Victoria's Energy Future
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Victoria’s Energy Future If you would like to receive this publication in an Disclaimer accessible format (such as large print or audio) please call the Customer Service Centre on: 136 186. This publication may be of assistance to you but the State of Victoria and its employees do not guarantee Published by the Department of Primary Industries, that the publication is without flaw of any kind or is Marketing & Communications Branch. May 2010 wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other © The State of Victoria, 2010 consequence which may arise from you relying on any This publication is copyright. No part may be reproduced information in this publication. by any process except in accordance with the provisions For more information about DPI visit www.dpi.vic.gov.au of the Copyright Act 1968. or call the Customer Service Centre on 136 186 Authorised by the Victorian Government, 1 Spring Street, Melbourne, Victoria 3000, Australia ISBN 978-1-74264-036-5 (print) ISBN 978-1-74264-037-2 (online) Message from the Premier Message from the Minister We are on the edge of a major energy transformation. Our energy system is something we all rely on, and perhaps take for granted. Countries around the world are searching for ways to cut greenhouse gas emissions and making huge investments However, the pressing need to reduce our greenhouse gas in clean energy projects. emissions in response to our changing climate will bring energy issues to the fore. This inevitable shift to a low carbon economy will create a climate of opportunity for Victoria. We know that it is the energy sector that produces the vast bulk of our greenhouse gas emissions. So it makes It is up to us to seize that opportunity and be at the sense for us to redouble our efforts in shifting towards forefront of change. cleaner sources of power. A strong move towards renewable and low emissions The Government has never understated the size of energy in Victoria will be good for the economy, good this task. We cannot get there overnight, but we must for jobs and good for the environment. It will drive down get there. emissions and drive up jobs and investment. It will create new opportunities in energy production and distribution Victorians recognise the scale of the transformation in regional areas and safeguard energy supply. Most of all, required – and understand that we must implement it will help us meet the climate change challenge and a generational change in technology and attitudes. preserve our quality of life. In the decades ahead, we will move from a system that Victoria’s leadership around climate change is well known. is almost entirely dependent on high emissions fossil fuels to a more diverse and dispersed system based on cleaner We were the first state to introduce a mandatory technologies. renewable energy target, mandatory energy efficiency target for electricity retailers and mandatory energy and Victoria is already positioning itself to benefit from such water efficiency program for the biggest corporate energy major changes. and water users. We have attracted major new investments We will see a tremendous growth in the amount of in gas generation and low emissions coal developments. renewable energy we use. Investment in wind-generated We are investing tens of millions of dollars into energy power will be taken up most actively at first, but over technology and innovation and remain committed to time solar power and other options will become large-scale solar. increasingly important. We have already released a biodiversity White Paper to The Victorian Renewable Energy Target has already been keep local economies strong after 13 years of drought and a big driver of this change, attracting more than $2 billion a Green Jobs Action Plan to equip the current generation of investment. The national expanded Renewable Energy of workers with the skills they’ll need for the future. And Target will build on this effort. we are teaming up with local communities across the state, exploring new ideas to reduce emissions. We also expect growth in low emissions forms of fossil fuel energy. Carbon capture and storage (CCS) is a Our shift to a low carbon economy is already well technology of global importance. Victoria has some underway, but there is much more to do. of the best conditions in the world to test whether Victoria’s Energy Future sets out the size and complexity of CCS will be effective. the task ahead. This statement outlines the short, medium We can all play a part in embracing cleaner energy and long term action needed to move Victoria away from for a brighter future. its historic reliance on coal, oil and gas to generate energy. The challenges ahead are significant, but so are the opportunities – to cut emissions, create jobs, safeguard our economy and secure energy supplies for the future. Peter Batchelor John Brumby Minister for Energy Premier of Victoria and Resources 1 Contents Victoria’s energy transformation 4 Part 3 – Our approach 59 3.1 Working with the community 60 Part 1 – Our energy story 7 Building awareness about the need for change 61 1.1 Our energy story 7 Helping to keep energy affordable 61 Victoria’s energy sector 8 Enhancing the capacity of communities and helping regions to adjust 65 Victoria’s energy demand 13 Building the skills for change 66 Making the transition to a low carbon future 14 Preparing for climate change and emergencies 67 Future energy options 16 3.2 Driving energy innovation 68 Getting ready for change 20 Renewable technologies 68 Victoria’s Energy Future 21 Low emissions coal and carbon storage 70 Part 2 – Our future options 23 Supporting new transport fuels 72 2.1 Renewable energy 24 A smarter electricity grid 72 Renewable energy resources in Victoria 25 3.3 Attracting and facilitating investment 74 Research and development into renewable energy 29 Efficient planning and development approvals 74 Bringing new technologies to market 29 Mapping new opportunities in Victoria 76 Integrating more dispersed and intermittent sources of power 30 Support for pre-commercial investment 77 2.2 Gas and low emissions coal 32 Future investment in coal and carbon storage 77 Gas – an essential part of the transition Supporting development of a carbon capture and to a low carbon economy 34 storage ‘hub’ – the CarbonNet project 77 Victoria’s coal – a cleaner future 34 Helping people and business invest to save energy 79 Low emissions coal technologies 34 3.4 Leading further market reform 80 Carbon capture and storage 36 Supporting the implementation of a well designed national emissions trading scheme 80 Managing Victoria’s coal resources 41 Providing competitive, efficient energy markets 81 2.3 Transport energy 44 Monitoring the evolution of national institutions 82 Oil and petroleum products 45 Improving transmission planning and Alternative fuels 46 network connection 84 2.4 Saving energy 50 Promoting effective national regulation Energy efficiency and a carbon price 51 of transport technologies 84 Smarter energy use 52 Glossary 86 Better design and processes 53 Further Resources 88 Ensuring best practice in energy efficiency 54 Reducing stationary energy use at times of peak demand 55 Distributed micro-generation 56 2 3 Victoria’s energy transformation As the world makes the shift to a low carbon future, Victoria’s energy sector faces a major transformation. In the coming decades, we will have to make energy differently – from a wider range of sources, with new technologies, and in new places. We will also have to use energy differently – in our homes and businesses, in our industries and in the vehicles we drive. To limit the damage from changes to our global climate, This program, and ultimately a carbon price, will have nations around the world are taking greater steps to major consequences for Victoria – and we must be significantly reduce carbon emissions from human activity. prepared for these changes and the opportunities More and more countries are investing unprecedented and challenges they will bring. amounts in low emissions energy, driven by concerns Victoria’s economic development over the 20th century about climate change and the need to secure their future benefited from accessible and cheap resources of fossil fuel energy supplies. energy. Brown coal provides us with electricity for many These developments mark the start of a global energy uses; oil is a versatile source of transport energy; and gas is revolution – a revolution that Victoria must embrace if we available for industrial and household heating and cooking want to remain competitive in a low carbon future, and if – all in large quantities and at low prices. we want to safeguard our economy and our standard of A low cost and reliable energy supply has provided the living from the worst impacts of climate change. Victorian economy – and especially manufacturing and To be part of this global energy revolution, Victoria needs industry – with a strong competitive advantage. This has to follow a path towards lower emissions. We need to take supported economic development and jobs in many parts immediate action to ensure that we continue to enjoy a of our State. secure energy supply and can take full advantage of the But the heavy use of fossil fuels, in particular our many opportunities being generated as the world moves dependence on brown coal for more than 90 per cent to reduce carbon pollution. of our electricity, has made us heavy carbon polluters: A price signal on carbon is the most effective and we release about 23 tonnes of carbon dioxide per person comprehensive way of making sure our investment and each year.