How The Energy System Is Structured
The energy policy of Australia is subject to the regulatory and fiscal influence of all three levels of government in Australia, although only the State and Federal levels determine policy for primary industries such as coal.
As of 2016, Federal energy policies continue to support the coal mining and natural gas industries. Subsidies for exported fossil fuel use and production by those industries contribute significantly to the earnings of foreign exchange and government revenues.
Federal climate policy changed following the election of the Labor Rudd Government in December 2007. The new government committed to introduce an Emissions Trading Scheme in 2010, and to expand the mandatory renewable energy target to ensure that 20% of electricity supply in Australia was from renewable sources by 2020.
Using 2013-14 as a baseline year, 31.7% of Australia’s electricity was generated by coal, 38.4% by oil, 24.0% by natural gas, and 5.9% by renewables.
Coal is the oldest export product of modern Australia and its second largest export. The nation’s long history with coal and current heavy dependence on coal for energy make it more difficult to move to more sustainable energy sources. Australia’s first industrial town, Newcastle, was founded on coal. Sydney can also trace much of its development to being a supply port for coal to visiting ships.
While there are environmental and social pressures to move away from coal, there are economic, historical and political pressures competing against them. Australia has the fourth-largest proven coal reserves and the established infrastructure to continue producing and exporting coal for an estimated 110 years for black coal and 510 years for brown coal using current reserves. Although supply is ultimately limited, there is no imminent pressure from the supply side to move away from coal production. Some models predict production and exports of coal to increase through 2035 to maintain or increase Australia’s global market share of coal.2 However, while production is expected to increase or at least be maintained, there are efforts being made to increase the efficiency of coal-fired plants and reduce CO2 emissions as well as research into carbon-capture and storage options. The focus of most major companies seems to be on expansion, not reduction, and given that coal provides roughly 75% of the nation’s energy, companies focused on implementing renewable energy technologies such as solar and wind could have a very tough time breaking into the energy market.
Renewable energy commercialization in Australia is an area of growing activity. Australia’s renewable energy industries are diverse, covering numerous energy sources and scales of operation, and currently contribute about 8–10% of Australia’s total energy supply. The major area where renewable energy is growing is in electricity generation following the introduction of government Mandatory Renewable Energy Targets. The two most populous states, New South Wales and Victoria, have renewable energy targets of 20% and 25% respectively by 2020.
Profiles of Leading Energy Production Companies
Acconia Energy is a major producer of renewable energy, generating emissions-free electricity from large wind and solar farms and producing 8,600 MW of renewable energy worldwide.
Wind farms are the company’s most common source of renewable energy in Australia with six farms currently operating in the country. It is a privately owned company that started in Australia and has since expanded globally, and it has built its own renewable energy plants and production sites as well as contracted through third parties.
ExxonMobil’s Australian branch is privately owned and produces energy primarily through oil and gas. Exxon does not expect carbon emissions to peak until 2030, but to begin declining after that as a result of decreased carbon intensity of fossil fuels. However, they project energy demand to grow by about 65% by 2040 and plan to play a role in meeting that demand by increasing use of natural gas and working to improve the efficiency of existing technologies.
Submitted by Climate Scorecard Country Manager Hannah Campi