Appendix d progress towards Australia’s emissions reduction goals

Table D.2: Australia’s electricity generation, 2000–2050

	Historical electricity generation (TWh)			Projected electricity generation (TWh)
Scenario	2000	2008	2012	2020	2030	2040	2050
No price	210	243	254	287	351	422	493
Low	210	243	254	275	312	344	398
Medium	210	243	254	269	312	346	401
High	210	243	254	253	282	329	378

Note: Electricity generation is ‘as generated’.
Source: Historical: BREE 2013b, Table O Projections based on ACIL Allen Consulting 2013

The Treasury and DIICCSRTE’s modelling projects that Australia’s electricity generation will remain steady or rise to 2020 and rise more quickly to 2030, in all scenarios. The effect of the price incentive on projected generation is evident. Electricity generation is about 6 per cent lower in 2020 under the high scenario than the medium scenario. By 2050, electricity generation could be between 80 and 89 per cent higher than in 2000, depending on the level of the price incentive (high and low scenarios, respectively).

Some of the major contributors expected to reduce future emissions, through changing demand in the residential and commercial sectors, have long lead times due to the slow replacement rate of buildings and appliances. These include:

• 
  improvements in building efficiency, which could reduce emissions, relative to 2000 levels, by about 12 Mt CO₂-e in 2020 and more in later years as stock turns over
  
• 
  improvements in the efficiency of electrical appliances, which could reduce emissions, relative to 2000 levels, by about 20 Mt CO₂-e in 2020 and more in later years (DCCEE 2010b, p. 23).
  

Section D3.3 discusses further the opportunities and barriers to the uptake of cost-effective emissions reductions through changing electricity demand and reducing the level of total generation.

D3.2 Emissions intensity of electricity supply

D3.2.1 Emissions intensity outcomes in an international context

Australia’s emissions intensity of electricity is among the highest in the developed world. It is about four times the intensity of New Zealand and Canada; almost double the intensity of Germany, the UK and Japan; and considerably higher than that of the US. Since 2007, Australia’s electricity supply emissions intensity has exceeded China’s (IEA 2013b).

Table D.1 summarises projections for Australia’s emissions intensity, which, in all scenarios, reflect some improvement on current and historical levels. Despite these projected improvements, in all except the high scenario Australia’s emissions intensity is likely to remain above that of China, the US and the world average in 2035 (IEA 2012a; Treasury and DIICCSRTE 2013).

D3.2.2 Contributors to emissions intensity of generation

With incentives in place, a range of projections suggest that Australia’s electricity supply will become less emissions-intensive as conventional fossil fuel-fired generation loses share to low- and zero-emissions sources. Several technologies could contribute directly to a lower emissions intensity of supply. Changes in the shares of conventional coal-fired generation and renewables could be particularly significant (Figure D.12).

This is illustrated in ACIL Allen Consulting’s outlook for Australia’s electricity supply in Figure D.14. The projected generation mix is affected significantly by the level of the price incentive. The high scenario projects a substantial increase in the share of generation from renewables and a fall in the share of coal-fired generation. Coal with CCS is also deployed by 2030, bringing the emissions intensity of generation down by over 60 per cent compared to the no price scenario, to 0.25 t CO₂-e/MWh. By contrast, the low scenario projects relatively modest changes to the supply mix, with emissions intensity of generation projected to be 0.66 t CO₂-e/MWh in 2030. The growth in renewable generation, driven primarily by the RET to 2020, is important in all scenarios, even in the no price scenario, where the generation mix is otherwise projected to be little changed.

Figure D.13: Share of electricity generation by fuel type, 2012–2050 

 

Note: Based on electricity generation ‘as generated’.

Source: ACIL Allen Consulting 2013

Uncertainties about the timing and magnitude of declines in emissions-intensive electricity generation and growth in low-emissions generation give rise to a range of potential electricity supply mixes for Australia. Table D.3 presents the projected range of generation shares between the no price and high scenarios.