Australia's natural energy resources
Australia's natural energy resources include a diverse mix of both renewable and non-renewable sources, with a notable reliance on coal for electricity generation, accounting for 65.5% of the energy mix in 2022. Despite being a major exporter of energy, particularly black coal, Australia has made significant strides in renewable energy adoption, hitting its national renewable energy target (RET) and aiming for further growth in sectors such as solar, wind, and hydroelectric power. Solar energy alone contributed 15.2% of electricity generation by 2023, while wind and hydro accounted for 12% and 6.3%, respectively.
The country has implemented various policies to promote renewable energy, including the establishment of the mandatory Renewable Energy Target (MRET) and its evolution into the RET, which aims for 20% of electricity to come from renewables by 2020. The clean energy sector is a growing employer, reflecting investments that have unlocked over $20 billion into renewable initiatives. However, challenges remain, including the need for investment in new technologies, grid connectivity, and regulatory hurdles, which could hinder the transition to a more sustainable energy future. Overall, Australia's energy landscape is evolving, balancing its substantial fossil fuel resources with a commitment to increasing renewable energy sources.
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Australia's natural energy resources
Official Name: Commonwealth of Australia.
Summary: Australia has a very energy-intensive economy and although the government did not ratify the Kyoto Protocol until 2007, the country exceeded its national renewable energy target (RET). A number of renewable energy measures have been taken, improving Australia’s energy situation as well as the state of the national economy.
Australia is the world’s smallest continent, lying in the Southern Hemisphere between the Indian and Pacific Oceans. Its population reached 26.7 million in 2024. Even remote rural communities have access to electricity through mini-grid installations, allowing the country to claim 100 percent electrification.
Australia is a net exporter of energy sources. Much of the energy exported from Australia is used for generating electricity overseas; three times as much black coal is exported as is used domestically. Australia is heavily dependent on coal for electricity production (65.5 percent in 2022). Power generation thus contributes to 35 percent of the country’s net CO2e emissions. (CO2e stands for “carbon dioxide equivalent” and is the concentration of CO2 that would have the same level of global warming potential as a given type and concentration of another greenhouse gas, such as methane, nitrous oxide, and chlorofluorocarbons.) Because the majority of Australia’s coal is easily accessible, Australian electricity prices are almost the lowest in the world, just over half of those in most European countries. This makes it difficult to attract investment in new generating plants to replace retiring plants and meet new demand.
Renewable Energy
Solar (15.2 percent) and other renewable energy (RE) sources used to produce electricity include wind (12 percent) and hydroelectricity (6.3 percent) by 2023. Wind and solar photovoltaics are the least-expensive forms of electricity generation, and Australia planned to rely heavily on them to meet its net-zero targets by 2050.
The clean energy sector is an important employer in Australia. According to the Clean Energy Council, Australia’s peak clean energy industry body, more than 26,800 jobs existed in 2019. This progress was possible thanks to the RE target, which unlocked more than $20 billion in investments (Australian dollars are used throughout this discussion). Much of this growth was in regional Australia, creating employment opportunities and an economic boost for towns and communities.
The government’s support for renewables has a lengthy history. In 2001, the Department of Resources, Energy and Tourism (DRET) established a national energy policy framework to guide future energy policy decision making and to provide increased policy certainty for energy users. This national framework allowed the establishment in 2001 of the mandatory RE target (MRET) policy, which aimed to source an additional 2 percent of energy generation from RE by 2020. This represented 9,500 megawatts of electricity from renewable resources per year by 2010.
In 2009, the MRET was amended and became the RE target (RET). The new scheme aimed to generate 20 percent of electricity through RE sources by 2020. It guaranteed a competitive RE market for additional renewables-based generation, using a mechanism of tradable RE certificates (RECs). A REC is a tradable certificate that demonstrates compliance with the RE target scheme. One REC represents the equivalent of 1 megawatt-hour of electricity generated from an RE source. Eligible parties—such as wind, hydropower, or solar generators—sell RECs through the REC registry to liable parties, such as wholesale electricity retailers. The price of RECs is determined by the market as negotiated between eligible and liable parties.
As a result of a significant fall in the price of RECs in late 2009 due to oversupply of RECs in the market, the scheme underwent another amendment. Effective January 1, 2011, the “enhanced RE target” (eRET) scheme was divided into two separate markets: the large-scale renewable energy target (LRET) and the small-scale renewable energy scheme (SRES). The LRET covers accredited power stations generating electricity from renewable sources and operates in much the same way as the 2009-designed RET, whereas the SRES covers only solar water heaters and small generation units.
Complementary measures were introduced to foster the development of RE projects. In 2010, the government committed $1.5 billion to the Solar Flagship Programme, supporting the construction of up to four large-scale grid-connected solar power stations in Australia, in partnership with the states and territories and the private sector. This program was part of the government’s $5 billion Clean Energy Initiative, which ended in 2011, and its aim was to provide the sector with the tools needed to play a major role in Australia’s electricity supply.
Additionally, the state of New South Wales developed the world’s first solar thermal power collector system for coal-fired power augmentation at Liddell Power Station; its initial one-megawatt solar field began operation in 2008. In 2010, Novatec Solar was awarded a contract to expand the solar field to 10.3 megawatts; this was completed in 2012. Solar fields also began to be installed at Lake Cargelligo and Kogan Creek. However, the Kogan Creek Solar Boost project was canceled in 2016, and the Liddell and Lake Cargelligo solar fields are also no longer operational.
In the Northern Territory, where many people live in very remote areas, distributed RE technologies have long been a part of everyday life. Significant projects include solar power stations in Hermannsburg, Yuendumu, and Lajamanu, all Indigenous communities, through a $3.4 million grant under the Renewable Remote Power Generation Programme (RRPGP). Thirty solar-dish power stations were installed at the three locations, producing a total of 720 kilowatt-hours. The project received the prestigious Engineers Australia Excellence Award in 2005.
In January 2010, the government of Western Australia launched the Perth Wave Energy Project, developed by Carnegie Wave Energy Limited, thanks to a $12.5 million grant from the state government. It was the first commercial-scale wave energy project to operate in Australia, generating sufficient power for around 3,500 households thanks to a peak installed capacity of 5 megawatts. It was discontinued in 2019.
In 2008, the Australian Centre for RE (ACRE) of the DRET launched a Geothermal Drilling Programme (GDP) to maintain a strong and internationally competitive geothermal industry, while reducing its carbon footprint at the same time. The $50 million GDP supported companies willing to develop geothermal energy through proof-of-concepts projects. (A proof of concept, or proof of principle, is the realization of a certain method or idea to demonstrate its feasibility.) This program was intended to help the industry meet the short-term high drilling costs, which constitute a major barrier to the uptake of geothermal projects in Australia. However, due to those high short-term costs, along with other setbacks such as changes in the market and concerns about increased seismicity, the program had little success. In 2011, funding for a second round of the program was discussed, but ultimately denied as the would-be recipients of the government funding could not prove their ability to match the federal contribution.
Additionally, in 2004 the Department of Climate Change and Energy Efficiency (DCCEE) launched its first Solar Cities Programme, developed in seven townships around Australia. It was administered by the federal government in partnership with local and state governments, industries, businesses, and communities. Participants were offered incentives to engage in a range of energy efficiency (EE), local energy generation, and demand management products and services. Information was then collected from participating homes and businesses in order to discover innovative local energy solutions and lead the way forward. The final report on the project, published in 2013, stated that the project had been successful in reducing environmental impact and energy costs for inhabitants of those seven cities, and pointed to the importance of communication with and education of the public in energy efficiency and green energy initiatives.
The DCCEE plays a major role in delivering the Australian government’s climate change framework. To accelerate the uptake of EE measures across the Australian businesses and households, a number of measures have been introduced, including the development of the National Strategy on EE, endorsed by the Council of Australian Governments in 2009. Its aim is to assist businesses and households in transitioning to a low-carbon economy, mainly by improving minimum energy performance standards and mandatory energy rating labeling for appliances and equipment. The strategy also aims to accelerate the uptake of new EE technologies through regulatory incentives. In addition to the federal government incentives, some state and territorial governments have established their own RE and EE targets.
Conclusion
Although the Australian uptake of RE and EE measures seems promising, there is a long list of barriers to the achievement of sustainable energy. The main difficulties are related to connection to the grid, the ability to invest in and deploy new technologies, and even resource availability where connection to the grid is possible, notwithstanding some regulatory barriers as well. Therefore, certain complementary measures need to be taken jointly by the federal, state, and territorial governments in order to ensure the total uptake of RE and thus preserve Australia’s energy future.
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