State of the Environment Report 2007
The energy sector comprises the extraction and conversion of energy (from primary fuel sources into useful energy), the consumption of energy and energy used for transportation. Resource extraction of fossil fuels has been discussed elsewhere (see 'Mining and petroleum'). Sustainable energy may be broadly defined as energy which is replenished on a time scale comparable to its utilisation, and where its use causes no adverse inter-generational social, economic or environmental impact. This usually involves increased utilisation of renewable energy, improved generation efficiency, fuel substitution to less environmentally damaging sources (as an interim measure) and energy efficiency initiatives. More recently, resource depletion and security of energy supply has also come under the umbrella of sustainable energy.
Western Australia has an energy-intensive, export-oriented economy with a significant primary industry sector. The State has an abundance of energy resources comprising fossil fuels such as coal, oil and natural gas, and renewable sources including wind, solar, wave, geothermal and biomass. Western Australia is a net exporter of energy with large contracts for the sale of natural gas to China, Japan and Korea. The State also has significant reserves of uranium. The State's large area, relatively small population, economic structure and heavy reliance on fossil fuels pose particular challenges to improving the sustainability of energy use and conversion in WA.
The State Sustainability Strategy outlines a vision for our natural resources by ensuring that they are '... conserved, protected, managed and used sustainably for the common good' (Government of Western Australia, 2003a, p. 108). The energy sector objectives that reflect this vision aim to:
Primary energy use represents the total consumption of each primary fuel. It includes fuel used directly in 'end-use' sectors as well as fuel used in the conversion of primary fuels to electricity and petroleum products. In 2003-04, total primary energy consumption in WA was approximately 760 petajoules (PJ) (Figure TS3.1). The State is reliant on fossil fuels: 98% of WA's primary energy needs are supplied from fossil fuels. Nearly half of all fuel use is from natural gas, followed by oil (32%) and coal (17%). Renewable energy sources constitute 2% of primary energy in WA and include wood used for heating and solar water heaters.
![Figure TS3.1: Western Australia’s primary energy usage (historical and forecast) by fuel type. [Data source: Office of Energy estimate, based on Australian Bureau of Agricultural and Resource Economics (2005a); Akmal & Riwoe (2005).]](/site/files/images/Figure-TS3.1_Large.jpg)
Primary energy consumption per dollar of gross state product is a measure of the intensity of energy use in the WA economy. Energy intensity is often used as a proxy indicator for how efficiently energy is used. Energy intensity decreased by 18% between 1998 and 2004 to 8.75 PJ per billion dollars gross state product (Figure TS3.2). Although energy intensity is decreasing (improving), changes in fuel mix, levels of production and the structure of the economy can mask real trends in energy efficiency. For example, a change in the structure of the economy away from energy intensive industries, such as from ore refining to office based service industries will reduce energy intensity. However, energy use per unit output within those sectors may not have changed. Analysis by the Australian Bureau of Agricultural Resource Economics suggests that after accounting for these factors, energy efficiency has not changed significantly since the late 1990s (cited in Tedesco & Thorpe, 2003).
![Figure TS3.2: Primary energy consumption per real dollar gross state product (2004 prices). [Data source: Australian Bureau of Agricultural and Resource Economics (2005a); Australian Bureau of Statistics (2004). Note: Energy consumption is measured in petajoules (PJ).]](/site/files/images/Figure-TS3.2_Large.jpg)
Primary energy consumption has grown by 3% per annum since 1998 and is forecast by the Australian Bureau of Agricultural and Resource Economics to grow by 3.8% in the medium term (Akmal & Riwoe, 2005). This growth rate includes the effect of several new liquid natural gas projects, such as the Gorgon Venture.
Manufacturing is the largest sector in terms of primary energy use, accounting for 29%, followed by electricity generation at 28%, transport at 18% and mining at 16% (Figure TS3.3). Bauxite refining, iron ore, nickel, mineral sands and silica processing are energy-intensive industries that collectively consume over two-thirds of the primary energy used in the manufacturing sector.
![Figure TS3.3: Western Australian primary energy use by sector and fuel use in the electricity generation sector, 2003–04. [Data source: Office of Energy estimate, based on Australian Bureau of Agricultural and Resource Economics (2005a).]](/site/files/images/Figure-TS3.3_Large.jpg)
Over 80% of energy used in WA is used for stationary (non transport) purposes. Of energy used for these purposes, natural gas remains the most significant fuel comprising around 60% of stationary energy use, followed by coal (21%) and oil and its derivatives (17.5%). Renewable energy sources supply approximately 2.5% of stationary energy use. Since 1998, the stationary energy sector has increased by 3.6% per annum in primary energy terms.
Electricity is the main product from energy sources used for stationary purposes. Natural gas has become the dominant fuel source for electricity generation in the State, with growth in electricity demand supplied by natural gas-fuelled power stations (Figure TS3.3). Coal use for electricity generation has remained stable since 1998. Electricity generated from renewable sources remains a small proportion (approximately 3.2% in 2005-06) of total electricity generation in WA. Historical and forecast electricity consumption by end-use sector shows continuously increasing growth (Figure TS3.4). The forecast electricity usage does not reflect current changes to government policy and approvals for new electricity generation infrastructure. Specifically, the forecast excludes the NewGen Power natural gas-fired power station, the Bluewaters 1 coal-fired power station, the retirement of Muja A and Muja B power stations, and the State Government's 6% renewable energy target for 2010.
![Figure TS3.4: Historic and forecast electricity consumption by sector, 1989–2030. [Data source: Office of Energy estimate based on Australian Bureau of Agricultural and Resource Economics (2005a); Akmal & Riwoe (2005). Note: Energy consumption is measured in petajoules (PJ).]](/site/files/images/Figure-TS3.4_Large.jpg)
A number of new renewable energy projects have been developed in recent years, particularly by the private sector, assisted by legislative and structural changes to WA's electricity system. Electricity market reforms have also allowed new retail entrants to become established. Since 1998, approximately 125 megawatts (MW) of new renewable energy plant greater than 0.5 MW capacity has been constructed, with 80 MW of wind farms committed or under construction. Wave and geothermal energy sources are also emerging as potential new sources of renewable energy.
Electricity consumption is forecast to grow at an average rate of 2.7% per year (Australian Bureau of Agricultural and Resource Economics, 2005a). The most significant growth in average electricity demand is forecast to come from the mining and commercial sectors. To meet growth in average electricity demand, a new combined cycle natural gas-fired power station will partly replace the aging coal-fired Muja power station (Muja A and Muja B), scheduled for decommissioning in 2008. A new 200 MW coal-fired power station at Collie has also been approved and is under construction. Peak electricity demand is forecast to increase at a rate approximately 25% higher than average electricity demand due to weather-sensitive loads such as air-conditioning (Independent Market Operator, 2005).
Cogeneration, or the combined generation of electricity and heat energy for industrial processes, will become more significant in the State. A cogeneration plant has a much higher efficiency than stand alone electricity or heat generation. Currently 890 MW of full or partial cogeneration capacity is installed in WA, with a further 280 MW of new gas-fired cogeneration systems under construction.
Transport energy comprises 18% of primary energy use. Petroleum products (including liquid petroleum gas) supply nearly all transport energy demand. The rate of growth of transport energy use in the State has declined since 1998, with little net change in road transport energy consumption. The data suggest the robust growth in transport energy consumption experienced in the mid 1990s has slowed. A trend for increased oil prices may have impacted on travel behaviour. The Australian Bureau of Agricultural Resource Economics (2005a) forecasts that between 2001-02 and 2029-30, primary and final road transport energy consumption in WA will continue to rise.
Although WA is a net exporter of energy resources it imports significant quantities of liquid transport fuels. Estimates of fuel reserves are often conflicting and reserves are only 'proven up' as needed. A Ministerial Council on Energy study found that Australia possessed sufficient primary energy resources to meet demand for the next thirty years (Strategic Energy Supply and Security Working Group, 2004). However, the WA transport sector's reliance on liquid fossil fuels increases vulnerability to price rises due to supply disruptions. Sustained high oil prices (due to supply constraints or political instability in oil-producing regions) may act as a driver to improve energy efficiency and investment in alternative vehicle fuels. Sustained higher oil prices could also make the conversion of gaseous to liquid fuels economically viable.
Western Australia has large reserves of fossil fuels including coal and natural gas. Natural gas is the cleanest burning fossil fuel and whilst non-renewable, there are still significant reserves around the world. Estimates indicate that the State holds around 80% of Australia's natural gas reserves, with production around 65% of the nation's gas production (Department of Industry and Resources, 2005b).
The State also has significant reserves of uranium, but current State Government policy prohibits uranium mining. The possible adoption of nuclear power would need to consider community concerns about the long-term storage of radioactive waste, the cost of electricity generation and the safety of the technology. The inter-generational impacts of nuclear energy would also need to be balanced against the inter-generational impacts of greenhouse gas emissions and climate change.
Western Australia has good wind, wave, tidal, geothermal and solar renewable resources. Geothermal and biomass resources (in the form of landfill gas, organic wastes and vegetative biomass) are currently receiving more attention from renewable energy generators. Unlike wind, solar and wave energy, output from geothermal and biomass plants are not intermittent and its output can be managed. This has advantages for network operation and stability.
Climate change poses a significant challenge to the energy sector in terms of infrastructure and potential economic impacts. The energy sector is the single largest contributor to greenhouse gas emissions in WA, which are a major contributor to human-induced climate change. Emissions from fossil fuel combustion constitute two-thirds of the State's emissions. To date, the environmental costs associated with climate change and greenhouse gas emissions have remained largely external to the price of energy. Energy supplies from less greenhouse-intensive sources of energy are typically more expensive than from conventional fossil fuels, partly because of these costs are not factored in to energy prices. The lack of recognition in economic terms of the environmental cost of greenhouse gas emissions from energy sources is also impeding the investment impetus for cleaner technologies.
Increasing peak electricity demand places pressure on WA's electricity infrastructure. Installing new electricity generation and network infrastructure upgrades (wires and poles) to meet the disproportionate growth in peak demand can be economically inefficient. Peak demand occurs for only a small period of the year and electricity plant to supply this load may only operate for one to two days a year. As a consequence, peak electricity generation is very expensive. Reducing peak and overall electricity demand will reduce the need for new power stations and upgrading of electricity networks. Collectively termed 'demand management', this can involve shifting electricity demand to off-peak periods, and improving energy efficiency and energy conservation. It is important to note that not all demand management options save energy (load shifting, for example).
Western Australia is Australia's largest state geographically, with consequent implications for transport energy use. There are constant and increasing pressures for increased mobility, driven by economic and social factors, e.g. increasing industry activity and associated freight transport, and increasing movement of people for work and other activities.
It will be a significant challenge to address greenhouse gas emissions from the transport sector. Our cities are based around inexpensive personal motor transport, relative to some other economies. This urban model encourages increased travel by motor vehicles and discourages more sustainable forms of transport such as public transport, walking and cycling. The State's freight network is also dominated by the motor vehicle and considerable investment has been made in infrastructure that supplies transport fuel. There is also a general lack of understanding in the community of the environmental impact of transport energy. As with stationary energy, the environmental costs of climate change are excluded from transport fuel pricing. Current financial models in Government and the private sector for vehicle pricing, fuels and transport systems encourage growth in the number and use of environmentally harmful vehicles and fuels.
State Government energy supply initiatives: The State Government has set a target of 6% of electricity sold on the South West Interconnected System (the main electricity grid in WA, servicing Perth and surrounding regions) to come from renewable sources by 2010 (Australian Labour Party Western Australian Branch, 2001) and is working with other states and territories on options for implementing this requirement through a multi-state scheme. Electricity generated from renewable energy sources on the grid has quadrupled in recent years and is currently 4.2% of all electricity generation on this system. A longer-term renewable energy strategy that will include a target for 2020 is under development. A bioenergy strategy is being developed with a focus on Landcare benefits. A handbook to guide development of renewable energy projects has been developed.
The State Government has committed to purchasing 20% of its electricity needs from renewable energy sources by 2010. A solar schools program is being established that will see the installation of 100 photovoltaic systems in State schools. The government is also funding an urban renewable energy demonstration plant and providing support for the Kalgoorlie-Boulder Sun Farm that proposes to use concentrating solar dishes. The Narrogin Integrated Wood Processing plant has demonstrated the Landcare potential that biomass can offer and represents the first Australian biomass gasifier to generate electricity into an electricity grid. Consumers can also choose to purchase renewable energy through the Green Power program.
The joint State-Commonwealth Remote Renewable Power Generation Program reinvests diesel excise funds paid by the State in renewable energy projects in remote areas. The terms of the agreement with the Commonwealth have been renegotiated to fund renewable energy projects on the fringes of the electricity grid as well as off-grid energy efficiency initiatives. As of 2005, the program has funded 1.2 MW of small scale solar projects and 5.4 MW of larger wind energy projects.
Electricity market reforms: Major reforms have been made to the electricity market in WA, making it easier for intermittent renewable sources (e.g. solar and wind) to participate in the market. An Independent Market Operator has been established to ensure fair access to the transmission and distribution system (wires). The Independent Market Operator is also required to investigate the potential for demand management options when new generation capacity is required. Following the separation of Western Power into four separate businesses, the 'new' Western Power (which will manage the electricity network) will be required to consider alternatives to new network infrastructure, including demand management and embedded generation.
Energy efficiency initiatives: Energy efficiency is generally agreed to offer the least-cost means to address climate change. Energy efficiency offers positive economic benefits and frees up resources for investment elsewhere. The State Government has implemented the Energy Smart Government program which seeks to reduce energy consumption in government buildings and services, and achieve a cultural shift in how energy is consumed in the public sector. Results for the 2005-06 financial year show the program has reduced the energy consumption of participating agencies by 7.8% towards a final target of 12% by 2007. The program has reduced associated greenhouse emissions by 3.6%.
Western Australia participates in the National Appliance and Equipment Energy Efficiency Program. This program implements and coordinates product energy efficiency initiatives nationally. The program sets minimum energy performance standards for appliances and equipment, administers a testing program, and coordinates appliance energy labels. By 2020 the cumulative savings in WA are estimated to be 65.7 PJ in final energy terms and 15.7 million tonnes of greenhouse gas emissions. The program is estimated to have a greenhouse gas abatement cost of -$23 per tonne of carbon dioxide.
The State Government in collaboration with the Commonwealth and other state and territory governments has developed the National Framework for Energy Efficiency. The framework aims to capture the potential of energy efficiency and is currently being implemented. The program has established improved standards for energy efficiency in residential and commercial buildings and energy efficiency reporting for larger energy users.
Transport initiatives: There are a number of State Government programs underway to decrease the impact of transport energy use on the environment. These measures include restricting the number of 6-cylinder vehicles in the government fleet, promoting alternative fuels such as liquefied petroleum gas and hybrid vehicles, and trialling alternative fuels in the form of hydrogen and biodiesel.
Measures to improve the public transport system include converting the bus fleet from diesel to compressed natural gas and extending the current public transport network, for example the Mandurah to Perth railway. Urban design measures include promoting 'mixed use' urban centres with convenient access to public transport and cycling and walking infrastructure, such as Subiaco and East Perth.
Australian vehicle emission standards generally follow European standards. Some American standards have been adopted for heavy-duty vehicles, where compliance costs are lower. Typically Australia lags behind Europe in adopting equivalent emission standards. The Fuel Quality Standards Act 2000 (Commonwealth) now provides a national framework for Australia's fuel standards. The first set of standards for petrol and diesel was introduced in 2002. Western Australia has been proactive in regulating fuel quality standards with regulations enacted in 1999 for petrol and diesel. Standards are currently under development for liquefied petroleum gas and biodiesel. Compressed natural gas standards are likely to be developed in the near future (Motor Vehicle Environment Committee, 2003).
Climate change has a number of implications for the stationary and transport energy sectors that affect the economic drivers of the industry as well as raising technical challenges. It is widely acknowledged in Australia and overseas that major reductions in global greenhouse emissions are required to manage the potential environmental impacts of climate change. In effect, the energy sector will become 'carbon constrained' in the future if the negative environmental outcomes of climate change are to be avoided. It is foreseen that major changes in how the State generates and uses energy will be necessary. Domestic and foreign demand for WA's extensive reserves of natural gas are likely to increase considerably in the transition to a 'low emission' economy where natural gas is seen as an important interim alternative to coal. However, increased production of natural gas for export will increase greenhouse gas emissions from this sector. Power stations require large capital expenditure and are constructed to last for decades. Constructing power plant in the near term using conventional technologies and greenhouse-intensive fuel sources could have implications for meeting greenhouse emissions reductions in the longer term.
Unchecked growth in electricity demand is likely to bring forward the need for new electricity generation infrastructure. Without pricing systems that reflect environmental costs, there is little incentive for investment in more sustainable forms of generation including renewable energy. Geosequestration (long-term underground storage of carbon dioxide) has been proposed to manage greenhouse gas emissions from fossil fuels. While carbon dioxide reinjection is a proven technology within the petroleum industry, the technology required for carbon dioxide capture and storage from stationary energy sources is still under development. There are examples of commercial geosequestration projects globally, but it is still to be proven on a commercial basis in Australia.
9.7 Require new generators to meet world's best practice, as adapted to Australian conditions, for generation technology for the chosen fuel type and operational mode.
9.8 Introduce incentives for owners of existing plant to improve energy efficiency by retrofitting new technology as it becomes available.
9.9 Facilitate the expansion of WA's renewable energy industry.
9.10 Increase the diversity or capacity of fuel supply infrastructure for cleaner fuels.
9.11 Expand measures to facilitate improvements in consumer energy efficiency.
9.12 Introduce incentives to encourage greater uptake of fuel efficient and alternative fuel vehicles.
9.13 Introduce a fuel efficiency target for government fleets.
The Department of Land Information is a state government agency responsible for land and property information and a proven leader in energy efficiency.
In 1994, the department started an energy management program for its head office in Midland. Between 1998 and 2002 the program achieved a 24% reduction in energy use and a 25% reduction in energy costs.
Seeking to capitalise on gains made under this program the department entered into an energy performance contract in 2003. The contract manages investment risk through linking expert knowledge with day-to-day operations. It guarantees a 15% reduction in energy and cost savings over the duration of the contract. To date, the energy performance contractor has exceeded these targets. In 2005, the department achieved energy savings of 1 349 157 kilowatt hours (kWh) against the baseline for the Midland building, which is an excess savings over the guarantee of 510 317 kWh.
Between 2003 and 2005 upgrades were made to the lighting, building control systems and water heating systems. An additional reduction in energy use of 23% was achieved between 2003 and 2005. Over the last seven years the department has also realised energy cost savings of $1.3 million. This is an outstanding example of what can be achieved when motivated staff work with industry experts to implement innovative approaches to energy management.
The Department of Land Information has been widely recognised for the innovative energy efficiency strategies introduced by its Midland staff more than a decade ago. The department has also received the prestigious Premier's Sustainable Environment Award and the WA Environment Award for Energy Efficiency in 2003.
