The Alan Pears column

There is reason to believe the recent decline in energy consumption is not a one-off blip; while the draft Energy White Paper needs significant improvement.

It is good to ask if the recent decline in electricity consumption is a blip or a change (The Power of An Energy Blip – Climate Spectator, March 12, 2012). But we also have to ask whether the trend of the 2000s was a blip or a trend. And because our end-use data are appallingly bad, none of us really knows the answer.

It’s easy to look at historical trends in a simplistic manner using statistical analysis, but the fundamental demand for energy is not driven by past history, it is a derived one: we use electricity to run appliances and equipment that deliver services we want or need. In this context, there have been some major discontinuities added recently that potentially explain significant reduction in consumption. Some are:

Commercial sector:

  • Two rounds of building energy regulations in 2006 and 2010 (after having none at all) plus MEPS for a range of commercial equipment.
  • Strong voluntary adoption of Green Star and NABERS building environmental rating systems.
  • Energy disclosure at time of resale or lease of buildings.
  • ‘Virtualisation’, smarter controls and equipment.

Most of these measures are just beginning to become visible.

Residential

  • Building codes in 2003, 2006 and 2010 requiring much better building performance, lighting and hot water energy efficiency.
  • From 1990s to 2010 inefficient air conditioners installed in thermally poor homes but now we are moving to more efficient air conditioners in thermally better homes replacing the previous trend.
  • Appliance energy growth from 2003 to 2010 was dominated by inefficient large TVs and halogen lights and take-up of desktop computers, but this has shifted dramatically in the past few years.
  • Insulation and Green Loans programs (despite the criticisms) and a lot of local action has upgraded existing buildings.
  • Strong growth in solar hot water and solar PV and shift to gas hot water away from off-peak electric hot water.
  • Behaviour change driven by price increases and broader questioning of energy waste.

Industry

  • Much of the manufacturing energy growth in the 1980s and ‘90s was electricity intensive industry. Energy market reform means the subsidies that drove these industries are harder to get in Australia and now being unwound.
  • Some industries are becoming much more efficient: for example alumina refining is now a major exporter of low emission electricity to the grid instead of being a consumer, and some pulp and paper mills are much more efficient.
  • Shorter operating hours and shutdowns at many sites driven by Global Financial Crisis, but also leading to fundamental change
  • Energy Efficiency Opportunities and other industry programs are saving a lot of energy including electricity.
  • Ongoing closures of Australian plants that are too small and old to compete internationally.

Many of these trends listed above mean that new buildings, equipment and retrofits are leading to much more efficient new facilities, and upgrading of performance of many existing ones. So it is quite feasible that there is an emerging downward trend in grid-sourced electricity consumption.

Also I’m not so sure that summers have been cooler overall: Melbourne had a high average temperature this summer, but it was more humid with hotter nights rather than extreme clear heat. And then there was Perth...

The Energy White Paper and energy efficiency

Martin Ferguson’s Department of Energy and Resources released its draft Energy White Paper in late 2011. It’s a disturbing document. For example, energy efficiency, considered by most studies to be a major contributor to climate abatement, is relegated to Chapter 6, which is not a good sign.

The introduction to the quite good but modest section on demand-side issues states: “Historically energy policy and market development in Australia have had a strong supply-side focus, suggesting that there could be further potential to realise cost-effective demand-side efficiencies through an integrated market framework.”

This comes after five chapters of supply-side, growth-focused, self-congratulatory material that shows the government hasn’t learnt this lesson. The paper quotes Bureau of Resources and Energy Economics growth projections that Australian primary energy consumption will rise by 30 per cent and electricity consumption by 42 per cent by 2035. Yet electricity consumption has been declining for the past three years.

The paper proposes three objectives:
• Provide accessible, reliable and competitively priced energy for all Australians;
• Enhance Australia’s domestic and export growth potential;
• Deliver clean and sustainable energy.

The impact on business and household budgets is the total cost of energy, not the price per unit. A recent UK study estimated that 88 per cent of world primary energy consumption was wasted, so energy efficiency improvement has the potential to transform our energy requirements and costs.

But this is not used to frame the approach.

If the second objective relates to energy production and use, it seems potentially incompatible with sustainable development of our overall economy and energy (the third objective), which might involve reducing energy consumption and exports.

The ‘old paradigm’ energy industry is facing increasing costs, low rates of return and long transition times. Energy and climate commentator Giles Parkinson recently said the energy industry is facing its ‘Kodak’ moment, as a new paradigm sweeps through.

The paper’s response to the energy market mess seems to be to create additional, separate markets and regulations to ‘fix’ a problem that need not exist, creating conflict between the various market signals and regulations. This is inefficient policy that is costing Australia dearly in both financial and environmental terms.

Let’s hope the final White Paper is a big improvement on the draft.

Big car and SUV buyers

It seems that most large cars and SUVs are bought by business (Richard Blackburn, The Age online, 4 Feb 2012). Private buyers prefer small cars. Since business vehicles receive tax deductions, this means the community is subsidising purchase and use of fuel guzzlers. But it’s worse than that. Business (and governments) typically own their new cars for only 40,000 to 100,000 kilometres, then sell them. Secondhand car buyers can only choose from what’s available on the secondhand market, so they use these large vehicles for the bulk of their typically 250,000 kilometre lives. So buyers of new high consumption vehicles actually lock-in a legacy of ongoing higher fuel use and running costs for future owners.

Public transport funding

The latest strategy by the road lobby in Melbourne seems to be grade separation of railway crossings, so that traffic is not affected by increasing frequency of trains. This seems to be described as rail funding, yet it does nothing for rail performance. As a rail user, it seems there is potential for boom gate closure times to be reduced by modern sensor technologies instead. It’s not hard to monitor the changing speed of a train approaching a station, and to lower boom gates if there is a risk of the train overshooting, instead of lowering them when the train is a long way from the crossing.

We should also be looking at the broader economics. If railway crossings reduce the number of cars in use by increasing congestion, that potentially brings societal economic benefits that may offset the congestion costs. It shifts more car usage to public transport and other options, and the money not spent on grade separation could be used to expand the public transport system.

Public transport funding should be revisited, possibly with a property levy, offset by free public transport entitlements. The levy size would be linked to the quality of access to public transport. My logic is that if someone lives near good public transport, but doesn’t use it, they are depriving someone else of their right to access this service.

In return, each household and business could be entitled to some free public transport usage. This would link funding to service improvement, creating an incentive for operators and government to support public transport. And it would encourage those close to public transport to use it.

Alan Pears is a senior lecturer in Global Studies, Social Science & Planning at RMIT University. He has been awarded a Member of the Order of Australia (AM) for “service to the environment through the development of policy and design in the fields of energy efficiency and sustainability and through public awareness programs.”

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