Energy

2.2.1 Non-renewables
2.2.2 Renewables
2.2.3 Energy flows in the economy
2.2.4 Production
2.2.5 Exports and imports
2.2.6 Consumption
2.2.7 Supply
2.2.8 Energy markets
2.2.9 Prices
2.2.10 Greenhouse gas emissions

Australia has abundant renewable and non-renewable energy resources (Figure 2.1).

Non-renewables include fossil fuels (coal, gas and oil) and nuclear energy fuels (uranium and potentially thorium). We have world-class wind, solar and geothermal resources and plentiful wave, tidal and biomass sources of energy.

Figure 2.1: Australia's major energy resources, excluding hydro and bioenergy, 2012

Source: GA-ABARE (2010:3), updated for BREE (2012a).

2.2.1 Non-renewables

In 2010, our economic demonstrated resources of thermal coal and uranium were estimated to last well into the next century, and our natural gas for over half a century (Table 2.2).

Our largest high-quality reserves of thermal black coal are in New South Wales and Queensland. Victoria holds the largest commercial brown coal resources. Australia's brown coal is currently used domestically for power generation, as its high moisture content makes it unsuitable for export. Work is underway to develop alternative uses for this vast resource (see Chapter 5: Energy resources).

Australia's identified conventional gas resources have increased threefold over the past 20 years. In addition to known coal-seam gas reserves, Geoscience Australia estimated in 2011 that there may be about 258 900 petajoules (PJ) of additional coal-seam gas, 435 600 PJ of shale gas and 22 000 PJ of tight gas, although the extent to which those resources are economically recoverable is untested. Flows from Australia's first shale well in the Cooper Basin in August 2012 was a milestone on the path towards commercial production of Australia's shale gas resources. Most of the coal-seam gas is in the black coal deposits of Queensland and New South Wales.

Most of Australia's identified uranium resources are in South Australia, the Northern Territory and Western Australia. The Olympic Dam deposit in South Australia is the world's largest.

Our crude oil reserves are relatively limited and in long-term decline in the absence of further discoveries. Our largest petroleum-producing basins are the Carnarvon Basin in the north-west and the Gippsland Basin in Bass Strait.

Australia's carbon capture and storage potential is estimated to be around 417 gigatonnes, equivalent to 2000 years storage (RET 2009).

Table 2.2: Australia's economic demonstrated energy resources, 2009 and 2010

n.a. = not available.
a Recoverable resources at 31 December 2010.
b Crude oil, condensate and liquefied petroleum gas combined.
c Reasonably assured resources recoverable at costs of less than US$80/kg U.

Source: BREE (2012a).

2.2.2 Renewables

Australia has some of the best wind resources in the world. Most wind farms are on high-quality sites in South Australia and Victoria. At the end of 2010, Australia had 2175 MW of installed wind generation capacity.

Solar power is a vast potential source of energy. The solar radiation falling on Australia each year is around 58 million PJ, which is about 10 000 times the nation's annual energy consumption (GA-ABARE 2010:268).

Almost all bagasse sources are in the sugarcane production areas in Queensland. Biogas sources are more evenly distributed, as they are based on gas generated from landfills and sewage treatment.

Hydropower generation is mainly in New South Wales, Tasmania, Queensland and Victoria. The expansion of hydro has been limited by the availability of suitable sites and some environmental concerns.

We also have significant potential geothermal, ocean energy (tidal and wave) and biofuel resources.

2.2.3 Energy flows in the economy

Figure 2.2 shows the principal energy flows in Australia in 2009–10. It demonstrates the significance of Australia's energy exports and shows the breakdown of consumption in the domestic economy. These flows will change in coming years as exports expand and the composition of electricity generation changes.

Figure 2.2 : Australia's energy flows, 2009–10 (PJ)

Source: ABARES (2011a).

2.2.4 Production

Australia is the world's ninth-largest energy producer, accounting for around 2.5% of the world's energy production (BREE 2012a). Energy production has grown strongly over the past decade (Figure 2.3), and most of it is now exported. In 2010–11, coal dominated energy production (about 60%), followed by uranium (20%), gas (13%), liquid fuels and renewables.

Figure 2.3: Australian energy production, 1973–74 to 2010–11

Source: BREE (2012a).

2.2.5 Exports and imports

In 2010–11, the value of Australian energy exports was around $69 billion (BREE 2011a:133). Table 2.3 shows export volumes, values and rankings in that year.

Table 2.3: Australia's energy exports 2010 and 2011

n.a. = not available.
a BREE (2012b).
b BREE (2010b, 2012a:61).
c Includes condensate and other refinery feedstock.
d Calculated from BP (2012a).
e IEA (2010a: Oil trade data).
f BREE estimate.
g Calculated from BP (2012b, using LNG exports only, excluding pipeline gas).

We are a net importer of crude oil and petroleum products, and our reliance on petroleum imports is increasing. Over the past decade, our domestic refining capacity declined while domestic consumption increased (Figure 2.4).

In 2010–11, Australia exported 2471 ML of liquefied petroleum gas (oil production in Australia's north-west is closer to Asian refineries than to domestic refineries on our east coast).

Australia has 11 major deepwater ports with facilities to export petroleum products. Our exports of crude oil and condensate are increasingly sourced from the west coast, while exports of refined products are largely sourced from the east coast.

Australia's nine major coal-exporting terminals had a combined capacity of almost 400 million tonnes and loaded nearly 290 million tonnes of coal in 2010–11. Further planned investment in coal, rail and port infrastructure in the next decade will support growth in this vital export industry.

Figure 2.4: Australian trade in refined petroleum products, 1986–87 to 2010–11 (ML)

Source: BREE (2011b:110).

2.2.6 Consumption

Australia is the world's 20th-largest primary energy consumer (15th on a per person basis). Energy consumption growth has slowed over the past 50 years, from an average of 5% a year in the 1960s to 1.8% a year since 2000. This is due to improved energy efficiency and more rapid growth of less energy-intensive sectors, such as the commercial and services sectors (BREE 2012a).

The transport sector is the largest end user of energy in Australia, consuming over a third of final energy, followed by the manufacturing and construction sectors, and then the residential, mining and commercial sectors.

2.2.7 Supply

In 2010–11, black and brown coal constituted 35% of Australia's primary energy supply. Since 1960–61, our coal consumption has increased by an average of 5% each year.

Oil makes up 36% of primary energy supply, although its share has been declining from a high of almost 50% in the late 1970s. Domestic consumption of oil, particularly for transport, continues to grow, but generally at rates below those experienced before the 1980s.

Figure 2.5: Electricity production, by fuel, 2010–11

Source: BREE (2012c).

Gas contributed 25% of total primary energy supply in 2010–11, growing strongly in the past five years at an annual average rate of 5.6%. Manufacturers and electricity generators are the largest consumers of domestic gas. The largest industrial users include smelting and refining, the chemical industry and the cement industry. The strong share of the mining sector is dominated by the use of natural gas in the production of LNG.

Renewable energy accounted for 4% of our primary energy supply in 2010–11. Around half of Australia's renewable energy is used to generate electricity. The other half is used for thermal and water heating in industrial and domestic applications.

In 2010–11 power generation from coal provided around 68% of Australia's electricity needs, but the use of gas and renewables is growing and coal is projected to decrease in market share over the coming decades (Figure 2.5).

2.2.8 Energy markets

Australia has a series of well-established liquid fuel, gas and electricity markets. They have different structures and coverage, largely reflecting geographical and jurisdictional arrangements. Australia's National Electricity Market and the east coast gas market form interconnected trading systems between the east coast states and the Australian Capital Territory.

These markets are described further in Chapter 7: Energy markets: overview and in chapters 8, 9 and 10 (liquid fuel, gas and electricity).

2.2.9 Prices

After a period of relatively stable retail electricity and gas prices throughout the 1990s and into the first decade of the new century, significant retail price increases occurred from 2007 onwards (Figure 2.6). The increases have been driven primarily by increased network (mainly distribution) costs, as well as a range of government measures to promote clean energy and energy efficiency (AEMC 2011a).

Overall, retail petrol prices have increased only marginally above 2007 levels, largely because of the moderating effects of a strong Australian dollar.

Figure 2.6: Electricity and gas retail price index (inflation adjusted), Australian capital cities, 1991 to 2012

Electricity

Gas

Source: ABS, Consumer Price Index (various years).

2.2.10 Greenhouse gas emissions

The energy sector accounts for around three-quarters of Australia's greenhouse gas emissions (Figure 2.7). Electricity generation is the single largest contributor, producing 38% of total emissions. This reflects Australia's high reliance on fossil fuels for electricity generation.

Figure 2.7: Australia's greenhouse gas emissions profile (excluding land-use change)

Source: DCCEE (2011).