Less power to the people

01 Oct 2008Archived News Energetics in the News

PUBLISHED: Business Spectator by Keith Orchison - Jon Jutsen, Executive Director; Business Development, Energetics Pty Ltd opinion is quoted in comparison with Ross Garnauts'.


As the current global financial crisis drives home it's becoming clearer – Gordon Gekko was wrong – greed is not good. And, getting closer to home, neither is Australian consumers' seemingly unquenchable thirst for energy.

It is a pity Ross Garnaut did not take a little time in his massive final report to consider and discuss how, where and why Australians use electricity – which accounts, because it is mostly produced from burning fossil fuels, for a third of national greenhouse gas emissions, or 0.5 per cent of global emissions.

Australia's demand for electricity has risen six-fold since 1965 and, on present trends, is going to almost double again by 2030. A very large part of Garnaut's focus is on making this so expensive that supply can be converted to non-fossil fuels (or low-emitting coal technology) at a cost of tens of billions of dollars.

The impact on the economy – and especially on the energy-intensive industries and on resource processing – of imposing carbon charges in the absence of a global abatement scheme will be severe, creating, in Garnaut's words, "diabolical" political issues.

Before the Rudd cabinet makes a decision later this year, it might care to read an interview with Jon Jutsen in the new edition of the Powering Australia yearbook that is just published.

Jutsen is Australia's foremost expert on energy efficiency – and he and his partners make money out of it through the North Sydney-based consultancy Energetics. Hundreds of companies here and overseas buy Energetics' advice on energy management.

He argues that Australia should set itself a world-leading goal: zero electricity growth rather than the 200,000 GWh of increased demand predicted by 2030.

Australia cannot seriously expect to continue to grow its energy consumption at more than two per cent a year and also achieve substantial and rapid reduction in greenhouse gas emissions, he argues.

In Jutsen's view, energy efficiency should be the centrepiece of domestic greenhouse mitigation programs.

He says the existing system, created to optimise centralised supply chains, offers policymakers the "perverse good fortune" of being very inefficient in its conversion of fuel in to end-services. "These services – cold beer, warm rooms, cooked meals, hot water – are often delivered at less than 10 per cent efficiency over the whole energy supply chain," he points out. "There is no inherent demand for central power stations but for the delivery of such services."

What gives added punch to Jutsen's assertions are the massive sums being expended on the other half of the supply system – the wires-based delivery networks – when almost all the attention at present is on generation.

The New South Wales trio of government-owned power distributors, plus its high voltage transmission business, are currently before the Australian Energy Regulator seeking approval for capital outlays of about $18 billion for the five years from 2009 to 2014. Several billion dollars of this will be unused except for a few weeks a year when extreme weather (hot or cold) drives up electricity consumption in a region that accounts for a third of all eastern seaboard demand. Across the Tweed River, the Queensland government-owned company ENERGEX is at present spending another $3.4 billion over five years on network augmentation.

Jutsen believes it is inevitable that there will be a worldwide explosion of interest in end-use energy efficiency in the face of both the huge capital demands required to meet growth and the problems of greenhouse gas emissions. Globally, he predicts this is an area that will create revenues of $10 trillion to $20 trillion over the next 40 years. It is a view shared by the International Energy Agency.

In his opinion – one I share – a core policy problem here for the past 25 years has been a lack of government understanding that energy efficiency can be a large part of the global warming management process. There is not, he argues, a coherent national dialogue on energy efficiency, therefore only a small industry works in the area and the most cost-effective solutions have the lowest attention of all.

The only baseload generation in which Australia should invest, going forward, he asserts, is plant that will serve the reduce existing emissions.

It seems to me that Garnaut and Jutsen are actually on parallel tracks but the former is focussed on finding a way to enable low-emission technology to chase ever-rising demand, while the latter is arguing for driving far more efficient use of power and replacing existing high emission technology to meet stabilised demand. The difference between them represents a massive amount of pressure on the economy.

The task of bringing the two approaches together is one for government. In the weeks ahead Rudd, Wong and their colleagues have an opportunity to really offer a world-leading approach, but not if they see the task solely through the prism provided by Garnaut.

Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.

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