As the Australian government continues to sit on the long-anticipated report from the prime minister’s task force on energy efficiency, a government-funded report highlights the country’s relatively poor performance over the past two decades.

The report by the Australian Bureau of Agricultural and Resource Economics and the Bureau of Rural Sciences found that the energy intensity of the Australian economy declined by 1.2% a year on average between 1989–90 and 2007–08.

This meant that the country’s final energy consumption over that period – driven by population growth and increased economic activity – grew by 46%, or 1,142 petajoules, over the period, instead of 60%, or 1,486 petajoules.

That might sound like a good achievement, and the government was certainly trumpeting it yesterday, but it falls well short of what is required. The reduction was mostly delivered by structural changes in the economy (most economies tend to become more efficient as they modernise), while improvements in energy efficiency accounted for just 0.3% per year.

Many experts believe that if Australia is to meet the challenging greenhouse reductions in the future, then energy efficiency will have to play a major role – possibly accounting for a third or more of the reductions.

China, for instance, has targeted a 45% reduction in energy intensity by 2020 — albeit from a lower base — and is looking to achieve a 15% reduction from 2005 levels by end of 2010, some of it through forced factory closures. But other more efficient economies, such as Japan and Germany, have also set ambitious targets and California claims that its overall energy consumption has not increased since 1978, saving some $56 billion in energy bills over that time.

Australia, as one of the most emissions-intensive economies in the world, is being urged to deliver an energy efficiency target similar to that of China, 45% by 2020, but this will not happen without government policies and the sort of incentives that can be delivered by a carbon price.

The ABARE report identified mining and agriculture as the weakest sectors over the past two decades, although home efficiency was also a challenge because of the range of new home entertainment products.

The energy intensity of the mining sector rose at a rate of 2.3% a year, as a result of Increases in the use of energy for exploration activity as miners were forced to dig deeper for lower-grade ores, particularly base metals such as copper, nickel, lead and zinc. The report also cited the sharp rise in production of relatively energy-intensive liquefied natural gas.

Energy intensity in the agriculture sector in rose at an average of 0.8% a year, but this was influenced by weather factors, with output reduced by drought conditions. ABARE said that in drought years, planting and harvesting activities require a similar amount of energy use to other more productive years. Overall energy consumption has increased in the sector, as farmers move away from sheep and wool (down 56%) to more energy-intensive cropping activities (up 60%).

In the residential sector, there was a reduction of just 0.2% a year, as efforts to improve the efficiency of standard household appliances such as dishwashers, lights and washing machines, were offset by increased use of computers and the number of appliances on standby, and the trend towards bigger TVs, as well as an increase in population and a continuing trend towards bigger houses with fewer residents per household over the study period.

Space heating and water heating remain the biggest consumers of energy in households, accounting for nearly 70% between them, but the fastest growth in energy consumption comes from IT equipment (up 28% a year), standby power (up 16% a year), and followed by TVs, microwaves, dishwashers and washing machines. The biggest efficiency gains came from water heating, partly driven by the move away from electric hot water to gas and solar powered hot water systems, and improvements in taps and shower heads.

The manufacturing sector reported improvements of 0.5% per annum, as reductions in the energy-intensive non-ferrous metal, iron and steel and chemicals sectors were partially outweighed by increases in energy intensity in the wood and other manufacturing sub-sectors. In the transport sector, which recorded an annual improvement of 0.8% a year, most of the savings were achieved in the freight sector through new vehicle technologies, company-driven efficiency programs, and the combination of higher fuel prices and government policy. However, rising incomes and sustained low petrol prices in the 1990s partially offset this improvement in efficiency.

The report suggested that high incomes were pushing consumers towards larger and heavier vehicles, particularly SUVs, and this trend was only partly offset by growing interest in small, diesel or hybrid cars. But ABARE noted that more recent fuel price rises (ie: after 2007 and including the spike in 2008) may have pushed more consumers towards hybrid and diesel vehicles, but this trend would not be reflected in the data for a number of years.

*This article originally appeared on Climate Spectator

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Peter Fray
Peter Fray
Editor-in-chief of Crikey