Navigating the complexities of Australia’s energy transition

Navigating the complexities of Australia’s energy transition


A total of 149 countries have committed to a goal of net-zero emissions by 2050 — the target necessary to keep global warming to a maximum of 1.5 degrees Celsius — but achieving that goal requires more than good intentions.

What you need to know:

  • Energy leaders are passionate about transforming the energy landscape.
  • To achieve the emissions reductions that net zero demands, collaboration across the energy sector will be vital.
  • Technological solutions such as carbon capture and storage are ready and waiting. Energy businesses have the best opportunity to make a difference if the government’s policy facilitates change.

The transformation of the energy landscape is by no means a simple process. Moving towards a cleaner and more efficient energy system will require us to navigate a swathe of complexities to ensure the transition is smart, effective and economic.  

In my role as ABB Australia’s VP of Energy Industries, I speak with leaders from all over the energy sector, and one thing that stands out in my discussions with them is their passion for and commitment to addressing the energy transformation forthrightly and intelligently.

The energy sector wants our sustainability measures to be implemented successfully. The leaders I speak to identify key challenges and opportunities in the energy transition, including regulatory policy, workforce retraining, and technical and infrastructure concerns.  

To achieve the emissions reductions that net zero demands, collaboration across the energy sector will be vital. Proven technological solutions, such as carbon capture and storage to name one, will have to be embraced. And public policy should shift towards an agnostic stance that offers flexibility for each organisation to embrace the best path forward for them.

Individual organisations are making a significant contribution, whether in terms of decarbonising their own operations, shaping policy or coming up with potential solutions. Each journey looks different, but by bringing disparate players together to coordinate their activities, organisations can make sustainability gains they would not be able to achieve alone.

Importantly, there is no one-size-fits-all solution and the economics have to make sense — if the business model for large-scale decarbonisation doesn’t work, then the business ceases to exist.

Working together

We recently partnered with Rystad Energy to host a series of nationwide executive roundtables. In our most recent discussion, facilitated by Perry Wilson, Head of Advisory for Australia and New Zealand, we heard a huge push for collaboration when it comes to decarbonisation. 

“We should be sharing the risk and funding so that the sustainability projects that come out of the collaboration are of value,” Perry says.“You don't want four different energy producers doing the same research and development on a specific technology if they're ultimately producing the same findings.” 

Perry points to a national adaptation plan that models physical risk as a potential path forward — a way of adapting multiple diverse projects to reduce emissions and drive value. 

Research organisations such as CSIRO are working to solve emissions reduction problems, government is looking to meet sustainability targets, and energy producers are seeking to lower their carbon output. Why not coordinate between these groups?

You can put the onus on businesses to solve the problems for themselves, but decarbonisation is ultimately about the planet — and, Australia — reaching its decarbonisation goals, “So building a plan that coordinates that action should lead to better outcomes.” Perry says.

Getting started immediately

While many of the solutions to the sector’s sustainability problems will require transformation over the medium term, low-hanging fruit will allow us to make substantial changes in the meantime. 

Organisations in the energy industry know that there is still quite a bit that each of us can do to improve the efficiency of our operations. We should also be looking to broaden our scope beyond carbon dioxide reduction; methane, for instance, is responsible for 30% of the increase in global temperatures [1] and has 80 times the impact on climate change compared to carbon dioxide [2].

“All of this is good business practice anyway,” Perry tells me. “Continuing to reduce flaring, venting, seepage, leakages — continuing to work efficiently."

There are other technological solutions also ready and waiting. Carbon capture and storage, for instance, is a proven technology and a genuine opportunity for the energy sector to make a difference. It uses a skill set organisations already have — taking material in or out of the Earth — and injections have been operating since the 1970s, including for enhanced oil recovery.

The International Energy Agency says carbon capture and storage (CCS) is key to achieving global net-zero targets by 2050.

To make the most of the potential around carbon capture and storage, Australia could consider pursuing a national strategy. There's tremendous opportunity, and a coordinated strategy could ensure the country does not fall behind partners in Asia such as Malaysia and Indonesia.

Getting policy right

While energy businesses are working hard to meet their sustainability goals, we have the best opportunity to make a difference if the government’s policy approach supports us. 

The Singaporean government, for instance, has implemented a decarbonisation fund [3] that supports emissions reduction, resolving disputes about who should bear the cost burden. Meanwhile, the Australian government’s target of 82% emissions reduction overlooks the potential for decarbonisation of fuels. 

The sector as a whole needs a flexible policy landscape — an agnostic approach that acknowledges there are many pathways to net zero and one solution is not going to fit all. We’re seeing a lot of legislative change introduced at a rapid pace, which results in policy that is not always cohesive. These mixed signals to different parts of the economy create challenges for both the demand and the supply side. 

There is a strong opportunity for the government to implement a comprehensive strategy with consistency across federal and state levels , and work with industry to create a roadmap ensuring that these solutions work across sectors, and for organisations of all sizes.

Although the energy transition brings with it unprecedented potential for job creation and upskilling, the onus cannot be solely on any one player, whether from industry or government. The balance of energy security, sustainability and affordability can only be delivered by collaborations and partnerships — across countries, regions and industries, and even through individual initiatives.

No single solution will work for all parties; the way forward lies in finding solutions that provide all parties with a win. The technologies and pathways that work best will be different for everyone, so if government provides a comprehensive strategy, each party will be able to provide an optimal solution for their business model. 

I would like to see a commitment from each organisation in the sector to undertake one action over the next year that will have a positive impact on the energy transition. We all have a part to play, and we can each play that role by committing to making a solid and achievable change for the future.

About the author

Abhinav Harikumar is VP of Energy Industries at ABB Australia. 

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References:

  1. Methane and climate change, International Energy Agency, 2022
  2. Methane emissions are driving climate change. Here’s how to reduce them. United Nations Environment Programme, 2021
  3. New $90 million programme to fund more research into hydrogen use, sustainable chemicals, The Straits Times, 2024

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