energy issues factsheet

8/12/2019 Energy Issues FactSheet

1/5

T H E A U S T R A L I A N C O L L A B O R A T I O NA Collaboration of National Community Organisations

www.australiancollaboration.com.au 1

Energy policies are some of the most contentious policies

facing Australia. A radical revision of the countrys energy

policies and programs is needed to help reduce Australias

greenhouse gas emissions, now the highest per capita in

the developed world. Australia also needs to protect itself

from the impact of decreasing oil supplies and increasing

prices. These are matters of great urgency.

Patterns of energy consumption in

Australia

Energy use needs to be looked at from two different per-

spectives: first, primary energy use by fuel the forms of

energy we depend on - and second, energy consumption

per sector how we use energy.

The graph illustrates vividly our dependence on fossil fuels

(oil, black and brown coal and gas) for the sources of our

energy. Currently, 95 per cent of our primary energy is

derived from fossil fuels.

Second, we need to consider where our energy is used.

Table 1 (on the next page) shows energy consumption in

households and in industry sectors.

From the table we can see that radical reforms to achieve

reductions in greenhouse gases particularly need to bemade in electricity generation, transport, manufacturing

and construction.

What are the problems that we face?

There are three crucial problems relating to energy supply

and use in Australia. The first is to ensure that there are

sufficient energy sources for the Australian economy and

for the daily use of households and citizens. The second is

to find ways of cushioning the Australian economy from

the impact of future oil shortages and high oil prices. The

third is to find ways of making very large reductions ingreenhouse gas emissions. These problems are intercon-

nected because a policy designed to deal with one has also

to find solutions for the other two.

Energy issues in Australia

Figure 1: Total primary energy supply by fuel (1973 - 2010)

Source: ABARE Energy Update 2011:http://adl.brs.gov.au/data/warehouse/pe_abares99010610/

EnergyUpdate_2011_REPORT.pdf
http://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdf


2/5

T H E A U S T R A L I A N C O L L A B O R A T I O N

2www.australiancollaboration.com.au

In general terms, the first issue guaranteeing the availa-

bility of energy to support the economy and household use

far into the future is only a problem of the cost of supply

for particular applications since Australia has abundant

energy resources. Australia has large black and brown

coal resources: 8 per cent per cent of world reserves of

black coal and 15 per cent of world reserves of brown coal.

It has the richest reserves of uranium in the world and

1.8 per cent of world natural gas reserves, although only

0.3 percent of world oil reserves. Australia receives around

60 million PJ of solar energy per annum, around 20,000

times the current energy use in Australia. Solar energy

could therefore meet all energy demands if it could be sat-

isfactorily harnessed. Australia has many sites with signif-

icant potential for wind energy. It has the opportunity to

develop fuels from wood and biomass. Australia has abun-

dant sources of geothermal energy with several thousand

cubic kilometres of hot, dry granite rock resources. Aus-

tralia also has the potential to harness ocean energy from

waves, tides and currents around its extensive shorelines.

Related to current supply, two of our major challenges are

firstly, to make the most productive use of the energy we

do use and secondly, to manage peak demand for electric-

ity in hot weather (since it is expensive to provide and

blackouts can have major economic and social impacts)

The second issue, reducing our oil dependency, is the nec-

essary means of lessening the impact of dwindling oil

stocks and high oil prices and also of reducing fossil fuel

use and greenhouse gas emissions.

The third issue, finding primary energy sources and tak-

ing other steps that significantly reduce our greenhouse

gas emissions, is by far the most important since upon itssuccessful resolution may depend the very existence of

human civilisation as we know it today. The problem is

that such a high percentage of our primary energy con-

sumption is from fossil fuels which, when burnt, are the

principal causes of greenhouse gas emissions.

The energy problem is not therefore the availability of

energy resources. It is rather reducing our dependence

on fossil fuels, in particular, black and brown coal for

electricity generation and oil for transportation. We need

to reduce this dependency as quickly as possible and with-

out major economic disruptions.

What should Australia be doing?

A successful greenhouse gas reduction energy policy

needs to have four major strands. The first is to reduce

energy demand. The second is to develop effective eco-

nomic and market mechanisms that reward improved

environmental outcomes. The third is to find new technol-

ogies that significantly reduce emissions from current

energy supply sources. The fourth is to develop clean,

renewable energy technologies. The overall challenge

Sector 2008-09

PJ

2009-10

PJ

growth

2009-10

%

share

2009-10

%

Mining 341 340 -0.4 9.2

Manufacturing and construction 1007 1036 2.9 28.0

Transport 1404 1416 0.9 38.2

Commercial 310 309 -0.2 8.3

Residential 435 440 1.2 11.9

Other 157 162 3.2 4.4

Total 3653 3703 1.4 100.00

PJ = petajoules

Table 1: Australias total final energy consumption by sector, 2009-10.

Source: ABARE Energy Update 2011:http://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdf
http://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdf


3/5



for Australia is to move strongly towards environmental

sustainability while maintaining economic prosperity.

Today, energy exports deliver over $25 billion dollars a

year in export income. A responsible policy would be to

develop clean technologies in areas where Australia has

abundant energy supplies, put them in practice at home

and use them to supplement and in time replace our cur-

rent fossil fuel exports.

Reducing demand

Reducing demand, the first strand, is essential because

changes in supply are difficult to make in the short term

due to the huge investments in existing technologies and

the time needed to bring about major change. Changing

demand for energy can, by contrast, be accomplished more

quickly, in many cases through a combination of chang-

ing behaviour, eliminating waste, investing in low cost

energy saving measures and ensuring that all major

investments incorporate energy efficiency. This does not

mean that demand reduction is easy to accomplish, but

rather that it is feasible with full commitments from all

sectors of society.

Using market measures

The general principle underlying most market mecha-

nisms, the second strand, is to price carbon emissions so

that the polluter pays. The right price signals are then

sent to the market encouraging business innovation and

enterprise.

One market mechanism is emission trading. Under emis-

sion trading regimes a limit is set on the amount of carbon

dioxide that can be emitted. Companies that exceed their

limits are required to purchase or trade permits from other

companies which have lower emissions. In the past this

option is has been favoured by many economists because it

allows participants to minimise the overall cost of compli-

ance with a given target by trading among themselves. An

international trading scheme, as has been implemented by

the Kyoto Protocol, binds nations to setting caps on carbon

emissions with the intention of trading in permits on the

international market and facilitating investments in emis-

sions reductions in developing countries.

An alternative market mechanism is a carbon tax, a type

of pollution tax on the use of fossil fuels. A carbon tax

penalises polluters, rewards those who use clean, greentechnologies and contributes to the expansion of low

emission alternatives. Sweden, Finland, the Netherlands

and Norway have introduced carbon taxes since the

1990s. Many of these countries have both an emissions

trading scheme and a carbon tax. Recently, there has been

increasing interest from economists in carbon taxes

because they are simpler to understand, use and manage.

Another mechanism is the use of subsidies to make energy

alternatives cheaper than they would otherwise be. Recent

examples include direct financial incentives for more effi-

cient energy use by households, such as low interest loans

for Australian households wanting to implement energy

and water savings, rebates for better insulation of rental

homes, and rebates for rooftop solar panels.

Australia should be actively using these market mecha-

nisms, particularly putting a price on carbon, since

economists widely agree that it is the most environmen-

tally effective (and cheapest) way to reduce emissions

whilst also creating incentives for the development of

clean technologies.

Reducing the impact of existing energy technology

The third strand is to find new technologies that signifi-

cantly reduce emissions from current energy supplysources. Energy sources such as renewable energy, low

emission coal, LPG or natural gas, could replace conven-

tional coal and petroleum. COAL21, a partnership between

the coal and electricity industries and Federal and State

governments, is also seeking to discover ways to eliminate

greenhouse gas emissions from coal-based electricity.

COAL21 is evaluating several technologies such as carbon

sequestration, which involves capturing carbon dioxide

and storing it deep underground. Other energy efficiency

gains can be made through the development of solar cities,

improving building designs and creating more efficientmachines and appliances and encouraging co-generation.

Using non-polluting energy supplies

The fourth strand is to develop clean and renewable energy

technologies. The five main potential technologies are

wind, solar, biomass, geothermal and ocean energy. The

first three are the fastest growing alternative technologies

around the world. In Australia they still only provide a very

small percentage of electricity supply and none as yet com-

pete with coal in price. It is nevertheless on these technolo-

gies that attention needs to be focused because we will needto rely on them to a significant degree in the future.


4/5



There are two other much less attractive options for future

development. The first is an extension of Australias hydro

energy resources, while the the second is the development

of nuclear reactors. In operation, neither emits greenhouse

gases, but each have problems. Building a dam has high

environmental costs (including disruption of riverine envi-

ronments, stream flows and habitats) whereas uranium

mining and reactors pose many problems such as environ-

mental, health and safety risks and the storage of nuclear

wastes. The Gillard Governments stance on nuclear issues

remains ambiguous. The 2009 Federal Budget included

funds for both an international nuclear disarmament

commission and funds to continue with the previous gov-

ernments plans to site a radioactive waste dump some-

where in remote Australia.

Readers interested in clean technologies are referred to

the Collaborations Clean Energy Alternatives fact and

issue sheet.

What is Australia currently doing?

Under its Kyoto Protocol commitments, Australia is

obliged to slow growth of its carbon pollution emissions to

108 per cent of 1990 levels in the first compliance period,now nearing an end. Due to the unstable political and eco-

nomic climate, energy policies to support this aim have

remained vague until recently.

In July 2011, the Gillard Government announced an

extensive suite of reforms, called Clean Energy Future,

aimed at reducing carbon pollution and supporting clean

energy sources. The plan includes: putting a price on car-

bon pollution, promoting innovation and investment in

renewable energy, improving energy efficiency and creat-

ing opportunities in the land sector to cut pollution.

Prior to the announcement of the new program, three

major reports were released: the Climate Commissions

report, the Garnaut Climate Change Review and the

Productivity Commissions 2011 report. Both the Garnaut

Review and the Productivity Commission recommended

putting a price on carbon. Treasury modelling shows that

the economy will continue to show strong growth despite

the use of such means to trigger an eventual transforma-

tion to a carbon free economy.

Under the Clean Energy Future program, two new bodies

will also be created. The new Clean Energy Finance Corpo-

ration will commercialise and deploy clean technologies.

The Australian Renewable Energy Agency, a new and

independent statutory body, will enable the research,

development and commercialisation of renewable energy

in the early stages. The existing Renewable Energy Target

and associated schemes remain, with the aim of ensuring

that 20 per cent of Australias electricity supply will come

from renewable sources by 2020. It was previously unclear

how this target was to be met.

Businesses will be supported in efforts to reduce emissions

through Low Carbon Australia, a new entity combining

public and private funding, innovative business approaches

and technical knowledge. A further initiative is Skills for

the Carbon Challenge, which will establish training

resources and qualifications to train Australians for future

green-collar jobs. Households will continue to be sup-

ported in their emissions reductions efforts through exist-

ing measures. For example, the National Strategy on

Energy Efficiency, an agreement between federal, state and

territory governments, aims to deliver estimated energy

savings of 32,000 gigawatt hours per year by 2020, more

than 14 per cent of all electricity generated in Australia. In

the land sector, financial incentives will be created to moti-

vate land-based action such as the storing of soil carbon,

revegetation and forest conservation.

In September 2011, the Gillard Government introduced

to Parliament the first of 18 bills to give effect to the gov-

ernments carbon price regime and also launched a statu-

tory body to advise the government of the day on pollution

caps, carbon budgets, the credibility of international emis-

sions units and the performance of the carbon pricing

mechanism. The bills will establish a fixed $23-a-tonneprice on carbon pollution from mid-2012 and an emissions

trading scheme with a floating price to begin three years

later. The bills were formally enacted in November 2011.


5/5



Useful sources

The Governments current policy and action on climate

change:

http://www.climatechange.gov.au/government.aspx

Australian Bureau of Agricultural and Resource Econom-

ics (ABARE), Energy Update 2011:

http://adl.brs.gov.au/data/warehouse/pe_abares99010

610/EnergyUpdate_2011_REPORT.pdf

This site lists energy consumption and productions statis-

tics for 1973-74 to 2009-10.

A Clean Energy Future for Australiahttp://www.wwf.org.au/news_resources/resource_

library/?1390/A-clean-energy-future-for-Australia

This Word Worldlife Fund publication sets out means of

achieving a clean energy future for Australia.

International Energy Agency, World Energy Outlook 2010:

http://www.worldenergyoutlook.org/

This is a comprehensive analysis of world energy trends,

projections and assessments, with a particular emphasis

on India and China.

The Productivity Commission (2006), The Private CostEffectiveness of Improving Energy Efficiency, Productivity

Commission Inquiry Report, No. 36, 31 August 2005,

http://www.pc.gov.au/projects/inquiry/energy/docs/

finalreport

This is an examination of the economic and environmen-

tal potential of energy efficiency measures.

The Productivity Commissions 2011 report, Carbon Emis-

sion Policies in Key Economies :

http://www.pc.gov.au/projects/study/carbon-prices/

report

The Australian Government Department of Resources,

Energy and Tourism released a 93-page report on energy

in Australian in February 2008:

http://adl.brs.gov.au/data/warehouse/pe_abarebrs99

001417/energy_in_aust_08.pdf

See also Australian Conservation Foundation

http://www.acfonline.org.au

Author

David Yencken, Professor Emeritus University of

Melbourne and Dr Siobhan Murphy.

Last revised January 2012.
http://www.climatechange.gov.au/government.aspxhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://www.wwf.org.au/news_resources/resource_library/?1390/A-clean-energy-future-for-Australiahttp://www.wwf.org.au/news_resources/resource_library/?1390/A-clean-energy-future-for-Australiahttp://www.worldenergyoutlook.org/http://www.pc.gov.au/projects/inquiry/energy/docs/finalreporthttp://www.pc.gov.au/projects/inquiry/energy/docs/finalreporthttp://www.pc.gov.au/projects/study/carbon-prices/reporthttp://www.pc.gov.au/projects/study/carbon-prices/reporthttp://adl.brs.gov.au/data/warehouse/pe_abarebrs99001417/energy_in_aust_08.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abarebrs99001417/energy_in_aust_08.pdfhttp://www.acfonline.org.au/http://www.acfonline.org.au/http://adl.brs.gov.au/data/warehouse/pe_abarebrs99001417/energy_in_aust_08.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abarebrs99001417/energy_in_aust_08.pdfhttp://www.pc.gov.au/projects/study/carbon-prices/reporthttp://www.pc.gov.au/projects/study/carbon-prices/reporthttp://www.pc.gov.au/projects/inquiry/energy/docs/finalreporthttp://www.pc.gov.au/projects/inquiry/energy/docs/finalreporthttp://www.worldenergyoutlook.org/http://www.wwf.org.au/news_resources/resource_library/?1390/A-clean-energy-future-for-Australiahttp://www.wwf.org.au/news_resources/resource_library/?1390/A-clean-energy-future-for-Australiahttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdfhttp://www.climatechange.gov.au/government.aspx

energy issues factsheet

Documents