Fight­ing de­mand just as vi­tal as chas­ing zero emis­sion

The Weekend Australian - Review - - Clean Energy - Keith Orchi­son

THE real holy grail of clean en­ergy sup­ply is not only find­ing com­mer­cially vi­able zero emis­sion tech­nolo­gies, but also driv­ing down de­mand at the same time through end- use ef­fi­ciency. The In­ter­na­tional En­ergy Agency es­ti­mates that ev­ery dol­lar spent on suc­cess­ful end- use elec­tric­ity ef­fi­ciency saves $ 2 on build­ing gen­er­a­tion plant. It also, of course, saves the cus­tomer ex­pense on buy­ing power — and, with the in­tro­duc­tion of emis­sions trad­ing in Aus­tralia, can take some of the sting out of higher elec­tric­ity prices.

The IEA strongly sup­ports gov­ern­ments pur­su­ing en­ergy ef­fi­ciency. ‘‘ It is by far the most cost- ef­fec­tive way to de­liver in­creased en­ergy se­cu­rity, re­duced en­ergy costs and a cleaner en­vi­ron­ment,’’ it ar­gues, urg­ing a fo­cus in par­tic­u­lar on build­ings.

The agency points out that build­ings to­day are re­spon­si­ble for 40 per cent of global en­ergy con­sump­tion and 24 per cent of CO emis­sions. ‘‘ An im­pres­sive amount of their en­ergy use can be saved sim­ply by ap­ply­ing ef­fi­cient tech­nolo­gies and prac­tices,’’ it says.

This per­spec­tive res­onates in Aus­tralia, where the In­su­la­tion Coun­cil says the hous­ing stock is among the least ef­fi­cient in the de­vel­oped world — and the Aus­tralian Glass & Glaz­ing As­so­ci­a­tion adds that win­dows here are the worst in the de­vel­oped world for en­ergy ef­fi­ciency, with house­holds and build­ings us­ing 60 per cent more en­ergy for heat­ing and cool­ing than is nec­es­sary.

Un­for­tu­nately, says the Clean En­ergy Coun­cil, en­ergy ef­fi­ciency ini­tia­tives in the past decade have been ham­strung by a com­bi­na­tion of in­ter- gov­ern­men­tal dis­putes and ri­val­ries, a lack of in­ter­est at top pol­i­cy­mak­ing lev­els, and ‘‘ ac­tive re­sis­tance from vested in­ter­ests and sec­tions of the bu­reau­cracy.’’

In Aus­tralia, the un­der­ly­ing prob­lem in en­ergy sup­ply man­age­ment is that de­pen­dence on elec­tric­ity is grow­ing faster than over­all en­ergy de­mand. Ac­cord­ing to the Aus­tralian Strate­gic Pol­icy In­sti­tute, power con­sump­tion grew 54 per cent be­tween 1990 and 2004 com­pared with an over­all in­crease in na­tional en­ergy de­mand ( which in­cludes use of pe­tro­leum prod­ucts) of 31 per cent, even though the use of mass tran­sit trans­port has risen only marginally in the past decade.

This fed­eral Gov­ern­ment has high am­bi­tions for achiev­ing ef­fi­ciency in Aus­tralia over the next 12 years: its tar­get for 2020 is to cut growth in elec­tric­ity de­mand — which sup­pli­ers at present pre­dict will be about 60,000 gi­gawatt hours more than to­day and will re­quire an ex­tra 9,000MW of gen­er­a­tion plant — by up to 35,000GWh a year.

De­liv­er­ing the ef­fi­ciency goal would chop about $ 5 bil­lion off the cost of build­ing new gen­er­a­tion ca­pac­ity to meet higher de­mand, as well as mak­ing a size­able dent in the growth of green­house gas emis­sions from power sta­tions.

Car­bon diox­ide emis­sions from coal­burn­ing and gas- burn­ing power sta­tions in Aus­tralia are pre­dicted to peak at 207 mil­lion tonnes a year in 2009.

By forc­ing 20 per cent of power con­sump­tion to be sourced from re­new­able en­ergy by 2020, the Rudd Gov­ern­ment aims to limit fur­ther emis­sions growth, but the De­part­ment of Cli­mate Change ac­knowl­edges that, even with this mea­sure, fos­sil- fu­elled sta­tions will still be emit­ting 200 mil­lion tonnes a year of green­house gases in 12 years’ time.

A broad es­ti­mate of the im­pact of the gov­ern­ment’s pro­grams by its eco­nomic agen­cies sug­gests that all its cli­mate change pro­grams could de­liver more than 80 mil­lion tonnes of abate­ment by 2020, with about 56 per cent com­ing from the higher re­new­able en­ergy tar­get.

This makes cut­ting cus­tomers’ thirst for power a crit­i­cal ex­tra el­e­ment in the pol­icy — but the multi- bil­lion dol­lar ques­tion is, what level of car­bon charge will it take to re­duce de­mand growth?

Elec­tric­ity de­mand is no­to­ri­ously ‘‘ nonelas­tic’’ — in oth­ers words, the need for en­ergy for house­hold and busi­ness use will con­tinue even if prices rise quite sharply.

The po­lit­i­cal prob­lem is that higher en­ergy prices are deeply un­pop­u­lar with vot­ers and main­tain­ing the pain long enough to force real de­mand cuts re­quires a cam­paign much longer than the elec­tion cy­cle.

Opin­ion dif­fers widely on what level of car­bon charge — through the emis­sions trad­ing scheme the gov­ern­ment is now de­vis­ing — will be needed to re­duce the growth in power de­mand to meet the Rudd Gov­ern­ment’s ef­fi­ciency goal.

Some economists be­lieve that it might need to be as high as $ 100 per tonne of CO — which would add $ 20 bil­lion a year to the whole­sale price of power.

Re­tail elec­tric­ity bills are made up of whole­sale costs ( about 50 per cent) and charges for trans­mis­sion, dis­tri­bu­tion and re­tail­ing ser­vices ( the other 50 per cent). A 50 per cent in­crease in the whole­sale price of power, for ex­am­ple, trans­lates in to a 25 per cent in­crease in the re­tail price.

A fur­ther prob­lem for the gov­ern­ment is that a third of the power used in Aus­tralia is con­sumed by en­ergy- in­ten­sive in­dus­tries such as plas­tics and chem­i­cals fac­to­ries.

Th­ese com­pa­nies ar­gue that they are al­ready in the fore­front of pur­su­ing en­ergy ef­fi­ciency and high lo­cal car­bon charges will im­pact heav­ily on their com­pet­i­tive­ness in in­ter­na­tional mar­kets.

Many in the busi­ness lobby groups warn that a large Aus­tralian go- it- alone car­bon charge po­ten­tially poses a threat to em­ploy­ment, an even more po­tent voter turn- off than high en­ergy prices.

Con­sump­tion: Build­ings are re­spon­si­ble for 40 per cent of global en­ergy con­sump­tion

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