Gillard switches on to energy efficiency

14 Jul 2010Archived News Energetics in the News

PUBLISHED: The Australian Financial Review by John Breusch. Jon Justen, Energetics says that by the time electricity reaches a home, less than 10 per cent of the energy in coal has been harnessed.

For the great majority of Australians, the electricity that provides lighting for homes and warms showers has its origins in chunks of coal dug up in places like NSW’s Hunter Valley and Victoria’s La Trobe Valley.

It’s a long, complex journey. It’s also highly wasteful, a problem that Prime Minister Julia Gillard is targeting as she works to revive her government’s reputation on climate change.

Once it is dug up – emitting, in the process, large volumes of methane, a potent greenhouse gas – the coal, is transported to a power station where it is burned.

That generates heat, which boils water, which creates steam, which drives a turbine which, via a generator, effectively pushes electricity down a wire.

To get from the coal fields to your home, this electricity is repeatedly transformed to lower voltages and sent hundreds of kilometres down transmission lines.

Jon Justen, executive director of business development at energy efficiency firm Energetics, says that by the time that electricity is used to light a home or provide a hot shower, less that 10 per cent of the energy in the coal has been harnessed.

Where did it all go?

Most was lost at the power station: about 65 per cent of the energy in coal is emitted as useless heat. A further 7 per cent disappears through transmissions losses. And more is wasted through inefficient appliances.

An electric hot water system, for instance, uses an element to heat water to temperatures far higher than people generally need, meaning cold water needs to be mixed in before it comes out your shower nozzle. At each stage in this long chain of events – generation, transmission and end-use – there are opportunities to cut electricity waste.

Many studies have concluded that if we pay more attention to the way we use electricity, it should be possible to cut greenhouse gas emissions in a way that, far from costing the hip pocket, should actually save money.

Yet consumed by confounding debates over emissions trading and renewable power, the federal government has so far paid relatively little attention to energy efficiency.
However, that now seems likely to change.

Desperate to restore government’s credibility on climate change before she calls an election, Ms Gillard is set to announce a new measures that aim to achieve a significant improvement in the way households and businesses use energy.

In a report released earlier this year, the thinktank ClimateWorks looked at what on-the-ground changes Australia would have to make to achieve a 25 per cent in emissions on 2000 levels by 2020, the government’s most ambitious greenhouse target.

ClimateWorks’ bottom-up analysis found that 54 million tonnes of abatement, or about a quarter of the cuts needed, could be achieved in a way that would deliver a positive return to business, even taking into account factors such as cost of capital.

Almost all of these savings were due to improved energy efficiency, such as residential lighting, heating and air conditioning, vehicles and heavy industry.

But it’s clear that even though they might make business sense, these opportunities are not being seized.

Building on what is understood to be a recommendation of a government-appointed task group, Ms Gillard is expected to announce that a re-elected Labor government would introduce a national energy efficiency scheme.

Under such a regime, energy retailers, such as Origin Energy and AGL Energy, would be required to improve energy efficiency by a certain amount each year.

To reach this target, the retailers would effectively buy certificates, each representing an amount of energy saved, from their household, commercial and industrial customers.

They might engage directly with a large industrial client, such as cement maker, seek efficiency proposals from the market through a tender, or engage an intermediary, such as Energetics to come up with its own idea on saving.

For a government in pre-election mode, there is a risk: the cost of certificates would be reflected in higher electricity prices.

But the hope is that because they would be using less electricity, consumers should generally be little worse off.

Similar regimes are already in place in South Australia, NSW and Victoria.
But unlike the latter two, the federal government is likely to steer clear of allowing trading of so-called “white certificates”, reflecting the extent to which it has been burned by its experience with emissions trading and the 20 per cent renewable energy target.

Booz & Co climate change specialist Rob Fowler says NSW’s scheme in particular has demonstrated the wide reach of an energy efficiency scheme.

“Everything from RSL clubs to hotels to office buildings to factories has benefited. And then there’s the thousands of households,” He says.

“It’s really just a matter of saying ‘let’s make this national’.”

As much as they encourage the uptake of more efficient appliances, buildings and equipment, energy efficiency schemes do not induce changes in behaviour.

Andrew Dyer, an engineer who now heads the local operation of US-based solar company BrightSource Energy, says behavioural change is best targeted through public awareness campaign, as shown by the strong conversation ethic that has developed in Australia around water use.

“A mate of mine brought a 3000-litre water tank and bemoaned the fact it wasn’t filling up from natural rainfall,” Dyer says.

“And I said: ‘Well, if you want, just stick the hose in their and fill it up; it will cost you about $3.’ And he said, ‘No I can’t do that, that’s the wrong thing to do.’

“So it’s not so much about the price signal, it’s about behaviour and doing the right thing. And that’s where we need to go with electricity.”

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