Australia is in the midst of an energy crisis.
Costs are growing for both homes and businesses. At the same time, our energy infrastructure is ageing, meaning more costs are looming to replace power stations and wires already past their sell-by date. And we’re having trouble coping with peaks and troughs in demand brought about by extreme weather. With climate change starting to bite, we’re under pressure to reduce our emissions.
Currently most Australian states and territories are part of a National Electricity Market – a way for east coast states to buy, sell and distribute the power they generate. But 87 per cent of the power in this market is generated using fossil fuels. In fact, a whopping 77 per cent of it comes from the notoriously high emission sources of brown and black coal, and about 10 per cent from gas. Only 13 per cent is from renewable sources like wind and solar.
This massive reliance on the dirtiest sources of fuel raises serious questions about how Australia can change to a greater use of renewables and replace our out of date infrastructure while ensuring that power supplies to homes and businesses are reliable. We know that our ageing distribution network struggles to cope with sudden rises in demand at peak times. How can we ensure that the lights stay on as we lower our emissions?
As a way to answer these questions, Chief Scientist Alan Finkel was given a brief to map a pathway to sustainable, reliable energy generation. Professor Finkel’s review into Australia’s energy market has now been released.
Most markets tend to be about supply and demand, and Australia’s energy market is no different. Changes need to be made on both the ‘supply’ side (the way we generate energy), and the ‘demand’ side (the way we use it).
Finkel made some clear recommendations for the supply side of the equation, calling for a new clean energy target of 28 per cent of electricity from renewables by 2030. He also recommended power stations be required to take more responsibility for energy reliability, for example by improving their frequency and voltage control to counter rises in demand at peak times.
The Finkel Report also acknowledges that managing energy demand better, and increasing energy efficiency, are both crucial to improving the situation. Australia’s building sector is well placed to advise on the best ways to do this. What’s more, the built environment can deliver demand side measures much more quickly and cheaply than we can overhaul our energy generation infrastructure.
The first change needed is simply to manage demand better, to avoid overloading our ageing energy distribution infrastructure at peak times. Sometimes surplus power is generated, making it cheaper. At other times, such as during heatwaves, demand for power soars, risking burnout for our ageing energy infrastructure. Technology for managing energy demand can take the pressure off infrastructure at peak times.
Our buildings are responsible for almost a quarter of Australia’s greenhouse gas emissions. The Low Carbon, High Performance report showed how more energy efficient buildings could save Australia $20 billion and 25 per cent of our emissions by 2030. Making our homes, schools and businesses more energy efficient provides incremental steps toward lowering overall demand. It’s also easier, and much faster, to retrofit existing buildings than to create new energy infrastructure.
Buildings are also becoming power generators in their own right. It’s well known that individual Australians are moving toward renewables, with more than two million households now employing rooftop solar, and an increasing number of offices and factories doing the same. Finkel says this trend will continue, with future power generation becoming a lot less centralised. This new highly distributed network of energy sources is only possible with the help of the building industry, who design and build the structures that can generate their own power.
Right now, a major study into Australia’s energy trajectory, examining how changes to the National Construction Code could affect our new buildings and renovations over the coming years.
High-level estimations performed by ClimateWorks indicate that at current rates of construction and demolition, by 2030 buildings constructed after 2019 could make up a quarter of our total residential and commercial stock. By 2050, this proportion could increase to more than 50 per cent.
With the next lot of revisions to the National Construction Code due to take place in 2019, decisions we take now about minimum standards for energy efficiency will therefore have a massive effect by 2050.
The Low Carbon, High Performance reports sets out a detailed roadmap to achieving this. This can’t happen without crucial government support. This includes establishing a national plan towards zero carbon buildings by 2050, and setting strong mandatory minimum standards for buildings.
We also need targeted incentives and programs to reward energy efficiency measures. At the moment, there are many obstacles preventing greater uptake of energy efficient technology. This includes split incentives, where those paying for capital upgrades (such as the building owner or landlord) do not accrue the benefits of those upgrades (the building tenant). Incentives such as stamp duty concessions on high performance homes, for example, would ensure greater uptake. In turn, higher demand would drive prices down.
Furthermore, as a major presence in existing buildings, government must show leadership in this space: government-occupied premises account for 14 per cent of emission reduction opportunities across commercial buildings. Government should leverage their considerable market power to directly fund improvements to its own property assets and influence improvements in buildings which it occupies.
Like the energy market itself, supply and demand are crucial to getting the changes the Finkel report has identified to reform our energy system. The building industry can supply many of the changes we need, if governments will support them to do so. But as with all big policy shifts, governments won’t supply what we need unless we demand it.