Sep 08 2022

Leading by example? Electricity sector emissions continue to trend down

Much has been made of the March Quarterly Update of Australia’s National Greenhouse Gas Inventory headline emissions figures, which show that overall emissions across the economy have increased by 1.5 per cent or 7.4 Mt CO2-e on the previous year. Overall, emissions in the year to March 2022 were 21.6 per cent below emissions for the year to June 2005, the baseline year for Australia’s Paris target commitments.

Lurking beneath the surface are the sector by sector emissions figures, which provide insight into the realities of emission volumes across the economy. For example, the figures show that emissions from electricity generation are down 24.6 per cent since their June 2009 peak. In this piece, we unpack the figures of a number of sectors and examine the impacts that electrification may have on Australia’s emissions reduction trajectory.

Figure 1: Emissions[1], by quarter, March 2010 to March 2022

Source: Department of Climate Change, Energy, the Environment and Water

Electricity Sector

Year on year, electricity sector emissions have decreased by 3.1 per cent in actual terms in the year to March 2022. This reduction is despite the March quarter seeing metered demand in the National Electricity Market (NEM) up 6.4 per cent compared to the previous quarter.

This continues the electricity sector’s trend of reduced emissions since 2009.

Figure 2: Electricity Sector emissions, by quarter, 2009 to 2022

Source: Department of Climate Change, Energy, the Environment and Water

Data from the Department of Industry, Science, Energy and Resources shows national emissions from electricity are expected to fall 55 per cent by 2030 from the 2005 baseline and by 64 per cent in the NEM. There is expected to be 91 million tonnes less carbon between 2019 and 2030 because of the energy transition underway.

Unfortunately, the story of the electricity sector is quite different to other parts of the economy. Sectors like transport and stationary energy (which covers things like manufacturing, mining and residential gas) account for a large portion of the economy and are continuing to experience year on year growth in emissions.

Australia’s total carbon emissions are expected to fall by less than 91 million tonnes this decade because some sectors will actually see their emissions increase. In fact, by 2030, stationary energy and transport will have become the largest sectoral emitters (see table 1), reinforcing the need for other sectors to start picking up the slack if we are going to reach net zero.

Table 1 Australia’s Emissions Projections 2021 Sectoral Breakdown

Source: Dept Industry, Science, Energy and Resources

Transport

The transport sector accounted for 18.7 per cent of Australia’s national emissions. Year on year, transport emissions in this quarter increased 5.4 per cent. While decreases were recorded in the previous two years due to COVID-19 restrictions on movement, the upward trend is likely to continue unless technological or behavioural changes can bend the curve.

Figure 3: Transport emissions, actual and trend, by quarter, March 2010 to March 2022

Source: Department of Climate Change, Energy, the Environment and Water

Transport – of people and freight – is the lifeblood of any economy. Australia, with its low-density cities and large distances between major population centres, depends on a range of transport modes to keep its economy going: cars, trucks, buses, bicycles, motorbikes, trains, trams, ships and planes.

Light passenger vehicles (i.e., cars, SUVs) are the largest source of transport emissions in Australia. It has become increasingly clear that a constructive way to reduce emissions for this segment is through an economy-wide switch to electric vehicles (EVs). Even at current grid emissions intensities, EVs emit lower emissions, and this will only improve further as our electricity systems continue to decarbonise.

Stationary Energy

Stationary energy accounted for 21 per cent of Australia’s national emissions in the year to March 2022. This figure represents an increase of 3.7 per cent when compared with the same quarter in the previous year. The stationary energy category includes manufacturing, mining, residential and commercial processes and primarily represents the production of heat. There is significant evidence that widespread electrification across parts of these industries would help drive down both emissions and costs for consumers. Jurisdictions like Victoria and the ACT have already stated their intent to pursue electrification as an economically viable substitute for residential gas.  

Figure 4: Stationary energy excluding electricity emissions, actual and trend, by quarter, March 2010 to March 2022


Source: Department of Climate Change, Energy, the Environment and Water

Figure four above illustrates the rise in emissions from stationary energy since 2010. In contrast to the electricity sector, its emissions are continuing on an upward trajectory.

In this context, there are two primary uses for stationary energy. The first is amenity based – to heat air and water in buildings for comfort and convenience. The second is industrial – to supply heat for a range of processes from baking bread to making steel. Amenity heat is lower in temperatures required (mostly below 100 degrees C) compared to industrial heat, which can range from around 100 degrees C to more than 1,000 degrees C. Electrification of both amenity and industrial heat is closely linked to the plant and equipment used to produce it.

Electrification of residential heat requires replacement of long-life assets like water heaters, space heating systems and cooktops.  The opportunities to electrify and decarbonise industrial heat depend on the temperatures required and the processes it is applied in. Lower temperature industrial heat, particularly that used in food processing, can exploit the same efficiency benefits of heat pumps as residential dwellings.

It is anticipated that the Federal Government’s reforms to the Safeguard Mechanism will likely provide an incentive for facilities that use stationary energy to explore low-carbon alternatives. This will inevitably include electrification technology, which promisingly for these captured facilities, is readily available now.

Related Analysis

Analysis

Fuel efficiency standards: Driving emission reductions in transport

The release of the Federal Government’s preferred option for an Australian fuel efficiency standard has quickly fallen into another version of the so-called climate wars while also being firmly couched as a ‘cost of living’ and ‘loss of vehicle choice’ issue. The Government’s proposal is for an “ambitious but achievable” standard that would allow Australia to catch up to markets like the US.

Feb 29 2024
Analysis

Internal Carbon Pricing – on the pathway to net-zero or just another sidetrack?

Leading into the last federal election, the then Labor opposition pledged no economy-wide carbon price under its leadership, reflecting the continued vexed nature of climate policy in Australia. Since then the Federal Labor Government has maintained its promise and is pursuing emissions reductions through targeted sectoral reforms. In this environment, many businesses have started setting their own internal carbon price based around various government decarbonisation policies. Now, under new reforms being proposed by Treasury, these businesses will be required to disclose their internal carbon price.

Feb 29 2024
Analysis

Green schemes: What are they and how are they causing greater inequality?

For the past two decades, state and federal governments have introduced various policies aimed at incentivising households and businesses to be more energy efficient and to support renewable technologies, which are often referred to as ‘green schemes’ or ‘environmental schemes’. While well intentioned, the cost of these schemes are typically passed onto consumers through electricity bills, impacting energy affordability for some users.

Feb 22 2024
GET IN TOUCH
Do you have a question or comment for AEC?

Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.

Call Us
+61 (3) 9205 3100