Energy in Australia 2014 Energy in Australia 2014
Energy in Australia 2014
BREE 2014, Energy in Australia 2014, Canberra, November. Commonwealth of Australia 2014 This work is copyright, the copyright being owned by the Commonwealth of Australia. The Commonwealth of Australia has, however, decided that, consistent with the need for free and open re-use and adaptation, public sector information should be licensed by agencies under the Creative Commons BY standard as the default position. The material in this publication is available for use according to the Creative Commons BY licensing protocol whereby when a work is copied or redistributed, the Commonwealth of Australia (and any other nominated parties) must be credited and the source linked to by the user. It is recommended that users wishing to make copies from BREE publications contact the Executive Director, Bureau of Resources and Energy Economics (BREE). This is especially important where a publication contains material in respect of which the copyright is held by a party other than the Commonwealth of Australia as the Creative Commons licence may not be acceptable to those copyright owners. The Australian Government acting through BREE has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, BREE, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law. ISSN (Online): 1833-038X Postal address: Bureau of Resources and Energy Economics GPO Box 1564 Canberra ACT 2601 Australia Email: chiefeconomist@industry.gov.au Web: www.bree.gov.au Acknowledgements: Energy in Australia 2014 was prepared by Allison Ball, Kieran Bernie, Alex Feng, Caitlin McCluskey, George Stanwix, Thomas Willcock and Nicholas Wokker. Visual analytics by Laura Jones and Jennifer Campbell, Department of Industry. Maps by Geoscience Australia. The authors would like to express their appreciation for the assistance provided by colleagues in BREE, Geoscience Australia, Department of Industry, Department of Environment, the Clean Energy Regulator, the Australian Bureau of Statistics, the Bureau of Infrastructure, Transport and Regional Economics, the Australian Energy Market Operator, the Independent Market Operator of Western Australia, and Northern Territory Power and Water Corporation. Cover image source: Shutterstock
Foreword Australia s economy and prosperity are built on access to secure, affordable and reliable energy. Our energy diversity is one of Australia s natural strengths and one of our best competitive advantages. This diversity provides Australian homes and business access to the energy needed to build our industries and our communities. Our coal, gas and uranium exports supply global markets hungry for energy security. The depth of the Australian energy resource base will support continued energy production well into the future. The energy sector plays a vital role in the Australian economy, accounting for 7 per cent of GDP and $71.5 billion in export earnings in 2013 14. Australia is the among the world s largest exporters of LNG, coal and uranium, and our importance to global energy markets will continue to grow. Energy related industries also contributed 1.5 per cent to total Australian employment in 2013 14, and provided significant infrastructure investments. The Australian energy market has undergone significant transformation in recent years as a result of declining demand and changing patterns of consumption. It is essential that we have a long-term framework in which the energy sector can grow, and adapt to the transformations taking place in Australian and global energy markets. In September, the Australian Government released the Energy Green Paper, ahead of the preparation of the Energy White Paper which will be a comprehensive blueprint for Australia s energy future. i
The Green Paper is built around four key themes attracting energy resources investment, electricity prices, building gas supply and improving market operation and security, and innovation and energy productivity. Getting our policy settings right will facilitate further growth and enhance productivity. To visualise and plan for where we are going, it is vital to know where we are now. Energy in Australia 2014 provides facts and figures on Australia s energy sector, covering all areas of energy production and use, from natural resources through to final consumption. Now in its tenth year, Energy in Australia 2014 is an essential source of information for policy makers and industry alike in understanding Australia s energy markets, how we supply and use energy in Australia, and informing policy development and investment in the energy sector. The production of objective economic advice, analysis and statistics for the resources and energy sectors is a high priority for the Australian Government. From 1 December, the activities of the Bureau of Resources and Energy Economics will come under the Office of the Chief Economist in the Department of Industry. This will consolidate the Department s extensive economic expertise in one place, and ensure that timely, accurate and objective information on Australia s resources and energy sectors continues to be available to all. The Hon Ian Macfarlane MP Minister for Industry ii
Contents Foreword... i Data sources...vi Abbreviations and acronyms...vii Overview...viii Energy resources... 1 Energy production... 1 Economic contribution... 3 Energy consumption... 4 Energy trade... 6 2. Energy resources... 11 Overview... 12 Coal... 16 Oil... 16 Gas... 17 Renewables... 19 3. Energy consumption... 23 Overview... 24 Energy intensity... 25 By energy type... 26 By industry... 30 Energy efficiency... 35 Energy expenditure... 37 iii
4. Electricity... 39 The Australian electricity market... 40 Electricity production... 42 Capacity... 46 Electricity consumption... 49 Electricity prices... 52 5. Renewable energy... 57 Overview... 58 Production and consumption... 58 Electricity generation... 61 Solar energy... 66 Wind energy... 68 6. Coal... 69 Production... 70 Consumption... 73 Trade... 75 Prices... 78 Low emissions coal... 79 7. Gas... 81 Overview... 82 Production... 82 Domestic consumption... 88 LNG exports... 91 Prices... 95 iv
8. Petroleum production and refining... 99 Overview... 100 Upstream production... 100 Downstream production... 104 Non-conventional liquid fuels...114 Prices...116 9. Transport... 119 Energy use... 120 Fuel standards... 125 Fuel prices... 125 10. International comparison... 127 Energy prices... 128 Energy resources... 128 Renewables... 135 Energy consumption... 135 Energy trade... 135 Appendix: Units and conversions... 139 v
Data sources The information in Energy in Australia 2014 is obtained from BREE and other sources, listed below. It is based on latest data available at the time of compilation, which can vary between datasets, energy types and industries. In particular, energy consumption statistics tend to lag behind energy production and trade statistics. Australian statistics are generally reported in fiscal years (1 July to 30 June), while international comparisons are generally reported in calendar years. AME Group www.amegroup.com Australian Bureau of Statistics www.abs.gov.au Australian Energy Market Commission www.aemc.gov.au Australian Energy Market Operator www.aemo.com.au Australian Energy Regulator www.aer.gov.au Australian Institute of Petroleum www.aip.com.au Biofuels Association of Australia www.biofuelsassociation.com.au BP www.bp.com Bureau of Infrastructure, Transport and Regional Economics www.bitre.gov.au Bureau of Resources and Energy Economics www.bree.gov.au Clean Energy Regulator www.cleanenergyregulator.gov.au Department of Industry www.industry.gov.au Energy Supply Association of Australia www.esaa.com.au EnergyQuest www.energyquest.com.au Geoscience Australia www.ga.gov.au Independent Market Operator www.imowa.com.au International Energy Agency www.iea.org vi
Abbreviations and acronyms ABS AEMC AEMO AER BREE CCS CER CSG EDR ESAA IEA LNG LPG MEPS NEM NGL OECD OPEC ORF PJ SDR TWh WEM Australian Bureau of Statistics Australian Energy Market Commission Australian Energy Market Operator Australian Energy Regulator Bureau of Resources and Energy Economics Carbon capture and storage Clean Energy Regulator Coal seam gas Economic demonstrated resources Energy Supply Association of Australia International Energy Agency Liquefied natural gas Liquefied petroleum gas Minimum energy performance standards National electricity market Natural gas liquids Organisation for Economic Cooperation and Development Organization of the Petroleum Exporting Countries Other refinery feedstock Petajoules Sub-economic demonstrated resources Terawatt hours Wholesale Electricity Market, Western Australia vii
1 1. Overview $71.5 billion Energy exports in 2013 14 7% Energy industry share of economy in 2013 14 68% Net exports share of energy production in 2012 13 8th Largest energy producer in the world in 2012 viii
Energy resources Australia has extensive and diverse energy resources, including both renewable and non-renewable energy. Fossil fuel resources include black and brown coal, and conventional and unconventional gas and oil. Australia also has the world s largest uranium resources. Renewable energy resources include wind, solar, hydro, bioenergy, geothermal, wave and tidal. These resources are widely distributed around the country and with the exception of oil, are expected to last for many more decades, even with increasing production. 1 Energy production Australia produces energy for its own use and for export overseas. Primary energy production in Australia was 19 318 petajoules in 2012 13. Net exports (exports minus imports) were equivalent to 68 per cent of energy production in that year. Australia is the world s eighth largest energy producer, accounting for 2.4 per cent of world energy production in 2012. Coal accounted for 59 per cent of Australia s energy production on an energy content basis in 2012 13, followed by uranium (22 per cent). Natural gas accounted for 13 per cent of energy production, oil a further 5 per cent, while renewable energy mostly bioenergy and hydro contributed 2 per cent. Energy production rose by 9 per cent in 2012 13, supported by increased black coal, uranium and natural gas production for export markets. Over the past ten years, energy production has grown by 2 per cent a year on average. Queensland and New South Wales are the largest energy producing states, with most of Australia s black coal production. 1
Figure 1.1: Australia s energy production, by fuel type 20 000 15 000 10 000 5 000 PJ 1977-78 1982-83 1987-88 1992-93 1997-98 2002-03 2007-08 2012-13 Coal Uranium Natural gas Oil and LPG Renewables Source: BREE 2014, Australian Energy Statistics, Table J. Figure 1.2: Australia s energy production and consumption, by state and territory, 2012 13 7 000 6 000 5 000 4 000 3 000 2 000 1 000 PJ NSW/ACT Vic Qld WA SA Tas NT production consumption Source: BREE 2014, Australian Energy Statistics, Tables C, I. 2
Table 1.1: Australia s energy production, by fuel type, 2012 13 1 2012-13 average annual growth PJ share (%) 2012-13 (%) 10 years (%) Black coal 10 790 55.9 9.2 4.1 Brown coal 647 3.4-13.3-1.3 Natural gas 2 439 12.6 14.3 5.8 Crude oil and condensate 787 4.1-11.6-4.0 LPG 95 0.5-7.5-3.0 Renewables 330 1.7 11.5 1.9 Uranium 4 229 21.9 17.5-0.7 Total 19 318 100.0 9.4 2.3 Source: BREE 2014, Australian Energy Statistics, Table J. Economic contribution The energy industry is an important part of the Australian economy. In 2013 14 it contributed nearly $106 billion to industry gross value added, around 7 per cent of Australia s gross domestic product. The coal mining and oil and gas extraction industries are the largest, contributing $64 billion to industry gross value added in 2013 14. The electricity supply industry contributed a further $22 billion. Energy related industries also contributed 1.5 per cent to total Australian employment in 2013 14, and provided significant infrastructure investments. 3
Energy consumption Australia s energy consumption has been growing slowly over the past ten years, at an average annual rate of 1.1 per cent. In 2012 13, primary energy consumption declined by 0.5 per cent, to 5884 petajoules, mainly due to a decline in energy use in the electricity generation sector. The electricity generation, manufacturing and transport sectors are the largest energy consumers in Australia, accounting for around three-quarters of energy consumption in 2012 13. Oil is the largest source of energy in Australia, accounting for 38 per cent of primary energy consumption in 2012 13. Coal accounted for a further 33 per cent of energy consumption in 2012 13, its lowest share since the early 1970s. Natural gas and renewable energy accounted for 24 per cent and 6 per cent respectively. Of the 6 per cent renewables, the majority was provided by bioenergy and hydro. Figure 1.3: Australia s primary energy consumption, 2012 13 Oil 37.7% Gas 23.6% Renewables 5.6% Coal 33.1% Bioenergy 3.6% Hy dro 1.1% Wind 0.4% Solar 0.5% Source: BREE 2014, Australian Energy Statistics, Tables A, D. 4
Table 1.2: Australia s energy-related industries 2012-13 2013-14 1 gross value added gross fixed capital formation employment gross value added employment A$b A$b 000 A$b 000 Coal mining 28.9 12.1 45.6 31.1 56.9 Oil and gas extraction Petroleum and coal product manufacturing Electricity supply 32.0 50.5 20.4 32.8 24.2 19.1 0.3 10.0 18.1 7.4 22.7 12.8 69.8 22.2 62.8 Gas supply 1.4 0.8 11.3 1.4 18.6 Energy industries total Australian total Share of Australian total (%) 104.1 76.6 157.1 105.6 169.9 1 525.3 211.6 11 388.7 1 569.5 11 482.1 6.8 36.2 1.4 6.7 1.5 Notes: Renewable energy is not available as a separate industry. Gross fixed capital formation not available for 2013-14 at the time of compilation. Sources: ABS 2014, 5206.0 Australian National Accounts: National Income, Expenditure and Product; 8155.0 Australian Industry; 6291.0 Labour Force, Australia. 5
Energy trade Australia s net energy exports (exports minus imports) in 2012 13 were equivalent to 68 per cent of production. Energy exports accounted for 31 per cent of the value of Australia s total commodity exports in 2013 14, and were valued at $71.5 billion. Coal was the largest energy export earner, with a value of around $40 billion in 2013 14, followed by LNG ($16.4 billion) and crude oil ($11.1 billion). Earnings from energy exports fell by 12 per cent in 2012 13, largely as a result of lower coal prices. Earnings rose by 6 per cent in 2013 14, supported by higher LNG prices. Australia s real energy export earnings have increased by 8 per cent a year on average over the past ten years. Figure 1.4: Australia s energy exports 90 80 70 60 50 40 30 20 10 2013-14 A$b 1989-90 1992-93 1995-96 1998-99 2001-02 2004-05 2007-08 2010-11 2013-14 Coal Crude, ORF, LPG Petroleum products LNG Uranium Source: BREE 2014, Resources and Energy Quarterly. 6
Box 1: Energy flows through the Australian economy 1 Australia produces energy directly from natural resources, such as coal, crude oil, natural gas and wood, referred to as primary energy. This primary energy can be exported, or used domestically. Domestically, primary energy is generally transformed in power plants and refineries into other types of energy such as electricity, petrol and diesel (derived fuels), for use by Australian industries and households. Industries and households can also use primary energy sources such as natural gas and wood directly. Australia imports both primary energy such as crude oil, and derived energy products such as diesel and petrol. Energy consumption is a net concept. To avoid double counting, derived fuels that are produced domestically are subtracted from primary fuels, as the energy embodied in these fuels is already accounted for in the primary fuels that they are produced from. Figure 1.5 shows the flow of energy through the Australian economy. In 2012 13 Australia produced 2439 petajoules of natural gas, and imported a further 244 petajoules of gas from the Joint Petroleum Development Area in the Timor Sea. Of this combined total, 1303 petajoules were exported as liquefied natural gas, 588 petajoules were transformed into other energy types such as electricity, and 799 petajoules were used directly by industries and households (plus a statistical discrepancy of 6 petajoules). 7
Figure 1.5: Australia s energy flows, petajoules, 2012 13 Source: BREE 2014, Australian Energy Update. 8
Figure 1.6: Energy trade insight 1 Source: BREE 2014, Australian Energy Statistics, Resources and Energy Quarterly. 9
Australia s energy imports were valued at $40.8 billion in 2012 13. Crude oil and refined petroleum products were the predominant energy imports, which were valued at $20.4 billion and $17.9 billion respectively. Australia is a net importer of crude oil and refined petroleum products, with net imports accounting for 35 per cent of oil consumption in 2012 13, compared with 7 per cent a decade ago. Figure 1.7: Australia s energy imports 45 40 35 30 25 20 15 10 5 2013-14 A$b 1993-94 1997-98 2001-02 2005-06 2009-10 2013-14 Crude and ORF Petroleum products Natural gas Note: Natural gas value confidential from 2013 14. Source: BREE 2014, Resources and Energy Quarterly. 10
2. Energy Resources 2 $5.3 billion Exploration expenditure on energy in 2013 14 1st Largest uranium resources in the world in 2013 9% Share of world black coal resources in 2013 7-10 years Crude oil resources remaining in 2012 11
Overview Energy can be extracted or captured directly from natural resources, including coal, crude oil, natural gas, wood, wind and solar energy, or by transforming these sources into other types of energy, such as burning coal to make electricity and refining crude oil to make petrol and diesel. Australia has abundant and diverse natural resources, including non-renewable and renewable resources. These high quality energy resources are widely distributed across the country and supply energy for domestic consumption and the world market. Australia holds the world s largest economic uranium resources, the fourth largest black and brown coal resources, and substantial conventional and unconventional gas resources. This globally significant resource base is capable of meeting domestic and export demand for many more decades. There remain significant underexplored and unquantified resources both onshore and offshore, with the potential for future resource discovery and development. Identified resources of crude oil, condensate and liquefied petroleum gas are more limited, and Australia is increasingly reliant on oil imports. Australia has significant renewable energy resources, with utilisation growing strongly over the past decade. Australia has some of the highest solar radiation levels per square kilometre of any continent in the world. Wind, geothermal, wave and tidal energy resources are also world class and hold considerable potential. 12
Figure 2.1: Energy Resources Insight AUSTRALIA S ECONOMIC DEMONSTRATED RESOURCES OF GAS 150 000 120 000 CONVENTIONAL GAS 2 90 000 60 000 30 000 COAL SEAM GAS PJ 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 AUSTRALIA S ECONOMIC DEMONSTRATED RESOURCES OF OIL 30 000 25 000 20 000 15 000 LPG CONDENSATE 10 000 5 000 CRUDE OIL PJ 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 AUSTRALIA S ECONOMIC DEMONSTRATED RESOURCES OF COAL 2 500 000 2 000 000 1 500 000 BLACK COAL 1 000 000 500 000 BROWN COAL PJ 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: Geoscience Australia. 13
Table 2.1: Australia s Economic Demonstrated Resources, as at December 2013 Share of world Resources to production Volume PJ % Years a Coal Brown 44.2 Gt 454 889 22 510 Black 62.1 Gt 1 691 468 9 110 Oil b Crude 856 Mbbl 5 038 0.2 7-10 LPG 959 Mbbl 4 118 na 16 Condensate 1 938 Mbbl 11 403 na 25 Gas Conventional b 2.83 tcm 110 120 1.6 51 Coal seam gas 1.16 tcm 45 013 na 150 Uranium c 1 167 kt 601 005 34 170 a 2012 production rate. b As at December 2012. c Reasonably assured resources recoverable at costs less than US$130/kg. Sources: Geoscience Australia 2014, Australia s Identified Mineral Resources; Geoscience Australia and BREE 2014, Australian Energy Resource Assessment; BP 2014, Statistical Review of World Energy. 14
Map 2.1: Australia s energy resources, excluding hydro and bioenergy 2 Source: Geoscience Australia and BREE 2014, Australian Energy Resource Assessment. 15
Coal Australia holds around 9 per cent of the world s proven reserves of black coal and 22 per cent of the world s proven reserves of brown coal. Australia s total coal reserves rank fourth behind the United States (27 per cent), Russia (18 per cent) and China (13 per cent). At the end of 2013, Australia s recoverable Economic Demonstrated Resources (EDR) of black coal were estimated at 1 691 468 petajoules (62.1 Gt). It is estimated that there are a further 137 045 petajoules (5.1 Gt) of Sub-economic Demonstrated Resources (SDR) of black coal. Brown coal EDR were estimated at 454 889 petajoules (44.2 Gt) at end of 2013. At current production rates, Australia s black coal EDR will support a further 110 years of production. Accessible brown coal EDR will support a further 510 years of production. Coal deposits are generally located in the east of Australia close to areas of domestic energy demand. Most of Australia s recoverable black coal EDR is located in Queensland (61 per cent) and New South Wales (36 per cent), in the Bowen, Surat and Sydney basins. The majority of Australia s brown coal resources are in Victoria s Gippsland Basin. Oil Australia has limited resources of crude oil, and most known remaining oil resources are condensate and naturally occurring liquefied petroleum gas (LPG) associated with large offshore gas fields. Australia holds around 0.2 per cent of world crude oil reserves. At the end of 2012, Australia s EDR of oil were estimated at 20 559 petajoules (3753 Mbbl), comprising 11 403 petajoules (1938 Mbbl) of condensate, 5038 petajoules (856 Mbbl) of crude oil and 4118 petajoules (959 Mbbl) of LPG. Australia s ratio of EDR to current production is estimated at around 16 years for LPG, 7 to 10 years 16
for crude oil and 25 years for condensate. The ratio for oil has remained around this level since the 1980s due to new discoveries and existing resources becoming more economic. Approximately 94 per cent of Australia s oil resources are located in four basins. These are the Carnarvon, Browse and Bonaparte Basins off the north-west coast of Western Australia and the Northern Territory, and the Gippsland Basin off the south-east coast of Victoria. 2 Gas Australia holds approximately 2 per cent of world EDR of conventional gas. At the end of 2012, Australia s EDR of conventional gas were estimated at 110 120 petajoules (2.83 tcm). At current production rates, there are sufficient EDR of conventional gas to last another 51 years. Australia also has significant unconventional gas resources. Coal seam gas (CSG) EDR has doubled in the past three years to an estimated 45 013 petajoules (1.16 tcm) at the end of 2013. This is equivalent to more than one-third of Australia s conventional EDR. Total identified resources of CSG are estimated to be 223 454 petajoules (5.75 tcm). Australia may also have significant resources of shale and tight gas, although estimates of potential resources have a high degree of uncertainty. Most (around 92 per cent) of Australia s conventional gas resources are located in the Carnarvon, Browse and Bonaparte basins off the north-west coast. There are also resources in south-west, southeast and central Australia. Large CSG resources exist in the coal basins of Queensland and New South Wales. Most potential shale gas resources are in South Australia. 17
Uranium Australia has the world s largest EDR of uranium with an estimated 601 005 petajoules (1167 kt) at the end of 2013. This represents around one-third of global resources. At current rates of production, Australia s uranium resources are sufficient for a further 170 years of production. The majority of Australia s uranium resources are located in South Australia, the Northern Territory and Western Australia. The Olympic Dam deposit in South Australia is the world s largest uranium deposit. Australia has significant potential for the discovery of new uranium resources, including through the newly released Woomera Protected Area in South Australia. Exploration Exploration expenditure on energy resources in Australia was $5.3 billion in 2013 14, one of the highest levels of spending on record. Oil and gas accounted for 92 per cent of total expenditure in 2013 14, at around $4.9 billion. Oil and gas spending rose by 46 per cent in 2012 13, reflecting historically high oil prices and the large number of projects under development. This level of spending was maintained in 2013 14. In contrast, coal and uranium exploration spending has dropped significantly in the past two years, as Australia continues to transition from the investment to production phase of the mining boom. Slowed expenditure can also be attributed to softening coal and uranium prices and risk mitigation as companies look to confirm brownfield reserves instead of expanding into higher risk greenfield exploration activities. 18
Figure 2.2: Australia s energy exploration expenditure 6000 5000 4000 2 3000 2000 1000 2013-14 A$m 1999-00 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 Oil and gas Black coal Uranium Source: ABS 2014, 8412.0 Mineral and petroleum exploration. Renewables Australia has a rich diversity of renewable energy resources, including wind, solar, geothermal, hydro, wave, tidal and bioenergy. Uptake of renewable energy is growing and there is significant potential for further development. Renewable energy resources are generally transient and not always available, and are therefore not readily classifiable and comparable to non-renewable resources. Australia s wind resources are some of the best in the world, primarily in the south-western, southern and south eastern margins and extending hundreds of kilometres inland. These resources are making an increasing contribution to Australia s electricity generation. High solar radiation levels over much of Australia provide some of the best solar resources in the world, and developments in commercial scale solar technologies are expected to encourage further utilisation. The annual solar radiation falling on Australia is approximately 58 000 000 petajoules, nearly ten thousand times larger than Australia s current annual energy consumption. 19
Map 2.2: Australia s solar energy potential Source: Geoscience Australia and BREE 2014, Australian Energy Resource Assessment. Australia has significant geothermal resources, potentially suitable for electricity generation and direct use. Identified geothermal resources as of December 2012 are estimated at around 440 570 petajoules. However, some of the more prospective geothermal resources in central Australia are long distances from infrastructure and centres of demand, and potentially costly to develop. There is presently no commercial scale production of geothermal electricity in Australia. 20
Map 2.3: Australia s geothermal energy potential 2 Source: Geoscience Australia and BREE 2014, Australian Energy Resource Assessment. Australia has world class wave energy potential, particularly along the south-western and southern coasts. Australia also has potential tidal energy resources off the northwest coast of Western Australia. Wave and tidal energy projects are still at the development/pilot stage. Hydro has limited potential for further development, with any future growth being determined by water availability. Australia s technically feasible hydro energy potential is estimated to be around 216 petajoules a year. 21
Map 2.4: Australia s wind energy potential Source: Geoscience Australia and BREE 2014, Australian Energy Resource Assessment. Potential bioenergy resources in Australia are large and diverse. Bioenergy is derived from biomass (organic materials) to generate electricity and heat, and to produce liquid fuels for transport. Potential resources include wood, wood waste, bagasse, gas from landfill and sewage, crops and animal fats. Commercialisation of advanced bioenergy technologies is likely to increase the range of resources, such as non-edible parts of plants and algae. 22
3. Energy Consumption 5884 PJ 3 Energy consumption in 2012 13 38% Oil share of energy consumption in 2012 13 9% Increase in energy use in mining in 2012 13 28% Electricity industry share of energy consumption in 2012 13 23
Overview Australia consumed 5884 petajoules of energy in 2012 13, with 94 per cent coming from fossil fuel sources (coal, oil and gas). Australia was the world s nineteenth largest energy consumer in 2012, and ranked sixteenth on a per person basis. While Australia s long-term economic growth has been relatively stable over recent decades, growth in energy consumption has gradually slowed over the same period. Before the 1990s, Australia s growth in energy consumption largely mirrored economic growth. Following average annual growth of around 5 per cent during the 1960s, growth in energy consumption fell during the 1970s to around 4 per cent a year, largely as a result of the two oil price shocks. During the 1980s, economic recession and rising energy prices resulted in annual growth falling to around 2.5 per cent. In the 1990s annual growth in energy consumption remained around 2.6 per cent, and around 1.7 per cent in the 2000s. Since 2010 11, Australia s energy consumption has been relatively flat, with a fall in energy use in electricity generation offsetting growth in end use sectors such as manufacturing, transport and mining. 24
Figure 3.1: Annual growth in Australia s energy consumption 600 500 400 300 200 3 100 1964-65 = 100 1964-65 1970-71 1976-77 1982-83 1988-89 1994-95 2000-01 2006-07 2012-13 GDP Source: BREE 2014, Australian energy statistics, Table B. Energy consumption Energy intensity Since the 1990s, there has been a steady decline in energy intensity (the ratio of energy use to activity in the Australian economy). This can be attributed mainly to improvements in energy efficiency associated with technological advancement, and a shift in industry structure towards less energy-intensive sectors such as commercial and services. In 2012 13, energy intensity, as defined by the ratio of energy consumption to gross domestic product, declined by 3 per cent. Trends in energy intensity are not uniform across states and territories. Western Australia and Queensland have higher energy intensities than other states, mainly due to the mining and energy intensive manufacturing industries accounting for a higher proportion of their economies and energy consumption. Tasmania has a lower energy intensity, with less energy-intensive industry sectors than in other states. 25
Figure 3.2: Energy intensity trends, by state 110 100 90 80 70 1992-93 = 100 1992-93 1997-98 2002-03 2007-08 2012-13 Aus Vic WA NSW SA QLD Tas Source: BREE 2014, Australian Energy Statistics, Table B. By energy type Fossil fuels including coal, oil and gas dominate Australia s primary energy consumption. Oil is Australia s largest source of energy, accounting for 38 per cent of consumption in 2012 13. Increased use of oil in the mining and transport sectors contributed to growth of 1 per cent in oil consumption in 2012 13. Coal is the second largest primary fuel consumed in Australia, but its share of total energy consumption is falling. In 2012 13 black and brown coal accounted for 33 per cent of energy consumption, the lowest share since the early 1970s. Coal consumption fell by 6 per cent in 2012 13, underpinned by falling coal use in the electricity generation and iron and steel sectors. 26
The share of natural gas in Australia s energy mix has increased in recent years, supported by greater uptake in the electricity generation sector and growth in industrial use, particularly in the non-ferrous metals sector. In 2012 13, natural gas accounted for 24 per cent of energy consumption. Gas consumption rose by 2 per cent in 2012 13, supported by an expansion in alumina output and additional gas-fired electricity generation capacity. Renewable energy sources accounted for the remaining 6 per cent of Australia s energy consumption in 2012 13. Renewable energy consumption rose by 12 per cent in 2012 13, with growth in all renewable energy sources except for biogas and biofuels. 3 Figure 3.3: Australia s primary energy consumption, by energy type 6 000 5 000 4 000 3 000 2 000 1 000 PJ 1972-73 1976-77 1980-81 1984-85 1988-89 1992-93 1996-97 2000-01 2004-05 2008-09 2012-13 Coal Oil Gas Renewables Source: BREE 2014, Australian Energy Statistics, Table C. 27
Figure 3.4: Fuel mix in primary energy consumption, 2012 13 100% 80% 60% 40% 20% 0% Aus NSW Vic Qld WA SA Tas NT Coal Oil Gas Renewables Source: BREE 2014, Australian Energy Statistics, Table C. Table 3.1: Australia s primary energy consumption, by energy type, 2012 13 2012-13 average annual growth PJ share (%) 2012-13 (%) 10 years (%) Coal 1 946 33.1-5.9-1.4 Oil 2 221 37.7 1.3 2.4 Gas 1 387 23.6 2.2 3.3 Renewables 330 5.6 11.5 1.9 Total 5 884 100-0.5 1.1 Source: BREE 2014, Australian Energy Statistics, Table C. 28
Table 3.2: Australia s energy consumption, by energy type, 2012 13 PJ Consumption Black coal 1 319 Brown coal 646 Coke 60 Coal by-products 55 Liquid/gas biofuels 27 Wood, wood waste 89 Bagasse 95 Refinery input 1 443 Petroleum products 2 250 Natural gas 1 387 Solar hot water 13 Total electricity 897 hydro electricity 66 wind electricity 26 solar electricity 14 3 Production of derived fuels Coke 78 Coal by-products 56 Petroleum products a 1 472 Thermal electricity 791 Total energy consumption b 5 884 a Production may exceed refinery input as some petroleum products are produced from other petroleum products. b Total energy consumption is the total quantity of primary and derived fuels consumed less the quantity of derived fuels produced. Source: BREE 2014, Australian Energy Statistics, Tables A and F. 29
By industry Australian energy consumption fell marginally in 2012 13. Growth in energy consumption in the mining, manufacturing and commercial and services sectors was offset by a fall in energy use for electricity generation. Final energy consumption (energy consumed by end-use sectors excluding energy used in energy transformation/conversion activities such as electricity generation) rose by 2 per cent in 2012 13. The electricity, transport and manufacturing sectors were the largest energy users in 2012 13. Together these sectors accounted for around three-quarters of Australia s energy consumption. The electricity sector accounted for the largest share, 28 per cent in 2012 13. In 2012 13, energy consumption in this sector (including fuel inputs to electricity generation and own use) declined by 6 per cent, mainly due to reduced electricity demand. The transport sector was the second largest energy consumer, accounting for 26 per cent of the total. In 2012 13, increased energy use in road, rail and air transport resulted in a marginal increase in energy consumption in the transport sector. New South Wales and Victoria, the largest two energy consuming states, together account for around half of energy consumption in Australia. In all states and territories except Tasmania and North Territory, electricity, transport, and manufacturing are the largest energy using sectors. The electricity sector has the highest share in Victoria, accounting for 36 per cent of state energy consumption in 2012 13; while transport has the highest share in New South Wales. The mining sector is among the largest energy users in the Northern Territory and Western Australia. 30
Figure 3.5: Australia s energy consumption, by industry 6 000 5 000 4 000 3 000 2 000 3 1 000 PJ 0 1976-77 1980-81 1984-85 1988-89 1992-93 1996-97 2000-01 2004-05 2008-09 2012-13 Electricity generation Transport Manufacturing Mining Residential Commercial, services Other Source: BREE 2014, Australian Energy Statistics, Table E. Table 3.3: Australia s energy consumption, by industry, 2012 13 2012-13 average annual growth PJ share (%) 2012-13 (%) 10 years (%) Agriculture 99 1.7 1.1 0.2 Mining 486 8.3 8.7 5.7 Manufacturing 1 275 21.7 1.5 1.0 Construction 25 0.4-1.6-1.1 Electricity generation 1 626 27.6-5.9-0.2 Transport 1 545 26.3 0.2 1.8 Commercial and services 308 5.2 3.2 1.6 Residential 454 7.7 0.3 1.0 Other a 66 1.1-2.4-2.5 Total 5 884 100-0.5 1.1 a Includes consumption of lubricants and greases, bitumen and solvents, and energy consumption in the gas production and distribution industries. Source: BREE 2014, Australian Energy Statistics, Table E. 31
Table 3.4: Australia s energy balance, 2012 13 Supply Coal, coal byproducts Natural gas Crude oil, Refined ORF LPG products Liquid/gas biofuels PJ PJ PJ PJ PJ PJ Primary indigenous 11 437.6 2 439.2 786.9 95.3 26.5 plus all imports 1.2 244.4 1 159.7 24.8 879.6 less all exports 9 485.4 1 302.6 583.2 64.4 125.0 less stock changes and discrepancies 6.7-6.1-79.7-0.3 32.8 Total primary energy supply a 1 946.7 1 387.1 1 443.1 56.0 721.8 26.5 less conversions Coke ovens 12.0 0.1 Petroleum refining 15.9 1 440.4-23.6-1 430.6 Gas manufacturing 0.1 0.0 Electricity generation 1 739.3 517.5 0.2 0.0 37.3 11.7 Other conversion b 57.3 20.6-8.3 9.3 Fuel use in conversion 33.9 0.2 102.2 Consumption Total final energy consumption c 138.1 799.1 2.5 87.7 2 003.4 14.8 Agriculture 0.9 1.9 88.5 Mining 3.3 174.5 1.8 1.7 212.2 1.7 Food, beverages, textiles 11.4 40.2 0.6 1.9 2.6 0.6 Wood, paper and printing 4.4 18.9 0.7 0.4 0.7 Chemical 9.3 126.0 13.9 59.5 0.3 Iron and steel 23.6 16.5 0.0 0.7 Non-ferrous metals 54.8 146.2 0.1 83.4 0.1 Other industry 24.0 64.1 6.4 6.8 2.8 Construction 2.9 0.2 21.3 Road transport 3.1 41.6 1 094.8 8.5 Rail transport 0.0 0.0 0.0 42.9 Air transport d 271.1 Water transport d 6.3 37.1 Commercial and services e 0.9 51.0 3.6 27.5 Residential 0.0 154.8 15.8 1.0 Lubes, bitumen, solvents 53.3 Totals may not add due to rounding. a Total primary energy supply is a measure of the total energy supplied within the economy. It is equal to indigenous production plus imports minus exports, plus stock changes and statistical discrepancies. b Includes return streams to refineries from the petrochemical industry, consumption of coke in blast furnaces, blast furnace gas manufacture, briquette manufacturing and lignite tar in char manufacture. 32
Table 3.4: Australia s energy balance, 2012 13 (continued) Supply Biomass Wind Solar Hydro Total electricity Uranium oxide Total PJ PJ PJ PJ PJ PJ PJ Primary indigenous 184.4 26.4 26.6 65.8 4 229.5 19 318.1 plus all imports 2 309.7 less all exports 3 943.8 15 504.3 less stock changes and discrepancies 285.7 239.1 Total primary energy supply a 184.4 26.4 26.6 65.8 5 884.4 less conversions Coke ovens 0.1 12.2 Petroleum refining 6.5 8.7 Gas manufacturing 0.2 Electricity generation 11.4 26.4 13.7 65.8-896.7 1 526.6 Other conversion b 0.2 79.1 Fuel use in conversion 99.1 235.4 Consumption Total final energy consumption c 173.0 12.8 790.7 4 022.1 Agriculture 8.0 99.3 Mining 0.0 90.8 486.1 Food, beverages, textiles 89.5 23.2 170.2 Wood, paper and printing 26.8 17.4 69.4 Chemical 0.5 16.5 226.0 Iron and steel 11.1 52.0 Non-ferrous metals 1.6 133.3 419.5 Other industry 1.5 29.1 134.6 Construction 0.3 24.7 Road transport 1 148.0 Rail transport 8.5 51.5 Air transport d 271.1 Water transport d 43.5 Commercial and services e 0.3 0.4 234.9 318.6 Residential 52.8 12.5 217.5 454.4 Lubes, bitumen, solvents 53.3 3 c Total final energy consumption is the total energy consumed in the final or end-use sectors. It is equal to total primary energy supply less energy consumed or lost in conversion, transmission and distribution. d Includes air and water transport bunker fuels. e Includes ANZSIC 281 water and sewage and ANZSIC 50-53 other transport, services and storage. Source: BREE 2014, Australian Energy Statistics, Table A. 33
Figure 3.6: Australia s energy snapshot, 2012 13 27% 23% 23% Northern Territory Energy consumption 97 PJ Energy consumption per person 403 GJ Energy consumption per $million GSP 4884 GJ 27% 23% 22% Western Australia Energy consumption 1035 PJ Energy consumption per person 411 GJ Energy consumption per $million GSP 4091 GJ 28% 25% 25% Queensland Energy consumption 1326 PJ Energy consumption per person 285 GJ Energy consumption per $million GSP 4502 GJ 32% 26% 21% New South Wales and Australian Capital Territory Energy consumption 1573 PJ Energy consumption per person 202 GJ 31% 20% 17% Energy consumption per $million GSP 3110 GJ South Australia Energy consumption 330 PJ Energy consumption per person 198 GJ Energy consumption per $million GSP 3503 GJ 35% 25% 16% Victoria Energy consumption 1413 PJ Energy consumption per person 246 GJ Energy consumption per $million GSP 4238 GJ 34% 27% 13% Tasmania Energy consumption 110 PJ Energy consumption per person 214 GJ Energy consumption per $million GSP 4547 GJ 28% 26% 22% 8% 8% 8% Electricity Supply Transport Manufacturing Mining Residential Other Australia at a glance Energy consumption 5884 PJ Energy consumption per person 254 GJ Energy consumption per $million GDP 3857 GJ Source: BREE 2014, Australian Energy Statistics. 34
Energy efficiency Australia is becoming more energy efficient as a result of new technologies, policies and regulations, and changes in consumer behaviour. Over the last two decades there has been a significant coordinated effort between Australian and state and territory governments to ensure that energy efficiency opportunities are recognised and realised. In 2009, Australian governments entered into a national partnership agreement and developed a National Strategy on Energy Efficiency to accelerate energy efficiency efforts. Energy efficiency improvements are occurring in large industrial energy users, in buildings, transport, and in household energy use. In particular, improved efficiency of appliances such as refrigeration, air conditioning and electronics, and more stringent energy efficiency requirements in the Building Code, are influencing Australia s energy use trends, along with consumer responses to higher prices. For example, air conditioners today are around one-third more efficient than a decade ago, supported by the introduction of Minimum Energy Performance Standards (MEPS) from 2001. The least efficient air conditioner (of 4 kilowatts or less) today is more efficient than the most efficient air conditioner on the market in 2002. 3 35
Figure 3.7: Efficiency of new air conditioners (<4kw split systems) 6.0 Energy Efficiency Ratio 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 MEPS level Oct 2001 MEPS level Apr 2006 MEPS level Apr 2010 MEPS level Oct 2011 1.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Registered energy efficiency ratio Average energy efficiency ratio Source: Department of Industry, 2014. Modern homes can consume 29 per cent less electricity than homes built ten years ago due to both more efficient appliances and changes to the Building Code, which ensures that all new residential and commercial buildings meet minimum energy efficiency ratings. Figure 3.8 shows an example of the cumulative effects of these energy efficiency improvements on electricity use in Melbourne homes on a hot day (with a maximum temperature of 35 degrees Celsius) and on a mild day (with a maximum temperature of 23 degrees Celsius). Both total electricity use and peak demand are lower in houses constructed more recently. Minimum performance standards for a range of common household appliances and efficiency requirements in the Australian Building Code are estimated to have saved consumers over $10 billion (net present value) in avoided energy costs between 2000 and 2013. 36
Figure 3.8: Electricity use in Melbourne homes on a hot day (max temp 35 C) and a mild day (max temp 23 C) 1000 800 600 3 400 200 kw/h 12:00 AM 3:00 AM 6:00 AM 9:00 AM 12:00 PM 3:00 PM 6:00 PM 9:00 PM Year of Construction Pre-2007 - hot day 2007-2010 - hot day Post-2010 - hot day Pre-2007 - mild day 2007-2010 - mild day Post-2010 - mild day Source: Department of Industry 2013, internal analysis from published data provided by SP Ausnet. Energy expenditure In 2012, Australian households spent an average of $99 a week on energy. This included $39 a week on energy sources used within the dwelling such as electricity or gas, and $60 a week for fuel for vehicles. Australian households average expenditure on energy represented 5.3 per cent of total gross weekly household income. Low income households spent on average almost 10 per cent of their gross household weekly income on total household energy costs, around three times that of high income households. Spending also varied across states and territories, with total household energy costs higher in the Northern Territory ($110 a week) and the Australian Capital Territory ($109 a week) than in most other states and territories. 37
Figure 3.9: Household energy expenditure by state, 2012 120 100 80 60 40 20 A$/ week NSW VIC QLD SA WA TAS NT ACT Australia Total dwelling energy Total fuel for vehicles Total energy expenditure Source: ABS 2013, 4670.0 Household Energy Consumption Survey, Australia. Figure 3.10: Energy expenditure as a proportion of gross weekly income, 2012 10 8 6 4 2 % Low income Middle income High income Total dwelling energy Total fuel for vehicles Total energy expenditure Source: ABS 2013, 4670.0 Household Energy Consumption Survey, Australia. 38
4. Electricity 249 TWh Electricity generation in 2012 13 56 000 MW Installed generation capacity in 2012 13 4 64% Coal share of electricity generation in 2012 13 38% Rise in retail electricity prices from 2010 11 to 2013 14
The Australian electricity market Electricity is transported from power stations via electricity transmission networks to electricity distributors and large end users. Electricity distribution networks carry electricity to customers, including households, businesses and industrial users. Electricity retailers buy electricity in wholesale markets, package it with costs associated with provision of network services, and sell it to customers. The Australian electricity market comprises three distinct electricity systems: the National Electricity Market (NEM), the Western Australian market, and the Northern Territory market. Due to the high costs associated with transporting electricity over long distances, Western Australia and the Northern Territory are not connected to the NEM. National Electricity Market (NEM) In the eastern states, the NEM forms a single electrically connected system extending from Port Douglas in Queensland, through New South Wales, the Australian Capital Territory, Victoria and Tasmania to Port Lincoln in South Australia. The NEM is connected by six major transmission interconnectors. Electricity network infrastructure in the NEM comprises around 44 000 kilometres of transmission lines and 760 000 kilometres of distribution lines. The Australian Energy Market Operator (AEMO) is responsible for the operation of the NEM. The NEM comprises the physical infrastructure of the electricity network, and the operation of a wholesale market for the supply of electricity to end-users. Exchanges between electricity generators and consumers are facilitated through a gross energy pool. Output from generators is aggregated and scheduled to meet demand. 40
4 Figure 4.1: Market structure of the National Electricity Market Source: BREE, AEMO. 41
Western Australia Western Australia s networks consist of the South-West Interconnected System (SWIS) which includes Perth, and the North-West Interconnected System (NWIS) for the mining areas in the north. While not connected electrically, the SWIS and NWIS are connected through gas pipelines. The SWIS network comprises 7 500 kilometres of transmission lines, and around 91 000 kilometres of distribution lines. The SWIS accounts for approximately threequarters of generation in Western Australia. The NWIS network consists of around 8 000 kilometres of transmission and distribution lines with a service area that covers 2.3 million square kilometres, including the Kimberley, Pilbara, Gascoyne, Mid West and Esperance, Hopetoun and Norseman in the Southern Goldfields. The Wholesale Electricity Market (WEM) in the SWIS comprises an energy market and the Reserve Capacity Mechanism (RCM). There are two types of market participants: market generators are owners or controllers of generation systems; market customers are sellers of electricity to retail customers, large individual consumers or demand side management (DSM) aggregators. Northern Territory The Northern Territory s electricity industry is small and consists of three regulated systems: the Alice Springs regulated system; the Darwin Katherine regulated system; and the Tennant Creek regulated system. There are also many small off-grid systems that primarily support indigenous communities and mining operations. Electricity production Electricity generation in Australia has been declining over the past few years, in response to falling electricity demand. In 2012 13, Australia s total electricity generation was 249 terawatt hours, a decrease of 1.7 per cent from 2010 11. 42
Figure 4.2: Market structure of the Western Australian Wholesale Electricity Market Source: BREE, AEMO. 4 43
Coal-fired power stations provide the majority of Australian electricity generation, as coal is a relatively low cost and abundant energy source in Australia. Black and brown coal accounted for 64 per cent of total electricity generation in 2012 13. However, coal use in electricity generation has been declining over the past decade, with its share falling from 77 per cent in 2001 02. In 2012 13, coal-fired generation declined by 7 per cent. Gas is Australia s second largest source of electricity, accounting for 20 per cent of generation in 2012 13. Gas-fired generation increased by 5 per cent in 2012 13, supported by new capacity coming on line in Victoria. Renewable energy sources, mainly hydroelectricity, wind and bioenergy, accounted for 13 per cent of electricity generation in 2012 13, supported by a significant boost to hydro generation. Figure 4.3: Australia s electricity generation, by fuel type 250 200 150 100 50 TWh 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 Black coal Brown coal Natural gas Other a Renewables a Includes oil and multi fuel fired power plants. Source: BREE 2014, Australian Energy Statistics, Table O. 44