Driving down Australia’s energy sector emissions

By Ruth DawkinsJanuary 24th, 2022

Electricity generation is the biggest contributor to our national greenhouse gas emissions, and it's undergoing a rapid transition.

Last year the Australian government announced its plan to reach a net zero target by 2050. Driving down Australia’s energy sector emissions is challenging because it’s made up of many different industries. We explain what’s going on behind the scenes in different parts of the energy sector, as the country works towards a net zero future.

Australia’s energy sector and its emissions

When you think about the energy sector in Australia, what comes to mind?

Perhaps it’s a coal-fired power plant, with spirals of steam rising from the chimneys. Perhaps it’s a row of windmills on the horizon, or solar panels stretching out in the desert, as far as the eye can see.

There’s no wrong answer. But what many of us don’t consider is that the energy sector isn’t just about electricity generation. Instead, it’s a large, multi-faceted system, with many interconnected, and rapidly changing parts.

Electricity generation is the most easily understood part of the energy system. It’s also the biggest contributor to our national greenhouse gas emissions – currently accounting for about a third of our emissions – although that share has declined in the last decade.

However, the energy sector also comprises a number of other important components, each of which also contributes to Australia’s total emissions. They include: transport (18 per cent), fugitive emissions (9 per cent), and direct combustion of fuels for industry and manufacturing (20 per cent), according to the most recent National Greenhouse Gas Inventory Update.

As Australia moves away from fossil fuel-based energy dependence – a move driven by emissions reduction targets, innovation, aging coal-fire power stations, consumer preferences, and the industry’s desire to reduce costs – the sector is undergoing a rapid transition. It’s an exciting time, and there is potential for gains to be made across the system through a combination of new and emerging technologies and efficiency measures.

CSIRO has a crucial role to play in providing actionable, reliable energy research that supports this transition and meets the challenges of Australia’s net zero emissions target.

“The last decade has been an impressive period of change,” says Paul Graham, Chief Economist at CSIRO’s Energy Business Unit. “Deployment of renewables in large scale and in our homes has become the norm. We now need to do our part in delivering the next decade of innovation which builds on the successes in the electricity sector to broaden out emissions abatement opportunities in the remainder of the energy sector.”

Wind farms along a coast

As Australia moves away from fossil fuel-based energy dependence the sector is undergoing a rapid transition.

Working towards net zero emissions

Since the Paris Climate Accords were signed in 2015, businesses, communities, and all levels of government have been setting emissions reductions goals. Australia currently has a national emissions reduction target of net zero by 2050.

In order to achieve this target at lowest cost, Australia must to take advantage of the opportunities presented by the energy transition and become a leader in low emissions technology. This would also allow our existing industries to maintain or improve our competitiveness in the global marketplace.

A number of key Australian industries are both emissions-intensive and heavily focused on exports. According to Mr Graham, that combination means there’s already buy-in within the sector about the need to transition.

“In some ways, the domestic policy environment matters less than the climate policies of overseas clients. Countries such as Japan and China are key markets for our energy intensive goods and as they look to green their supply chain, they will need Australia to contribute to that. For example, if a car manufacturer wants to make a claim about their car being a green product, that comes all the way back to the emission intensity of the raw materials that we are exporting.”

“There may be some things we need to do in the energy sector that initially cost a bit more in order to hit our emissions reduction targets,” continues Mr Graham. “But that’s essential if we want to participate in green global supply chains. Decarbonisation is happening around the world and if we’re not a part of that there are others who will take our share of the market.”

A technology-driven approach

Australia has chosen to take a technology-led approach to the energy transition, and CSIRO is supporting that through the assessment, development and demonstration of priority low emissions technology.

The robust, evidence-based research outcomes that CSIRO provides can then be used for informed decision making by governments, industry, investors and communities.

There is no single, silver bullet technology that will achieve the coming energy transition. Rather, it will require a combination of existing and emerging technologies which will change over time in response to market demand, scientific advancement, and the policy or regulatory environment.

A key guiding document is the Government’s Low Emissions Technology Roadmap and accompanying annual Low Emissions Technology Statement (LETS), which is aimed at cutting power costs for households and business, creating jobs, and reducing greenhouse gas emissions. CSIRO does work across the five LETS priorities, as well as research into the productivity, social and environmental impacts of onshore gas.

Electricity storage is a key to expanding low emissions electricity. (The Tesla 100MW ‘big battery’ at the Hornsdale Wind Farm, South Australia. David Clarke/flickr (cc by-nc-nd 2.0))

Within the energy sector, electricity generation is where low emission technology is most advanced. It makes sense to leverage the existing success in this space – partly because it will enable the most rapid gains, and partly because it’s where the highest percentage of emissions come from.

“Abatement through electrification is low cost, so we should start by electrifying what we can,” says Mr Graham. “Using electricity in more industries, such as transport, will reduce our exposure to global markets and fossil fuel prices. One of the major keys to the expanding low emission electricity use though is affordable electricity storage. Minimising storage costs will be good for consumers and it will also be good for our global competitiveness. Australian industries want to be selling low-emissions products and we can support their efforts by providing them with the lowest cost electricity.”

Meeting the challenges of the transition

In order to capitalise on Australia’s natural advantages, while simultaneously driving down greenhouse gas emissions, it’s essential that we close the technology gap. It’s not just a question of developing the tools that will help us meet net zero. It’s also about making those tools demonstrable, cost-effective and adopted at an unprecedented scale.

In order to achieve that, we require an integrated approach across government, industries and communities – and CSIRO’s multidisciplinary research can help make that happen.

Electricity storage is just one example of a technology where gains can be made through better integration and collaboration.

“There are several key ways we can get storage costs down,” says Mr Graham. “The first is going to be better integration between the electricity sector and the transport sector. If we electrify our transport fleet, that’s going to mean a lot of under-utilised batteries. Many people will have up to 80 per cent of their vehicle’s battery unused every day and that’s a huge resource the electricity sector could take advantage of if there were vehicle-to-grid capabilities. You could potentially halve the number of large-scale batteries required by better linking and integration of the two sectors.”

Electrifying our transport fleet will result in a lot of under-utilised batteries, which also means great storage opportunities. ©Future Battery Industries CRC

Hydrogen is another growth area where there’s a clear need for joined-up thinking. Hydrogen is important in and of itself as a low-emissions export industry, but the hydrogen production process will also lead to a huge demand for electricity. The flexibility of hydrogen electrolysers means that if they are grid-connected, hydrogen production can closely track renewable production, turning down or up where necessary and reducing storage requirements.

CSIRO researchers are also looking into long-duration storage alternatives to batteries and pumped hydro.

“Pumped hydro is good for eight hours up to several days but obviously it can’t be deployed everywhere,” says Mr Graham. “It needs bodies of water and a degree of elevation, so for other environments we’re looking to understand more about other resources such as end-of-life mines. There are many options to explore, all with a view to bringing down the costs for individuals and industry and bringing down our emissions to hit those important targets.”

3 comments

  1. But still no interest in hydrogen from pyrolysis of natural gas?

  2. No mention of nuclear. Why not?

    1. HI John,
      Thanks for your question.
      Paul Graham, CSIRO Chief Energy Economist has answered your query.

      “Like the GenCost process, we found that nuclear is not competitive against other generation technologies such as renewables (even after including the cost of renewable integration). [Additionally,] Industry feedback we have received through our GenCost process indicates that there is no prospect of deployment of nuclear in Australia before 2030. We will continue to monitor the cost of nuclear power, particularly the costs of small modular reactors which have the potential for faster cost reductions than conventional nuclear.”

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