Towards an integrated approach to energy and decarbonisation

We need a joined-up systems approach to effectively manage a set of interconnected and overlapping energy and climate issues including:

• Meet international climate change abatement commitments In Australia these commitments are net zero emissions by 2050 and -43% relative to 2005, with new climate targets due for 2035. Australia should meet the 2030 goal, largely through renewables displacing coal for power generation (both centralised generation and almost 40% penetration of PV on rooftops). But from there on (and increasingly as time goes on) a larger part of the heavy lifting needs to be done by end users (homes, business and transport) through energy productivity/efficiency, electrification and some displacement of fossil fuels by biogas, biomass, solar thermal and waste combustion (and in some niches H2).
• Ensure reliable power supply in the face of the accelerating closure of 90% of aging coal fired power station capacity in the next decade as they become increasingly uneconomical to run. The gap will be met by renewables and storage with some firming gas plant.
• Address cost of living stresses, due to high and volatile electricity and gas prices during the transition to renewables. This can be addressed by governments (and this relates directly to voters) by a mass market approach to implement solar, improve energy efficiency through measures like home insulation, and electrification of space and water heating to displace gas, together with energy storage where it makes economic sense (and point below).  
• Provide a great deal more end user load flexibility to ‘soak’ up the daytime surplus of power from renewables (ideally without curtailing any home generation) and provide other network services. As all sectors electrify, it is critical to integrate thermal and electrical storage into end user projects at a local and community/precinct level.
• Address looming natural gas shortage in Victoria (and later possibly in NSW) through reducing gas demand, rather than the continuing focus on new supply. Energy efficiency and electrification of homes and businesses, together with improved utilisation of organic waste for biogas/biomethane production, can reduce gas DEMAND in the next 5 years. We also must avoid installation of new end user gas connections.  Demand reduction can significantly dampen potential gas price increases. In any case, we need to make inroads into gas consumption by 2030 on the way to completely displace the end use of gas in the next 15 years, while retaining capacity to supply small amounts for firming centralised power generation and chemicals.
• Improve business competitiveness by reducing energy costs and carbon liabilities through regulation, potential future C pricing (as we have no direct C pricing at present) and border adjustments. In Australia, The Commonwealth intends to drive large company decarbonisation by regulation - the ‘Safeguard’ mechanism - impacting 219 sites with over 100,000 tonnes p.a. emissions (including 35 or so manufacturing sites). The regulations place a cap on emission which diminishes at -4.9% p.a. to 2030 (and at a lightly lower rate post 2030). Note that NSW government has targets which are more demanding than the Safeguard mechanism.
• We also need to address competitiveness and emissions of 100,000 smaller industrial and commercial sites employing well over 1 million people. It is feasible to double EP in the next 10-15 years, making the electrification task much more feasible. Support for these companies on energy and carbon mitigation is critical for creating jobs, and for some businesses to ensure their survival due to high and volatile energy prices. There is currently no national program to support these businesses through the transition, and this will be needed particularly if the Safeguard threshold is reduced to say to 25,000 tonnes p.a. The Commonwealth government committed to deliver a Nation Energy Performance Strategy (NEPS) to drive business energy performance, but the document released in 2023 had few new initiatives and certainly will not drive major change. There is a coming industry sector plan for decarbonisation which may make a better fist of this. The government also committed internationally to double rate of energy efficiency improvement i.e. from 2-4% p.a. but we immediately lost sight of this commitment.
• Another key intersecting issue is reducing waste (particularly food waste, but also wasted materials across the economy e.g. clothes/textiles and other wasteful consumption) and enhancing circularity in the economy , including reducing the carbon footprint of building materials. Reducing material flows and increasing circularity are critical to addressing climate change. DCCEEW recently released Australia's Circular Economy Framework, designed to guide the nation’s transition to a circular economy. The framework sets a national goal: to double Australia's circularity by 2035. Within the same timeframe, it also targets a 10% reduction in per-capita material footprint, a 30% increase in material productivity, and an 80% resource recovery rate. The CSIRO will support this effort by monitoring material flows and tracking progress toward circularity. We need to see a concrete path to implementation with annual concrete targets to ensure this is not just another target, and this needs to be integrated with the climate/energy policy.

Forecasting Aggregate Impacts

Apart from being able to have integrated plans and policies, we need to model and forecast the aggregated effect of all of these end use issues on the electricity supply grid (as well as biomass, biogas feedstocks….). This is currently challenging due to the limited energy use data available. Our DNSP's have very poor visibility of the likely impacts of electrification on their networks.

In New Zealand they have a program - RETA – ‘Regional Energy Transformation Accelerator’* to provide clear visibility of the wider impacts of electrification.

*Regional Energy Transition Accelerator | EECA

This process is led and funded by EECA – The Energy Efficiency and Conservation Authority. This is an organisation that was set up in 1992 by the NZ government specifically address demand management.

PS One other element I thought of that needs to be integrated is the impact on infrastructure of decarbonisation. The aggregate impact on energy infrastructure is one element - not just electricity but also stranded gas assets, and potentially integrated assets for electrification of business/freight transport and business sites.

NECESSARY GOVERNANCE MEASURE: Australia needs a demand side planning authority (like EECA) to bring focus to energy use on all sectors, to deliver an integrated end use transformation plan and to deliver Australia’s RETA. The demand authority proposal is also supported by range of organisations that signed onto this document recently Energy Efficiency Council - Demanding Better - 2024