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Australian Government Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences Energy

Australian Government Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences

and Resource Economics – Bureau of Rural Sciences Energy update 2010 Andrew Schultz and Rebecca Petchey

Energy update 2010

Andrew Schultz and Rebecca Petchey

July 2010

© Commonwealth of Australia 2010

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire docu- ment may not be reproduced by any process without the written permission of the Executive Director, ABARE–BRS.

The Australian Government acting through Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, the Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law.

Schultz, A and Petchey, R 2010, Energy update 2010, Canberra, July.

Australian Bureau of Agricultural and Resource Economics – Bureau of Rural Sciences Postal address GPO Box 1563 Canberra ACT 2601 Australia Switchboard +61 2 6272 2010 Facsimile +61 2 6272 2001 Email info@abare-brs.gov.au Web abare-brs.gov.au

ABARE–BRS project 1646

Acknowledgments

The authors gratefully acknowledge the assistance of Dianne Stefanac, Richard Brownlee and Clara Cuevas-Cubria in the preparation of the statistics underlying this update.

Funding for this update was provided by the Energy and Environment Division of the Australian Government Department of Resources, Energy and Tourism.

ii

Energy update 2010

Australian energy production, consumption and trade, 1973–74 to 2008–09

Australia’s energy production, in energy content terms, rose by 2.7 per cent in 2008–09 to 17 769 petajoules, largely as a result of increases in black coal, uranium oxide and gas production.

Australia’s energy exports increased by 2.3 per cent to 13 810 petajoules in 2008–09, reflecting strong growth in coal and liquefied natural gas (LNG) exports.

Largely reflecting subdued economic activity, Australia’s energy consumption in 2008–09 remained flat, rising only 0.2 per cent to 5773 petajoules.

Growth in energy consumption in 2008–09 was mainly driven by the mining and electricity generation sectors. Partly offsetting this growth were falls in energy consumption in the manufacturing and transport sectors.

Total electricity generated in Australia grew by 1.2 per cent in 2008–09 to around 939 petajoules (261 000 gigawatt hours).

In energy content terms, in 2008–09 the fuel type that recorded the strongest consumption growth was renewables (up 4 per cent), while consumption of oil and gas each grew by 1 per cent.

Production and trade

In 2008–09, Australia produced 17 769 petajoules of primary energy, three times more than was consumed domestically. Growth in energy production of 2.7 per cent in this year was significantly higher than growth in energy consumption of 0.2 per cent.

Production of most energy sources increased in 2008–09, with the strongest increases in crude oil and condensate (6.9 per cent), gas (4.5 per cent) and renewables (4.4 per cent) (figure a, table 1). The growth in crude oil and condensate production was a result of the start-up of several oil fields during late 2008, including Woodside’s Vincent and Angel developments. Gas production was also supported by the start-up of new offshore fields in Western Australia’s North West Shelf. Following declines in recent years as a result of drought conditions, production of hydroelectricity rose slightly in 2008–09, with increases in wind energy and bioenergy also supporting the growth in renewable energy production. Coal production grew by 2 per cent to 9572 petajoules in 2008–09, maintaining its share of around 54 per cent of total energy production.

In 2008–09, total electricity generated in Australia grew by 1.2 per cent to around 939 petajoules (261 000 gigawatt hours), reflecting increased generation from combustible fuels such as coal and gas. While comprising a small share of overall electricity generation, generation from renewable sources such as water, solar and biogas also increased.

1

Energy update 2010

ABARE–BRS

a Australian energy production

20 000 18 000 16 000 14 000 12 000 10 000 8000 6000 4000
20
000
18
000
16
000
14
000
12
000
10
000
8000
6000
4000
2000
petajoules
1976
1980
1984
1988
1992
1996
2000
2004
2008
–77
–81
–85
–89
–93
–97
–01
–05
–09
Black coal
Uranium
Natural gas
Oil
Brown coal
Renewables

1 Australian energy production, by fuel

growth

share

contribution to growth

PJ

%

% 5 year annual

% (percentage points)

2008–09

2008–09

average growth

2008–09

2008–09

Black coal

8 904

2.1

3.2

50.1

1.1

Brown coal

668

3.4

0.6

3.8

0.1

Renewables

303

4.4

2.7

1.7

0.1

Crude oil and condensate

1 132

6.9

–0.4

6.4

0.4

Gas

1 916

4.5

5.6

10.8

0.5

Uranium

4 846

2.1

1.5

27.3

0.6

Total

17 769

2.7

2.6

100

2.7

Australia is a significant exporter of energy commodities, and in 2008–09 energy exports grew by 2.3 per cent to 13 810 petajoules, or around 78 per cent of total energy production (figure b, table 2). Exports of LNG grew strongly (12.7 per cent), while coal exports increased by 3.2 per cent. In energy terms, coal accounted for over half of Australia’s energy exports in 2008–09 (7411 petajoules), with uranium oxide accounting for 34 per cent or 4754 petajoules. The increase in energy exports in 2008–09 was supported by increasing demand from Asia, particularly China and India, where economic growth remained relatively strong during the global downturn.

2

Energy update 2010

ABARE–BRS

b Australian energy exports

16 000 14 000 12 000 10 000 8000 6000 4000 2000 petajoules 1976 1980
16
000
14
000
12
000
10
000
8000
6000
4000
2000
petajoules
1976
1980
1984
1988
1992
1996
2000
2004
2008
–77
–81
–85
–89
–93
–97
–01
–05
–09
Coal
Uranium
Oil products
LNG

2 Australian energy exports, by fuel

 

growth

share

contribution to growth

PJ

%

% 5 year annual average growth

% (percentage points)

2008–09

2008–09

2008–09

2008–09

Coal

7 411

3.2

3.6

53.7

1.7

Oil products

807

–0.1

–0.6

5.9

0.0

LNG

838

12.7

14.3

6.1

0.7

Uranium

4 754

–0.2

2.1

34.4

–0.1

Total

13 810

2.3

3.3

100.0

2.3

Australia is a net importer of liquid hydrocarbons, including crude oil, liquefied petroleum gas and petroleum products. In 2008–09, Australia exported around 807 petajoules of liquid fuels (excluding LNG but including international bunkers) and imported around 1666 petajoules. A fall in imports of liquid fuels, coupled with the small decrease in exports, led to net imports declining by 1 per cent in 2008–09.

Consumption

Australia’s energy consumption (total domestic availability) is estimated to have increased by 0.2 per cent to 5773 petajoules in 2008–09, well below the five-year average annual energy consumption growth of 1.5 per cent. This weak growth is largely a result of reduced

3

Energy update 2010

ABARE–BRS

activity stemming from the global financial crisis experienced in 2008–09. Increased energy consumption in the commercial, residential, mining and electricity generation sectors was largely offset by a decline in energy consumption in the manufacturing and transport sectors (figure c, table 3).

C Australian energy consumption, by industry 6000 5000 4000 3000 2000 1000 petajoules 1976 1980
C Australian energy consumption, by industry
6000
5000
4000
3000
2000
1000
petajoules
1976
1980
1984
1988
1992
1996
2000
2004
2008
–77
–81
–85
–89
–93
–97
–01
–05
–09
Electricity generation
Transport
Manufacturing and construction
Mining
Residential
Commercial
Other

3 Australian energy consumption, by industry

growth

share

contribution to growth

PJ

%

% 5 year annual

% (percentage points)

2008–09

2008–09

average growth

2008–09

2008–09

Mining

429

5.5

6.3

7.4

0.4

Manufacturing and

construction

1 283

–2.5

0.6

22.2

–0.6

Electricity generation

1 744

0.7

1.3

30.2

0.2

Transport

1 435

–0.4

1.6

24.9

–0.1

Commercial

277

2.2

2.6

4.8

0.1

Residential

434

1.3

1.6

7.5

0.1

Other

171

1.8

–0.8

3.0

0.1

Total

5 773

0.2

1.5

100.0

0.2

4

Energy update 2010

ABARE–BRS

In 2008–09, energy consumption in the mining sector increased by around 5.5 per cent, supported by continued robust export demand for energy commodities. Reflecting reduced demand for goods and services, commercial and residential sector energy consumption growth was lower than the five-year average annual growth rate, growing by 2.2 per cent and 1.3 per cent, respectively.

Declining activity in the energy-intensive manufacturing sector led to energy consumption falling by 2.5 per cent. The largest falls in energy consumption in the manufacturing sector were related to iron and steel (15 per cent), chemicals (12 per cent) and textiles, clothing and footwear (10 per cent). Transport energy use also experienced a modest decline, mainly reflecting a fall in road transport fuel use. Energy consumption within the refining subsector of manufacturing grew strongly in 2008–09, partly reflecting a return to production following scheduled maintenance activities in 2007–08.

  box 1 Total energy consumption Total energy consumption, as depicted throughout this update, is
  box 1 Total energy consumption Total energy consumption, as depicted throughout this update, is
 

box 1

Total energy consumption

Total energy consumption, as depicted throughout this update, is a net concept. To avoid double counting, the energy used to produce energy products (consumed in other sectors) does not count towards the estimate of total energy consumed in the sector where the products are produced. For example, in the electricity generation sector, total energy consumption comprises fuel inputs of all types less the amount of electricity produced. The primary energy that is transformed to electricity is then largely consumed by end users such as the transport and residential sectors.

 
transformed to electricity is then largely consumed by end users such as the transport and residential
transformed to electricity is then largely consumed by end users such as the transport and residential

Since the early 1990s, growth in energy consumption has generally remained below the rate of economic growth. This indicates a longer-term decline in the ratio of energy use to activity of the Australian economy (energy intensity), which can be attributed to two factors:

improvements in energy efficiency associated with technological advancement; and a shift in industry structure towards less energy-intensive sectors such as commercial and services (figure d). In 2008–09, energy intensity, as defined as the ratio of energy consumption to gross domestic product (GDP), declined by around 1 per cent.

d Intensity of Australian energy consumption 2.0 1.75 1.5 1.25 1.0 0.75 0.50 0.25 index
d Intensity of Australian energy consumption
2.0
1.75
1.5
1.25
1.0
0.75
0.50
0.25
index
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
–91
–93
–95
–97
–99
–01
–03
–05
–07
–09

GDP2006 2008 –91 –93 –95 –97 –99 –01 –03 –05 –07 –09 energy consumption energy intensity

energy consumption2000 2002 2004 2006 2008 –91 –93 –95 –97 –99 –01 –03 –05 –07 –09 GDP

energy intensity2002 2004 2006 2008 –91 –93 –95 –97 –99 –01 –03 –05 –07 –09 GDP energy

5

Energy update 2010

ABARE–BRS

Energy consumption by region

Energy consumption across Australia’s states and territories largely reflects the industry structure of each jurisdiction. Shifts in the composition of Australian industry from energy- intensive manufacturing to less energy-intensive services over several decades, combined with the energy requirements associated with the more recent mining boom, has led to changing trends in regional energy consumption growth.

In 2008–09, energy consumption declined by almost 7 per cent in Tasmania, largely reflecting reduced use of natural gas for electricity generation. Falls in energy consumption in South Australia (down 2.6 per cent), Victoria (down 1.4 per cent) and New South Wales (down 0.6 per cent), largely reflected lower manufacturing production associated with reduced economic activity. In Western Australia, the Northern Territory and Queensland, ongoing demand from the mining sector helped sustain positive energy consumption growth.

4 Australian energy consumption, by region

growth

share

contribution to growth

PJ

%

% 5 year annual

% (percentage points)

2008–09

2008–09

average growth

2008–09

2008–09

New South Wales

1 564

–0.6

0.7

27.1

–0.2

Victoria

1 378

–1.4

–0.5

23.9

–0.3

Queensland

1 296

0.7

3.2

22.4

0.2

South Australia

351

–2.6

0.7

6.1

–0.2

Western Australia

946

4.6

3.5

16.4

0.7

Tasmania

116

–6.7

1.5

2.0

–0.1

Northern Territory

122

5.2

9.3

2.1

0.1

Australia

5 773

0.2

1.5

100.0

0.2

Energy consumption by fuel

Overall, the fuel mix in Australia’s domestic energy use was largely unchanged between 2007–08 and 2008–09, with black and brown coal remaining the dominant fuel source in the Australian energy mix at around 39 per cent. The shares of oil and gas were roughly steady at 34 per cent and 21 per cent, respectively (table 5). The consumption of gas grew by 1 per cent in 2008–09, well below the five-year average annual growth of around 3 per cent. Given its widespread use throughout the economy, this moderation in gas consumption reflects the effects of below-average economic activity in Australia during this period. The moderation of gas used in electricity generation during the year may partly reflect the ability of gas-fired plants to rapidly alter their output in response to fluctuating demand.

6

Energy update 2010

ABARE–BRS

5 Energy consumption in Australia, by fuel

 

growth

share

PJ

%

% 5 year annual average growth

%

2008–09

2008–09

2008–09

Coal

2 253

–0.4

0.1

39.0

Oil

1 983

0.8

2.0

34.4

Gas

1 233

1.0

3.1

21.4

Renewables

303

4.3

3.5

5.2

Total

5 773

0.2

1.5

100.0

6 Australian renewable energy consumption, by fuel

 

growth

 

PJ

%

2008–09

2008–09

Biogas/biofuels

24

33.8

Hydro

44

2.0

Solar/wind

23

6.5

Biomass

212

2.0

Total

303

4.3

Of the renewable energy sources, biogas and biofuels grew strongly at around 33 per cent in 2008–09 (table 6), largely reflecting increased ethanol consumption in the road transport sector. Solar and wind energy grew by almost 7 per cent to 23 petajoules, while energy from hydropower increased by 2 per cent as rainfall increased in 2008–09 after several years of drought conditions.

Methodology and coverage

This year’s Energy update reflects the addition of 2008–09 data to ABARE–BRS’s Australian energy statistics (AES) database, which can be found at www.abare-brs.gov.au/publications. For some series, the AES extends back to the early 1960s; however, the most detailed AES information relates to the period 1973–74 to 2008–09.

ABARE–BRS’s energy database provides detailed energy consumption and production statistics, by state and by fuel, at an industry-specific level. The greatest coverage of industries is provided in the energy-intensive manufacturing sectors and for Australia as a whole. In some cases, particularly at the state level, specific industry detail is not able to be released for confidentiality reasons. The overview tables also include less industry-specific detail.

The general methodology used in the AES is the process of balancing energy consumption with production and trade, where much of the production and trade data are sourced independently. The check for internal consistency has been an important component of the AES and ensures that the estimates of energy consumption at an aggregate level are as accurate as possible.

7

Energy update 2010

ABARE–BRS

The construction of ABARE–BRS’s historical statistics is based primarily on the voluntary Fuel and electricity survey (FES), conducted in the second half of each year. The FES can be described more accurately as a partial census of energy users in Australia. With the introduction of the National Greenhouse and Energy Reporting System (NGERS), survey year 2008–09 represents the final year that the FES will be conducted. NGERS data will replace the FES in survey year

2009–10.

In energy terms, the FES provides consumption and derived production statistics for just over half the national total. A further 25 per cent comes from other state and Australian Government agencies and industry associations. The remainder is estimated using the energy balance process and a variety of economic indicators, based on the assumption that statistics for energy production and trade are reliable.

Some changes to the historical series occurred when ABARE–BRS’s FES was benchmarked to a one-off statistical collection for 2001–02 by the Australian Bureau of Statistics (ABS). The results of this ABS benchmarking study can be found at www.abs.gov.au/ausstats/ (ABS cat. no. 4649.0.55.001). Breaks in some series occurred as a result.

The coverage of industries and fuels provided in ABARE–BRS’s energy database can be found at the FES website at www.abare.gov.au/interactive/fuelsurveys/. The industry categorisation for the 2008–09 AES remains unchanged from the categorisation used over the past 17 years. The AES industry classifications are a modified form of the Australian and New Zealand Standard Industrial Classification (ANZSIC), introduced in 1993, containing additional classes in some industries and assuming aggregated energy usage in others. Apart from these distinctions already in place, a change to the new ANZSIC 2006 classifications could compromise confidentialised data in the current tables and would introduce breaks in many of the time series.

8

ReseaRch funding ABARE–BRS relies on financial support from external organ- isations to complete its research program. As at the date of this publication, the following organisations had provided financial support for ABARE–BRS’s research program in 2009–10 and 2010–11. We gratefully acknowledge this assistance.

07.10

AusAID

Fisheries Resources Research Fund

Austmine

Forest and Wood Products Australia

Australian Fisheries Management Authority

Grains Research and Development Corporation

Australian Government Department of Climate Change

Grape and Wine Research and Development Corporation

Australian Government Department of the

Horticulture Australia

Environment, Water , Heritage and the Arts

International Food Policy Research Institute

Australian Government Department of Innovation,

Land and Water Australia

Industry, Science and Research

Meat and Livestock Australia

Australian Government Department of Resources, Energy and Tourism

National Australia Bank

Australian Trade Commission (Austrade)

OECD

CRC Plant Biosecurity

CSIRO (Commonwealth Scientific and Industrial Research Organisation)

Dairy Australia

Department of Primary Industries, Victoria

Queensland Department of Employment, Economic Development and Innovation

Rural Industries Research and Development Corporation

South Australian Department of Trade and Economic Development

DN Harris and Associates

The Treasury

European Commission

Western Australian Department of State

Fisheries Research and Development Corporation

Development

9 9