline from a more severe climate change.
67
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Transition risks
Transition risks are related to the transition to a low-emissions, climate-resilient global and domestic economy, and
include policy
, legal, technology, market and reputation changes associated with the mitigation and adaptation
requirements relating to climate change.
Decarbonisation of the transport sector, which Channel provides the fuel infrastructure to support, will be dependent
on the up
take of EV’s and continued fuel efficiency improvements for the light vehicle fleet; the development of
alternative technologies (such as electric, hydrogen, biofuels and SAF) and improved technologies leading to fuel
efficiencies for heavy transport and air travel.
TABLE 7: TOP FIVE TRANSITION RISKS
68
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Opportunities
There is opportunity for the Company to grow and diversify while at the same time, contributing to New Zealand’s
wider decarbonis
ation efforts. A growing range of transport fuels and energy choices will require infrastructure to
support lower emission, secure energy transport. Channel Infrastructure has a central role to play providing resilient
infrastructure for a decarbonising world - keeping energy available when it is needed.
TABLE 8: TOP FIVE OPPORTUNITIES
69
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Business activities aligned to transition risks and opportunities
Channel Infrastructure's strategic framework, set out on page 32, includes a strategic imperative to “grow through
s
upporting the energy transition”.
OpportunityBusiness activities/assets aligned to transition risks and opportunities
Supporting New
Zealand's demand
for transport fuels
(renewable and non-
renewable)
We are in discussions with our customers on the potential use of our strategic infrastructure to enable the
r
eceipt, storage testing and distribution of lower-emissions fuels. This includes considering opportunities
to increase scale as demand and available supply grows. We have already processed a shipment of SAF
through our infrastructure as part of a trial for Air New Zealand.
Innovation of new
technologies and
service diversification
We are currently working with Fortescue to study the feasibility of eSAF production at Marsden Point for
dome
stic consumption.
Increased domestic
stockholding/storage
With New Zealand’s import supply chain, resilience comes from our domestic capacity to identify and
deal with s
upply chain disruptions. We are committed to supporting our customers and the New Zealand
Government with their
efforts to provide a resilient fuel supply chain for New Zealand and have offered
additional product storage in country to meet strategic storage and minimum stock holding obligations.
Sustainable aviation fuel
Refer to case study on page 104.
Security and quality of supply
Refer to case study on page
108.
In addition to the specific business activities outlined above, we will continue to:
- monitor domestic and international technology developments which may represent commercially attractive
oppor
tunities for our business over the longer-term, and
- work closely with our investors, iwi and local community, and other stakeholders to better understand their
e
xpectations on climate change-related matters.
70
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Capital deployed towards climate risks (physical and transition) and opportunities
Channel has a clear investment criterion for all growth opportunities and that is to only invest in projects that generate
r
eturns above our Weighted Average Cost of Capital and projects underpinned by contracted revenues.
From a risk management perspective, Channel will invest to mitigate risks (including climate related), in line with our
ris
k tolerance.
We will use the Emissions Trading Scheme New Zealand emissions unit (NZU) price to align to New Zealand's current
s
tate and inform our strategic development projects at the point in time of auction results and project inception
1
.
To ensure we continue to remain aligned to a net zero Scope 1 and 2 emissions
2
trajectory, we also consider the
Climate Change Commission (CCC) recommended auction reserve prices as a basis for understanding NZU pricing
mechanisms required to incentivise changes in consumer behaviour, and investments required to meet national
climate targets.
From a risk management perspective, Channel will invest to mitigate risks (including climate related), in line with our risk
management fr
amework.
As an example, in 2023 we invested resource into the the following climate risks and opportunities:
Risk/OpportunityBusiness Activity2023 Resource Allocation/Investment
Harm to people, assets,
and the environment
Cleaned the storm water systems, removing over 200
t
onnes of sediment and sludge, to further improve
our ability to respond to significant rainfall events.
Spend of c.$820K on these activities.
Completed a coastal hazards assessment for the
Mar
sden Point site.
Innovation of new
technologies and
service diversification
Provided support to Fortescue in relation to the
s
coping study and pre-feasibility phase of the
potential hydrogen and eSAF project.
Support hours provided (not measured).
Increased Domestic
Stock holding/storage
Commissioned an additional c. 45 million litr
es
of jet fuel storage at Marsden Point, more than
doubling on-site jet fuel storage through the import
terminal conversion programme. This aligns with our
expectation that sustainable aviation fuel, blended
with traditional jet fuel will be a long term enabler of
the decarbonising of aviation.
The jet fuel tanks were converted from crude oil
s
torage in the last 18 months as part of the $45-
$50 million project to deliver c.100 million litres of
additional storage capacity.
Entered into a new storage contract (c.$9 million o
f
additional revenue across 10 years from 2024) and
increasing domestic stockholding, increasing supply
chain resilience.
Minimal incremental growth capital expenditure.
1
The average secondary market closing price across the four auctions for 2023 was NZ$67.15, ranging between NZ$57.25 - NZ$75.85 per NZU
2
Refer to page
77
71
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2023
performance
72
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
73
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Environment
Objective
We are committed to maintaining a high standard of
en
vironmental performance and to reducing our impact
on the environment in which we operate.
Our environmental commitments extend beyond carbon
emis
sions to include waste, waste water, bio-diversity,
land contamination and coastal erosion.
We seek to:
• Reduce our carbon footprint, build resilience to climate
change ris
ks, and, where possible, to responsibly
contribute to achieving New Zealand and global
decarbonisation targets,
• Act as responsible managers of the land and coastline
upon which w
e operate,
• Utilise our strategic infrastructure to support others,
par
ticularly through innovation in the energy and fuels
sector, to reduce carbon emissions,
• In addition, we will report on our climate approach,
pr
ogress and performance in compliance with the
Aotearoa New Zealand Climate Standards (NZCS1-3)
each year.
Sustainable Development
Goal
s (SDGs)
1
Reducing impacts on the environment in which we
oper
ate is an intrinsic part of our care value, and
our good neighbour, good citizen pillar within our
refreshed strategy.
We acknowledge this is a critical responsibility
upon poupouwhenua her
e, at Marsden Point, and
we acknowledge the links we have in our current
performance in this area with the UN SDGs, as outlined
in the following table.
Sustainable
Development goalSDG ReferenceOur Contribution
15.8 B
y 2030, introduce measures to prevent the introduction
and significantly reduce the impact of invasive alien species
on land and water ecosystems and control or eradicate the
priority species
Funding research with iwi for pest control
of Mediterranean fan worm.
1
The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and
pr
osperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for
action by all countries - developed and developing - in a global partnership.
74
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2023 environmental performance at a glance
2023 performance highlights
4,037
tCO
2
e Scope 1 & 2 emissions in FY23
1
Over 1,099
Tonnes of decommissioned metals sent for
r
ecycling in FY23
73%
Reduction in FY23 water consumption from
FY
22, saving c.600,000 m
3
of water
1
Refer to page 79
75
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Delivery against 2023 focus areas
2023 Focus AreaOur Performance
Assess physical impacts from a 4
0
C global
warming scenario
Physical risks to our Marsden Point site have been assessed out to 2080 as
lo
w to medium in the majority of cases with only simple mitigations being
required. Having completed the assessment for the Marsden Point site we are
now assessing physical risks for the Pipeline.
Extend our climate change reporting disclosures
in accordance with XRB requirements
This report is prepared in compliance with the Aotearoa New Zealand
Climat
e Standards.
Work with customers on Scope 3 emissions
Fortescue study into production of eSAF in pre-feasibility phase.
Continue programme of
groundwater remediation
Groundwater monitoring and remediation continued throughout 2023 in line
with the s
ite resource consent.
Increase reliability of groundwater
network by implementing improved asset
maintenance strategies
In 2023 we increased our groundwater system reliability to >98% through the
implement
ation of an improved preventative maintenance programme.
Establish pathway for 20% reduction in waste
to
landfill
Under development, now scheduled for delivery in 2024.
Expand our environmental pest control by
supporting Mediterranean Fan Worm Research
We have funded work with our Iwi partners to trial fan worm eradication, as
outlined on page 91.
Additional data
Data tables, summarising our environmental performance
o
ver the last five years against a range of metrics can be
found in the Appendix on page 110.
76
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
GHG emissions
A material topic
Management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they
r
elate to Scope 1, 2, and 3 GHG emissions.
Our performance in detail
Channel measures its Greenhouse Gas (GHG) emissions in accordance with the global standards established in the
Gr
eenhouse Gas Protocol
1
, which recognises three categories of emissions as set out in Figure 17.
In accordance with the GHG Protocol Corporate Value Chain Scope 3 Accounting and Reporting Standard category
boundarie
s, emissions associated with the refined transport fuels that Channel stores and distributes but does not own
or sell to the end user
2
are not a Channel Scope 3 emission. However, Channel supports the goal of decarbonisation
of the transport fuels value chain in New Zealand.
End user emissions are emissions (upstream and downstream) that result from the end use consumption (combustion)
o
f transport fuels that Channel distributes via its owned and operated infrastructure, but does not take ownership
of and therefore does not own or sell to the end user. Refer to Figure 18, NZ's transport fuels supply chain via
Marsden Point.
In FY23, being our first year of reporting in accordance with the Aotearoa New Zealand Climate Reporting Standard,
w
e report Scope 1 and 2 emissions
3
only.
FIGURE 17: SCOPE 1, 2 AND 3 EMISSIONS
1
Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) (the GHG Protocol).
2
Channel distributes transport fuels by the Marsden Point to Auckland pipeline, Marsden Point Jetty and pipeline to the Truck Loading Facility (adjacent
t
o the Marsden Point site), but does not import, own or sell any of the fuels
3
As per Adoption of Aotearoa New Zealand Climate Standards (NZ CS 2), Adoption provision 4: Scope 3 GHG emissions
77
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Operational
Control
of Channel
Infrastructure
CustomerCustomer
FIGURE 18: NZ TRANSPORT FUELS SUPPLY CHAIN VIA MARSDEN POINT
Crude oil
extraction
Crude oil
extraction
Oil refinery
operations
Crude oil
transport
Fuel
transport
Oil refinery
operations
Fuel
transport
Fuel
storage
Marsden
Point
jetties
Laboratory
Marsden Point
terminal 280ML
fuel storage
Marsden
Point to
Auckland
pipeline
Diesel
supply
Petrol
supply
Jet supplyWiri Terminal
to Auckland
Airport pipeline
Truck
loading
facility
Diesel
supply
Wiri terminal
(Leased)
Petrol
supply
78
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2023 delivery
GHG emissions
In FY23, Channel reports Scope 1 and 2 emissions only. Although inherently difficult to calculate, we are well advanced
in de
veloping the framework for the reporting of Scope 3 emissions from 2024 onwards.
Channel's total Greenhouse Gas Scope 1 and 2 emissions for the year ended
31 December 2023 were approximately
4,037 tonnes of carbon dioxide equivalent (tCO
2
e).
2023
SCOPE
PROPORTION OF
S
COPE 1 & 2
ELEMENTtCO
2
e
137%
Fuel consumed by stationary and mobile combustion equipment974
Wastewater treatment189
Fugitive emissions released from transport fuel storage and refrigeration systems326
Total Scope 11,489
263%Purchased electricity2,548
Total Scope 2
1
2,548
Total Scope 1 and 24,037
1 Calculated using the location method
Channel monitors its GHG emissions intensity by measuring total Scope 1 and 2 emissions per million litr
es of terminal
throughput (tCO
2
e/ML). In 2023, our base year, Channel's emissions intensity was 1.15 tCO
2
e/ML.
79
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
GHG inventory - key details and assumptions
Channel measures its impact and emissions in accordance with the Greenhouse Gas Protocol. Key details are
as f
ollows:
DetailApproach, Assumptions, Basis
Annual measurement period
1 January
to 31 December, following our financial reporting cycle.
Base emissions measurement year
FY23:
1 January 2023 to 31 December 2023, being the first full year of import
terminal operations.
Base year recalculation approach
In case of structural changes to our business, substantial changes by third parties to
emis
sions factors, or discovery of significant errors or several cumulative errors that exceed
a 5% materiality threshold shall trigger a recalculation of the FY23 base year to ensure
like-for-like comparisons. Organic growth or decline will not trigger a recalculation.
Assurance
No assurance required in FY23 as per Part 7A of the Financial Markets Conducts Act 2013.
Consolidation approach
Operational control consolidation approach, meaning that the organisational boundary
of Channel NZ’s GHG inventory is defined by those emissions over which we have
operational control (refer to Figure 18).
Organisational boundaries
All of Channel's operating subsidiaries.
Exclusions
The New Zealand
Refining Nominees Limited, which Channel had an interest in during the
reporting period, is excluded from our emissions inventory. This is because the Company
acts as custodian of the assets belonging to the New Zealand Refining Pension Fund,
a legacy defined benefit Restricted Workplace Savings Scheme. The Pension Fund is
independently governed and is therefore not under direct or operational control of
Channel as it does not make the investment decisions for the Pension Fund and the
administration of the Fund is carried out by an independent third party.
Gases included in the inventory
All seven greenhouse gases under the Kyoto Protocol: carbon dioxide (CO
2
), methane
(CH
4
), nitrous oxide (N
2
O),
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur
hexafluoride (SF6), and nitrogen trifluoride (NF
3
).
Emissions factors
Emissions factors used in Channel's inventory are based on the latest factors deployed by:
• Ministry for the Environment (MfE), Measuring Emissions: A guide for organisations - 2023
De
tailed Guide
• Australian Government Department of Climate Change, Energy, the Environment and
W
ater (DCCEEW) Australian National Greenhouse Account Factors (August 2023)
And in the absence of emissions factors in these documents, relevant sector information
is utilis
ed:
• Market Economics Limited, research report prepared for Auckland Council -
C
onsumption Emissions Modelling (March 2023) (for Scope 3 spend-based methods)
• BRANZ CONSTRUCT v3.0 Report – (emission factors for Scope 3 Purchased Goods).
Global Warming Potential (GWP)
We use the GWP value from the sources above. These have been disclosed as GWP100
fr
om the IPCC AR5 (MfE, 2023; DCCEEW, 2023) other sources used do not disclose the
GWP used.
Data collection methodology
The data collection methodology including data source, uncertainties, and assumptions inherent in the calculation
o
f Channel's GHG emissions is detailed in the Appendix on page 112. Greenhouse Gas emissions reported for the
year ended 31 December 2023 (Scope 1 and 2) were sourced from our Finance, Procurement, Operational records, and
suppliers/service providers.
80
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Targets
In our
first Sustainability Report released in April 2022, the Company set a “Net Zero” target as part of our Transition
Roadmap
1
. As we transitioned from refining to import terminal operations, we made a commitment to achieve net zero
Scope 1 and 2 emissions (absolute) by 2030.
With the business transition complete (resulting in a greater than 98% reduction in scope 1 and 2 emissions (over
1 million t
onnes of CO
2
per annum)), our direct emissions are now primarily from electricity consumption and the use of
fuel for vehicles and equipment on site.
We
reconfirm the commitment made in
2022, to achieve net zero Scope 1 and 2
emissions by 2030
2
.
In 2023, we further reviewed the opportunities to achieve our commitment. O
ur emissions reduction plan now includes
a new renewable electricity supply contract
3
which came into effect on 1 January 2024, operational improvements,
and the use of high-quality offsets where emissions reductions are not otherwise possible. This net zero target supports
the contribution Channel makes to limiting planetary warming to 1.5°C, in line with the Paris Agreement. This target
relies on the use of Energy Attribute Certificates (EAC's) issued by the New Zealand Energy Certificate System to reduce
Scope 2 emissions, which are currently considered hard to abate. Technological innovations and scalable disruptions
to existing energy options are needed to replace carbon consumptive materials such as fossil diesel for low-carbon
biogenic diesel fuel.
In FY24, our customers will remove their residual crude oil slops (ex the refining process), eliminating the Scope 1 fugitive
emis
sions from crude tanks (refer to Appendix 3: Climate change & GHG emissions).
Based on these initiatives and other emissions reduction plans we have in place, next year, we expect to reduce our
FY
23 Scope 1 and 2 GHG emissions by c.50%.
1
Refer to 2021 Sustainability Report, “Our transition to a sustainable future”, available at: www.channelnz.com
2
This absolute target is based on the application of a market based approach in respect of Scope 2 emissions.
3
In 2023, the Company entered a long-term
fixed price variable volume contract for the supply of renewable electricity from 1 January 2024.
The electricity supply arrangements under this new contract include Energy Attribute Certificates, certifying that electricity has been generated
from renewable sources. Refer to NZX announcement dated 16 June 2023: Channel secures long-term renewable electricity supply - NZX, New
Zealand's Exchange.
81
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Infrastructure resilience and physical impacts of
climat
e change
Material topics
Ability to manage risks and opportunities associated with direct exposure to actual or potential physical impacts
o
f climate change.
Ensuring our infrastructure is resilient to environmental changes.
Our 2023 delivery
Preparing for extreme weather events
We actively plan and prepare for weather impacts on
our as
sets and operations, with well-developed response
systems, coastal erosion management framework
and established emergency response and incident
management processes.
In recent years, we have improved the resilience of
our s
ite to severe weather events through investments
in our storm water management systems and dune
protection improvements. In 2023, we cleaned the storm
water systems, removing over 200 tonnes of sediment
and sludge, to further improve our ability to respond to
significant rainfall events. The resilience of our operations
through cyclone Gabrielle and severe weather in 2023
demonstrate the effectiveness of these measures and our
emergency preparedness.
Infrastructure resilience
Refer to the case study on page 105
Climate change risk assessment
In 2023, we undertook work to assess site resilience
t
o potential warming scenarios to inform a range of
short and long-term coastal erosion and inundation
management options for inclusion in our Asset
Management Plans. This work has assessed the risks
to our site as low to medium until at least 2080 in
the majority of cases with implementation of simple
mitigations. For further detail on the climate change
physical risk assessment, refer to Climate change risks
and opportunities (see page
65).
Coastal erosion management strategy
Recent studies have observed and confirmed evidence
o
f erosion at the coastal site boundary, and identified
the future possibility of ongoing erosion events as a
result of climate change. This includes storms and
tsunami aggravated by sea level rise and changing
weather patterns. Our erosion management strategy
aims to manage the dynamic coastal environment in
which we operate in a way that not only provides
resilience to our nationally significant infrastructure,
but also recognises the wider social, cultural, and
environmental considerations.
Our coastal erosion strategy includes monitoring of the
dune
s 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 to manage the potential retreat from land
that is most at risk of weather-related impacts over
this time.
The erosion studies were expanded in 2023 to include
as
sessments for climate warming scenarios including
a 4
o
C warming case, assessing the risk to at least
2080 as low to medium in the majority of cases,
with only simple mitigation required. The output of
this work is being incorporated into our long-term
strategic asset management plan to ensure necessary
mitigations are planned to maintain long-term resilience
of our infrastructure.
In addition, we are developing a Coastal Landscape
Management Plan in con
junction with our iwi partners,
which will, among other things, include dune planting to
improve dune resilience to erosion events.
82
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Land, waste and water
A material topic
Efficiency
of water resource usage and management of waste water treatment and managing existing site
contamination to reduce this over time.
Our 2023 delivery
Our environmental management systems include
monit
oring of our discharges to air and water, soil and
groundwater management, awareness and permit to
work controls, as well as a zero spill target and prompt
cleaning and remediation, as far as possible, of all
leaks or spillage if this is not achieved. More information
on our environmental management systems can be
attained on the Environment section of our website
at
www.channelnz.com.
Refinery
decommissioning
Permanent decommissioning of the refinery process plant
w
as completed in 2023. The decommissioned plant has
been left in a safe state that will allow us time to explore
options for future repurposing of these parts of the site.
Groundwater remediation
The Company is obliged under its resource consents,
ob
tained in April 2021, to continue maintaining the
current level of environmental standards. Environmental
measures at Marsden Point include operation of
a groundwater hydraulic containment system and
hydrocarbon recovery program reducing the extent
of legacy contamination over time as part of the
ongoing remediation of the ex-refinery site. The
Company has recognised a liability in respect of this
on-going obligation, as set out in note 14 to the FY23
Financial Statements.
As a condition of the resource consent, Channel
Infr
astructure has also committed to work with the
Northland Regional Council ahead of time (during the
20th year of consent or at least 12 months prior to the
cessation of terminal operations) to set out the actions
necessary to maintain compliance for the discharges
of contaminants. Given the unknown nature of the
future activities that may be agreed with the Northland
Regional Council, no liability has been recognised
in the Consolidated Balance Sheet other than the
cost associated with ongoing environmental monitoring
activities over a period of 20 years.
Potential sale of decommissioned assets
In July 2023, Channel entered into a conditional
agr
eement with Seadra Energy Incorporated (SE) under
which SE is granted an option to purchase permanently
decommissioned parts of the former refinery. Under the
current agreement, SE has until 7 July 2024 to confirm
whether it will proceed with the purchase of assets from
the former hydro-cracking complex for a total price
of US$33.875 million, including non-refundable option
payments amounting to US$4.5 million, but excluding any
transaction costs.
Should SE choose to proceed with the purchase, this
agr
eement provides an opportunity for Channel to free
up space on our Marsden Point site, allowing us to
consider repurposing opportunities, such as the potential
manufacture of green hydrogen and eSAF at Marsden
Point. Refer to Case Study: Sustainable aviation fuel
(see page 104). These site repurposing opportunities
have the potential to contribute to New Zealand's wider
decarbonisation efforts and energy transition, and bring
the potential for new jobs for Northlanders.
83
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Circularity
Throughout the company's transition, it has been a
priorit
y to reuse and recycle as much equipment as
possible and to minimise the waste that is sent to landfill.
Through the decommissioning project, we have focused
on r
ecycling or reusing redundant plant and materials
removed from the refinery process plant. We continued to
build on the prior year's significant achievements and in
2023, we recycled:
• Over 47,000 litres of lube and seal oil as a cost-
effective heating fuel,
• 48 tonnes of wood,
• 1,099 tonnes of metal, which was a mixture of
s
teel, stainless steel, aluminium, bronze and mixed
metals, and
• Over 1.14 tonnes of cardboard.
Among other general recycling initiatives, Channel is
w
orking to implement processes around the recycling
of used Personal Protective Equipment, reducing water
usage, and increasing recycling of plastic and metals,
particularly in Independent Petroleum Laboratory (IPL),
who are high users of both plastic sample bottles and
metal sample tins.
Water usage
As a result of the transition to import terminal operations
our s
ite water consumption has reduced considerably.
Daily water consumption continued to reduce throughout
2023 as decommissioning/conversion activities on site
wound down. At the end of 2023, our daily water
consumption was around 28m3 per day, a reduction
of >99% on the typical consumption during refinery
operations of over 4,000 m3 per day.
84
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2024 Environmental focus
In 2024, we will focus on the following:
Climate change resilience
Assess physical impacts on the Pipeline from global
w
arming scenario
Groundwater
Continue program of groundwater remediation
Waste
Complete plan to achieve a 20% reduction in waste
to landfill
GHG Emissions
Aim to reduce Scope 1 and 2 emissions by 50% from
the 2
023 baseline
Scope 3 GHG Emissions
Complete Scope 3 emissions inventory and report in
the 2
024 Sustainability Report
85
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
People and
community
Objective
Our commitment is to get ‘Everyone Safely Home, Every
Day’ and activ
ely value and protect the physical and
mental health and safety of all those who come to
our site, be they permanent employees, contractors,
or visitors.
We aim to:
• Be a good neighbour and corporate citizen,
• Partner with local iwi, hapu and community in
impact
ful ways, and
• Attract, support, and maintain a diverse workforce and
health
y working culture.
Sustainable development goals
The safety of our workplace and the health and well-
being o
f our people are an intrinsic part of our care value,
which sits at the heart of the on-site culture.
We acknowledge this is a critical responsibility and that
our oper
ations contribute to the welfare of our people
and the surrounding communities. This responsibility
is grounded in the United Nations' Guiding Principles
on Business and Human Rights (UNGP) and the UN
SDG 3 Good Health and SDG 8 Decent Work and
Economic Growth.
We recognise our direct links to the SDGs sub targets
wher
e relevant under each of our selected goals. Our
contribution to UN SDG 5 Gender Equality 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. The table on page 87 highlights how we are
contributing to the relevant SDG's.
86
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Sustainable
Development GoalSDG ReferenceOur Contribution
3.4 By 2030, reduce by one-third premature mortality from non-
communicable dis
eases through prevention and treatment and
promote mental health and well-being
Benestar Employee Assistance
Program, Critical Incident Response,
and Development.
5.1 End all forms of discrimination against all women and
girls e
verywhere
Parental leave policy updates to support
a more balanced approach to primary
care giving. Focus on reducing the
gender pay gap.
5.5 Ens
ure women's full and effective participation and equal
opportunities for leadership at all levels of decision-making in
political, economic and public life
Establishment of a women's CEO forum
to raise and address workplace issues
specific to women.
8.5 By 2030, achieve full and productive employment and
decent w
ork for all women and men, including for young
people and persons with disabilities, and equal pay for work
of equal value
Updates to contractor working policy
and all new contracts to meet the living
wage. In conjunction with Northable,
exploring opportunities for a neuro
diverse workforce.
8.6 By 2020, substantially reduce the proportion of youth not in
emplo
yment, education or training
Apprenticeship /internship opportunities
to encourage youth employment.
8.8 Protect labour rights and promote safe and secure
w
orking environments for all workers, including migrant
workers, in particular women migrants, and those in
precarious employment
Pay equity and living wage. Modern
Slavery Policy.
Channel Infrastructure's
specific values and commitments
are detailed in our Diversity and Inclusion Policy (available
on the website under Governance).
87
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2023 people and community performance at
a glance
2023 Performance highlights
99%
Of our people affected by the closure of the
refinery since 2022, supported into their next
opportunity within six months, exceeding
our target of 90%
$1.2 M
Paid to employees as redundancy and
entitlement benefits in 2023 (2022: $29 M),
t
o help support our people during the
refinery closure
33%
Of the corporate and senior leadership
team identify as female (2022: 36%)
88
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Delivery against 2023 focus areas
2023 Focus AreaOur Performance
Maintaining safe and reliable terminal operations
Excellent overall leading and lagging performance with important learnings
fr
om the API Tier 1 event embedded in our systems.
Embedding the new safety and compliance
management systems
New permit to work and lock-out-tag-out systems implemented along with our
ne
w compliance management system.
Ensuring that at least 90% of the staff who will
exit in 2023
find new opportunities within six
months of leaving the business
99% of staff who left the business since 2022 found new roles within six months.
Building capability of all staff through
comprehensive personal development plans and
systems and competency targets
We focused heavily on helping
staff understand their new roles with the
business. Performance and Development Plans were a key way to communicate
accountabilities and responsibilities and to identifying development gaps
and opportunities.
Future
proofing our workforce through employee
upskilling and development
We continue to identify and work on upskilling our staff in areas that we see as
core to the business.
Additional data
Data tables, summarising our people and community
perf
ormance over the last five years against a range of
metrics can be found in the Appendix on page 110.
89
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Health, safety and well-being
A material topic
Creating and maintaining a safe and healthy workplace, consistent with regulatory expectations, and one that
v
alues employee well-being.
Upholding labour standards and increasing transparency throughout our supply chain to promote a high
s
tandard of human rights.
Our 2023 delivery
Our transition from a refinery to an import terminal
cr
eated change and uncertainty for many of our team.
With many staff continuing to transition from the business
in 2023 as conversion works concluded, our continued
support into their future employment opportunities and
their mental health, has remained a huge focus for the
business. Ensuring we have a broad range of mental
health support services available continues to be key to
contributing to the well-being of our staff.
“Care” Framework
This framework provides key support services to ensure
all emplo
yees have access to support for their mental
health. Care, an initiative that started as a way of
supporting our people during major workforce changes,
includes counselling, workshops and well-being initiatives
designed to support mental health. A key initiative in
2023 has been our new partnership with employee
support provider – Benestar - providing a digital platform
with access to a vast library of well-being information
along with direct and confidential access to an excellent
selection of counsellors to provide support.
Fatigue Management
Through 2023 we have continued to improve our
s
hift roster system, designed specifically for terminal
operations, by incorporating learnings from our early
experiences in 2022 and implementing a flexible
resourcing model to support periods of additional
workload and provide greater flexibility for leave
and holidays.
Health & Safety Leadership Training
A key component of our health and safety culture
is s
trong leadership. In 2023, to support leadership
development at Channel, we partnered with Safety
Futures for implementation of their Safety Leadership for
Supervisors and Managers.
The Safety Futures program, involving our front-line
leader
ship, is based on recognised safety practice
and has been successfully applied across a range of
industries. Through the training, participants undertake
a series of "missions" over a 12-week period, practising
the application of a ‘Safe System of Work’ in their daily
work routines. The Safety Futures program has been
recently updated based on participant feedback and will
remain a key element of our health and safety culture
programme for 2024.
Safety Engagements
Underpinning our safety culture programme are our
s
afety engagements, which are undertaken by people
across the business. These initiatives encourage site
leaders and workers to engage on safety through on-site
visits and toolbox talks based on Channel's critical risks
and life-saving rules.
In 2023, over 439 leadership walks were undertaken
acr
oss the business offering the opportunity for our senior
leaders to engage with employees and contractors
with monthly themes on compliance with critical safety
controls. As we look to 2024, we plan to further improve
the effectiveness of safety engagements through
applying positive and corrective reinforcement of site
procedures during these engagements.
Total Recordable Case Frequency (TRCF)
and L
ost Time Injury Frequency (LTIF)
From a personal safety performance perspective in 2023,
as w
e have completed the peak of the conversion
project work and worked to embed new systems and
practices under terminal operations, we have achieved
a pleasing reduction in our recordable and lost time
injury rates. Our TRCF and LTIF in 2023 were 0.9 and 0
per 200,000 hours worked respectively. (2022: 1.80 TRCF,
0.77 LTIF).
Notwithstanding the improved performance, the
r
ecordable incidents that have occurred have provided
important learnings which have been integrated into our
health and safety management systems as we continue
to strive to always get everyone safely home every day.
90
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Partnering with local iwi, mana whenua
and communit
y
A material topic
Recognising hapū and iwi responsibilities as mana whenua and kaitiaki over poupouwhenua, the land upon
which w
e stand. Partnering in work to maintain the cultural health of our operational site and the surrounding
area, and informing our partners of potential changes and considering their views.
Engaging our local community to partner with the aim to achieve significant impacts and to continue as a
r
esponsible corporate citizen and neighbour.
Our 2023 delivery
We have continued our focus on building s
trong and
enduring partnerships with the kaitiaki (guardians) over
the poupouwhenua. We are proud of our work and
acknowledge iwi perspectives as we recognise the
intergenerational impact our business has had on
tangata whenua from our region. 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, now and in the future.
We have long-term formal relationship agreements with
tw
o of our nearest iwi partners – Patuharakeke and Te
Parawhau. This mechanism gives us a framework to work
through differences and a way to work together in areas
where we share a common interest.
These are living documents that guide the way we
w
ork together. This includes regular kanohi ki te kanohi
(face-to-face) hui with each iwi partner, and a quarterly
joint Mana Whenua Roopu hui, which brings together
leadership from the local iwi in our area. We have open
lines of communication with iwi, and frequently update
them on key business decisions, particularly those in
areas of known interest to iwi, such as protecting our
environment, and the future use of our site.
Throughout 2023 we have worked in agreement
with local hapū on thr
ee independent projects:
Community-based Marine Pest
Er
adication Plan
Mediterranean Fan Worm (
Sabella spallanzanii) was
first detected in 2008 in New Zealand and has since
proliferated throughout our country's harbours and
coastlines. These non-indigenous worms out-compete
other native taonga species for food and habitat, such
as scallops and mussels, forming dense colony clusters of
up to 1,000 individuals per square metre.
The cultural and ecological importance of protecting
the local coas
tline and taonga species, is critical
for Patuharakeke as kaitiaki over Poupouwhenua.
Community-led participation is another key feature of
Patuharakeke and Channels Whakawhanaungatanga
Roopu which supports effective and enduring
en
vironmental action. As a result, Channel has assisted
in the development of a hapū led community-based
marine pest eradication plan to trial the eradication
of the Mediterranean Fan Worm on the surrounding
Takahiwai coastline.
Poupouwhenua Cultural Health
Monit
oring Program
Hapū recognise the strong links between environmental
and eco
systems health to the health and well-being
of people, and have long held concerns regarding
the impacts of industrialisation on Poupouwhenua,
including the potential to diminish the relationship of
Māori as kaitiaki of this place. Channel Infrastructure
has continued to collaborate with Patuharakeke in
undertaking sediment and shellfish sampling on both
Marsden and Mair banks Mātaitai area as part of the
program of work for both parties to better understand
the health of the Mātaitai area and surrounding
aquatic systems.
Iwi consultation on our material issues
Following a
significant business transition and shift
in stakeholder needs and expectations, Channel
engaged with an independent third-party provider
to consult with hapū and iwi to better understand
the sentiment toward Channel Infrastructure and our
updated material issues. Channel plans to provide
further ongoing support and undertake projects in
areas of importance to Patuharakeke, this includes the
exploration of opportunities to develop a presence on-
site at Poupouwhenua, Marsden Point.
91
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Equity, diversity and inclusion
A material topic
Attracting, supporting, and maintaining a diverse workforce and healthy working culture.
Our 2023 delivery
As an organisation we are committed to treating
e
veryone with respect and dignity. As part of our
2023 strategy refresh, we have focused on what
changes might be required to be a diverse and
inclusive organisation.
Diversity and inclusion
The Company's Diversity and Inclusion Policy guides
our r
ecruitment, talent management, performance
management, values, and succession planning. Through
these principles, we are constantly reviewing and
seeking to diversify our workforce as the business grows
and changes.
The Company's Diversity and Inclusion Policy also states
the C
ompany's definition of diversity, and details what
metrics are captured and monitored. 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.
Rather than setting strict numerical diversity targets, the
C
ompany has focussed on non-numerical diversity and
inclusion objectives, and it uses the metrics in its Diversity
and Inclusion Policy and Appendix 2 to measure its
progress towards these objectives. At the end of 2023,
Channel had employees from 10 different countries and 9
different ethnicities.
• 43% of the Board identify as female (2022: 43%)
• 33% of the corporate and senior leadership team
identif
y as female (2022: 36%)
• 29% of women employed are in leadership positions
(2
022: 36%)
• 32% of our employees identify as female (2022: 23%)
and 68
% as male (2022: 76%) (2022: 1% gender diverse)
Following the
significant changes occurring as part
of the transition to an import terminal, the Company
has considered how to further apply its diversity and
inclusion principles to its processes. These steps taken are
described here (and Appendix 1 on page 110), together
with the Company's focus for 2024.
The Company wishes to improve its gender, age and
e
thnic diversity so that it better reflects our community,
and promotes the benefits of diversity and inclusion
referred to in our Policy. Therefore, the steps explained
here were implemented with the goal of improving
the ability of women and younger people to work at
Channel. In our focus for 2024, we continue with our work
on gender diversity, but also seek to further build our
cultural inclusiveness.
Early career roles
In 2023 we have increased our overall headcount and
br
ought in new roles that suit early career development.
These roles in the laboratory and maintenance team
bring in new diversity and build pathways for young
people to join the organisation.
Pay equity and living wage
We are focused on and committed to pay equity, already
t
aking steps to ensure equity for all employees. The
gender pay equity gap for the business was assessed
at 19% (2022: 16% ). The increase is largely driven by the
departure of our former CEO, Naomi James, the smaller
size of the organisation and the drive to bring women
into the organisation, entering into early career roles
and operations.
Channel will continue to review and monitor pay equity
int
o the future. In 2023, we formally committed to paying
the Living Wage to all staff.
Parental Leave Policy
In late 2022, the Company approved its Paid Parental
L
eave Policy which provides enhanced entitlements
to eligible employees which are not available under
current legislation.
The Paid Parental Leave Policy focuses on supporting
permanent emplo
yees and their family's well-being,
throughout the parental leave journey. In 2023, two of our
employees were offered support under the Policy. Refer to
case study on page 109. In-line with our overall Company
principles, the Policy also provides an employee benefit
that supports retirement planning and financial security.
92
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Human Rights
Modern slavery is a key human rights risk, both in
oper
ations and in supply chains. Channel Infrastructure
is committed to being a responsible corporate citizen
and to maintaining high standards in all of the work that
we do. Channel will not tolerate any form of modern
slavery in our business, including those we do business
with. On 23 February 2023, we approved our formal policy
on modern slavery. The policy is available on our website.
Our people enjoying the 2023 Christmas luncheon
93
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2024 people and community focus
In 2024, we will focus on:
Continue to build employee value
pr
oposition -'whole of life' view
Focused development of our women leaders
Flexible working arrangements
CEO women's forum to discuss issues
specific
to women
Developing our Māori whanau
Develop cultural capability of our leaders
Support of tikanga on site e.g. site hāngī, karakia
Partnerships to grow capability
Iwi scholarships and leadership training
Internships for neurodiverse young people entering
the w
orkforce, in conjunction with Northable
Preparations underway for the 2023 site hāngī
94
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
95
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Governance
and finance
Objective
We commit to:
• Seeking to be open and transparent and acting in the
be
st interests of our shareholders.
• Supporting our customers and the New Zealand
Go
vernment with their efforts to provide a resilient fuel
supply chain for New Zealand.
• Operating our critical infrastructure safely and reliably
o
ver the long-term, and as the transition to lower
carbon fuels continues, to help ensure that transport
fuels are affordable and available when needed.
Sustainable Development Goals
We understand the importance of a strong governance
and financial foundation through which we build our
or
ganisation's growth and resiliency to provide the
critical infrastructure and security of supply needed to
successfully transition to a low-carbon economy.
We illustrate our direct contributions to the SDGs
thr
ough SDG 9 Industry, Innovation, and Infrastructure.
Our selected goal links to the strategic opportunity for
Channel to support the energy transition and keep New
Zealanders moving.
Sustainable
Development GoalSDG ReferenceOur Contribution
9.1 Develop quality, reliable, sustainable and resilient
infrastructure, support economic development and human well-
being, with a focus on affordable and equitable access for all
9.4 By 2030, upgrade infrastructure and retrofit industries to
mak
e them sustainable, with increased resource-use efficiency
and greater adoption of clean and environmentally sound
technologies and industrial processes.
Completed
first iteration of the asset
management plans for our assets to
manage infrastructure resilience.
96
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2023 Governance and
finance performance at
a glance
2023 Performance highlights
First
Strategic asset management plan prepared
and independently reviewed
45ML
Additional jet fuel storage commissioned,
more than doubling Marsden Point jet
storage through the conversion project
Performance against 2023 focus areas
2023 Focus AreaOur Performance
Complete Fortescue study (2
nd
phase) on
hydrogen production
The second phase of the study was completed in July 2023 and the
pr
oject has now progressed to the pre-feasibility phase.
Continue to assess Sustainable Aviation Fuels
options at Marsden Point
The Fortescue green hydrogen project progressed from scoping to pre-
f
easibility phase.
Completed the
first iteration of the terminal asset
management plan
Channel's
first strategic asset management plan was independently
reviewed and finalised in quarter 4 of 2023.
Transition of primary emergency response capability
to external agencies
Responsibility for emergency response passed to the Terminal Operations
t
eam with emergency services team support until upgrades to the
firefighting systems are complete.
Optimising preventative maintenance programmes
and maintenance execution model
In 2023 we achieved our target preventative maintenance level of 60%
and incr
eased our campaign maintenance execution to a completion rate
of 83%
Additional data
Data tables, summarising our governance and financial
performance over the last five
years against a range
of metrics can be found in Appendix 2: Summary
data tables.
97
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Asset and life-cycle management
A material topic
Ability to manage infrastructure and operational asset life-cycle risks.
Our 2023 delivery
With the
effective completion of the refinery
decommissioning, the business has been equally focused
on establishing new systems and processes to manage
the life-cycle of the company's critical assets. Channel's
Strategic Asset Management Plan (SAMP), which was
developed by drawing on support from external experts,
outlines over the long-term, the way the business
will manage asset design, construction, operation,
maintenance and disposal. The objective of the SAMP
is t
o seek the optimal lifecycle cost while maintaining
the resilience and performance required to support our
critical infrastructure operations.
A key output of this work is our long-term funding
plan mapping out the as
set investments needed to
support business objectives through our budgeting
process. Channel's SAMP project is a key work-stream
for the Board's HSEO Committee.
Terminal operator preparing a fuels sample for quality testing by Independent Petroleum Laboratory
98
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Security and quality of supply
A material topic
Supporting the delivery of reliable, high-quality fuel by our customers to accommodate changing needs and to
maint
ain their competitiveness.
Our 2023 delivery
Having safely transitioned our operations in 2022,
our f
ocus for 2023 has been to embed the high
standard of operational discipline needed to sustain
safe and reliable terminal operations. This has included
a peer review of our safety management systems
by Australian terminal operator ATOM along with
independent benchmarking of our operations. Insights
from these assessments are being implemented through
our world-class operations strategy alongside our H&S
Leadership training programme with Safety Futures.
Safety Case
Our comprehensive Safety Case for terminal operations
w
as accepted by WorkSafe in 2022 and we continually
update and improve the Safety Case to reflect
changes in our operations. For more detail, refer
to our Safety Case Summary available on our
website. (www.channelnz.com).
Tier 1 and 2 Process Safety Incidents
During 2023 we had one API Tier 1 process safety
incident r
elating to a leak from a 60-year-old pipe.
Whilst the leak was contained within the site drainage
systems and did not escalate, the incident has provided
important learnings which have been incorporated into
our site integrity management systems and emergency
response plans.
Emergency Response Training
During 2023 we have completed a broad range of
emer
gency exercises and emergency response training.
This included training of terminal operations staff on
terminal emergency response procedures, multi-agency
exercises and training with Fire and Emergency NZ
to test terminal emergency and incident management
procedures, and oil spill response training for all terminal
operations staff, including an oil spill response exercise
in conjunction with Maritime NZ and Northland Regional
Council. Through our transition programme we are
making considerable investments in emergency response
equipment, facilities and training so that we are
well placed to respond to emergency situations that
may arise at Marsden Point, until emergency response
agencies arrive.
Pipeline Integrity Management
As part of the pipeline integrity management process, in
2
022 we completed a full inspection of the pipeline using
an intelligent pipeline inspection gauge (or PIG) with
results indicating that the pipeline remains in very good
condition. The results of these five-yearly inspections
are fed in to our proactive maintenance programme to
address identified corrosion.
A focus for the Channel team in 2023 was to
ens
ure the pipeline continued to operate reliably
through, and following, severe weather events including
Cyclone Gabrielle. Through the 2023 summer period,
we experienced over 400% of normal rainfall which
presented, amongst other things, an increase in
ground stability risk along the pipeline route. Through
the weather events we undertook additional aerial
monitoring of the pipeline and were pleased to confirm
that there were no significant stability threats to the
pipeline resulting from these events. This outcome is the
result of comprehensive assessment and works to protect
the pipeline from ground stability risks and this work is
now being complemented with an assessment of future
risks based on climate change scenarios.
Increasing our storage capacity
Channel Infrastructure is committed to playing its part
and in
vesting to support a resilient supply chain.
In 2023, the Company commissioned an additional
45 million litres of jet fuel storage, more than doubling
on-site jet fuel storage through the import terminal
conversion programme.
Security and quality of supply
Refer to the case study on page 108
99
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Our 2024 Governance and financial
focus
In 2024, we will focus on:
Site plan
Continue to progress Site Plan for Marsden Point
SAF
Continue to work with Fortescue in completing their
pr
e-feasibility assessment
Supply resilience
Supporting our customers to meet their obligations
under the incoming minimum fuel s
tockholding
policy and submitting to the Government onshore
diesel storage tender
Emergency services
Transition primary emergency response capability
t
o external agencies, following completion of fire
systems upgrade project
100
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
101
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendices
102
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 1:
Our performance in detail
Sustainable aviation fuel104
Infrastructure resilience105
Greenhouse Gas Emissions106
Health and safety107
Security and quality of supply108
Parental Leave109
103
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Types of SAF : Biogenic and Power-to-liquids
Sustainable aviation fuel
When we talk about Sustainable Aviation Fuel (SAF) we
r
efer to a group of hydrocarbon molecules that are
largely indistinguishable from fossil jet fuel. There are
different ways of manufacturing SAF, and there is a range
of feed-stocks that can be used. These can be broadly
grouped into two classes; biogenic SAF and synthetic
SAF. It is expected that both types of SAF will be needed
in the future to meet the decarbonisation objectives of
the aviation sector.
As part of our site repurposing activities, we are currently
w
orking with Fortescue to evaluate the potential to
produce synthetic SAF, or eSAF, at Marsden Point by
combining renewable, green hydrogen (from water) with
carbon dioxide using the Power-to-Liquids technology.
In 2023, following a successful scoping study that
as
sessed the overall viability of producing eSAF for the
domestic market at Marsden Point, we announced that
Fortescue was progressing its study to the pre-feasibility
stage. This will include more detailed engineering and
design studies and developing further detail on the
economic viability of the project.
The pre-feasibility study will investigate a 300MW,
c.60 million litr
es per-year eSAF production facility at
Marsden Point, with the eSAF to be distributed via the
e
xisting Marsden Point-to-Auckland Airport supply chain,
as well as further analysis of the project’s benefits to New
Zealand, including the potential provision of large-scale
demand response, enabling electricity to be released to
the grid when needed.
Fortescue has signed a Memorandum of Understanding
with Air Ne
w Zealand to further their mutual interest
in investigating eSAF production and eventual use in
New Zealand, with the initial focus being on Air New
Zealand becoming the foundation customer for eSAF
produced through the Marsden Point project once
it becomes commercially available and economically
viable. Fortescue has also entered into MOUs with
Mercury, Manawa Energy, Yinson Renewables and Top
Energy to support the provision of renewable electricity
for the project.
The pre-feasibility phase of the project is being
s
upported by the government through the Energy
Efficiency and Conservation Authority. Underpinning
government support is the potential demand response
benefits that the facility could provide to the
electricity market.
104
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Canals are an integral part of the stormwater network on the Marsden Point site
Infrastructure resilience
Cyclone Gabrielle, which hit New Zealand from
12-
14 February 2023 proved a test of Channel's
infrastructure resilience, and we are proud to report
that the site, and its assets, including the Pipeline,
came through this significant weather event with limited
damage and no disruption to fuel supply.
Over the three days of Cyclone Gabrielle, our Marsden
P
oint site received 240mm of rainfall, and overall,
the area recorded 400% of normal rainfall over the
summer period.
As a lifeline utility, Channel's infrastructure is required to
continue oper
ating in the event of a natural disaster, such
as a cyclone. That means that the business receives
support from civil defence where necessary, and in this
case, is able to access advance warning systems such as
Metservice forecasting and analysis. This early warning
system greatly helped Channel to prepare the site and
stand up the Incident Management Team (IMT) well in
advance of the cyclone's arrival. The IMT made the
decision to clear the site and stop all non-essential work,
s
end non-essential staff home, and prepare the canals,
storm-water basin, and waterways for a large amount of
rain. All shipping movements were halted by the harbour
master, and Channel was able to work alongside its
customers and contractors to ensure there would be no
impact on fuel supply.
The cyclone, as well as the extraordinary levels of
r
ainfall that Northland experienced throughout 2023 has
proven to the business that its investments over the past
10-years’ have helped to build resilience to these to
the events.
During the cyclone, Bream Bay recorded waves of 11-12
me
tres and the Marsden Point site lost power, which
was quickly restored after less than an hour. Proactive
drainage (surface and sub-surface) clearing around
the pipeline and earlier investment to improve the
waste and storm water network, helped limit impact to
the infrastructure.
105
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
The Company has taken action to reduce its Greenhouse Gas Emissions
Greenhouse Gas Emissions
In 2022, Channel Infrastructure set itself the ambitious
t
arget to achieve net zero Scope 1 and 2 emissions by
2030 (refer to page 81). At the same time, the Company
made the commitment to work alongside its customers
to facilitate the use of low-carbon future fuels, by using
our strategic infrastructure. This includes considering
opportunities to increase scale as demand and available
supply grows.
With the closure of the oil refinery in April 2022, the
C
ompany's Greenhouse Gas Emissions (Scope 1 and 2)
have reduced considerably to 4,037 tCO
2
e in 2023. In
practical terms, Channel Infrastructure, has gone from
one of the largest emissions intensive businesses listed on
the New Zealand stock exchange, to accounting for less
than 0.1% of Scope 1 and 2 CO
2
emissions on the NZX50
in FY23.
In 2023, Channel entered a long-term fixed
price
variable volume contract for the supply of renewable
electricity from January 2024 with Energy Attribute
Certificates attached. Meeting all our electricity needs
from renewable sources would mean that Channel will
hav
e largely eliminated its Scope 1 and 2 emissions from
2024 - some six years ahead of the company's target.
Channel Infrastructure recognises that the fuel and
tr
ansport sector significantly contribute to climate
change and our infrastructure continues to distribute
refined oil products. The Company therefore remains
committed to supporting the reduction of emissions
within the fuels supply chain, being End Users
Emissions. Our large storage capacity at Marsden Point
is able to support larger shipping vessels, providing
opportunity for emissions efficiency of delivered fuel and
lower upstream emissions intensity, and we provide our
customers with low-emissions delivery of fuel to Auckland.
Over time, we see the mix of transport fuels in New
Z
ealand changing, and renewable fuels are set to make
up a far greater proportion of fuels being distributed
through our infrastructure. The Company and its critical
infrastructure has a key role to play in supporting, and in
some cases, enabling this transition.
106
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Laboratory technician at Independent Petroleum Laboratory setting up specialist equipment for fuels quality testing
Health and safety
The health, safety, and well-being of our people
r
emains core to everything that we do at Channel
Infrastructure. As a high-hazard site, we continue to have
a strong focus on ensuring that we get ‘everyone safely
home, everyday’.
With the successful transition to an import terminal
s
afely completed in 2022, we took the time to reset
our aspirations for health and safety as an import
terminal operation. This is not only good for our people,
but it is
specifically designed to support our company
drive towards world-class operations. We appointed
a Health and Safety Specialist with a mandate to
further lift the standards of the Company's health and
safety culture, by continuing to build health and safety
leadership capabilities within the business, bringing
forward operational discipline and incentivising safety
engagement. Where good practices are observed, these
are recognised and celebrated and when opportunities
for improvement are identified, corrective actions are
implemented as part of the learning environment for
continuous improvement.
A key component of our Health and Safety management
s
ystem is strong leadership, and this has also been
a focus for Channel in 2023. We partnered with
external providers, Safety Futures, to deliver a twelve-
week training programme for 40 leaders from different
teams across the business, including members of the
Corporate Lead Team, and the CEO. The world-class
Safety Futures program builds the leadership capabilities
of individuals, who in turn take this knowledge to their
teams to exercise shared responsibility for safety. As
a result, we have been able to further improve our
hazard management processes by implementing what
we learned and improve overall discipline by challenging
the balance of safety, speed and quality and improve our
collaborative planning processes.
At the same time, as the Company seeks to bed in
pr
ocesses and polices consistent with a high-performing
terminal operation, there has been a strong focus
on implementing robust safety and risk management
systems and streamlining safety and emergency
response procedures.
107
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Geodesic dome roof on converted jet fuel storage tanks commissioned in 2023
Security and quality of supply
Channel Infrastructure is committed to playing its part
t
o support a resilient supply chain for the good of New
Zealand, given our highly strategic location in Northland,
direct supply route to Auckland, and ample unutilised
storage capacity at Marsden Point.
In 2023, the Company was proud to announce that it
had comple
ted the final contracted tank conversions,
which as a result, means that Channel has now doubled
its on-site jet fuel storage through the import terminal
con
version programme. At the end of 2023, Channel had
280 million litres of product storage capacity contracted
to its existing customers and a further c.400 million litres
of unutilised tank capacity available.
With jet fuel so crucial to New Zealand's links with the
r
est of the world, this significantly adds to New Zealand's
overall fuel resilience at a time when we are seeing air
travel demand return sharply.
108
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Jane Thomson, Operational Excellence Manager, with her daughters
Parental Leave
Parental leave has proven
beneficial for the two people
in our business, who accessed it in 2023, as this ensured
financial support during their time away. This support
alleviated financial concerns and fostered a sense of
security. The experience of parental leave provided
essential time with their families and contributed to their
professional commitment to our business.
“Six months paid leave was invaluable. It allowed me
t
o focus on quality time with my newborn and family,
but also
afforded me the means to look after myself
and my well-being whilst on leave. For example, I was
able to re-join my gym community, when I was physically
ready, without worrying too much about how we would
pay for it. Because I was able to get back to feeling
‘myself’ a lot quicker, this has made my transition back to
into work much smoother than last time,” Jane Thomson,
Operational Excellence Manager.
The business benefits from this investment are clear; we
ob
served a seamless return to crucial roles, supported a
workplace culture that acknowledges and supports the
diverse journeys of its staff, and saw a return of much
needed skills. The people who took this leave returned
with a positive outlook towards the business, feeling
valued and supported. The impact extends beyond the
obvious financial considerations, as their reintegration
into important roles was smooth and positive.
“We are committed to supporting our people and their
f
amilies during the significant milestone of welcoming a
new family member. Our gender-neutral policy supports
primary carers and their partners to take time away from
work to focus on family, and provides financial security
and a phased return to work for primary carers.“
Alexa Preston, CFO.
109
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 2: Summary data tables
Environmental
ENVIRONMENTALMEASURE20232022202120202019
Releases outside of consent#-31051
Direct CO
2
emissions (Scope 1)tCO
2
-
1
236,940857,042848,6211,080,041
Indirect CO
2
emissions (Scope 2)tCO
2
-
1
47,321141,940134,927177,132
Sulphur Dioxide Emissions (Refinery)Tonnes-1,2593,3413,3454,329
Greenhouse Gas emissions (Scope 1)tCO
2
e1,489726---
Greenhouse Gas emissions (Scope 2)tCO
2
e2,548----
NOX, SOX, VOC and particulate matterTonnes188
1
1,777---
1 The CO2 emissions were
refinery metrics calculated for NGA reporting. NOX and SOX only relevant in FY22; VOC only in FY23.
RESOURCE USAGEMEASURE20232022202120202019
Total fuel usage
(Refinery)
Petajoule-2.9711.611.214.3
Natural gas usage
(Refinery)Petajoule-0.231.92.43.5
Electricity usagePetajoule0.120.320.960.921.23
Water usageMillion Tonnes0.220.821.461.491.68
Water consumption intensity
Total water consumption
(m
3
)/revenue1.685.176.246.064.82
Waste
WASTEMEASURE20232022202120202019
Total WasteTonnes5,601----
Recycled / Re-usedTonnes1,269----
LandfillTonnes4,332----
Health, Safety and Well-being
SAFETYMEASURE20232022202120202019
Total Recordable Case FrequencyTRC/200,000 hours0.901.80--0.27
Long-Term Injury FrequencyLTI/200,000 hours-0.77--0.13
Tier I Process Safety Incidents#1-2--
Tier II Process Safety Incidents#-----
Number of Emergency Exercises#125141622
Number of reportable pipeline incidents
1
#-----
Percentage of pipeline inspected
int
ernally with Pipeline Inspection
Gauge (PIG)%-100--100
Percentage of pipeline
inspect
ed externally
2
%100100100100100
Total metric ton-kilometeres of refined
fuels transported by mode of transportMetric T kilometers14,16811,5289,879--
1 As per SASB Standards
definition of reportable pipeline incidents.
2 External inspection activities include aerial and ground based observations over the length of the pipeline. Preventative maintenance insepection
activities of above ground equipment as per the inspection schedule.
110
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
People, Diversity and Community
PEOPLEMEASURE20232022202120202019
Number of
Staff
#101135294344412
Number of Contractors#127220109105251
Employee Turnover:
Unplanned%8.54.0---
Diversity
20232022
BOARD
CORPORATE
LEAD TEAMWORKFORCEBOARD
CORPORATE
LEAD TEAMWORKFORCE
#%#%#%#%#%#%
GENDER
Male457%686%6468%457%675%9776%
Female343%114%3032%343%225%2923%
Gender Diverse----------11%
ETHNICITY
NZ
Eur
opean/Pākehā343%457%5356%457%338%7458%
Other European457%342%1314%343%562%2117%
Māori & NZ European----1011%----129%
Māori----89%----129%
Asian----44%----32%
Other----66%----54%
NATIONALITY TOTAL
New Zealand----8074%----11178%
United Kingdom-
---109%----118%
Australia----33%----43%
South Africa----33%----43%
Other----1211%----128%
AGE
Under 30----44%----10%
30 to 50229%457%4750%229%450%6350%
over 50571%343%4346%571%450%6350%
111
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 3: Climate change &
GHG emis
sions
GHG Emissions Methodology
In the following table we outline the methodology for data collection and basis of calculation for the GHG emissions
s
ources included in Channel's 2023 GHG Inventory.
Scope
GHG
Emissions
Source
(Activity)Data Source
Data
Collection
UnitUncertaintyEmission Factor
FY23
Emissions
tCO
2
e
1
Fuel
consumed
by
stationary
and mobile
combustion
equipment
Suppliers’ invoices and fuel
car
d data
Kg, LHigh certainty data
qualit
y. Reliant
on accuracy of
supplier data
Table 3 Stationary combustion
o
f fuel emission factors from MfE
2023 Detailed Guide: LPG, Fuel Oil
(Commercial), Diesel
966
Based on number of fuel
oil as
h tests and quantity
burned and IPL RON MON
engine running hours
LHigh certainty data
qualit
y. Reliant
on accuracy of
internal records
Table 4 Transport fuel emission
f
actors from MfE 2023 Detailed
Guide: Regular Petrol, Premium
Petrol, Diesel
8
Waste water
treatment
Calculated on waste
w
ater feed processed and
average: a) COD of feed,
and b) conversion of COD
to organic matter
tReasonable
cer
tainty data
quality.
1
Accuracy
of ±10%
Table 1 GWPs emission factors,
MfE 2
023 Detailed Guide:
CH4 AR5 GWP
N2O AR5 GWP
189
Fugitive
emissions
released
from
transport
fuel storage
and
refrigeration
systems
Annual Site survey report
fr
om Refrigeration system
maintenance provider
kgHigh certainty data
qualit
y. Reliant
on accuracy of
supplier data
Table 7 Refrigerant Emission
f
actors, MfE 2023 Detailed Guide:
HFC-32 AR5 GWP
HFC-134A AR5 GWP
410A AR5 GWP
32
Fugitive emissions from
crude t
anks:
API 2009
GHG C
ompendium
kgReasonable
cer
tainty
data quality.
2
Emission estimate
is bas
ed on
a correlation
so assume
±20% accuracy.
Table 1 GWPs emission factors,
MfE 2
023 Detailed Guide:
CH4 AR5 GWP
294
2
Electricity -
location
based
Online consumption report
fr
om electricity supplier
kWhHigh certainty data
qualit
y. Reliant
on accuracy of
supplier data
Table 9 Emission factor
f
or purchased grid-average
electricity - annual average 2022,
from MfE 2023 Detailed Guide
2,548
1 Waste water emissions: Conversion of carbon present in waste water feed to activated sludge removed from the system is 72%, based on validated
his
torical data and confirmed via cross-check with operational data. Methane generation from waste water treatment is calculated via method set
out in API Compendium of GHG emissions methodologies for the Oil and Natural Gas industry (2009)
2 Fugitive emissions per crude tank are calculated as 3t/month based on the method outlined in AP-42, 5th Edition, Chapter 7 and is consistent with
historically
verified data used for NGA reporting. 15% methane concentration in “live” crude oil vapour, per guidance in the API Compendium of GHG
emissions methodologies for the Oil and Natural Gas industry (2009)
112
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
2023 by Greenhouse Gas Type
In the following table we summarise our total 2023 emissions (4,037 tCO
2
e) by type of Greenhouse Gas.
Carbon Dioxide CO
2
Methane CH
4
Nitrous Oxide N
2
O
Hydroflourocarbons
HFCs
Perfluorochemicals
PFCs
FY23 Emissions
tCO
2
etCO
2
etCO
2
etCO
2
etCO
2
etCO
2
e
Scope 1
9
63
439
55
32
- 1,489
Scope 2
2,4
74
6
7
7-- 2,548
Scope 1 & 2
3,437
506
62
32
- 4,037
Detailed climate scenario data
Focal question
How could climate change plausibly affect our transport fuels infrastructure or
ganisation, what should we do
and when?
References for climate change scenarios physical and socio-economic indicators
Scenario
IndicatorGreen LightAmber LightRed LightReference
Physical
Global temperature increase by 2100,
r
elative to pre-industrial levels
1.52.64.0IPCC WG1 AR5 Summary for Policymakers
New Zealand sea level rise for 2031-50
r
elative to 1995-2014
0.22m0.24m0.28mMinistry for the Environment. (2018). Climate
change pr
ojections for New Zealand
New Zealand rainfall intensity 100yr ARI
12-hr
e rain depth, 2031-2050 relative
to 1986-2005
+6.0%+7.5%+8.6%Ministry for the Environment. (2018). Climate
change pr
ojections for New Zealand
New Zealand hot days 100yr ARI 12-hre rain
depth, 2031-2050 relative to 1986-2005
+43%+54%+67%Ministry for the Environment. (2018). Climate
change projections for New Zealand
Socio-economic
New Zealand carbon price$277 NZD$369 NZD$35 NZDTreasury New Zealand. (2022). CBAx Tool
U
ser Guidance.
New Zealand population6.04 million5.94 million6.94 millionInternational Institute for Applied Systems
Analy
sis. (2020). SSP Database
New Zealand fuel demand graphn/an/an/aClimate Change Commission (2021). Scenarios
dat
aset for the Commission's 2021 Final Advice
113
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Use of reference scenarios
Network for Greening the Financial System (NGFS)
The NGFS framework is a widely used tool for determining high level scenario narratives. It was decided that the
‘
Orderly’, ‘Disorderly’ and ‘Hothouse’ scenarios best spanned the range of plausible futures for our organisation, which
has also been used for the tourism sector level climate change scenarios by The Aotearoa Circle. ‘Orderly (Net Zero
2050)’ describes a world with a smooth transition to net zero carbon dioxide emissions, ‘Disorderly (Delayed Transition)’
describes a world with little change until 2030, before a disruptive and rapid reduction in emissions, and ‘Hothouse
(Current Policies)’ describes a world with continuing high emissions.
ScenarioRCP UsedRationaleSSPRationale
Green light2.6
RCP2.6 is the most stringent mitigation
scenario in which carbon dioxide emissions
decline to net zero relatively quickly. It reflects
a world in which warming is limited to
around 1.5-2°C
1
SSP1: Sustainability reflects a world in
which energy affordability and human
well-being is prioritised. There are
‘low challenges to mitigation and
adaptation’. This aligned well with the
rapid and smooth transition described in
Green Light
Amber light4.5
RCP4.5 illustrates global emissions peak
ar
ound 2040 and slowly begin to decline
thereafter. Similar climatic impacts are
expected in the disorderly scenario described
in this report
2
SSP2: Middle of the Road describes a
w
orld with largely similar socio-economic
trends of today with ‘medium challenges
to mitigation and adaptation’. This aligns
well with the lack of action until 2030
before a dramatic change thereafter
Red light8.5 D/S
7.0*
1
RCP7.0 is a baseline outcome to 4.0 degrees
w
arming by the end of the century. This
was downscaled using RCP8.5 due to data
unavailability for RCP7.0 in New Zealand.
RCP8.5 features growing emissions, leading
to severe physical impacts and is understood
to be the worst-case of climate scenarios.
Although this RCP is considered high and
less plausible, the climate impacts of this
emissions trajectory is possible under lower
emissions scenarios
3
SSP3: Regional rivalry describes a world
with mat
erial focused consumption and
low international priority for addressing
environmental concerns. This aligns well
with the lack of political action and
technological development over time
1 These RCPs have been downscaled (D/S) to the New Zealand context by NIWA. The New Zealand-specific climate impacts in these scenarios were
t
aken from downscaled NIWA data.
Climate Change Commission (CCC)
As part of Ināia tonu nei: a low emissions future for Aotearoa, the Climat
e Change Commission's advice to Central
Government on the first three emissions budgets, the CCC published a set of pathways that outlined potential
changes in land use, energy, transport and other economic indicators over the coming decades. They reflect pathways
that meet the emissions targets in the Climate Change Response Act. These three pathways and associated data
were also chosen to inform our three scenarios.
ScenarioCCC PathwayRationale
Green light
TailwindsFast technology uptake and behaviour change which aligns to Green Light technology
impr
ovements at scale
Amber light
HeadwindsTechnology uptake and behaviour change is relatively slow compared to Tailwinds which
aligns t
o the disorderly and delayed response described in Amber Light
Red light
Current policyPolicy change remains weak and unambitious which aligns to Red Light where little to no
policy is in
effect and initial plans are not supported by legislation
114
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 4: GRI disclosure index
Statement of use:
Channel Infrastructure has reported the information cited in this GRI content index for the period 1 January 2023 to
31 December
2023 with reference to the GRI Standards
GRI 1 used | GRI 1: Foundation 2021
GRI StandardDisclosure2023 Sustainability Report (SR)
2023 Annual Report (AR)
2023 Governance Statement (GS)
GRI 2: General
Disclosures 2021
2-1 Organizational details4-7 AR
2-2 Entities included in the organisation's sustainability reporting2 SR
2-3 Reporting period, frequency and contact point1 Jan 2023 to 31 Dec 2023;
Annual reporting period;
communications@channelnz.com
2 SR
2-4 Restatements of information74 AR
2-5 External assuranceNone
2-6 Activities, value chain and other business relationships6-7,
25-28 SR
2-7 Employees112 SR
2-8 Workers who are not employees112 SR
2-9 Governance structure and composition43-44 AR,
17-22 SR 5 - 7 GS
2-10 Nomination and selection of the highest governance body43-44 AR,
17-22 SR 5 - 7 GS
2-11 Chair of the highest governance body12 AR
2-12 Role of the highest governance body in overseeing the
management o
f impacts
17-19 SR
2-13 Delegation of responsibility for managing impacts18 SR
2-14 Role of the highest governance body in
s
ustainability reporting
17-19 SR
2-15
Conflicts of interest
44 AR, 4 GS
2-16 Communication of critical concerns61-64 SR
2-17 Collective knowledge of the highest governance body29 AR,
17 SR
2-18 Evaluation of the performance of the highest
go
vernance body
44 AR
2-20 Process to determine remuneration47-51 AR,
19, 21, 64 SR
2-21 Annual total compensation ratio51 AR
2-22 Statement on sustainable development strategy32 SR
2-23 Policy commitments74-102 SR
2-24 Embedding policy commitments74-102 SR
2-25 Processes to remediate negative impacts61-64 SR
2-26 Mechanisms for seeking advice and raising concerns2 SR
2-27 Compliance with laws and regulations2 SR
2-28 Membership associationsNorthland Chamber of Commerce, CEO
Health and S
afety Forum, NZ Initiative
2-29 Approach to stakeholder engagement25-28 SR
2-30 Collective bargaining agreementsNot reported
115
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
GRI 3: Material
Topics 2021
3-1 Process to determine material topics29-31 SR
3-2 List of material topics29-31 SR
3-3 Management of material topics29-31,
74-102 SR
GRI 302: Energy 2016
302-1 Energy consumption within the organisation75-79 SR
302-3 Energy intensity75-79 SR
302-4 Reduction of energy consumption75-79 SR
GRI 303: Water and
Effluents 2018
303-1 Interactions with water as a shared resource83-85 SR
303-5 Water consumption83-85 SR
GRI 305: Emissions 2016
305-1 Direct (Scope 1) GHG emissions75-79 SR
305-2 Energy indirect (Scope 2) GHG emissions75-79 SR
305-4 GHG emissions intensity75-79 SR
305-5 Reduction of GHG emissions75-79 SR
305-7 Nitrogen oxides (NOx), sulphur oxides (SOx), and other
significant
air emissions
114 SR
GRI 306: Waste 2020
306-1 Waste generation and significant
waste-related impacts
83-85 SR
306-2 Management of significant waste-related impacts83-85 SR
306-3 Waste generated83-85 SR
306-4 Waste diverted from disposal83-85 SR
GRI 401: Employment 2016
401-1 New employee hires and employee turnover93, 112 SR
GRI 403: Occupational
Health and Safety 2018
403-1 Occupational health and safety management system87-95 SR
403-2 Hazard
identification, risk assessment, and
incident investigation
87-95 SR
403-3 Occupational health services87-95 SR
403-4 Worker participation, consultation, and communication on
occupational health and s
afety
87-95 SR
403-6 Promotion of worker health91 SR
403-9 Work-related injuries91 SR
GRI 404: Training and
Education 2016
404-2 Programmes for upgrading employee skills and transition
as
sistance programmes
88, 95, 101 SR
GRI 405: Diversity and
Equal Opportunity 2016
405-1 Diversity of governance bodies and employees112 SR
116
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 5: CRD disclosure index
We have aligned our reporting to the New Zealand Government's mandatory reporting requirements in accordance
with the Financial S
ector (Climate-related Disclosures and Other Matters) Amendment Act 2021.
In the following sections we provide our disclosures against the four key pillars of the NZCS reporting framework –
Go
vernance, Strategy, Risk Management and Metrics and Target
CRDDisclosureThis Report
Governance
7 (a)the identity of the governance body responsible for oversight of climate-related risks and opportunities17-19
7 (b)a description of the governance body’s oversight of climate-related risks and opportunities17-19
7 (c)a description of management’s role in assessing and managing climate-related risks and opportunities20
8 (a)processes and frequency by which the governance body is informed about climate related risks
and opportunities
19
8 (b)how the governance body ensures that the appropriate skills and competencies are available to
pr
ovide oversight of climate-related risks and opportunities
17
8 (c)how the governance body considers climate-related risks and opportunities when developing and
o
verseeing implementation of the entity’s strategy
17-19
8 (d)how the governance body sets, monitors progress against, and oversees achievement of metrics and
t
argets for managing climate-related risks and opportunities, including whether and if so how, related
performance metrics are incorporated into remuneration policies
64-65
9 (a)how climate-related responsibilities are assigned to management-level positions or committees, and
the pr
ocess and frequency by which management-level positions or committees engage with the
governance body
20
9 (b)the related organisational structure(s) showing where these management-level positions and
commit
tees lie
20
9 (c)the processes and frequency by which management is informed about, makes decisions on, and
monit
ors, climate-related risks and opportunities
61-65
Strategy
11 (a)a description of its current climate-related impacts37
11 (b)a description of the scenario analysis it has undertaken38
11 (c)a description of the climate-related risks and opportunities it has identified over the short, medium, and
long t
erm
42
11 (d)a description of the anticipated impacts of climate-related risks and opportunities65-69
11 (e)a description of how it will position itself as the global and domestic economy transitions towards a
lo
w-emissions, climate-resilient future state
65-71
12 (a)its current physical and transition impacts37
12 (b)the current
financial impacts of its physical and transition impacts identified in paragraph 12
Adoption
provision 1
12 (c)if the entity is unable to disclose quantitative information for paragraph 12(b), an explanation of why
that is the cas
e.
13An entity must describe the scenario analysis it has undertaken to help identify its climate related risks
and oppor
tunities and better understand the resilience of its business model and strategy
38
14 (a)how it
defines short, medium and long term and how the definitions are linked to its strategic planning
horizons and capital deployment plans
42,56
14 (b)whether the climate-related risks and opportunities identified are physical or transition risks or
oppor
tunities, including, where relevant, their sector and geography
66-69
14 (c)how climate-related risks and opportunities serve as an input to its internal capital deployment and
funding decis
ion-making processes
71
15 (a)the anticipated impacts of climate-related risks and opportunities reasonably expected by the entity66-69
117
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
CRDDisclosureThis Report
15 (b)the anticipated
financial impacts of climate-related risks and opportunities reasonably expected by
an entity
Adoption
provision 2
15 (c)a description of the time horizons over which the anticipated financial impacts of climate-related risks
and oppor
tunities could reasonably be expected to occur
15 (d)if an entity is unable to disclose quantitative information for paragraph 15(b), an explanation of why that
is the cas
e
16 (a)a description of its current business model and strategy32-33
16 (b)the transition plan aspects of its strategy, including how its business model and strategy might change
t
o address its climate-related risks and opportunities
56-59
16 (c)the extent to which transition plan aspects of its strategy are aligned with its internal capital
deplo
yment and funding decision-making processes
37
, 56 - 59, 71
SR
Risk Management
18 (a)a description of its processes for identifying, assessing and managing climate-related risks61-64
18 (b)a description of how its processes for identifying, assessing, and managing climate related risks are
int
egrated into its overall risk management processes
61-64
19 (a)the tools and methods used to identify, and to assess the scope, size, and impact of, its identified
climate-related risks
66-69
19 (b)the short-term, medium-term, and long-term time horizons considered, including specifying the
dur
ation of each of these time horizons
42
, 65
19 (c)whether any parts of the value chain are excluded39
, 79-80
19 (d)the frequency of assessment62,
64
19 (e)its processes for prioritising climate-related risks relative to other types of risks61
Metrics And Targets
21 (a)the metrics that are relevant to all entities regardless of industry and business model46-47, 50-51,
54-55
21 (b)industry-based metrics relevant to its industry or business model used to measure and manage climate-
r
elated risks and opportunities
57
21 (c)any other key performance indicators used to measure and manage climate-related risks
and oppor
tunities
75-102
21 (d)the targets used to manage climate-related risks and opportunities, and performance against
tho
se targets
75-102
22 (a)greenhouse gas (GHG) emissions: gross emissions in metric tonnes of carbon dioxide equivalent (CO
2
e)
classified as:(i) scope 1;(ii) scope 2 (calculated using the location-based method);(iii) scope 3;
79-80
Adoption
provision 4
22 (b)GHG emissions intensity79
22 (c)transition risks: amount or percentage of assets or business activities vulnerable to transition risks68
22 (d)physical risks: amount or percentage of assets or business activities vulnerable to physical risks66
22 (e)climate-related opportunities: amount or percentage of assets, or business activities aligned with
climat
e-related opportunities
69
22 (f)capital deployment: amount of capital expenditure, financing, or investment deployed toward climate-
r
elated risks and opportunities
71
22 (g)internal emissions price: price per metric tonne of CO
2
e used internally by an entity71 SR
22 (h)remuneration: management remuneration linked to climate-related risks and opportunities in
the current period, expressed as a percentage, weighting, description or amount of overall
management remuneration
21 SR
23 (a)the time frame over which the targets applies81
23 (b)any associated interim targetsNone
23 (c)the base year from which progress is measured80
118
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
CRDDisclosureThis Report
23 (d)a description of performance against the targets81
23 (e)for each GHG emissions target:
(i)whether the target is an absolute target or intensity target81
(ii)the entity’s view as to how the target contributes to limiting global warming to 1.5 degrees Celsius81
(iii)the entity’s basis for the view expressed in 23(e)(ii), including any reliance on the opinion or methods
pr
ovided by third parties
81
(iv)the extent to which the target relies on offsets, whether the offsets are verified or certified, and if so,
under which s
cheme or schemes
79-81
24 (a)a statement describing the standard or standards that its GHG emissions have been measured in
accordance with
80
24 (b)the GHG emissions consolidation approach used: equity share, financial
control, or operational control
80
24 (c)the source of emission factors and the global warming potential (GWP) rates used or a reference to the
G
WP source
80
24 (d)a summary of specific
exclusions of sources, including facilities, operations or assets with a justification
for their exclusion.
80-81
Adoption provision 5: Comparatives for Scope 3 GHG emissions
Adoption provision 6: Comparatives for metrics
Adoption provision 7: Analysis of trends
119
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 6: Forward-looking statements
This report contains certain forward-looking statements, which can be identified
by the use of forward-looking
terminology such as “may, “will”, “should”, “expect”, “intend”, “plan”, “ambition”, “anticipate”, “estimate”, “continue”,
“assume”, “project”, “target”, or “forecast” or comparable terminology. Forward looking statements include climate-
related metrics, climate scenarios, estimated climate projections.
Primary users are reminded that the climate-related scenarios used in scenario analysis are not intended to be
pr
obabilistic or predictive, or to identify the ‘most likely’ outcome(s) of climate change. They are intended to provide
an opportunity for entities to develop their internal capacity to better understand and prepare for the uncertain future
impacts of climate change. Further, scenario analysis is simply a process for systematically exploring the effects of a
range of plausible future events under conditions of uncertainty. Engaging in this process is meant to help an entity to
identify its climate-related risks and opportunities and develop a better understanding of the resilience of its business
model and strategy.
Therefore, primary users are cautioned in their use of the information presented in this report. The information
pr
esented in this report is not a prospective financial statement. Primary users are also reminded that pages 38
to 43 and Appendix 3: Climate change & GHG emissions (see page 112) set out the methods and assumptions
underlying the climate-related scenarios used, and the scenario analysis process employed. It is important that
primary users understand the limitations applicable to the information presented. Climate change is also prone
to inherent uncertainty and novelty, and is subject to ongoing change as the circumstances of a transition to a
low-emissions economy and climate change develop in New Zealand and across the world over a long period of time.
The forward-looking statements in this report:
• To the extent prepared by entities or persons other than Channel Infrastructure and repeated herein, are not
adop
ted by Channel Infrastructure unless expressly stated otherwise. Channel Infrastructure does not make
any representation or warranty (express or implied) as to, the accuracy, completeness, reliability, adequacy or
reasonableness of any such statements, or matters (express or implied) contained in, or derived from, or any
omissions from such statements.
• To the extent prepared or adopted by Channel Infrastructure, are based on management’s current expectations
and
reflect judgements, assumptions, estimates and other information available when the report was compiled
or scenario analyses were undertaken. With respect to climate related disclosures they are inherently uncertain
and subject to limitations, particularly as to inputs, available data and information. Therefore, the forward-looking
statements that Channel Infrastructure has prepared or adopted may be affected by a range of variables which
could cause actual results to differ materially from what was planned or expected.
• Relating to climate related disclosures are subject to risk factors associated with, amongst other things, the energy
s
ector, decarbonisation technologies, government action, consumer attitudes and potentially carbon products
and markets. Users are also reminded that Channel Infrastructure’s business and plans are subject to risks that
may also cause actual results to differ materially from the forward looking statements. These risk categories are
set out in Channel Infrastructure’s Governance Statement available on its website: https://channelnz.com/who-we-
are/corporate-governance/.
• Involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance,
achie
vements and outcomes to be materially different from the forward-looking statements contained in this report
(including things such as availability of technology or the cost of technology or other emission reduction proposals).
Users are again reminded of the inherent limitations that are associated with scenario analysis noted above.
• Should be read in the context of the variables, risks, uncertainties and other factors outlined above or mentioned in
the r
eport, the Annual Report and Governance Statement.
Accordingly, this report should not be relied upon as a recommendation, forecast or guarantee by or expectation
o
f Channel Infrastructure, its related or controlled entities or officers, directors, employees or agents, (together, the
Channel Entities) and the Channel Entities, to the maximum extent permitted by law, disclaim any liability whatsoever
(including for negligence) for any loss howsoever arising from any use of this report or reliance on anything contained in
or omitted from it or otherwise arising in connection with this report. Other than as required by law or the Listing Rules
of the New Zealand Stock Exchange, the Channel Entities will not release publicly any updates to any forward-looking
statement contained herein to reflect changes to relevant risks, inputs, uncertainties or other factors, and/or the
Channel Entities’ understanding of them.
120
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Appendix 7: Definitions
and abbreviations
AbbreviationsDefinitions
Aotearoa New Zealand
Climate Standards
Standards issued by the External Reporting Board that comprise the climate related
dis
closure framework
ARI
Annual recurrence interval
BioSAF
Jet fuel derived from biogenic material like wood residues
BL
Billion litres
Carbon dioxide equivalent
CO
2
e
In order to aggregate and compare the
different types of GHGs that have different levels of global
warming potential, emissions and removals are largely expressed in tonnes of carbon dioxide. The
carbon dioxide equivalent is calculated by multiplying the quantity of a GHG by the relevant
global warming potential
Climate-related
disclosure framework
Climate-related disclosure framework has the same meaning set out in section 9AA of the
Financial R
eporting Act 2013
Climate-related opportunities
The potentially positive climate-related outcomes for an entity. Efforts to mitigate and adapt to
climate change can produce opportunities for entities, such as through resource efficiency and
cost savings, the adoption and utilisation of low-emissions energy sources and building resilience
along the value chain
Climate-related risks
The potential negative impacts of climate change on an entity. See also the definitions of physical
ris
ks and transition risks
Climate-related scenario
A plausible, challenging description of how the future may develop based on a coherent and
int
ernally consistent set of assumptions about key driving forces and relationships covering both
physical and transition risks in an integrated manner. Climate-related scenarios are not intended
to be probabilistic or predictive, or to identify the ‘most likely’ outcome(s) of climate change. They
are intended to provide an opportunity for entities to develop their internal capacity to better
understand and prepare for the uncertain future impacts of climate change
COD
Chemical oxygen demand - a measure of water and wastewater quality
CO
2
Carbon dioxide
Carbon dioxide equivalent
CO
2
e
In order to aggregate and compare the
different types of GHGs that have different levels of global
warming potential, emissions and removals are largely expressed in tonnes of carbon dioxide. The
carbon dioxide equivalent is calculated by multiplying the quantity of a GHG by the relevant
global warming potential
Decarbonise
The process of avoiding, reducing or
offsetting anthropogenic greenhouse gas emissions through
operational activities or efficiencies, technology deployment, use of generated or acquired carbon
credit units, and/or other means
Emissions
CO
2
emissions unless otherwise specified
Emissions factor
A factor allowing GHG emissions to be estimated from a unit of available activity data (for
e
xample, tonnes of fuel consumed) and absolute GHG emissions
Emissions intensity
Scope 1 and 2 tCO
2
e per million litr
es of throughput
Employees
Direct hire permanent employees
End user emissions
Upstream and downstream emissions that result from the end use consumption (combustion) of
tr
ansport fuels that Channel stores and distributes through its infrastructure but does not take
ownership of and therefore does not own or sell to the end user
eSAF
Synthetic jet fuel produced by combining green hydrogen and carbon dioxide
ESG
ESG, also known as the three pillars, is an acronym for three categories (environment, social, and
go
vernance) where each can have a direct or indirect impact on organisational
finance matters
EV
Electric vehicle
Fortescue
Fortescue Limited is a global green energy company committed to producing green hydrogen,
cont
aining zero carbon, from 100% renewable sources
121
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
AbbreviationsDefinitions
Global warming
potential (GWP)
A factor describing the radiative forcing impact (degree of harm to the atmosphere) of one unit of
a giv
en GHG relative to one unit of carbon dioxide (CO2)
GRI
Global Reporting Initiative
H
2
Hydrogen
ICE
Internal combustion engine
IFRS
International Financial Reporting Standards
IPCC
Intergovernmental Panel on Climate Change - the United Nations body for assessing the science
r
elated to climate change
Kt
Thousand tonnes
LTIF
Lost Time Injury Frequency:
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
Materiality assessment
In reference to GRI Standards, a process to identify and prioritise the issues that are most
impor
tant to an organisation and its key stakeholders
Material topics
In reference to GRI Standards, topics that have a direct or indirect impact on the organisations
ability to create, preserve or erode economic, environmental and social value for the organisation
and its stakeholders
ML
Million litres
MON
Motor Octane Number measures the knock resistance of gasoline in engine conditions mirroring
high-speed, high-load driving s
cenarios
MOU
Memorandum of Understanding
Net Zero
When anthropogenic emissions of greenhouse gases are balanced by anthropogenic removal
o
f greenhouse gases through means such as operational activities or efficiencies, technology or
offset through the use of carbon credits, or other means
NGA
Negotiated Greenhouse Agreement
NZ CS
(Aotearoa) New Zealand Climate Standards issued by the External Reporting Board that comprise
the climat
e related disclosure framework
Physical risks
Risks related to the physical impacts of climate change. Physical risks emanating from climate
change can be e
vent-driven (acute) such as increased severity of extreme weather events. They
can also relate to longer-term shifts (chronic) in precipitation and temperature and increased
variability in weather patterns, such as sea level rise
Pipeline
Marsden Point to Auckland Pipeline
PJ
Petajoule (1 million billion joule
s)
RON
Research Octane Number measures the knock resistance of gasoline in engine conditions mirroring
lo
w-speed and low-load driving
SAF
Sustainable Aviation Fuel – with lower overall emissions than fossil-jet
SSP's
Shared Socio-economic Pathways - climate change scenarios of projected socio-economic
global change
s up to 2100 as defined in the sixth IPCC Assessment Report on climate change
in 2021
Sustainable/sustainably
At Channel, sustainability is about striving to ensure safe operations, minimising environmental
harm and gr
eenhouse gas emissions, and creating long-term value for our stakeholders including
our customers, iwi and community, employees, contractors and suppliers and shareholders:
balancing the needs of today without undermining the ability to meet the demands of tomorrow
TCFD
Task Force on Climate-related Financial Disclosures
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
122
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
AbbreviationsDefinitions
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
r
esulting in greater than or equal to $2,500 of direct cost to the Company; a release of material
greater than the threshold
Transition plan
An aspect of an entity's overall strategy that describes an entity's targets, including any interim
t
argets, and actions for its transition towards a low emissions, climate-resilient future
Transition risks
Risks related to the transition to a low-emissions, climate-resilient global and domestic economy,
s
uch as policy, legal, technology, market and reputation changes associated with the mitigation
and adaptation requirements relating to climate change
TRCF
Total Recordable Case Frequency: The number of lost time incidents, restricted work cases,
medical tr
eatment cases and fatalities per 200,000 man-hours worked
UNSDG
United Nations Sustainable Development Goals. More information about the SDGs can be found
at
https://sdgs.un.org/goals
Value Chain
The full range of activities, resources and relationships related to an entity's business model and
the e
xternal environment in which it operates
WACC
Weighted average cost of capital
XRB
External Reporting Board - responsible for developing and issuing reporting standards on
accounting, audit and as
surance, and climate, for entities across the private, public, and not-for
profit sectors
123
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
Directory
CHANNEL INFRASTRUCTURE NZ LIMITED
Physical Address
Port Marsden Highway
Ruakākā
New Zealand 0171
Mailing Address
Private Bag 9024
Whangārei 0148
New Zealand
Telephone: +64 9 432 5100
Website
www.channelnz.com
Email
corporate@channelnz.com
124
Channel Infrastructure NZ Limited | Resilient infrastructure for a decarbonising world
---
channelnz.com
NZX RELEASE
29 February 2024
Channel releases third sustainability report, outlines new ESG
focus
Channel Infrastructure NZ Limited (NZX:CHI), New Zealand’s largest fuel infrastructure business, has today
released its 2023 Corporate Sustainability Report: ‘Resilient Infrastructure for a Decarbonising World’. This
report reflects the first disclosure prepared in accordance with the new Aotearoa New Zealand Climate
Standards, and captures the risks, challenges and opportunities from climate change for the business. It also
provides stakeholders with a new ESG (environmental, social, governance) framework to measure
performance.
Commenting, CEO Rob Buchanan said:
“In 2021, we set ourselves three ambitious targets, which reflected the way that we wanted to manage the
significant transition of the business. It’s great to be able to report that we have made significant progress
against all three. We have successfully delivered a just transition as described in the report, with 99% of
those our people who left the business through the transition being supported onto new paths. We are on
target to achieve our goal of Net Zero Scope 1 and 2 emissions by 2030. In practical terms, this means that
we have gone from being one of the largest emissions-intensive businesses listed on the New Zealand stock
exchange (with emissions of over c.1.2 million tCO2e as a refinery), to accounting for less than 0.1% of
Scope 1 and 2 CO2 emissions on the NZX50 in FY23. We continue to work with our customers with the aim
of using our infrastructure to support the decarbonisation of the transport sector. Utilising what we have
already will help to keep transport energy available when needed.”
In 2023, following the effective completion of the import terminal conversion, the company undertook a
strategy refresh, realigning Channel’s vision to be a world-class energy infrastructure company with a
purpose of delivering resilient infrastructure solutions to meet changing fuel and energy needs.
“Sustainability and climate risk are material to our business, and these issues, alongside the opportunities
from the coming climate and energy transition, directly shaped our strategy refresh last year. Today’s report
outlines the way we have incorporated ESG matters into our future strategy, including by incorporating a
selection of our material targets into the company scorecard which will align with the scorecard used to
determine short-term incentive payments for our people in 2024.”
Alongside the preparation of this report, Channel also undertook a materiality assessment, to determine the
Company’s future ESG priorities, as well as undertaking a specific climate change physical and transition risk
assessment.
“We know that, in the long term, the future of our core business is going to be in aviation fuel supply, given
our critical position in supplying fuel to New Zealand’s main gateway, Auckland International Airport. At
present, liquid SAF is emerging as the most technically viable way to bring down aviation emissions for
medium- to long-haul travel. At Marsden Point we have the unique opportunity to support decarbonising the
jet fuel supply chain via either the receipt and storage of imported SAF through our infrastructure, or by
enabling domestic manufacture of SAF at our site if this becomes feasible in the future. We are firmly
channelnz.com
focused on ensuring we are ready to leverage our critical role in the liquid aviation fuel supply chain, and this
work is already underway. To test our capabilities, we received New Zealand’s first shipment of SAF through
our facilities as part of a trial for Air New Zealand last year, and we are investigating with Fortescue the
potential to manufacture eSAF at Marsden Point.”
“In the short to medium term, while the energy transition is underway, traditional transport fuels will still have
an important role to play in keeping the economy moving. That means the reliability and resiliency of our
assets remains a priority so that we can continue to support New Zealand’s supply chain now, as well as into
the future. Our ambition is to deliver world-class operations. This not only supports the long-term reliability
and resilience of our assets, but positions Channel as a partner of choice for a broader role in New Zealand’s
future energy supply chain as we look to grow at Marsden Point and beyond.”
ENDS -
Authorised by:
Chris Bougen
General Counsel and Company Secretary
Media contact
Laura Malcolm
communications@channelnz.com
About Channel Infrastructure
Channel Infrastructure’s vision is to be a world-class infrastructure company, delivering resilient
infrastructure solutions to help meet changing fuel and energy needs.
Channel Infrastructure’s assets are a critical part of the Northland and Auckland fuel supply chain,
supporting the delivery of around 40% of New Zealand’s transport 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 receive, store, test and distribute fuel owned by our customers. Channel Infrastructure’s wholly-owned
subsidiary, Independent Petroleum Laboratory Limited, provides fuel quality testing services at Marsden
Point and around New Zealand.
Channel Infrastructure will seek to support New Zealand’s decarbonisation ambitions, by utilising our
strategically-located assets and our expertise in supply chain infrastructure. The Company remains focused
on its future growth opportunities at the Marsden Point site and beyond, including additional fuel storage to
support fuel security and studies underway with partners on hydrogen and sustainable aviation fuel
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.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- NZX — NZX Limited: NZX Full Year 2023 Results & Annual Report Published2024-02-22
“NZX Annual Report 2023 OUR SUSTAINABILITY IMPACT – GRI CONTENT INDEX NZX is committed to comprehensive sustainability reporting. This report contains the Global Reporting Initiative (GRI) content index and includes climate statements prepared in accordance with the Aotearoa New…”