Emissions intensity - the recent journey and outlook to 2020
The Industry report in ClimateWorks Australia’s ‘Tracking Australia’s Progress towards a low carbon economy’ project analysed Australian industrial energy and emissions data. The report shows that the emissions intensity (emissions per unit of output) of Australia’s industrial sector has dropped by an estimated 10 per cent between 2002–03 and 2011–12, following years of sustained emission increases.
This has been largely due to resources companies turning from electricity to the less emissions-intensive gas as an energy source, and wood, pulp and printing sectors replacing 11 per cent of fossil fuel use with biomass. The improved flaring and venting processes in oil and gas production have contributed to fewer fugitive emissions (those sustained during extraction and transportation of fossil fuels).
So while industrial value added grew by 25 per cent, emissions grew by only 13 per cent in the same period.
Alcoa has built in an energy system based on the Toyota Manufacturing System that aims to eliminate processes and activities that do not add value to the business – by involving all personnel. Alcoa staff compare performance data against targets, monitor energy use in all processes and discuss energy in daily, weekly and monthly management meetings.
The Industry report also examined the likely scenarios for industry productivity to 2020. It concluded that if industry continues to switch from coal powered electricity to gas, emissions intensity could continue to reduce as it has since 2007. However, the projected sharp rise in gas prices means Australian companies may return to the more fuel intensive oil or coal fuel sources.
For more information, see the Industry report on the ClimateWorks website.
Energy efficiency outlook to 2020
Based on historical data, ClimateWorks concluded that if companies continue to increase their energy savings by 1.1 per cent per annum, energy efficiency could deliver 207 petajoules of energy savings by 2019–20. Energy costs, government policy instruments and the economic context for Australia industry that could affect this outcome.
In interviews with 47 EEO companies, ClimateWorks found that two-thirds of respondents expect to maintain or increase their current levels of energy efficiency activity. For companies facing a tough economic outlook, energy costs are likely to provide the motivation for further opportunity uptake.
The combination of increased energy management expertise in companies and recent energy efficiency action suggests current levels of opportunity uptake could continue. Interviews with Energy Managers (or similar role) for the ‘Special Report on factors influencing large industrial energy efficiency’ (link), showed that it is becoming more common for companies to disseminate relevant energy use data through regular business processes and to include energy use in their business strategies and plans.
The Murray Goulburn Cooperative, Australia’s largest dairy company sends an ‘Energy Blitz’ team to its sites for a week to observe plant operations, identify opportunities and understand barriers. Energy data is presented at each site’s daily production meeting and staff are involved in a collaborative analysis of their energy use. The visits leave site staff better informed and more motivated and the company with the benefits of greater overall energy savings.
Unlocking further opportunities
As costs increase it is expected that opportunities that were financially unattractive when first assessed may become more attractive over time. In addition, new opportunities for energy efficiency projects will need to be identified and implemented in order to manifest a 1.1 per cent increase per year in energy savings. As energy prices are projected to rise further to 2020, there will be additional incentives for companies to pursue energy savings.
Factors that affect investment decisions for energy efficiency projects can be grouped into three main categories: company capacity, project attractiveness and company motivation. The next article will look in depth at what these issues mean for Australian companies and where the potential energy savings lie.