Emissions deductions are just the beginning: Australia's opportunity to build the energy system of the future

By Julie Romanet-Perroux, Energy Transition Lead, Accenture Australia and New Zealand

Australia’s energy system is undergoing an enormous overhaul in the race to net zero. While there is currently an intense focus on reducing emissions to achieve 2030 climate goals, the objectives of energy transition in Australia should be to achieve much more than just the transition of a single sector of the economy.

The Australian Institute of Company Directors (AICD) noted at its inaugural Climate Governance Forum in early August 2022, the transition to a low-carbon economy presents a $420 billion investment opportunity. Boardroom conversations have shifted from trying to understand why organisations need to respond, to understanding what actions need to be taken. At the same time, boards and senior leadership are facing strong, sometimes conflicting expectations on climate from a wide range of stakeholders.

Value at scale

We have built a strong energy transition team at Accenture, well positioned to advise the government and our corporate clients on how to navigate the challenges of the energy transition and understand the impact of the decisions they are facing. In recent work led by my colleague Dominic Mendonca, we have leveraged the World Economic Forum’s System Value Analysis framework to identify the value of the energy transition in twelve dimensions, including emissions, access to electricity, job creation, health, water footprint, resilience and security. Our analysis of these dimensions reveals that the value to be gained from energy transition in Australia is immense if we manage the process well and create a common journey for government, industry and consumers.

What will it take to achieve these benefits?

While significant effort has already been made to transform Australia’s supply-side energy system, equal focus needs to be put on demand-side interventions. Building a strong, resilient and efficient energy system will require a major shift not only across industries, but also in how everyday Australians view energy and the role we play within the system.

The System Value Analysis framework explores four specific energy usage interventions:

Shifting from petroleum-based vehicles to electric vehicles

While most consumers realise that electric vehicles (EV) are inevitable in the decarbonised future, there is still work to be done in setting up a national charging network to facilitate this change, as well as match supply to what is already great demand for EVs in the nation. Not only that, Australia’s supply chains depend on road transport. How will our road-freight industry adapt to a decarbonised future? How will our long-haul trucks be converted? These questions have not been answered yet. We are working with our clients who have supply chains that will be affected by these decisions in the future to map out contingency plans and test solutions to these questions.

Despite the challenges, however, the benefits associated with clean transport for Australia are huge. Not only will the shift help us achieve decarbonisation, many Australians will see health benefits as the tailpipe emissions from diesel and petrol cars are eliminated. In addition, our reliance on imported refined oil has been identified as a significant national security weakness, so by reducing this dependency, we increase the sovereignty and resilience of our nation.

Shifting from gas to electric appliances in residential and commercial businesses

Once we are generating “clean” electricity from renewable sources, we need to make sure that it is being used preferentially over other sources of energy. This means encouraging a consumer and commercial shift from gas to electric appliances, which involves a significant behavioural, attitudinal and structural change. It will take collaboration from government, wholesalers, retailers, trade and consumers to move from gas appliances to electric appliances in homes and commercial premises across the nation.

As Australian households make the switch from gas to electric appliances, once again we will not only make progress towards our decarbonisation goals, we will also see visible health improvements, notably from reductions in childhood asthma and other respiratory illnesses. From our analysis, we anticipate that these societal health improvements will see a national health saving of $4 billion per year. This is a huge hidden benefit to Australia moving into the clean energy future.

Shifting industrial processes to be circular economy based and electricity based

In order to achieve net-zero emissions by 2050, there is a need for a radical acceleration of the decarbonisation of heavy industries in Australia. One of the ways we can do this is by creating “Industrial Clusters” within Australia which are concentrated regions where industrial companies are located close together and collaborate to share resources, and even by-products, to reduce environmental impact and increase their own cost efficiencies. One such cluster that has been very effective is the Kwinana cluster in Western Australia. Areas in the Hunter Valley in NSW and Gladstone in Queensland have also been identified as having potential to form circular-economy based industrial clusters.

Expanding distributed solar energy generation and storage in homes and communities

Finally, but importantly, it will also take cooperation and understanding from consumers that they have a role to play in the capture and storage of energy in the future. By installing solar panels and battery storage in the home, Australians have the opportunity to change their role from energy consumers to energy producers, for the greater good. By making the switch to more efficient sources of electricity, we will see a reduction of around four per cent in the total energy we use nationally.

What next?

With the right planning and collaboration between government, industry and consumers, we have the chance to build a better energy system for all Australians. A system that takes advantage of our abundant renewable energy sources and that can cut the cost of our bills, create jobs and even help our health. Not only that, we have the opportunity to build a system that empowers customers to be both producers and consumers of energy. However, this involves a fundamental change in the way all Australians view energy, and that will require time, education and an ongoing dialogue.

Health

The reduction of particulate emissions and noise pollution will save Australia approximately $4 billion per year from 2035 in hidden healthcare costs.

Employment

Clean jobs will be created, with an estimated 400,000 opportunities during the electrification journey and ongoing.

Energy storage

The creation of 85 gigawatt hours of battery storage capacity and 21 terawatt hours of hydrogen storage capacity in 2035, will protect Australia during natural disasters and unplanned outages.

Water

There will be an estimated reduction in water usage by 40 gigalitres per year in 2035.

Electricity prices

Improving the utilisation of the electricity system will reduce electricity prices by more than 30 per cent. This is in addition to the energy cost savings through improved energy efficiency.

Oil imports

By 2013, Australia will avoid importing 150,000 barrels of refined fuels per year – the import of which is a key weakness in Australia’s national security. Expected benefits from the transition towards clean energy by 2035.