Lecture 1:

Introduction

Lecture Material Covers:

The objectives of this course are to give a broad appreciation of the topic of energy efficiency and
why it is important; to provide examples of quantitative analysis of how EE can reduce energy use
and emission of GHGs; to compare this to emissions reductions achieved using renewable
energy; to place this in the context of emissions from fossil fuel-based energy supply; and to
outline the importance of development of an entire energy services system, as opposed to
focusing only on supply.
Reducing Australia's total energy consumption is desirable because:
(i) The extraction and processing of Australia's current major sources of energy (oil, coal, and gas)
comes at an economic cost, and so reducing their use would lead to increased profitability and
cost effectiveness.
(ii) These resources have a finite life, substitutes will have to be imported adding extra costs to
any processes they are required for. As world reserves become scarcer these imported fuels will
increase in price adding further to these costs. The corollary being that our own reserves will also
become more valuable in the international marketplace and so it is important to conserve them as
much as possible.
(iii) Extraction and use of these resources has negative environmental consequences such as
water and air pollution, mining site degradation, and the production of greenhouse gases. Such
consequences have the potential to be of even greater significance than those outlined in (i) and
(ii) depending on their severity on the world ecosystem and global society.
(iv) because of these negative externalities environmental regulations such as emissions trading
permits may make fossil fuels more expensive to use.
This course is divided into the following lectures.

Week Topic
1
2
3
4
5
6
7
8
9
10
11
12

Introduction and Overview

Relevant Economics, Residential and Commercial Energy Use,
Commercial energy management; HVAC;
Energy audits, design and rating tools, review of electric power and
power factor, transmission and distribution, distributed generation.
Consumer & Office Products, Water heating & Lighting
Industry: Furnaces, Boilers, Cogeneration, Combined cycle generation,
Distributed generation, Heat recovery
Production & distribution of process steam, Compressed air
Motor systems
Pumps and fans
Transport
Water efficiency
Energy Efficiency Policy
Exam preparation

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
1

Lecture 2:

Overview of Energy Efficiency

Lecture Material Covers:

Current and predicted energy use and related emission of greenhouse gases in Australia;
Subdivision by sector. The potential of energy efficiency to reduce energy use, costs and
greenhouse gas emissions.
Definitions of demand management, energy efficiency, energy intensity, and greenhouse gas
intensity.
Assessable Learning Outcomes:

Knowledge of current and predicted patterns of energy use and consequent greenhouse
emissions in Australia
Understand the need for reduced energy use to reduce emission of greenhouse gases
Knowledge of the potential of energy efficiency to reduce greenhouse emissions in Australia
Understand the meanings of the terms; energy efficiency, demand side management, energy
intensity, GHG intensity.

Contents:
1.

The Need for Action

Current situation Energy and Emissions
Energy Use Predictions from ABARE
Greenhouse Gas Predictions

3
4
10
11

2.

The Potential of Energy Efficiency

13

3.

Terms and Definitions

15

(a)
(b)
(c)

COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
WARNING
This material has been copied and communicated to you by or on behalf of the
University of New South Wales pursuant to Part VB of the Copyright Act 1968
(the Act).
The material in this communication may be subject to copyright under the Act.
Any further copying or communication of this material by you may be the subject
of copyright protection under the Act.
Do not remove this notice.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
2

Resources:
1. ABS (2006) Year Book Australia, Australian Bureau of Statistics
2. AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office,
Canberra.
3. AGO (2007) Tracking to the Kyoto target: Australias greenhouse emissions trends 1990 to
2008/12 and 2020, Department of Climate Change, Canberra.
4. AG (2004) Securing Australias Energy Future, Australian Government, Canberra
5. AGO (2004) National Greenhouse Gas Inventory 2002: Energy, Stationary Sources and
Fugitive Emissions Fact Sheet, Australian Greenhouse Office, Canberra
6. ABARE (2003) Australian Energy: National and state projections to 2019-20, ABARE report
for the Ministerial Council on Energy, abareconomics
7. ABARE (2005) Australian Energy: National and state projections to 2029-30, ABARE report
for the Ministerial Council on Energy, abareconomics
8. BG (2003) Energy White Paper: Our energy future creating a low carbon economy, British
Government, United Kingdom
9. IPCC (2001) Climate Change 2001: Mitigation - Technical Summary, The Third
Assessment Report of Working Group III of the Intergovernmental Panel on Climate
Change (IPCC), Geneva, Switzerland
10. NFEE (2003) Towards a National Framework for Energy Efficiency Issue and Challenges,
Discussion Paper, Energy Efficiency and Greenhouse Working Group, Commonwealth of
Australia, 2003

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
3

1.

The Need for Action

(a)

Current situation Energy and Emissions

Australias net Greenhouse Gas Emissions for 2006 were 576 Mt CO2-e. Between 1990 and 2006,
Australias greenhouse gas emissions (excluding land use, land use change and forestry)
increased by 29%. If land use, land use change and forestry are included, emissions have
increased by only 4.2%.1 Inclusion of land use, land use change and forestry was allowed under
the Australia Clause. Australia pushed hard for this clause to be included in the Kyoto Protocol
because our land use change and forestry emissions in 1990 were very high - effectively
increasing our baseline. It is clear that the reductions that land use change and forestry can
provide will soon run out (unless of course massive re-afforestation projects are carried out). Once
this happens, emissions will steadily increase unless additional measures are taken. See Figures
1, 2 and 3.
Note that storage of carbon in forest sinks is not equivalent to storage of carbon as fossil fuels.
Fossil fuels are the safest form of sequestration known, as the carbon has been slowly removed
from the atmosphere many millions of years ago via growth of organic matter and formation of
coal oil and natural gas. Fossil fuel usage per annum globally emits carbon that took millions of
years to be sequestered as fossil fuels. Thus increasing carbon sequestration through land use
change and forestry does not compensate for continued use of fossil fuels. Australias population
has steadily increased by 12.5% between 1995 and 20052, (~ 1.3% per annum growth) and all the
following should be seen in this context.

Figure 1
Net CO2equivalent3 emissions by
sector, 1990-2006
From AGO (2009)4

AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
ABS (2006) Year Book Australia, Australian Bureau of Statistics.
3
See definitions at end of notes.
4
AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
2

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
4

Stationary Energy: includes emissions from fuel combustion for energy in the following
subsectorsEnergy Industries (includes fuel combustion in electricity generation, petroleum
refining, gas production and distribution, and solid fuel manufacture), Manufacturing Industries
and Construction, Other Sectors (residential, commercial and institutional, and agriculture, forestry
and fishing) and Other (lubricants and military transport).
Transport: comprises road transport, civil aviation (domestic), navigation (domestic), and
railways.
Fugitive emissions: comprises Net Solid Fuel emissions (associated with coal mining and
handling), and emissions from Oil and Natural Gas production, processing and distribution. (i.e.
extra emissions from these industries over and above those directly from energy production.)
Industrial Processes: comprises emissions that are a by-product of various production
processes. For example, high temperature processing of calcium carbonate to produce quick-lime
gives rise to CO2 emissions. Soda ash production and use, nitric acid production and ammonia
production also produce GHGs.
Agricultural: mainly comprises emissions of CH4 from Enteric (or intestinal) Fermentation by
livestock, N2O (nitrous oxide) from Agricultural Soils (the cultivation of agricultural soils, the use of
nitrogen fertilisers on crops and improved pastures, and faecal and urine deposition from grazing
animals onto pasture).
Other Agriculture: includes emissions from Rice Cultivation, Agricultural Soils, Prescribed
Burning of Savannas and Field Burning of Agricultural Residues.
Land use change and forestry: comprises clearing of forests and establishment of plantations.
Waste: predominantly CH4 generated from anaerobic decomposition of organic matter. Small
amounts of CO2 and N2O are generated through the incineration of solvents and the
decomposition of human wastes respectively.

Figure 2

Projected change in sectoral emissions 1990 to 2008/12

From AGO (2007)5; is for total CO2-equivalent emissions.

AGO (2007) Tracking to the Kyoto target: Australias greenhouse emissions trends 1990 to 2008/12 and 2020,
Department of Climate Change, Canberra.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
5

350
300
1990
2006

Mt CO2 -e

250
200
150
100
50
0
Stationary
Energy

Figure 3

Transport

Fugitive
Emissions

Industrial
Processes

Agriculture

Land Use,
Land Use
Change &
Forestry

Waste

CO2-equivalent emissions by sector in 1990 and 2006

From AGO (2009)6

The Energy sector (Stationary, Transport and Fugitive) accounted for 70% (401 Mt) of total net
emissions in 2006. From 1990 to 2006, Energy sector emissions increased by 40 %. The main
contributors to this were Electricity Generation (34.4% of national emissions), and Transport
(14.6%). Manufacturing Industries and Construction contributed another 8.2%.
Electricity generation emissions increased by 2.0% from 2005 to 2006, and by 53% from 1990 to
2006 (~3.1%/annum).

Figure 4

Stationary energy combustion emissions by subsector from 1990 to 2002

From AGO (2004) 7

AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
AGO (2004) National Greenhouse Gas Inventory 2002: Energy, Stationary Sources and Fugitive Emissions Fact
Sheet, Australian Greenhouse Office, Canberra.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
6

Road transportation contributed 87.1%, and Passenger cars contributed 54%, of emissions from
the Transport subsector. Transport emissions increased by 27.4% from 1990 to 2006. 8

Figure 5
1990-2006

Total CO2-equivalent emissions from Stationary Energy combustion by fuel,

Figure 6

Total Transport emissions, 1990-2006

From AGO (2009)9

From AGO (2009)10

AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
10
AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
9

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
7

Figure 7

Comparison of growth in transport emissions by subcategory, 1990-2006

From AGO (2009)11

Australia has abundant supplies of cheap coal and natural gas, and so electricity is very cheap by
world standards (see Figure 8). This has led to relatively inefficient use of electricity. Australias
energy intensity12 is amongst the highest in the industrialised world. Although it is decreasing, it is
not doing so as fast as any other nation.

Figure 8

Comparison of industrial energy prices, 4th quarter 2002

From AG (2004)13

Energy efficiency improvements in Australia have occurred more slowly than in other nations.
Over the period from 197374 to 200001, technical energy efficiency in Australia improved by 3
per cent. The International Energy Agency has found that Australias energy efficiency has
improved at less than half the rate of other countries.
11

AGO (2009) National Greenhouse Gas Inventory 2006 , Australian Greenhouse Office, Canberra.
See definitions at end of notes.
13
AG (2004) Securing Australias Energy Future, Australian Government, Canberra.
12

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
8

Figure 9

Figure 10

Manufacturing energy intensity improvement, 1973-95

From AG (2004)14

Energy Intensity Ratio in top 20 OECD countries, 2000

From BG (2003)15

14

AG (2004) Securing Australias Energy Future, Australian Government, Canberra.

BG (2003) Energy White Paper: Our energy future creating a low carbon economy, British Government, United
Kingdom.
15

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
9

(b)

Energy Use Predictions from ABARE out to 2029-3016

The following projections assume Business as Usual (BAU) and include the effects of existing
policy measures such as MRET (Mandatory Renewable Energy Target), the NSW GGAS
(Greenhouse Gas Abatement Scheme) and the QLD 13% Gas scheme. The impacts of the Kyoto
Protocol, the NFEE (National Framework on Energy Efficiency), and other measures such as a
possible Victorian equivalent to MRET have not been included. Nor has the impact of a price on
carbon.

Total energy consumption will grow on average by 2.1% per year in the short term (to 2010)
and 1.8% per year over the long term (to 2029-30), becoming 63% higher than in 2003.

Electricity generation in Australia using black and brown coal will grow on average by 1.9%
and 1.2% respectively per year until 2029-30, becoming 62% and 37% higher than in 2003
respectively. Generation from natural gas is forecast to grow by 3.8% a year, becoming 164%
higher in 2029-30 than in 2003.

Energy use in the residential sector, which accounts for 11.5% of total final energy use, is
forecast to increase by around 1.7% a year, becoming 55% higher than in 2003.

Energy use in the commercial and services sector (which accounts for 8.8% of the total) is
forecast to continue to grow relatively strongly, at 2.7% a year, becoming 101% higher than in
2003.

Aggregate energy intensity has been decreasing by 1.1% per year in the 1990s, and is
forecast to decrease by 1.1% per year until 2030. In this case, 25% less energy would be
needed to produce a dollar of output in 2030 than in 2003.

Transport energy use is predicted to increase by 1.9% per year until 2030, becoming 63%
higher than in 2003. Road freight is predicted to increase by 2.3% per year, and the passenger
car sector is predicted to increase by 1.1% per year.

Energy consumption in manufacturing is forecast to increase by 1.7% a year by 2029-30.

Figure 11

Final energy consumption, by sector

From ABARE (2005)17, (PJ = petajoules = 1015 J)

16

ABARE (2005) Australian Energy: National and state projections to 2029-30, ABARE report for the Ministerial Council
on Energy, abareconomics.
17
ABARE (2005) Australian Energy: National and state projections to 2029-30, ABARE report for the Ministerial Council
on Energy, abareconomics.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
10

Figure 12

Natural gas consumption, by end use sector

Figure 13

Australian energy production, by fuel

(c)

From ABARE (2003)18

From ABARE (2003)19

Greenhouse Gas Projections

Given the BAU predicted rate of growth in energy use, and the increased use of fossil fuels to
meet this demand, it is clear that Australian energy-related GHG emissions will increase
significantly. Stationary Energy emissions (approximately 70% electricity generation) are projected
to grow by about 12.0% between 2000 and 2010, which would result in a 46% increase compared
to 1990. Transport emissions (where over half of emissions are from cars) are projected to be
18

ABARE (2003) Australian Energy: National and state projections to 2019-20, ABARE report for the Ministerial Council
on Energy, abareconomics.
19
ABARE (2003) Australian Energy: National and state projections to 2019-20, ABARE report for the Ministerial Council
on Energy, abareconomics.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
11

53% higher in 2010 than they were in 1990. By 2020, Stationary Energy and Transport emissions
are projected to increase by 70% and 78% respectively, compared to 1990. These projections
include the impact of all current government policies to promote renewable energy, energy
efficiency and sustainable transport, and correspond to the With measures best estimate in
Figure 14 and Figure 15. BAU (Business As Usual) assumes no government measures. 20

Figure 14

Stationary energy emissions projections

From AGO (2007)

Figure 15

Transport emissions projections

From AGO (2007)

20

AGO (2007) Tracking to the Kyoto target: Australias greenhouse emissions trends 1990 to 2008/12 and 2020,
Department of Climate Change, Canberra.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
12

2.

The Potential of Energy Efficiency

No regrets options to reduce energy use and greenhouse gas emissions are those that can be
taken at either zero or negative cost. They usually revolve around energy efficiency measures that
reduce energy consumption and so save on energy costs, and are the cheapest, fastest, safest
and simplest means to reduce energy-related impacts.
The British government is aiming to cut its
carbon dioxide emissions by 60% from 1997
levels by about 2050, and by 20% by 2010.
It expects more than half these emissions
reductions to come from energy efficiency
improvements.21 Similarly, the IPCC found
that energy efficiency options are
responsible for more than half of the total
emission reduction potential of buildings,
transport, and industry sectors.22
Already Britain has decoupled economic
growth from energy use and carbon
emissions. Overall energy consumption in
the UK has risen by around 15% since
1970, while the economy has doubled. Over
the last 30 years the economys energy
intensity - the ratio of energy consumption to
GDP - has improved by around 1.8% each
year.
Figure 16

British GDP, primary energy consumption and emissions

From BG (2003)23

In Australia, technical analysis and economic modelling, undertaken as part of the development of
the National Framework on Energy Efficiency,24 found that energy consumption in the
manufacturing, commercial and residential sectors could be reduced by 2030% with the adoption
of current commercially available technologies with an average payback of four years.25
Two scenarios were developed from this modelling, (i) a low energy-efficiency improvement
scenariocurrent commercially available technologies with an average four-year payback; and (ii)
a high energy-efficiency improvement scenarioexisting or developing technologies potentially
available within the study timeframe with an average eight-year payback period.
As shown in their Figure 4 (below), significant energy efficiency improvement potential is available
across all sectors of the economy. If this energy efficiency improvement potential is applied to the
20002001 stationary energy use, the potential annual energy savings are as shown in their
Figure 5 (next page). The low numbers represent 50% penetration, and the medium numbers
represent 100% penetration, of the low energy efficiency improvement potential (all those
measures with an average four-year payback). The high numbers represent 50% penetration of
the high energy-efficiency improvement scenario.

21

British Government (2003) Energy White Paper: Our energy future creating a low carbon economy, British
Government, United Kingdom.
22
IPCC (2001) Climate Change 2001: Mitigation - Technical Summary, The Third Assessment Report of Working
Group III of the Intergovernmental Panel on Climate Change (IPCC), Geneva, Switzerland.
23
BG (2003) Energy White Paper: Our energy future creating a low carbon economy, British Government, United
Kingdom.
24
For more detail on the NFEE see Lectures 21 & 22.
25
NFEE (2003) Towards a National Framework for Energy Efficiency Issue and Challenges, Discussion Paper,
Energy Efficiency and Greenhouse Working Group, Commonwealth of Australia.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
13

Economic modelling showed that significant economic benefits would be delivered with only 50%
penetration of the low energy efficiency improvement scenario over a 12 year period (excluding
the electricity supply sector).
The modelling results show that in year 12 after the energy efficiency improvement has
commenced, enhanced energy efficiency delivers the following economic benefits:

Real GDP would be $1.8 billion higher (+0.2%).

Employment would increase by around 9000 (+0.1%).
A 9% reduction in stationary final energy consumption (-213 PJ).
A 9% reduction in greenhouse emissions from the stationary energy sector (-32MT).

Their Figure 6 (below) shows the incremental impact of improved energy efficiency on GDP.
Accessing these benefits would require an investment in energy efficiency over the 12 years of
approximately $12.4 billion (NPV terms) generating lifecycle energy savings of approximately
$26.9 billion (NPV terms). Overall these measures would achieve a 26% internal rate of return on
investment which is very high, especially for non-core activities of a business.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
14

3.

Terms and Definitions

Energy Efficiency: A reduction in the use of energy for a given output, so if output increases so
may energy use. Energy efficiency is most effective when it results in energy conservation.
Energy Conservation: A reduction in the absolute amount of energy used.
Demand side management: DSM is not necessarily the same as energy efficiency. It includes all
activities that occur on the demand side of the energy system and change the energy demand
profile. This includes not only reduced use of energy (energy efficiency), but also actions that
change when energy is required. Often the emphasis is on reducing costs, not reducing energy
use. For example, one measure to reduce peaks in air conditioning demand is to use base-load
electricity overnight to freeze water or some other liquid. This is used the next day to provide
cooling. Because the processes used to cool the liquid are not 100% efficient, and because
insulation is not perfect, more energy is needed overall. Another form of demand-side
management is to move load from times of peak prices to times of off-peak prices. While this
saves on costs, often the generation used to meet peak demand (gas-fired) has a lower GHG
intensity than the generation used to meet baseload (coal-fired), and so moving from peak to
baseload increases emissions.
Energy Intensity: This relates to the amount of energy needed to produce a certain amount of
output. For example, MJ/$GDP, or MJ/$ value-added for a particular sector. A change in energy
intensity within a sector may be caused by:

A change in structure (change in the mix of activities), or

A change in the market value of products of the sector, or
A change in the technical efficiency of energy use

Emissions intensity: Emissions intensity relates to the amount of greenhouse gases released
per unit of output. For example, tonnes of CO2-equivalent per $GDP.
CO2-equivalent (CO2-e): Converts the global warming potential of one or more greenhouse gases
into the equivalent amount of carbon dioxide. For example since methane has 23 times the global
warming potential of carbon dioxide, 3 tonnes of methane would be 69 tonnes CO2-e.

Lecture Notes: Managing Energy Efficiency SOLA5057 GSOE9017

A/Prof Alistair Sproul & Dr Rob Passey
15