Decarbonising Australia: can we create world leading clean energy industries?

Author Dr Peter Holt, Dr Gordon Weiss

Date May 2020

Energetics’ Dr Peter Holt and Dr Gordon Weiss are both long time advisors to governments and corporates on the challenge of achieving emissions reductions in significant footprints. In this article, based on our podcast, Peter interviews Gordon to discuss the findings from Gordon’s recent analysis of the effectiveness of Australia’s decarbonisation efforts to date. They also consider the technologies that could both deliver future abatement and offer new industry opportunities that are highly competitive, cost effective and capitalise on Australia’s vast renewable energy resources.

Australia’s emissions reduction record: little achieved beyond ‘business as usual’

Gordon Weiss’ recent reports show that Australia’s history of emissions reductions is one characterised by low ambition.  In the first Kyoto commitment period (2008 -2012), Australia’s target was 108% on our 1990 baseline emissions levels: permitting a net increase. With the second Kyoto period, Australia’s target became to achieve a 5% reduction on 2005 emissions by 2020. 

In the podcast Gordon stated, “Australia was given a very generous target at a time when there was a massive decline in land clearing, which had been a large source of emissions. Electricity generation was beginning to decarbonise with the rise of wind and solar power. As a result, Australia significantly exceeded their Kyoto target and in so doing, acquired carryover credits.”

The Australian government has - controversially - claimed the credits for application against our 2030 national target as committed under the Paris Agreement. The ability to use Kyoto credits in the post-Kyoto period under the Paris Agreement is one of the elements of the Paris Agreement which has not been concluded yet. It was a sticking point at the recent negotiations in Madrid.

Gordon said, “It’s clear in 2020 that we have not done enough as evidenced by the fact that the Australian government is flagging the use of the carryover units from the Kyoto Protocol. They know that projecting ahead business as usual emissions reductions do not get us to the Paris target. If we don't use the carryover credits, then we have to do more to meet the target.”

Certainly Energetics’ analysis shows that improvements anticipated between now and 2030 are either cost effective transitions – replacing aging coal-fired power stations with new renewable generators and adopting electric vehicles; or the natural evolution of technology.

There are few that agree with the Australian Government’s intended use of carryover credits. Energetics argues that the government should instead find ways to support new Australian technologies that could close the gap to the Paris target.

Gordon and Peter discussed measures such as bringing forward the closure of coal fired power stations and their replacement with renewable generation, citing the recently released AEMO Renewable Integration Study which considers the operation of the National Electricity Market with a much greater amount of electricity generated by renewables. As Gordon said, “We're also beginning to see the electrification of transport with electric vehicles and the electrification of space heating in the form of reverse cycle air conditioners and heat pumps. Together these technologies will reduce emissions when coupled with ever less emissions intensive electricity.”

Challenges facing Australia’s largest emitters

Electricity generation is the largest source of emissions and responsible for 34% of Australia’s emissions in 2019. Direct combustion (across energy, mining, manufacturing, building, agriculture forestry and fishing, and military) and transport each contribute 19% of Australia’s emissions. While emissions from agriculture, fugitives, industrial processes and waste together contribute the remainder of the nation’s emissions[1].

Gordon said, “If we consider electric vehicles, we are really just talking about electric cars and light commercial vehicles. It is more challenging to electrify heavy vehicle transport because there are different constraints. For example, different operating cycles apply to surface fleets on mine sites. These are very large vehicles that operate at all times and so there's not 12 hours available to recharge the batteries.“

He adds, “If we look at stationary energy, and in particularly the energy used for heating in industry there are challenges. Where gas is used in furnaces to heat to temperatures that are in the hundreds, if not thousands of degrees centigrade, and you cannot do that easily with renewables or with electrification. Gas is also needed to fire very large turbines which run rotating machines. That is where the energy goes in LNG trains. A LNG train is essentially a giant refrigerator with compressed air run by jet engines, which consume a very large amount of gas. Finding a low emissions alternative is challenging. That’s why there's so much hype around hydrogen, because renewable hydrogen is one way of generating high temperatures in a furnace or running a gas turbine to turn a large compressor.”

The hydrogen opportunity

As Peter pointed out, one of the great ironies of hydrogen is that it is by far the most common element in the universe and the third most common element on the surface of the Earth. However, it does not exist as hydrogen gas.

Hydrogen can be produced by electrolysis - the spinning of water into hydrogen and oxygen, and from steam reforming from a variety of carbon based molecules. Currently, most hydrogen gas is made by steam reforming of methane. However, as with methane, if the energy source is a fossil fuel, the hydrogen created contains embodied emissions.

On the other hand, as Gordon states, “If hydrogen is produced from a renewable source, such as renewable electricity, there aren't any embodied emissions. The challenge is that it is currently not cost effective. But the reason why Australia is so excited by the hydrogen opportunity is that we have the best renewable resources in the world. We have a large land mass, desert lands and huge wind resources. Australia has the potential to use our extraordinary renewable resources to generate electricity, which can then be used in very large electrolysis units to generate hydrogen for use as a fuel or a feedstock.”

Overcoming challenges

Peter noted that there are challenges with distributing hydrogen through pipelines. As a very small molecule which will find the smallest of cracks, if pipelines do not have the right seals, the metal can become brittle as the hydrogen penetrates it.

However, if around 10 to 15% hydrogen[2] is injected into the existing natural gas supply, it can be used in furnaces or for a cooktop or a hot water heater. Beyond this amount, the pipelines and end use equipment such as burners will be compromised.

Gordon also discussed the export opportunity, “If you want to send it overseas, hydrogen needs to be liquefied. Hydrogen liquefies at a far, far lower temperature than natural gas, so it's a lot more challenging. You can add it to other molecules. A very good example of that application is ammonia. However, it takes energy to transform the hydrogen into these other molecules, which decreases the efficiency of your process.”

Reducing Australia’s emissions and creating opportunities for new industries

Energetics’ position is that Australia is not doing enough to reduce our emissions. Restrictions on land clearing based reductions have worked in the past and renewable energy generation has proliferated, but much more is needed now to achieve deeper emissions reductions. As Gordon states, “For businesses there have been opportunities, from renewables right through to energy efficient lighting. However, now we are getting to the hard part.”

In an examination of the impact of COVID-19, there is much discussion about relying less on overseas supply chains.

One opportunity as discussed in the podcast, lies in battery technologies which in turn support the grid when there is high penetration of variable renewable energy. Australia is one of the world’s major suppliers of key raw materials used in manufacture of the current suite of battery technologies such as lithium, cobalt and graphite. Gordon noted, “Instead of shipping the raw materials overseas, batteries could be made locally. We’ve long heard the argument that we can't do things in in Australia because our labour is too expensive, this challenge is removed with the use of robotics.”

Similarly, hydrogen can be produced in Australia from renewables which in turn offers opportunities for an array of industries which can use hydrogen as a fuel source.

Backed by government, an economic recovery founded on renewable energy offers Australia the opportunity to secure a sustained competitive advantage.

 

References

[1] Weiss, G: “An examination of the 2019 emissions projection”, Energetics, 12.2.2020.

[2] Energy Networks Australia (ENA): “Renewable gas for the future: policies to support Australia’s sustainable and affordable gas network”, June 2019.