Energy productivity and the role it can play in Australia’s future prosperity

20 Oct 2014Archived News Jonathan Jutsen Climate Change Matters

Recently the Australian Alliance to Save Energy held a briefing on the energy productivity roadmap which targets doubling our national energy productivity levels by 2030.  Led by Jonathan Jutsen as chair of A2SE, other speakers supporting the work were NSW Minister for Environment and Heritage, the Hon Robert Stokes MP; Chief Operating Officer of the Australian Chamber of Commerce and Industry, John Osborn, and Margaret Sewell who heads the Energy White Paper Taskforce for the Department of Industry.  She outlined the role of energy productivity as a component of the Energy Green Paper, which has since been released.

Energy productivity, as you would have read in previous newsletters, is the total value of economic output generated by energy we consume, and focuses on ”how we can get the greatest value for each dollar of energy we use”, to quote Jon Jutsen.

The need and the opportunity for Australian business

Energy productivity is important for Australia’s economy and overall productivity, as end-use energy costs are a major component in our economy.  In 2012, domestic end-use sectors spent $109b on energy which equates to 7.4% of GDP. 

Australia’s energy price competitiveness has shifted dramatically in recent years as seen in the chart below.

 

Note: this chart only looks at electricity. Over the next 3 years the same thing will happen with east coast domestic gas prices.

Australia also has poor energy productivity than our competitors and it has been increasing at half the rate of comparable countries.  When you combine this with the price escalation, it has a powerful impact on the competitiveness of energy intensive businesses, but also on not-so energy intensive industry such as food processing.

A2SE aims to produce a roadmap by June 2015 which details the means by which Australia double its energy productivity and bring our performance in line with competitors that have similar energy prices. 

What can doubling energy productivity deliver?  

Productivity growth is vital to improving prosperity, and in particular providing a means for dealing with high electricity and escalating gas prices.

Outcomes envisaged:

  • Competitiveness, jobs, economic growth. With an annual 1.4% increase in energy efficiency by 2030 an increased GDP/capita of ≈ $2000 will be achieved

  • Energy users save ≈ $30b by 2030

  • Most cost effective way to cut greenhouse emissions.  The USA 2XEP will cut 2030 emissions by 1/3 below  2005 levels, and in Australia a 20% reduction on forecasted 2030 emissions is estimated

  • Reduced oil vulnerability and improved balance of payments from oil imports, currently $37b.

The 2XEP roadmap process will be lead by business.  There will be sector working groups set up for each major sector of the economy including manufacturing, mining, agriculture, passenger transport, freight transport and the built environment – commercial and residential.

Each sector working group will define the opportunity to achieve 2XEP, the barriers to making major improvements, define and implement measures to deliver energy productivity improvements, and recommend policy measures to government to facilitate this change.If you would like to contribute to 2XEP, information is available through the A2SE website www.a2se.org.au, or you can contact Jon Jutsen personally on 0418 510109 

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