Energy needs in Australia - Research Paper Example

 Energy Needs in Australia I. Introduction Any economy is driven by energy. This includes electricity and fuel. Industries rely on electricity and fuel to run their daily production or processing activities. People light and heat their houses using energy. People also cook their meals using fuel. The cars, planes, or trains that people use to get to their respective workplaces require energy. Therefore, in essence, energy forms an integral part of our lives. It is the main driver of a country’s economy. Over the years, fossil fuels have been widely used. Perhaps the oldest form of fuel used is wood. During the industrial revolution, coal was used in industries, and in steam ships. Oil and gas have probably been the most depended on forms of energy sources in the world today. Most economies are reliant on oil. However, countries have come off their comfort zones due to the fact that oil will not be forever. Oil, coal, and gas are non-renewable sources of energy. This means that someday, oil, coal, and gas reserves might be depleted from the face of the earth. As the peak oil theory seems to suggest, oil production has already reached its peak and is on the declines. This has been compounded by the fact that the number of oil and gas reserves being struck has decreased significantly. This is despite the fact that energy needs are not decreasing. As economies and populations grow, energy needs are also growing. Therefore, governments need to explore ways in which they can meet their energy needs. One such country is Australia. This paper aims to conduct an in-depth analysis on the energy needs in Australia, and provide recommendations on ways in which to address these needs. A. Problem Statement Over the past thirty years, Australia’s total energy consumption has more than doubled. In the next 20 years, the Australian society will be characteristic of an ageing and growing population. At the same time, there is the issue of the global climate change and its effects on the environment. These factors are likely to affect the economic activity, as well as reduce the available revenue. Also, Australia’s population is expected to be about 35.9 million people by the year 2050. This directly translates to higher energy needs. Therefore, a comprehensive research is necessary in order to determine the energy needs that Australia has and how they can be sustained in the future. B. Significance of the Study Australia is a modern technological society. This means that the country makes a considerable use of energy in order to make the lives of its citizens better and more enjoyable. With a growing population, the use of energy will also increase. The growing populations also have to live better and enjoyable lives. Most people have been dependent on oil and other fossil fuels. However, these are energy resources that will be depleted at some point or the other. Therefore, addressing the energy needs in Australia helps in developing ways, solutions, and policies that will enable Australia to meet its future energy needs. This study is significant in providing a clear picture of the energy situation in Australia, as well as the expected energy consumption in the near future. These details are important in developing both short term and long term measures to meet the energy needs in Australia. C. Research Hypotheses Australia’s energy consumption will increase significantly in the next 10 to 20 years. Also, this increase in energy consumption will be confronted by a pressing need to decrease greenhouse emissions and reduce climate change. Australia’s energy needs will also have to move away from the polluting and diminishing non-renewable sources such as fossil fuels to renewable sources of energy such as solar and wind. This brings up the research questions. D. Research Questions When addressing the energy needs in Australia, several questions come up. Will Australia’s energy consumption increase significantly in the next 10 to 20 years? How will the country manage these future increases in the consumption of energy when there is a confronting need to decrease greenhouse emissions and reverse climate change? What will be the future of fossil fuels in Australia? How will the Australia’s energy needs transit from non-renewable sources of energy to renewable sources of energy? Can renewable sources meet Australia’s future energy needs? What will be the socio-economic and environmental impact of this transition? E. Purpose of Study The purpose of this study is to evaluate the energy needs in Australia and the measures that are necessary to meet these needs. The aim of this study will be guided by the achievement of various objectives of the study. F. Objectives This study aims; to establish the energy consumption increase in Australia in the coming years, to determine how the country will address the increase in energy needs amid the push for a low-carbon footprint, to establish how the country will transit from the non-renewable sources to renewable sources, to determine the role fossil fuels will play in meeting future energy needs, and to establish the socio-economic and environmental impacts of this transition. II. Literature Review Several studies have been conducted regarding the situation of energy in various parts of the world. These studies are aimed at adopting measures that are likely to ensure energy security, as well as sustainable development. In addressing future energy needs, it is difficult to separate energy and sustainable development. This is because countries are working towards reducing carbon emissions. This means shifting focus from the burning of hydrocarbons in fossil fuels to the much cleaner renewable and more efficient sustainable sources of energy. This section seeks to perform a review of literature on previous research regarding energy needs. In his book Our Energy Future, Justin Healey samples some facts regarding energy in Australia and the world over. According to Healey (2009), Australia’s total energy consumption has more than doubled over the past thirty years. He also notes that the consumption of energy per person has risen by about 40 percent. Australia ushered in the 21st century as one of the world’s leading economies. The country has recorded high labor and general productivity, sustained economic growth, and a strong environmental record. These aspects have ensured the continued prosperity for the country. The energy sector has been a key player in this success. It is through the development of the vast energy resources that Australia boasts of, that citizens have access too low-cost energy. It has also attracted a considerable export income. An effective response to global and domestic environmental issues, as well as more competitive energy markets, has made huge contributions to the lifestyle and economy of Australia. It is estimated that energy exports earn the country about $24 billion every year. Therefore, between the year 2012 and the year 2020, the economy of Australia will continue to grow. As a result, the country’s energy consumption is projected to increase by 26 percent. Healey also examines the current situation of the energy sector in Australia. Currently, the current heavily relies on non-renewable energy. Fossil fuels account for about 95 percent of the energy needs. Of this 95 percent, gas provides 19 percent, oil provides 36 percent, and coal accounts for 41 percent. Consequently, renewable sources account for only about 5 percent of the energy that is used in the country. The main renewable energy source is bio-fuels, which account for about 3 percent, while water accounts for about 1 percent. Wind and solar energy are only responsible for a tiny fraction of the country’s energy use. At the same time, there are no nuclear power plants in the country currently. According to the Energy Task Force (2004), the energy sector in Australia spans the production and supply of stationary energy (e. g. gas and electricity), transport energy (mostly petroleum-based fuels), and energy for export. The sector also covers the identification and development of primary sources of energy such as gas, coal, uranium, and oil. It also encompasses renewable such as wind, biomass, solar, and hydro-electricity. This development entails the conversion of raw, primary sources of energy into final products such as refined petroleum fuels and electricity. According to Healey (2009), in its World Energy Outlook, the International Energy Agency cautions that oil prices are likely to peak at $200 per barrel by the year 2030. This is because the demand for energy will continue to rise as merging economies such as Brazil, India, and China increases their demand for fuel. This prediction means that the demand for energy globally will rise by more than half by the year 2030. This means that economies such as China and India will continue relying on cheap coal reserves in order to meet their power needs. In Australian Energy Projections, the Australian Bureau of Agricultural and Resource Economics (ABARE, 2004) makes several projections regarding the country’s probable energy consumption. The total consumption of primary energy is expected to grow by almost 35% over the projection period between 2007/2008 and 2029/2030. This translates to about 1.4% growth every year. Also, oil and coil will continue being the suppliers of the bulk of the country’s energy needs. However, their share in the energy mix is likely to decrease. The use of gas, both coal seam and natural gas, is expected to strongly grow by about 3.4% every year over the outlook period. This growth will primarily be driven by the electricity generation sector and gas consumption in LNG (Liquefied Natural Gas) production. Based on the support by RET (Renewable Energy Target), the renewable energy share is expected to increase considerably, and account for about 8% of the country’s total consumption of energy in 2029/2030, (Australian Government, 2012). This translates to an annual growth rate of 3.5%, with strong growth especially expected for wind energy. In Western Australia and Queensland, it is projected that the growth rates in the consumption of energy will be higher in these states than other states. This is due to the relatively higher gross state product assumptions, compounded with the high share of mining in economic output and the expected expansion of the gas sector, specifically LNG. It is also expected that the transport sector and the electricity generation sector will continue to be the 2 main users of primary energy. In 2007/2008, the mining sector contributed to just about 5% of consumption of primary energy. However, in the next two decades, the sector is expected to have the highest growth rate in consumption. In the transport sector, oil consumption is projected to experience a steady growth rate over the projection period, growing at an average rate of 1.2% annually. This will be mainly driven by economic growth. Within this sector, it is road transport that is the biggest contributor to the consumption of energy. In fact, energy use in the sector is expected to experience a growth rate of 0.9% every year during the projection period. Healey (2009) also dwells on reducing the dependence on fossil fuels. Reducing the consumption of fossil fuels assists in reducing greenhouse gas emissions. This is in turn expected to put reduce global warming. However, despite reducing the carbon intensity of fossil fuel energy, it is important to reduce the demand on energy since it contributes greatly to reducing the consumption of energy at various points in the supply chain. This has to do with energy efficiency. During the period between the year 1990 and the year 2004, the country’s energy efficiency improved at a rate that was 3 times slower than the OECD average. The efficiency improved at a rate of 0.3 percent annually compared to the OECD’s average of 0.9 percent. Among the OECD nations, Australia has the 3rd highest energy intensity in energy productivity, with the US and Canada the only worst performers. Energy productivity is the amount of energy that is used in the production of goods and services. According to the Energy Task Force (2004), improving the country’s performance in energy efficiency is crucial for the plans by the government to deliver sustainability and prosperity from energy. Increasing the uptake of commercially attractive energy efficiency opportunities would deliver considerable economic and environmental benefits. According to the National Framework for Energy Efficiency (2008) estimates, implementing half of all energy efficiency opportunities could increase the GDP by $975 million every year, and reduce greenhouse gas emissions by 10 million tones every year. However, Australia might be unwilling to transit from fossil fuels to clean energy. According to the Energy Information Administration (2011), Australia possesses substantial oil, gas, and coal reserves. It is one of the few OECD countries that are significant net hydrocarbon exporters. The country exports about two thirds of its total energy production. In 2010, Australia was the largest exporter of coal in the world, and the 4th largest exporter of Liquefied Natural Gas. The country is a net importer of crude oil and refined petroleum products, but is a net exporter of LPG (Liquefied Petroleum Gas). In the 2009/2010 fiscal year, hydrocarbon exports were accountable for about 34% of the total commodity export revenues. According to the Oil and Gas Journal (OGJ, 2011), Australia had about 3.3 million barrels of proven oil reserves as of January 2011. The crude oil found in Australia is of light variety, meaning that it contains low wax and sulfur. Therefore, it is of higher value than the heavier crudes. Also, as of January 2011, Australia had about 110 trillion cubic feet of proven natural gas reserves, making it the 12th largest holder of conventional natural gas reserves in the world, (OGJ, 2011). By the end of the year 2010, Australia had about 84 billion short tons of recoverable coal reserves (BP, 2011). Coal-fired power stations dominate electricity generation in the country. Coal is utilized in fueling base load power stations. These are power stations which run continuously whilst providing continuous power outputs. However, these power stations contribute about one third of net greenhouse emissions in the country. This shows just how the country has enormous potential in terms of fossil fuels. However, with the confronting issues of the global climate change and the reduction in greenhouse gases, the country looking towards improving its renewable energy portfolio. In the year 2007, the Australian Government committed to ensuring that 20% of the country’s energy supply comes from renewable energy sources by the year 2020. Homes, community groups, schools, and businesses are being encouraged to put up solar power through incentives such as tax rebates, grants, and feed-in tariffs that pay system owners for the electricity they produce. However, renewable have been criticized as being unsuitable in providing base load power due to their intermittency. According to Healey (2009), the technology for generating reliable continuous power from some renewables such as biomass is already available. The problem lies in the power capacity. The current power capacity is small. This means that further development in the sector is necessary before any meaningful level of substitution of coal-fired power can take place. Research and development into ocean and geothermal energy, photovoltaic, wind and solar thermal is an indication that there are promising prospects for continuous and reliable power from renewables within the next 2 or 4 decades. It is estimated that the overall cost of electricity from renewable sources of energy is much higher than for gas and coal. Healey (2009) observes that there appears to be no financial or technical impediment to producing 50% of the country’s electricity by 2040 provided a suitable policy framework is put in place. This policy framework could be in the making. The Energy Research Institute in collaboration with the University of Melbourne presents a Zero Carbon Australia Stationary Energy Plan which provides a 10 year roadmap towards 100 percent renewable energy. This means that baseload energy will be supplied by renewable sources. It also means that energy will be extremely affordable, with one household paying about $8 per week. This means a total shift from fossil fuels, which are abundant, to clean energy. This entails fuel-switch from oil and gas to electricity, as well as the identification of suitable generation technologies that are commercially available including wind turbines, concentrating solar thermal, small-scale solar, hydroelectric generators, and biomass contingency. A. Interpretive Summary The review of literature has touched on various subjects regarding the energy sector in Australia. These include the current energy needs in the country, the main contributors to this energy in Australia, and the projected energy needs. The review has also evaluated the possibilities of substituting non-renewable sources of energy with renewable sources of energy. Most of the literature review is derived reports prepared by various energy players in Australia, as well as the government. This body of knowledge has been extremely valuable in deducing the research findings in this study. III. Research Findings A. Overview of Statistical Procedures This study applies a qualitative analysis technique known as content analysis. It incorporates all the three approaches of content analysis so as to interpret meaning from the context of data. This study adopts a directed approach whereby analysis begins with the theory and relevant research findings in deriving the necessary conclusions. As such, this study draws from the wide body of knowledge covered under literature review. B. Description of Results Will Australia’s energy consumption increase significantly in the next 10 to 20 years? Over the past 30 years, Australia’s total energy consumption has more than doubled. The total energy consumption per person has increased by about 40%. The total consumption of primary energy is projected to increase by about 35% over the projection period between 2007/2008 and 2029/2030. This means that there will be an annual growth of 1.4%. Between the year 2012 and the year 2020, the country’s energy consumption is expected to rise by 26 percent. Queensland and Western Australia are expected to have higher consumption growth rates than other states. The main users of primary energy are expected to be electricity generation and the transport sector. The mining sector is also expected to have the highest growth rate in energy consumption. In the transport sector, oil consumption is projected to experience a steady growth rate over the projection period, with an annual growth of about 1.2%. Of this, road transport is expected to be the highest contributor, having an annual growth of 0.9% over the projection period. These statistics are a clear indicator that the energy consumption in Australia will continue to increase in the next 10 to 20 years. How will the country manage these future increases in the consumption of energy when there is a confronting need to decrease greenhouse emissions and reverse climate change? Currently, fossil fuels account for about 95% of the country’s energy needs while renewable sources of energy account for a mere percent. There is a high need to reduce greenhouse gas emissions significantly. This means reducing the country’s dependence on fossil fuels. Though it might seem not feasible, there is a better solution which involves energy efficiency. Though the country’s energy efficiency has improved, its rate is three times slower than the OECD average. Australia also has a high energy intensity economy which means it performs poorly in energy productivity. An important step towards tackling the issue is by reducing the demand on energy. This is likely to reduce the consumption of energy at various points along the supply chain. In fact, the Energy Task Force (2004) observes that improving the country’s performance in energy efficiency is significant in delivering prosperity and sustainability from energy. It is estimated that with the implementation of half of all energy efficiency opportunities, greenhouse gas emissions would be reduced by 10 million tones every year. The country also intends to invest heavily in renewable energy. The government is committed to ensuring that 20% of the country’s energy supply comes from renewable energy sources by the year 2020. The government is encouraging homes, community groups, schools, and businesses to put up solar power through incentives such as tax rebates, grants, and feed-in tariffs that pay system owners for the electricity they produce. At the same time, the technology for generating reliable continuous power from some renewables such as biomass is already available. There has been research and development in ocean and geothermal energy, photovoltaic, wind, and solar thermal. This indicates that there are promising prospects of producing continuous and reliable power from renewables with the next 2 or 4 decades. However, a suitable policy framework is necessary to ensure that about 50% of the country’s electricity is produced from renewable energy sources by 2040. What will be the future of fossil fuels in Australia? According to the research findings, fossil fuels will continue to play a major role in meeting the energy needs of the Australian people in a number of years to come. This is due to the vast resources that the country possesses. The Energy Information Administration observes that the country has considerable oil, gas, and coal reserves. Australia was the largest exporter of coal in the year 2010, and the 4th largest exporter of LPG. At the same time, there were about 3.3 million barrels of proven oil reserves as of 2011. This is combined with the fact that Australia’s crude oil is of light variety, meaning that has a higher value. This is complemented by the vast amounts of gas, and coal reserves. Most baseload power stations are coal-fired. According to ABARE (2008), the use of gas, both coal seam and natural gas, is expected to grow strongly by about 3.4% annually over the outlook period. At the same time, the country collects significant amounts of foreign revenue through energy exports. This therefore means that the use of fossil fuels in Australia will continue to increase in the future with emphasis being placed on energy efficiency. How will the Australia’s energy needs transit from non-renewable sources of energy to renewable sources of energy? Like mentioned above, Australia needs a suitable policy framework in order to transit from non-renewable sources of energy to renewable sources of energy. Renewable energy forms an important part of the country’s low emissions energy mix, as well as its energy security. Despite the vast amounts of oil, gas, and coal reserves, it is projected that their production will decline if new discoveries are not made. The solution lies in the use of renewables. One such policy framework presented by the Energy Research Institute is the Zero Carbon Australia Stationary Energy Plan, whose aim is to draw a 10 year roadmap for 100% renewable energy. This means that baseload power will be produced from renewable sources. According to the ERI (), in order to make a transition immediately, it is only the solutions that are available today can be used. Dubbed as the ZCA2020 Plan, it specifies a 100 percent renewable grid based on technologies that are already proven, commercially available, and have been demonstrated in large industries. Under this plan, it is estimated that the grid electricity demand in 2020 will be 40 percent higher than it is today. This will be as a result of the switch of services that are currently provided by oil and gas, to be supplied more efficiently by renewable electricity. In order to meet this demand, the proposed primary electricity generation technologies are a combination of wind and solar thermal. At the same time, energy efficiency measures need to be put in place in order to reduce electricity that is used for current services. according to ERI (), replacing inefficient fossil fuels and introducing energy efficient measures reduces the total energy consumption in the country by a massive 50 percent. Therefore, this transition requires the fuel-switch from oil and gas to electricity for end use applications such as heating and transport, improving on the energy efficiency, and the identification of suitable and commercially-viable generation technologies such as wind turbines, concentrating solar thermal (CST), small-scale solar, hydroelectric generators, and biomass contingency. What will be the socio-economic and environmental impact of this transition? The socio-economic and environmental impacts of this transition are enormous. A transition to a renewable energy economy means a transition to sustainable development. The transition would significantly reduce the greenhouse gas emissions. It would also create massive employment opportunities for people in this new field of renewable energy. The use of renewable energy would ensure that Australia’s economy is not affected by fluctuating world oil prices, hence guaranteeing a stable and sustainable economy/ C. Supplementary Analysis and Conclusion Therefore, several conclusions can be drawn from this study. First, the total energy consumption in Australia will continue to rise in the next 10 to 20 years. This can be attributed to the expansion of the economy, as well as the rising population. Second, it is clear that the country will have a hard task in managing these rising energy needs while confronting the environmental issues regarding the use of fossil fuels and the consequent greenhouse gases and climate change. This requires a suitable framework in meeting these energy needs while adhering to the Kyoto Protocol on GHGs. Third, fossil fuels will continue to play a huge role in meeting the country’s energy needs in the future. However, emphasis will put on adopting energy efficiency measures. Fourth, the transition from non-renewable energy sources to renewable energy sources will require the fuel-switch from oil and gas to electricity for end use applications such as heating and transport, improving on the energy efficiency, and the identification of suitable and commercially-viable generation technologies. Therefore, for a sustainable economy, Australia needs to exploit its massive renewable energy potential. IV. References ABARE. (2004) Australian energy; National and state projections to 2019–20. Report Australian Government. (2012) Energy: Renewable Energy Target (RET). Retrieved. 21 November 2012. http://australia.gov.au/topics/environment-and-natural-resources/energy Energy Information Administration. (2011) Australia Energy Data, Statistics, and Analysis: Oil, Gas, Electricity, Coal. Retrieved. 21 November 2012. http://wwwdev/EMEU/cabs/Australia/Full.html Energy Research Institute. (2011) Zero Carbon Australia Stationary Energy Plan. Australian Sustainable Energy, A Research Collaboration with the University of Melbourne, 2011, pp. 1-17. Energy Task Force. (2004) Securing Australia’s Energy Future. Canberra: Goanna Print. for the Ministerial Council on Energy, June 2003. Future Directions International. (2010) Australia’s Energy Future: A Time for Reflection. West Perth, WA: Future Directions International Pty Ltd. Healey, J. (2009) Our Energy Future. Thirroul, NSW: Spinney Press. IEA. (2003) Key world energy statistics. International Energy Agency, 2003. Read More