Has falling demand solved the electricity emissions problem?

Electricity emissions and demand have been on the decline, but it is very far from given that this will continue.

A few days ago the government released emissions data up to September 2013 which showed emissions from the electricity sector had declined by 5.5 per cent compared to 12 months ago.

The National Generators Forum, the lobby group for large fossil-fuel power generators, put out a press release in response that seemed to imply that because of this decline, electricity generators had been unfairly done by and should now be left alone.  

The press release stated:

“The electricity sector has achieved a disproportionate share of Australia’s emissions abatement task, with emissions from the sector falling since 2008 and now at levels last experienced in 2002.”

And, with this statement, seemed to suggest emissions were under control:

“If electricity demand continues to decline at the same rate as it has for the past four years then emissions from electricity generation will be 5 per cent below 2000 levels by 2017-18 without government intervention through the RET or Direct Action”, cautioned Tim Reardon, executive director of the National Generators Forum.

Emissions have certainly declined in the electricity sector over the last few years, but is this likely to continue?

That’s a question worth considering in our charts of the week.

A little while ago the government released its updated projections of where it sees emissions going without the carbon price in place  Below is what is projected for the electricity sector based on analysis prepared by ACIL Allen Consulting.

As you can see, 2013 is pretty much the best it’s going to get in terms of emissions. 

Australian electricity sector greenhouse gas emissions to 2030

Graph for Has falling demand solved the electricity emissions problem?

Essentially, LNG gas field developments are expected to reverse a steady decline in electricity demand. It was originally expected that the LNG developments would employ gas directly to fuel a range of compression equipment, but now they plan on making greater use of electricity to power this equipment. This leads to the uptick in emissions to 2015 before expansion in wind power driven by the Renewable Energy Target drives emissions back down again to 2020. After that emissions begin their inexorable trend back upwards.

If we look only to 2020 it appears as if electricity is indeed not the worry it once was in terms of emissions growth, as shown by the chart below.

Sectoral sources of change in Australian emissions 2020 relative to 2012

Graph for Has falling demand solved the electricity emissions problem?

However, if we cast our gaze further beyond 2020 when the RET has ceased to encourage new projects, sure enough electricity resumes its role as the primary driver of increased emissions.

Sectoral sources of change in Australian emissions 2030 relative to 2020

Graph for Has falling demand solved the electricity emissions problem?