Meeting Australia’s net-zero targets will require more than the best intentions, according to Tsen Wong, ANZ’s Head of Energy Transition, Resources, Energy & Infrastructure. It will require action – and investing in energy efficiency is an effective way for businesses to do their part.
Speaking on an ANZ Institutional On Air podcast with Holly Taylor, Head of Projects at Australia’s Energy Efficiency Council, Wong said the shift to a low-carbon economy in the coming decades would require a fundamental reshaping of the energy system, and business has an important role to play.
“From a timeline perspective - and there's actually not a lot of time left when you think about it, we are in 2023 - [the world has] hard targets to meet to keep to a maximum warming ambition of 1.5 degrees,” Wong said.
“It's not a case of ‘let's just hope for the best at 2050’; you actually have to do things out to 2030, 2040. When you think about all the things we have to do… we need to think about the solutions that are relevant at each stage of the transition.”
Taylor and Wong were speaking after the release of Putting Energy Efficiency to Work, a report that finds energy efficiency in Australia has not reached its potential as a method for addressing energy concerns. It also contains modelling suggesting energy efficiency is a critical tool to help businesses lower their emissions.
Incoming sustainability rules – including changes to the safeguard mechanism – means emissions, and how they can be reduced, are front of mind for many large businesses in Australia.
Modelling discussed in Putting Energy Efficiency to Work suggests energy efficiency and the additional efficiencies that come from electrification can play a significant role in this, Wong said on the podcast.
“The modelling suggests it's in the order of 40 per cent of Australia's total emissions reduction target out to 2050,” he said.
Wong said many of ANZ’s large institutional customers were well on the way in their sustainability journey, including considering how energy efficiency fits into their risk-management and sustainability strategies.
“But the value of energy efficiency is amplified because this is something businesses of all shapes and sizes can actually do and participate in,” he said.
Taylor said an important finding from the report is not just what energy efficiency can do – but what would happen if nothing is done at all.
“The business-as-usual modelling has energy efficiency only playing 2.1 per cent of our emissions reductions job out to 2050,” she said. “It’s critical to think about how we can massively ramp up something that, in most situations, is the most cost-effective thing you can do - and just get it out to businesses and households now, immediately.
“We're talking thermal performance from insulation, draft proofing. We're talking energy-efficient heat pumps. We're talking energy-efficient lighting.
“We're talking energy-efficient process improvements, from energy management systems, electrification. We're talking about changing something from a gas system to an electric system or a fuel system to an electric system.”
Wong said investment in renewables, including Australia’s electricity network, would eventually help lower Australia’ s emissions - but take time. Energy efficiency is more readily available and faces less immediate barriers, he said.
“We are approaching a level of technical constraint in our network,” he said. “[The shift to renewables] requires a fundamental rewiring of the transmission network. Because the pipes that transport those electrons are now built for existing technologies, which is largely around centralised thermal generation.
When Australia moves to a decentralised grid, that transmission system needs rebuilding – a project with substantial scale, Wong said.
“We’re talking … about 10,000 kilometres of new transmission lines,” he said.
“Those issues will be dealt with, but I think that just takes time. In the meantime, I think energy efficiency plays a role in reducing emissions… while you’re waiting for that next wave of renewable energy to really hit the market. It buys you time, effectively.”
Taylor said the key takeaway from the report for businesses is “energy efficiency should be a part of any sensible businesses’ business plan for achieving decarbonisation”.
“The report is really trying to demonstrate if you’re a business and you care about action on climate or you just care about saving money, roll out energy efficiency right now,” she said.
The experts also touched on expected impact of the energy efficiency measures announced in the May federal budget. Listen to part two of the discussion on podcast above to find out more.
You can read the ANZ and EEC report Putting Energy Efficiency to Work here. This note reflects the edited version of the conversation as it appears on the podcast.
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