21st-century energy: get more efficient and embrace disruptive technology

Australia’s new prime minister, Malcolm Turnbull, has announced what he calls a “21st-century government”. This article is part of The Conversation’s series focusing on what such a government should look like.

The first step towards 21st-century government ideas about energy policy will be to ignore last year’s Energy White Paper. It’s dinosaur thinking.

The key drivers for energy in the 21st century are managing climate change, shifting community concerns, and radical technology change.

The climate issue is well understood: fossil fuels generate three-quarters of Australia’s emissions and two-thirds of global emissions, and they must be slashed – preferably yesterday. Also, climate change affects demand for energy and performance of energy infrastructure. So energy policy must address that.

For Australia, the management of the decline of the politically powerful fossil fuel industry is a key challenge. This is made somewhat easier by the growing community rejection of the industry’s “licence to operate”. Most people have realised that it has no long-term future, and that its contribution to employment and the economy has been overstated.

So they are no longer prepared to tolerate the pollution, environmental damage and impact on other industries of fossil fuel operations. The strong reactions to coal seam gas, coal mining, and events such as coalmine fires reflect this shift. The community is actively embracing a clean energy future.

But the really big issue is rampant and unpredictable technological change. Few predicted the decline in demand for energy, the rapid cost reduction of emerging alternatives or the emerging diversity of options.

This is the area of economic opportunity and threat for Australia. We have to capture the opportunities and manage the threats while accepting the uncertainties. Governments will play a key role.

The International Energy Agency (IEA) recently released its contribution to the Paris climate negotiations, in its special report on energy and climate change. It frames the key policy challenges, as shown below. Australian government performance in most of these areas has been poor and must improve.

Get more efficient

The IEA’s top priority is energy efficiency. This is the weakest area of Australian performance: it has been the poor cousin in our energy policy. And this is where there are large, cost-effective opportunities. Yet we have few, poorly resourced and politically weak government agencies working in this space.

Our efforts on research and development have been almost invisible. And both Labor and Coalition governments have cut back, blocked or shut down effective programs because these have upset powerful lobby groups. Big industry hated the now-defunct but globally acclaimed and very cost-effective Energy Efficiency Opportunities program (see submissions on the 2014 repeal here).

Our appliance efficiency program runs on the smell of an oily rag, despite delivering millions of tonnes of emission abatement at a profit.

The local government Cities for Climate Change program was defunded under Labor.

And our building energy regulations are not enforced, even though they are not particularly tough by world standards and are very cost-effective (if balanced economic analysis is used).

Policy groups (such as ClimateWorks Australia and A2SE) are now reframing energy efficiency as a key element of energy productivity in the hope that they can raise its profile with policymakers and leaders. Governments are developing energy productivity strategies, but they are not exactly ambitious.

Cut the coal

The IEA also recommends progressive removal of fossil fuel subsidies. In Australia, governments struggle to even admit they exist, let alone reduce them!

Investing in renewable energy is another key policy priority for the IEA, and Australian governments seem to be refocusing on this. The Australian Renewable Energy Agency and the Clean Energy Finance Corporation seem to be doing good work in this area, despite the recent government-created threats to their existence. Hopefully the shift to the environment portfolio announced by the new prime minister will allow them to continue operating.

However, Australia’s focus has been mainly on renewable electricity, at the expense of other forms of renewable energy, particularly supply of heat and transport solutions.

Government must broaden the agenda. This can help us to deal with the emerging gas cost problems on our east coast, due to the massive LNG export developments in Queensland. And transport is a key vulnerability for Australia.

The IEA also proposes reduction of inefficient coal use. Australia’s old and inefficient coal power stations are an obvious target for government policy action. To date, attempts at government action have clearly failed. This must change.

Lastly, the IEA proposes a focus on reducing upstream methane leakage. Some coal mines and the oil and gas industry are key targets here.

Methane is a very active greenhouse gas over the short term, so reducing methane emissions will bring disproportionately large climate benefits. This will add to pressures on the coal seam gas industry. But there have been some positive developments, such as methane recovery from some coal mines and large gas projects.

Ongoing improvement in management of methane from landfills and waste also offers opportunity to cut emissions and develop low-emission gas sources.

Energy for the future

Our approach to energy policy will need to shift from its simplistic centralised model to a much more complex one.

In particular, our electricity market model will have to be reframed from its present focus on large-scale systems, summarised in the IEA chart below.

IEA

Our new energy model will include:

• More efficient energy and resource use

• Smart management of demand, including real-time computer monitoring of energy use, equipment operation and energy prices to manage energy use optimally

• Storage of energy in many forms (heat, stored cold, electricity, chemical, gravitational potential, movement)

• Distributed energy (such as rooftop solar) production or conversion

• Innovative reframing of what our needs are. For example, do we need such large houses? Do we need to travel so much? Could we use telecommunications to avoid travel, or to avoid printing physical documents, and more broadly replace the need for physical products and activities with services?

• Diverse business models, markets and technology supply chains. For example, Uber, distributed energy, creative financing models for renewable energy and energy efficiency, and online businesses.

This new model has been emerging, despite the failures of governments.

But more active policy initiatives could create economic and employment opportunities, and help to build innovation and optimism. Our new prime minister seems to understand this, but can he deliver against the powerful blocking forces?

Alan Pears AM has carried out consulting work for many sustainable energy organisations and provides policy advice to a variety of organisations. At present he has no paid roles for such organisations except as a member of ARENA's Advisory Panel. He is an honorary adviser to the Energy Efficiency Council, Climate Alliance and Alternative Technology Association. He holds some investments in the sustainable energy industry.