Electricity Generation
emissions projections
2014–15
August 2015
Published by the Department of the Environment.
www.environment.gov.au
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Executive summary
Key points
• Emissions from electricity generation are the result of fuel combustion for the production of electricity on-grid and
off-grid.
• In the 2014–15 Projections, over the period 2013–14 to 2019–20, total emissions from electricity generation are
projected to be 1,369 Mt CO2-e.
• This is lower than the 2013 Projections by 42 Mt CO2-e due to lower projected economic growth, the closure of
several large industrial facilities, and projections of stronger growth in rooftop solar photovoltaic and energy
efficiency.
• Without taking account of abatement from the Emissions Reduction Fund, emissions from electricity generation
are projected to be:
– 201 Mt CO2-e in 2019–20, a 15 per cent increase on 1999–2000 levels.
– 224 Mt CO2-e in 2029–30, a 28 per cent increase on 1999–2000 levels.
– 236 Mt CO2-e in 2034–35, a 35 per cent increase on 1999–2000 levels.
• Emissions from electricity generation were 33 per cent of Australia’s preliminary national greenhouse gas
inventory 2013–14.
• Economic growth, population growth, and major resource development projects are expected to lead to a reversal
of the recent trend of declining electricity use.
• The majority of the projected increase in electricity generation is expected to come from increased output from
existing coal fired power stations, followed by solar generation and wind generation.
• Overall, the emissions intensity of electricity generation is expected to fall by 3 per cent over the period to 2034–
35.
Throughout this report:
1. Totals may not sum due to rounding.
2. Percentages have been calculated prior to rounding.
3. Years in charts and tables are financial years ending in the stated year.
Electricity Generation emissions projections 2014–15
2
Baseline projections
• The projections of electricity emissions have been prepared from a base year of 2013-14.
• Before taking account of the Emissions Reduction Fund, emissions from electricity generation are projected
to increase by 12 per cent from 2013–14 to 2019–20 to reach 201 million tonnes of carbon dioxide equivalent
(Mt CO2-e). Over the period 2013–14 to 2034–35, the emissions from electricity generation are projected to
increase by 32 per cent to reach 236 Mt CO2-e. The emissions intensity of electricity generation is expected to fall
slightly.
• Over the period to 2034–35, general business electricity use is expected to increase by around 50 per cent and
account for half of total electricity use. However, general business is expected to use significantly less energy per
unit of output. Residential electricity use is expected to gradually increase from 2017–18 because incomes are
expected to grow faster than electricity prices, due to population growth, and this sees a reversal of the recent
trend of declining residential electricity use.
• Coal fired generation is expected to account for 67 per cent of the projected increase in electricity generation over
the period 2013–14 to 2034–35 as existing coal-fired power stations increase output and retired power stations
come out of retirement.
• Solar and wind generation are expected to account for 22 per cent and 15 per cent of the projected increase in
generation respectively. New investment is behind this increase and returns on investment in renewable electricity
are expected to improve, in part due to the Renewable Energy Target.
• Over the period to 2017–18, electricity emissions from the liquefied natural gas (LNG) industry are expected to
increase as three LNG projects located in Queensland commence production utilising electricity from the National
Electricity Market (NEM).
• The emissions factors for fuel combustion for electricity generation are the same as in Australia’s National
Greenhouse Accounts and are assumed to be constant.
Figure 1
Electricity generation emissions 1989–90 to 2034–35
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
Electricity Generation emissions projections 2014–15
3
Table 1
Total
Baseline electricity emissions, key years
2000
2014
2020
2030
Mt CO2-e
Mt CO2-e
Mt CO2-e
Increase
on 2000
Mt CO2-e
Increase
on 2000
175
180
201
15%
224
28%
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
Impact of measures
• The baseline projection is based on a ‘real 20 per cent’ Large-scale Renewable Energy Target equal to
27,000 gigawatt hours (GWh) of renewable electricity as this was the policy position at the time of the finalisation
of the projections results. Abatement from a ‘real 20 per cent’ Large-scale Renewable Energy Target is estimated
to be 27 Mt CO2-e over the period 2014–15 to 2019–20.
• Abatement from a 33,000 GWh Large-scale Renewable Energy Target, as is now legislated by the Australian
Government, is estimated to be 37 Mt CO2-e.
• Estimates of energy savings and abatement from energy efficiency programs have not been explicitly identified
due to data limitations.
• Projections of abatement from the Emissions Reduction Fund are not included to avoid disclosing potentially
market sensitive information, and because the safeguard element of the Fund has yet to be decided.
• The Government will consider including estimates of abatement in future projections if it is possible to do so
without reducing the effectiveness of the Emissions Reduction Fund auctions.
Changes from the 2013 Projections
• In the 2014–15 Projections, emissions from electricity generation over the period 2013–14 to 2019–20 are
41 Mt CO2-e lower than in the 2013 Projections. In 2019–20, emissions from electricity generation in the 2014–15
Projections are 1 Mt CO2-e lower than in the 2013 Projections. The differences are a result of a range of factors:
– Economic growth is projected to be lower than in the 2013 Projections, in Australia and overseas.
– Projected electricity use in Australia is lower than in the 2013 Projections due to the closure of several
electricity-intensive facilities and expectations of stronger growth in rooftop solar photovoltaic and
energy efficiency.
Electricity Generation emissions projections 2014–15
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Table of Contents
Electricity Generation emissions projections 2014–15 .............................................................. 1
Key points ................................................................................................................................................................. 2
Baseline projections ............................................................................................................................................. 3
Impact of measures ............................................................................................................................................... 4
Changes from the 2013 Projections ................................................................................................................ 4
1.0
1.1
1.2
1.3
1.4
2.0
2.1
2.2
2.3
3.0
3.1
Introduction .................................................................................................................................. 9
Sources of emissions from electricity generation .......................................................................... 9
Recent trends—national greenhouse gas inventory ..................................................................... 9
Projections scenarios ............................................................................................................................. 10
Outline of methodology ......................................................................................................................... 11
Projections results ................................................................................................................... 13
Trends in the electricity generation projections ......................................................................... 14
Electricity demand .................................................................................................................................. 15
Electricity generation and emissions ............................................................................................... 16
Sensitivity analysis .................................................................................................................. 19
Electricity demand .................................................................................................................................. 19
Appendix A Measures ............................................................................................................................. 21
Appendix B 33,000 GWh Renewable Energy Target scenario ................................................. 23
Appendix C Changes from the 2013 Projections .......................................................................... 24
Appendix D
Key assumptions ......................................................................................................... 26
Appendix E References .......................................................................................................................... 28
Figures
Figure 1
Electricity generation emissions 1989–90 to 2034–35 ......................................... 3
Figure 2
Electricity generation trends 1989–90 to 2013–14 ................................................ 9
Figure 3
Projected electricity generation by fuel 2009–10 to 2034–35 ......................... 14
Figure 5
Electricity generation emissions 2009–10 to 2034–35 ...................................... 16
Figure 6
Projected annual average change in electricity generation .............................. 17
Figure 7
Projected emissions intensity 2009–10 to 2034–35 ............................................ 18
Figure 8
Electricity demand sensitivity analysis .................................................................... 20
Figure 9
Electricity generation emissions under a 33,000 GWh Renewable Energy
Target.................................................................................................................................... 23
Figure 10 Comparison between the 2013 and 2014–15 Projections ................................. 25
Electricity Generation emissions projections 2014–15
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Electricity Generation emissions projections 2014–15
6
Tables
Table 1 Baseline electricity emissions, key years ........................................................................... 4
Table 2 Projections scenarios .............................................................................................................. 10
Table 3 Projected electricity generation levels and fuel types, key years ........................... 13
Table 4 Electricity generation sensitivity analysis, key years ................................................. 19
Table 5 Changes between the 2013 and 2014–15 Projections ................................................ 24
Electricity Generation emissions projections 2014–15
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Electricity Generation emissions projections 2014–15
8
1.0 Introduction
The 2014–15 electricity generation projections are a full update of the 2013 electricity generation projections. They
are based on research commissioned by the Department of the Environment from ACIL Allen (ACIL Allen 2015) and
pitt&sherry (pitt&sherry 2015).
1.1 Sources of emissions from electricity generation
Emissions from electricity generation are the result of fuel combustion for the production of electricity on-grid and
off-grid. Greenhouse gases produced by electricity generation are carbon dioxide, methane and nitrous oxide.
Emissions from the construction of electricity generation facilities are counted in the 2014–15 direct combustion
projections of construction emissions. Solar, wind, biothermal and hydroelectricity generation are assumed to be zero
emissions technologies.
The 2014–15 electricity generation projections have been updated to take account of the 2006 IPCC Guidelines for
National Greenhouse Gas Inventories and now include emissions from industrial electricity generation that were
previously counted for under direct combustion.
1.2 Recent trends—national greenhouse gas inventory
Emissions from electricity generation in 2013–14 are estimated to have been 180 Mt CO2-e; 33 per cent of Australia’s
preliminary national greenhouse gas inventory (DoE 2015). Figure 2 shows that emissions from electricity generation
increased by 63 per cent over the period 1989–90 to 2008–09, but declined by 12 per cent from 2008–09 to 2013–14.
Overall, electricity emissions rose by 2.5 per cent from 1999–2000 to 2013–14.
The decline in electricity emissions from 2008–09 to 2013–14 was a result of lower electricity use, and a fall in the
emissions intensity of electricity generation. Closures of electricity intensive industrial facilities, such as the Kurri Kurri
and Point Henry aluminium smelters in October 2012 and July 2014, contributed to the fall in electricity use. Higher
electricity prices as a result of investment in poles and wires led to reductions in electricity use as consumers and
businesses found new ways to use less electricity, and invested in renewable electricity. Ongoing cost pressures and
government energy efficiency programs also led to improvements in the energy efficiency of buildings and technology.
The emissions intensity of electricity generation fell over the period 2008–09 to 2013–14, as seen by the increasing
gap between electricity generation and electricity emissions in Figure 2. The reduction in the emissions intensity of
electricity generation was driven by several factors:
The Renewable Energy Target and state government feed in tariff incentives which led to increases in renewable
energy generation. Large increases in renewable energy generation, particularly from wind and rooftop solar
photovoltaic, were observed.
The carbon tax which increased the price of coal and gas fired generation, and provided a financial incentive for
hydroelectricity generators to run down their water storages. Relatively low gas prices and the improved
competitiveness of gas fired generation compared with coal under a carbon tax led to the use of gas in new
generation capacity.
Figure 2
Electricity generation trends 1989–90 to 2013–14
Electricity Generation emissions projections 2014–15
9
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
1.3 Projections scenarios
The baseline scenario has been developed on the basis of current information regarding the outlook for electricity
generation. It includes the effect of energy savings and abatement from all electricity demand and generation
measures currently in place. The baseline scenario does not include projected abatement from the Emissions
Reduction Fund for the reasons outlined above.
High and low emissions scenarios have been used to indicate the possible upper and lower bounds on the projections.
Sensitivity analysis has been conducted to examine the effect of changing the assumptions which underpin the
electricity generation projections, as per Table 2. The results of the sensitivity analysis are presented in Chapter 3.
Table 2
Projections scenarios
Scenario
Description
Baseline
Best estimate of emissions based on current information.
No supply side
measures
A scenario to determine the effect of the Renewable Energy Target.
Sensitivity
Description
High electricity demand
The high demand sensitivity is based on higher Gross Domestic Product (GDP)
growth and lower electricity prices.
Low electricity demand
The low demand sensitivity is based on lower GDP growth and lower income
Electricity Generation emissions projections 2014–15
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Scenario
Description
elasticity of demand.
1.4 Outline of methodology
The 2014–15 electricity generation projections have three components:
1. Projections of electricity demand by pitt&sherry.
2. Projections of electricity generation by ACIL Allen.
3. Projections of emissions from electricity generation.
Electricity demand and generation were projected for each of the major electricity grids, and for large energy users
not connected to a grid.
Electricity demand
Pitt&sherry used separate Microsoft Excel based models of residential, business and large industrial electricity
demand to project electricity consumption. Residential demand was projected mainly on the basis of population
growth, while business demand was assumed to be more closely related to economic growth. Large users of electricity
are assumed to make discrete, large, infrequent and long-lived investment and disinvestment decisions. Projections of
electricity produced and generation transmission losses were prepared in order to estimate the amounts of electricity
consumed.
Pitt&sherry used the following data sets in its models:
1. The Australian Energy Market Operator (AEMO)’s 2014 National Electricity Forecasting Report
(AEMO 2014).
2. Projections of Gross State Product, based on Gross Domestic Product (GDP) forecasts from the Treasury’s 2014–15
Mid-year Economic and Fiscal Outlook (MYEFO).
3. Australian Energy Regulator (AER)’s Network Performance Reports for each National Electricity Market network
business (AER 2015).
4. Estimates of household solar photovoltaic electricity generation (ACIL Allen 2015).
5. Beyond the NEM and the SWIS 2011–12, regional and remote electricity in Australia (Bureau of Resources
and Energy Economics (BREE) 2013).
6. SWIS Market Data (Independent Market Operator of Western Australia (IMOWA) 2015).
Further information is available from pitt&sherry’s report 1.
Electricity generation
ACIL Allen used a forward looking cost optimisation model, as well as pitt&sherry’s projections of electricity
consumption to model a number of features of Australia’s major electricity markets, including:
1. existing generator operation
1
http://www.environment.gov.au/climate-change/emissions-projections
Electricity Generation emissions projections 2014–15
11
2. new investments
3. retirement decisions.
This enabled modeling of the types of fuels that would be used for electricity generation and the resulting emissions.
Separate sub-models were used to project emissions from off-grid generation and on site generation by large, remote
resource extraction and processing facilities.
The Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme are explicitly incorporated into
the modeling approach.
Further information is available from ACIL Allen’s report 2.
2
http://www.environment.gov.au/climate-change/emissions-projections
Electricity Generation emissions projections 2014–15
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2.0 Projections results
The cumulative emissions from electricity generation over the period from 2013–14 to 2019–20 are projected
to be 1,369 Mt CO2-e. One third of Australia’s emissions are projected to come from electricity generation over that
period.
Table 3 shows the projected electricity generation and fuel types in key years. Electricity generation is expected to
increase by 12 per cent to 276 terrawatt-hours in 2019–20. Electricity generation is projected to increase as a result of
economic growth and population growth. Although electricity use and economic growth are expected to remain
tightly linked, technology improvements are expected to lead to reductions in the amount of electricity required to
generate a unit of economic output. The emissions intensity of electricity generation is projected to fall slightly over
the period to 2034–35 (refer to figure 7) for two reasons: less electricity is required for a given level of output and the
proportion of electricity generated from renewable sources is expected to increase.
Table 3
Projected electricity generation levels and fuel types, key years
2014
2020
Increase
on 2014
2030
Increase
on 2014
2035
TWh
TWh
%
TWh
%
TWh
Black coal
107
133
24
144
35
159
Brown coal
47
50
7
56
21
53
Gas
43
33
-25
41
-6
49
Cogeneration
7
4
-48
3
-60
3
Liquid fuel
4
4
1
4
8
4
Hydro
19
16
-15
15
-17
14
Wind
10
23
119
23
125
23
Solar
5
11
128
20
327
24
Biothermal
3
3
1
3
1
3
245
276
12
311
27
333
Total
Note: Hydro, wind, solar and biothermal tecnologies are assumed to be zero emissions.
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
Electricity Generation emissions projections 2014–15
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2.1 Trends in the electricity generation projections
Without taking account of the Emissions Reduction Fund, emissions from electricity generation are projected to
increase by 36 per cent over the period 2013–14 to 2034–35, due to expected increases in the demand for electricity.
Improvements in market conditions are expected to lead to increases in generation from renewable sources, and the
return to service of some mothballed coal-fired generators.
Electricity generation is expected to grow by an average of 2 per cent a year from 2013–14 to 2019–20, and an
average of 1.2 per cent a year from 2019–20 to 2034–35. Faster growth is expected in the earlier period because coal
seam gas projects which are expected to start liquefying gas for export from 2014–15 will use electricity to power
their gas fields and processing plants. The choice of electricity enables the LNG producers to retain more gas for
export. Continual improvements in energy efficiency by business and residential users are expected, resulting in
gradual declines in the rate of growth of electricity generation.
Figure 3
Projected electricity generation by fuel 2009–10 to 2034–35
Source: ACIL Allen 2014, pitt&sherry 2014, DoE 2015, DoE analysis.
Electricity Generation emissions projections 2014–15
14
2.2 Electricity demand
Electricity demand is projected to increase by 11 per cent from 2014–15 to 2019–20, to 213 TWh. Over the period
2014–15 to 2034–35, electricity use is projected to increase by 35 per cent to 260 TWh. Much of
the increase in electricity use is expected to come from growth in general business that is closely linked to economic
growth.
Figure 4
Electricity demand 2014–15 to 2034–353
Source: pitt&sherry 2015, DoE analysis.
General business demand for electricity is closely linked to economic growth, which is projected to increase over the
period 2014–15 to 2034–35. Residential energy demand is expected to grow in line with population growth, and as a
result of small projected increases in appliance ownership (such as air conditioners).
The large industry category generally refers to large manufacturing and mining facilities. Use of electricity by large
industry is expected to increase from 2014–15 to 2017–18. New coal seam gas projects in Queensland are expected to
use grid electricity and account for the majority of this growth.
Energy efficiency is projected to improve as appliances and equipment are repaired and replaced with newer, more
energy efficient models. Construction of new buildings and the refurbishment of old buildings are also expected to
lead to improvements in energy efficiency. As the stock of energy efficient buildings, appliances and equipment
increases, the amount of electricity needed to generate economic output is expected to reduce. The overall effect is
that the rate of demand growth is significantly lower than the projected rate of economic growth.
3
The demand series presented in Figure 4 are taken from pitt&sherry’s demand analysis. In developing the electricity generation projection, ACIL
Allen modelled additional sources of demand from large industrial, mini-grid, off-grid and grid-exempt sources. This was equivalent to roughly
24 TWh of additional demand, and these sources of demand are not included in the chart above. For this reason, the chart total does not match
the numbers for overall demand in TWh quoted in this document.
Electricity Generation emissions projections 2014–15
15
2.3 Electricity generation and emissions
Emissions from electricity generation are projected to increase by 12 per cent between 2013–14 and 2019–20 to
reach 201 Mt CO2-e. Over the period 2013–14 to 2034–35, emissions from electricity generation are projected to
increase by 32 per cent, to reach 236 Mt CO2-e. As shown in Figure 5, the vast majority of emissions from electricity
generation are expected to come from the combustion of black and brown coal. The projected increase in coal fired
generation is met primarily through the return to service of mothballed coal fired power stations.
Figure 5
Electricity generation emissions 2009–10 to 2034–35
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015a, DoE analysis.
Minor changes in the fuels used for electricity generation are expected, with larger changes expected between 2013–
14 and 2019–20 than between 2019–20 and 2034–35, as seen in Figure 6. Coal fired generation is expected to be
more competitive than gas fired generation following repeal of the carbon tax in 2013–14,
and because of the expected gas price rise due to the commencement of LNG exports from the east coast.
Hydroelectricity generation is expected to fall in the near term because the carbon tax provided the incentive
for these entities to increase their generation above long-term levels which has led to the depletion of
water storages.
Electricity Generation emissions projections 2014–15
16
Figure 6
Projected annual average change in electricity generation
Source: ACIL Allen 2015, pitt&sherry 2015, DoEa 2015, DoE analysis.
The Renewable Energy Target is expected to lead to increases in wind and solar generation between 2013–14 and
2019–20. From 2019–20, the Renewable Energy Target is not expected to increase further, however, projected
improvements in the return on household photovoltaic installations are expected to lead to further increases in
household solar.
Gas fired generation is projected to increase between 2019–20 and 2034–35 because it is projected to be the most
competitive way to increase generation capacity, particularly off-grid in Western Australia.
Overall, the emissions intensity of electricity generation is expected to increase by 5 per cent between 2013–14 and
2015–16, return to 2013–14 levels in 2019–20, and fall by 3 per cent by 2034–35 as seen in Figure 7.
Electricity Generation emissions projections 2014–15
17
Figure 7
Projected emissions intensity 2009–10 to 2034–35
Source: ACIL Allen 2015, pitt&sherry 2015, DoEa 2015, DoE analysis.
Electricity Generation emissions projections 2014–15
18
3.0 Sensitivity analysis
It is not possible to predict future trends in emissions drivers with complete certainty. For electricity generation, key
drivers affecting emissions include electricity demand and fuel prices. Sensitivity analysis has been conducted for
these drivers to inform plausible upper and lower bounds for the projections. Results for key years are described in
Table 4.
Table 4
Electricity generation sensitivity analysis, key years
2020
Change
from baseline
2035
Change
from baseline
Mt CO2-e
Mt CO2-e
Mt CO2-e
Mt CO2-e
Baseline
201
-
236
-
High electricity demand
208
7
252
16
Low electricity demand
195
-6
214
-22
Projection
3.1 Electricity demand
Under the low demand sensitivity, projected cumulative electricity demand is lower by 5.9 per cent from
2014–15 to 2034–35 relative to the baseline. This is accompanied by corresponding lower projected cumulative
emissions (5.5 per cent over the same period).
In the low demand sensitivity, coal and gas output is projected to be lower in comparison to the baseline scenario. As
a result of lower coal-fired generation, the lower demand results in a corresponding 5.5 per cent reduction in
emissions. Under this sensitivity, very little additional capacity is expected to be installed other than that required to
meet the Renewable Energy Target.
Under the high demand sensitivity, expected electricity demand is 7.2 per cent higher cumulatively from
2014–15 to 2034–35 and expected emissions are 5 per cent higher. The anticipated increase in demand seen under
the high demand sensitivity is met through a combination of expected higher coal output, and the projected
installation of additional gas and solar PV capacity. The projected additional gas and solar capacity under the high
demand sensitivity means that the higher cumulative demand under this scenario is met by
lower emissions intensity energy supply on average and therefore emissions don’t rise to the same degree as
electricity demand.
Electricity Generation emissions projections 2014–15
19
Figure 8
Electricity demand sensitivity analysis
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
Electricity Generation emissions projections 2014–15
20
Appendix A
Measures
The 2014–15 electricity generation projections include estimated abatement from generation measures including the
Renewable Energy Target and GreenPower. The following scenarios assisted in determining these estimates:
1. A baseline scenario which includes the effect of generation measures currently in place.
2. A scenario where the Renewable Energy Target ends from 1 July 2014 to determine the effect of the Renewable
Energy Target.
Impact of generation measures—Renewable Energy Target4
The Renewable Energy Target is comprised of the Large-scale Renewable Energy Target and the Small-scale
Renewable Energy Scheme. It allows renewable energy power stations and owners of small-scale renewable energy
systems to create certificates for every megawatt hour (MWh) of renewable electricity they produce.
Liable entities (generally electricity retailers) are obligated to purchase certificates and surrender them to the
Clean Energy Regulator each year to demonstrate compliance with the scheme, providing financial incentives to both
large-scale renewable power stations and owners of small-scale systems.
The 2014–15 electricity generation projections were finalised while the Renewable Energy Target negotiations were
ongoing. Therefore, in assessing the impact of the Renewable Energy Target, a decision was taken to assess the
Government’s then stated preference for a Large-scale Renewable Energy Target consistent with a ‘real
20 per cent’ share for renewables.
Compared to a ‘real 20 per cent’ Renewable Energy Target scenario, if the Renewable Energy Target ended from
1 July 2014, then no new wind, or utility-scale solar PV developments are projected to occur throughout the
projections period. In this scenario, electricity demand is instead met by fossil-fuelled generation (primarily black and
brown coal).
The comparison of the results of the two scenarios provides an estimate of the abatement achieved through the ‘real
20 per cent’ Renewable Energy Target of 13 Mt CO2-e in 2020, and by 27 Mt CO2-e cumulatively from 2015–16 to
2019–20.
GreenPower
GreenPower is a voluntary government accredited program that enables electricity providers to purchase renewable
energy on behalf of households or businesses.
This program is projected to reduce emissions by 0.9 Mt CO2-e in 2019–20 and by 6 Mt CO2-e between 2014–15 and
2019–20.
Abatement from this measure is considered additional to the abatement task (see the calculation of the abatement
task in the 2013 Projections).
4
Appendix B has further discussion of impact of the finalised Renewable Energy Target agreement on projected emissions.
Electricity Generation emissions projections 2014–15
21
Energy savings and abatement from demand side measures
The 2014–15 electricity generation projections do not explicitly identify abatement from demand side measures such
as energy efficiency policies due to data limitations.
Electricity Generation emissions projections 2014–15
22
Appendix B
33,000 GWh Renewable Energy Target
scenario
Further analysis was conducted by ACIL Allen and the Department to enable the estimation of the abatement impact
of a 33,000 GWh Renewable Energy Target5.
Over the period to 2019–20, a 33,000 GWh Renewable Energy Target is projected to deliver 37 Mt CO2-e of abatement
cumulatively in comparison to a scenario where the Renewable Energy Target ended on 1 July 2014. This contrasts
with the 27 Mt CO2-e projected to be supplied by a ‘real 20 per cent’ Large-scale Renewable Energy Target over the
same period. Therefore the newly legislated Large-scale Renewable Energy Target is expected to deliver an additional
10 Mt CO2-e to 2019–20 compared with a Large-scale Renewable Energy Target designed to help deliver a ‘real 20 per
cent’ outcome for renewable in 2020.
Figure 9
Electricity generation emissions under a 33,000 GWh Renewable Energy Target
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
5
As a result of the policy uncertainty surrounding the Renewable Energy Target, ACIL Allen was commissioned to model electricity sector
emissions under a 34,000 GWh Large-scale Renewable Energy Target. The Department then used these results to estimate the effect of a 33,000
GWh Large-scale Renewable Energy Target on the projections.
Electricity Generation emissions projections 2014–15
23
Appendix C
Changes from the 2013 Projections
Key changes include:
1. an amended Renewable Energy Target, based on the Government’s announced policy position at the time the
projects were prepared of a ‘real 20cent per ’ Large-scale Renewable Energy Target (see Appendix A for further
details of the changes);
2. revisions to the national greenhouse gas inventory, resulting in changes to the electricity emissions for 2013–14 .
Those changes have been carried through to the 2014–15 Projections;
3. the inclusion of new sources of industrial electricity generation that were previously accounted for in other sectors,
to be consistent with the national greenhouse gas inventory and international reporting rules;
4. updated forecasts for industrial electricity consumption, particularly growth in electricity use by LNG projects
derived from coal seam gas; and
5. updated macroeconomic assumptions to take account of the depreciation in international commodity prices,
Australia’s terms of trade and exchange rate.
Table 5
Changes between the 2013 and 2014–15 Projections
2020
Cumulative
2014 to 2020
2030
Cumulative
2014 to 2030
Mt CO2-e
Mt CO2-e
Mt CO2-e
Mt CO2-e
2013 Projections
201
1,409
244
3,605
2014–15
Projections
201
1,367
224
3,489
Difference
0
-42
-20
-116
Source: ACIL Allen 2015, pitt&sherry 2015, DoE (2015a), DoE analysis.
In the 2014–15 Projections, electricity emissions are expected to grow faster from anticipated increases in black coalfired generation, partially in response to the change in Renewable Energy Target policy settings, for the period to
2019–20. Electricity emissions in the 2014–15 Projections are comparatively lower than the 2013 Projections for the
period 2019–20 to 2029–30 due to expected lower demand and weaker economic conditions.
Electricity demand is projected to be lower, particularly in the National Electricity Market, due to the closure of
electricity-intensive facilities and stronger growth expectations in rooftop solar PV.
Electricity Generation emissions projections 2014–15
24
Figure 10
Comparison between the 2013 and 2014–15 Projections
Source: ACIL Allen 2015, pitt&sherry 2015, DoE 2015, DoE analysis.
Electricity Generation emissions projections 2014–15
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Appendix D
Key assumptions
The 2014–15 electricity generation projections were completed by the Department of the Environment in
consultation with a range of agencies including the Treasury, the Department of Industry and Science and
the AEMO.
The 2014–15 electricity generation projections are based on:
1. An electricity demand projection by consultants pitt&sherry.
2. Electricity generation and emissions projections by consultants ACIL Allen.
Macroeconomic parameters are based on Treasury’s 2014–15 Budget and the 2014–15 MYEFO. These parameters
were extended to cover the projections period, based on advice from the Treasury and the Department of Industry
and Science.
Electricity generation and emissions projections
The Department engaged ACIL Allen to produce electricity generation and emissions to 2034–35 for Australia’s
electricity projections.
Key assumptions for this modelling included:
1. confidential historical emissions, electricity generation, electricity consumption and fuel use data (2011–12, 2012–
13 and 2013–14) from the National Greenhouse and Energy Reporting Scheme (NGERS) and the national
greenhouse gas inventory;
2. updated state and federal government policy settings for key generation measures including:
a. the removal of a carbon pricing mechanism from 1 July 2014
b. changes to the Renewable Energy Target including amending the Large-scale Renewable Energy Target to
achieve a ‘real 20 per cent’ of projected electricity demand in 2020 for renewables, with amended annual
targets commencing on 1 January 2016 and Emissions-intensive trade-exposed activities 100 per cent exempt;
3. commodity production assumptions were based on a range of sources including the Department of Industry and
Science’s Resources and Energy Quarterly, IBIS World reports, Wood Mackenzie’s LNG tool and the AME Group
and cross checked against company statements about the timing of new projects, expansions and facility closures;
4. international prices for oil and gas based on projections from the International Energy Agency’s 2013 World
Energy Outlook (low oil price scenario); and
5. coal prices based on the Treasury’s medium-term projections, informed by stakeholders as well as domestic and
international experts.
Further information about assumptions made is available in the report provided by ACIL Allen’s modeling report
Electricity Sector Emissions: Modeling of the Australian Generation Sector.
Electricity Generation emissions projections 2014–15
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Electricity demand projections
The Department engaged pitt&sherry to produce an electricity demand projection, which includes major grid, minigrid and off-grid electricity consumption to 2034–35.
Key assumptions for this modelling included:
1. projections of Gross State Product (GSP) , based on Gross Domestic Product (GDP) forecasts from Treasury’s 2014–
15 MYEFO;
2. Australia’s forecast population, consistent with Australian Bureau of Statistics (ABS) modelling to 2034–35 (ABS
2013);
3. forecast retail and wholesale electricity prices (ACIL Allen 2015);
4. updated state and federal government policy settings for key demand-side measures, including changes to energy
efficiency programs and state government rooftop solar PV feed-in tariffs;
5. updated historical energy savings data for appliances and equipment provided by the Department of Industry and
Science; and
6. updated forecasts for industrial electricity consumption, taking account of the new sources of growth in LNG
projects derived from coal seam gas, based on advice from ACIL Allen and the AEMO.
Further information about assumptions made is available in the report provided by pitt&sherry’s modeling report
Electricity Demand Projections to 2035 (pitt&sherry 2015).
Electricity Generation emissions projections 2014–15
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Appendix E
References
AEMO 2014, 2014 National Electricity Forecasting Report,
http://www.aemo.com.au/Electricity/Planning/Forecasting/National-Electricity-Forecasting-Report
ACIL Allen Consulting 2015, Electricity Sector Emissions: Modelling of the Australian Electricity
Generation Sector, ACIL Allen consulting, Brisbane, QLD.
Australian Bureau of Statistics (ABS) 2013, Population Projections [Series B], Australia, 2012 (base) to
2101 (cat. no. 3222.0), Commonwealth of Australia, Canberra, ACT.
AER 2015, Network performance reports 2014 and 2015, http://www.aer.gov.au/
Bureau of Resources and Energy Economics (BREE) 2013, Beyond the NEM and the SWIS 2011–12
regional and remote electricity in Australia, http://www.bree.gov.au/publications/beyond-nem-and-swis2011%E2%80%9312-regional-and-remote-electricity-australia
Department of the Environment (DoE) 2015, Australian National Greenhouse Accounts: Quarterly
Update of Australia’s National Greenhouse Gas Inventory September Quarter 2014, Commonwealth
of Australia, Canberra, ACT.
Independent Market Operator of Western Australia (IMOWA) 2015, South West Interconnected System
(SWIS) Market Data, http://www.imowa.com.au/
NGER 2015, Greenhouse and energy information in the National Greenhouse and Energy Reporting (NGER)
data publication 2013–14, Clean Energy Regulator, Canberra, ACT
pitt&sherry 2015, Australia’s Emissions Projections 2014: Electricity Demand Projections to 2035. Report
prepared for the Department of the Environment.
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