02

SUPERCHARGING
EMISSIONS REDUCTION

For both businesses and households, energy efficiency and energy management are essential to ambitious emissions reduction efforts.

In 2021 Australia set itself the urgent task of achieving net zero emissions by 2050. To avoid the worst impacts of climate change and preserve a liveable planet, global temperature increase needs to be limited to 1.5°C above pre-industrial levels.¹⁰To do this, worldwide emissions need to be reduced by 45 per cent by 2030 and reach net zero by 2050.¹¹

Limiting the effects of climate change means not just achieving net zero emissions, but also limiting the total amount of emissions we create. Every tonne of carbon we don’t emit helps keep temperature increase down.

Energy efficiency is key to this, as it helps us reduce emissions quickly. Switch out a high-power light bulb for an LED globe and you’ve reduced emissions today – quicker even than installing solar panels on a roof.

What does net zero actually mean?

Net zero emissions means balancing the greenhouse gas emissions created and released into the atmosphere with the emissions removed from the atmosphere.

A ‘net zero economy’ is achieved when the sum total of activities results in no increase in emissions added to the atmosphere. Achieving this by 2050 – and almost halving emissions by 2030 – is integral to achieving the Paris Agreement’s goal of limiting global warming to 1.5ºC.

The energy we use in our homes, businesses and vehicles is responsible for around 80 per cent of Australia’s emissions,¹² and while our energy systems are changing fast, they continue to be dominated by fossil fuels.

This means any effort to use energy more efficiently – using less to provide the same service – not only saves money, it reduces emissions at the same time.

Fugitive emissions means emissions that occur during the production, processing, transport, storage, transmission and distribution of fossil fuels
LULUCF means land use, land-use change, and forestry, and includes activities like reforestation
Stationary energy, excluding electricity means fuels used for heat and industrial processes

Source: DCCEEW 2022, Quarterly Update Of Australia’s National Greenhouse Gas Inventory: September 2022.

Not all of Australia’s emissions can be lowered easily. Some – like those from producing steel and cement – will take many years. Energy efficiency will still reduce emissions from those businesses, helping them comply with the requirements of the reformed Safeguard Mechanism to start decreasing their emissions each year as we head towards net zero by 2050.¹³

Around the world, energy efficiency is already hard at work reducing emissions. Between 2000 and 2017, energy efficiency was responsible for reducing global emissions by 12 per cent,¹⁴ while the global economy grew by 65 per cent at the same time.¹⁵

Many countries – and some Australian jurisdictions – have energy efficiency programs for household appliances – think of the incentives to replace incandescent light globes with modern LEDs available in some states. Where these long-running programs exist, they’ve been shown to help reduce energy usage by more than half – and up to 84 per cent for big energy-intensive appliances such as air conditioners¹⁶– creating fewer emissions and reducing costs while maintaining our quality of life.

AS IMPORTANT AS RENEWABLES

To achieve net zero by 2050, experts predict energy efficiency and electrification will be responsible for 25 per cent and 20 per cent, respectively, of all emissions reduction worldwide.¹⁷

In Australia, new research commissioned by ANZ and the EEC suggests energy efficiency will deliver 19 per cent of the emissions reduction we need by 2030 – and 14 per cent by 2050.¹⁸ Energy efficiency can deliver us a larger part of our 2030 target because we can get started on it quickly, accelerating the energy transition and limiting emissions immediately.

Looking out to 2050, combined with electrification, which takes advantage of more efficient electric appliances, we can achieve 39 per cent of the emissions reduction we need – a larger share of emissions reduction than renewable electricity.¹⁹

To achieve Australia’s target of reducing emissions by 43 per cent by 2030, we’ll need to reduce our emissions by 157 million tonnes. We will also need to reduce our emissions by a further 343 million tonnes – or around 500 million tonnes in total – to get to net zero by 2050. In order to achieve those goals, we must use a range of technologies, including renewable electricity, energy efficiency and electrification, as well as renewable fuels like green hydrogen and biofuels, and carbon removals through reforestation and other efforts.

Ambitious effort on energy efficiency is the least-cost way to transform our economy to net zero emissions.

Right now, we’re not on the necessary path. With current policies and business-as-usual conditions, energy efficiency and electrification will make up a relatively small part of our emissions reduction. With business-as-usual, energy efficiency will deliver only two per cent of emissions reduction in 2050, and renewable electricity and carbon removals will have to do much more of the work.

Energy efficiency scenario modelling

ANZ and the EEC commissioned Northmore Gordon, a leading provider of energy and carbon advisory services across Australasia, to undertake research into the role of energy efficiency and electrification in decarbonising Australia.

The modelled scenarios all support a net zero economy by 2050, with the business-as-usual scenario based on what Australia is currently doing, i.e. current policies and programs. The low-cost enhanced energy efficiency scenario is based on ambitious but demonstrated and available energy efficiency improvements.

What is electrification?

Electrification involves replacing technologies that use fossil fuels with technologies that use electricity instead. Importantly, electric appliances and equipment not only enable the use of renewable electricity, but are more efficient than gas appliances, equipment and vehicles.

Common examples for households include induction cooktops, reverse cycle air conditioners, heat pump hot water systems and electric vehicles.

Common examples for businesses include electrifying low and medium temperature heat in commercial buildings and food and beverage manufacturing from gas to electric heat pumps or switching to electric powered irrigation systems and tractors for farmers.

Using energy more efficiently enables the essential transition to renewables to move faster and cheaper – helping reduce the impacts of climate change on all of us.

Because it’s quicker and less costly to reduce energy-related emissions through energy efficiency than it is to build and transition to new low-emissions energy supply, the more we can optimise existing renewable energy sources, the less we need to build new ones.

Electrification is an important part of this: not only can electric appliances and industrial equipment use renewable electricity, they are typically more efficient than kit powered by fossil fuels. An electric car is usually around three to four times more efficient than a comparable petrol car.²⁰ And a heat pump – like a reverse cycle air conditioner or heat pump water heater system – can provide three to four times as much heat energy as it takes to run.²¹This means the emissions savings are realised from both energy efficiency and renewable energy usage.

Reducing emissions through energy efficiency can be done right across the economy – from households and small businesses to big industry and transport. The graph on page 13 shows how major sectors of the economy can use energy efficiency, electrification and renewables to reduce their emissions.

Across the economy, there are big opportunities for energy efficiency and electrification. In mining and manufacturing, businesses can reduce almost half of their emissions through energy efficiency and electrification. Decarbonising our homes will also involve using these methods to reduce emissions by 46 per cent, and then harnessing renewable electricity for net zero-ready housing.²²

We still don’t have the technology to reduce all our emissions to zero. Some things, like producing cement and steel, create some emissions that we can’t get rid of with existing cost-effective technology. To deal with these hard-to-abate – or hard-to-remove – emissions, we’ll need to use carbon or CO₂ – removals.

Ramping up ambition on energy efficiency and electrification will be a very cost-effective way to achieve net zero in Australia.²³

Using energy efficiency and electrification to reduce emissions is available now and almost always cost-effective,²⁴ giving us a better chance of achieving our emissions reduction targets as quickly as possible, whilst also saving money.