19 Oct Changing the narrative on energy transition as energy prices escalate
The 2022 AFR Energy and Climate Summit takeaways by Julia Hoy, Sustainability Practice Lead, Sefiani.
We have been talking about Australia being a renewable energy superpower for a long time. After a decade of inaction, a destination is now in sight, but the journey ahead will be tough.
Australia has all the ingredients needed to be a leader in renewables – sun, wind, space, resources and expertise – but after a decade of stalling, other countries have stepped up and Australia risks losing its natural advantage. Australia has to move quickly. There is a huge job ahead with seven years to go until 2030 – our deadline for cutting 43% of emissions – and we’re running out of time. What will it take to achieve our ambitions? More than money and new technology; it requires a complete transformation from the way we live today.
A rough road ahead for everyone
We are now in the first true global energy crisis, said Anna Collyer, Chair of the Energy Security Board & Australian Energy Market Commission. However, while geopolitical challenges have exacerbated our east coast energy crisis, it is largely down to ‘inaction and denial’. There was consensus in the room that we are in this position because haven’t moved fast enough on our transition.
Perhaps Amanda McKenzie from the Climate Council put it best, “we were not as set up as we should have been for a smoother transition.” For consumers and businesses, there is no relief in the short-term with Alinta Energy Chief Executive, Jeff Dimery expecting tariffs to increase by as much as 35% next year. Guy Debelle, Fortescue Future Industries said that “we can’t get distracted by the shorter-term pain because the long-term pain will be there if we don’t get on with it.”
A new narrative
With soaring energy prices, consumers and small businesses will be among the hardest hit. Lisa Chiba, Managing Director at Momentum Energy, said around seven million households in the UK were experiencing fuel poverty and Australia needed to “gear up” for similar problems.
Until now, the renewable transition narrative has been one of a cleaner future with cheaper bills, and while that’s true in the long-term, the promise of cheaper energy isn’t as close as people think. Andrew Richards, CEO of the Energy Users Association of Australia, said, “It appears that some people think it will be easy and cheap, but I think most people in this room understand it’s hard and expensive and likely to drive energy bills up in the near term.” Many leaders called for a rethink of the narrative around the cost of the energy transition, so people understand the huge challenge involved and what that will mean for them.
Currently, most consumers’ only interaction with energy transition is seeing rising energy bills. Most people don’t have an opportunity to control the situation beyond swapping to another retailer and receiving similarly high bills or reducing their energy usage.
People with wealth and the right dwellings can invest in solar, batteries, EVs, insulation, and energy-efficient appliances to push their energy prices down, but not everyone will have this privilege. This means a wealthier cohort can reduce their energy bills faster while those who simply cannot afford EVs, batteries, solar and new appliances will have to pay more. People will also be disadvantaged if they are in rental properties or apartments because they will not have the same opportunities to adapt their homes.
Getting there together
It is our responsibility to ensure everyone is part of energy transition in an equitable way. Effectively supporting consumers will become an increasingly important part of companies having a social license to operate.
To get ahead of the energy crisis, Clare Savage from the Australian Energy Regulator is calling for a new approach to dealing with customers in hardship to ensure low-income households can survive record commodity prices and big spending on infrastructure. Many retailers including Momentum Energy are investing in training for staff to support customers in financial difficulty.
The electrification of everything
Saul Griffith, Founder and Chief Scientist at Otherlab and Rewiring Australia had an interesting proposal for the AFR Summit attendees which put focus on demand. According to Griffith, the average annual Australian household energy bill – which includes petrol and diesel, electricity and gas – is about $7,000, but he estimates that could fall to $2201 a year in 2030 if Australians gradually electrified their homes with rooftop solar, batteries, electric appliances for heating, cooking and hot water, and electric cars.
He is not expecting mass electrification overnight, but rather, for people to replace old items with energy-efficient ones to support an orderly reduction in household emissions between now and 2030.
To cover these costs, Griffiths calls for an ‘investment’ covering the upfront costs for all households. This could be as high as $12 billion but he believes it would generate about $40 billion in savings by 2030, and cumulative savings of $300 billion by 2035.
We are yet to see such ambition land on receptive ears, but at a time when the cost of the transition to everyday Australians seems wholly unaffordable, he told a story a lot of people in the room wanted to get behind. Griffiths is in the process of running a pilot, aiming to turn his North Wollongong community into Australia’s first 100% electrified community.
While the conversation oscillated back and forth between optimism and pessimism, the grounding facts were again and again restated: we are in this mess because of ten years of inaction, and we don’t have a moment to lose. We are already at one degree of warming, seeing a rise in extreme weather events and natural disasters. These events will only become more frequent and extreme as we get closer to 1.5, let alone 2 degrees. They are hard facts to stomach, but we’ve just come through a serious period of hardship with the pandemic. Can we take learnings from the pandemic and see the possibility of what we can achieve when the community is informed, engaged, and given a role to play?
It’s a long and tough road ahead. Many will be left behind if we don’t take an inclusive approach that helps everyone transition without unaffordable energy tariffs. But if we get this right, it will fundamentally change our lives for the better in ways we cannot imagine. Afterall the biggest evolutions tend to happen when times are toughest.
Anna Collyer paraphrased the US Energy Secretary saying this is a global peace plan: “No one has been held hostage for the wind or the sun.” Many will take comfort in imagining a vision of the future fuelled by clean energy, where we have the infrastructure, reshaped industries, and the new behaviours that come along with it. But to ensure it doesn’t remain in the realms of science fiction, we need to act quickly, reframe the narrative, put control back in the hands of consumers, and ensure that no one is left behind.