As Australia approaches its next election, energy policy debates have once again surged to the forefront, dominating public discussion and television broadcasts alike.
The familiar arguments around fossil fuels – coal jobs, gas-fired recovery, and the promise of hydrogen as a saviour – are front and center. But the fundamental truths of Australia’s energy landscape, when viewed through the government’s own numbers, present a stark contrast to the political rhetoric.
As an outside observer, looking closely at the official energy flows, one sees a nation that primarily mines and exports fossil fuels to the benefit of others, while shouldering significant domestic environmental and economic risks.
The Australian government’s official energy flow diagram for 2022-23 is revealing. Out of the 11,201 petajoules (PJ) of coal produced or imported, Australia exports an astonishing 9,626 PJ.
This means around 86% of Australian coal never serves domestic homes or industries, but is shipped offshore, where its carbon emissions, pollution and any economic benefits are enjoyed by other nations. The story is similar for natural gas, where approximately 73% of the total 6,249 PJ produced is exported as liquefied natural gas (LNG).
The sheer scale of these exports underscores Australia’s position less as a nation powered by coal and gas, and more as the world’s coal and gas mine – highly vulnerable to global decarbonization policies.
As China’s infrastructure booms ends and coal and gas demand are starting to fall with their massive renewables and storage build out, the more than a third of Australia’s exports that flow to that country are going to drop rapidly, and other nations won’t make up the gap.
Hydrogen, despite heavy promotion, will not be replacing fossil fuels as an energy export vendor as the obvious diseconomies of the gas as an energy carrier are becoming glaringly obvious to everyone, not just to people like me who do techno-economic workups before breakfast.
Focusing solely on Australia’s domestic energy consumption, an adjusted Sankey diagram for 2022-23 further highlights the profound inefficiencies of its fossil-fuel-heavy economy.
Shifting out of the more accurate yet completely non-intuitive petajoules to the more intuitive – but odd for fossil fuels – terawatt-hours (TWh), Australia’s domestic energy use is approximately 1,500 TWh annually, yet of this, roughly two-thirds – around 964 TWh – is lost as rejected energy.
In simpler terms, two-thirds of the fossil fuel energy Australians buy never produces useful work or warmth. It simply dissipates as heat into the atmosphere.
Electricity generation alone wastes about 314 TWh each year, largely due to the inherent inefficiency of coal and gas-fired thermal power plants. Another 200 TWh is lost in the transport sector, mostly through internal combustion engines in cars, trucks, and aircraft that burn fuel at shockingly low efficiencies – often converting less than a quarter of the energy in fuel into actual forward motion.
This pattern repeats across homes, businesses, and factories, where outdated gas boilers and heaters lose enormous quantities of purchased energy. In total, Australians spend billions annually on energy they never effectively use, highlighting a stark inefficiency tax buried in the economy.
Contrasting this bleak picture of waste and loss, an electrified vision for Australia’s energy future emerges as both logical and economically advantageous.
Reimagining Australia’s energy flow through comprehensive electrification and renewable generation dramatically reshapes the Sankey diagram. In this scenario, primary energy needs plummet significantly – only about 660 TWh of renewable electricity would be required annually to power the entire country, less than half of today’s energy use.
This massive reduction is achieved primarily through the inherent efficiency gains electrification brings: heat pumps in homes and commercial buildings can deliver three to four units of heating, hot water or cooling for every unit of electricity consumed, compared to fossil fuel heaters which often struggle to deliver even one unit of useful energy per unit consumed.
Electric vehicles, similarly, use only a quarter of the energy consumed by gasoline or diesel counterparts. Industrial processes electrified with modern technologies achieve energy efficiency gains of up to double that of fossil fuel-driven processes.
In the fully electrified vision, Australia’s primary energy inputs are entirely renewable – split evenly between wind and solar generation, with rooftop solar alone meeting 15% of the total energy needs.
Environmental heat captured by heat pumps supplements residential and commercial energy requirements, further reducing reliance on grid electricity. Biofuels modestly fill the remaining gap, meeting the 70% of long-haul aviation and shipping needs that remain beyond current electrification capabilities.
Remarkably, this new Sankey reveals a drastically reduced volume of rejected energy, from today’s staggering 928 TWh down to a mere 169 TWh, from two-thirds waste to one-fifth, yet useful energy services remain the same.
This transformation clearly illustrates not only the enormous environmental gains but also significant economic benefits – far less money wasted on energy Australians never actually use.
As the Australian electorate heads to the polls, the choice before them is stark.
The rhetoric around coal and gas as indispensable economic backbones is misleading; the government’s own data highlights an economy dangerously exposed to global fossil fuel decline and domestic inefficiencies. Conversely, the fully electrified scenario is not merely environmentally preferable – it represents profound economic and resilience gains.
Australian voters would do well to scrutinise closely the energy platforms of their candidates and parties. Those who back substantial investments in renewable generation, transmission infrastructure, electric vehicle adoption, and efficiency-focused electrification policies are poised to deliver both lower household energy bills and enhanced economic stability in the decades ahead.
Australia’s future prosperity hinges less on perpetuating its status as a coal and gas exporter and more on embracing electrification and renewable energy at scale.
