Aus emissions: output or intensity - part two

Part one of this series outlined Australia’s emissions projections and what’s behind them. Click here to read more.

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In 2016-17, five industries accounted for more than 80 per cent of total emissions: utilities, mining, agriculture, transport and manufacturing.

" Emissions from agriculture excluding land use, land use change and forestry tend to be volatile, but data suggest they fell in the late 2010s due to the worsening drought.”

Households were responsible for a further 12.5 per cent.

The National Greenhouse Gas Inventory (NGGI) does not break emissions down into standard (ANZSIC) industries but the Australian Bureau of Statistics’ Environmental-Economic Accounts do.

These data have enabled ANZ Research to analyse changes in industry emissions and emissions intensity. The Accounts only cover 2004-05 to 2016-17, so ANZ Research is unable to consider changes in industry emissions and emissions intensity over 2017-18 and 2018-19.

Much of the consistent declines in annual agriculture emissions came from falling net land use change and forestry (LULUCF) emissions. Emissions from agriculture excluding LULUCF tend to be volatile but NGGI data suggest they fell in the late 2010s due to the worsening drought.

However, Australia is likely to see a rise in emissions from agriculture excluding LULUCF once the drought breaks and livestock numbers rebuild.

Annual emissions from the utilities sector fell by 19.7 million tonnes of carbon dioxide equivalent gas (Mt CO2-e) during the two years of the carbon pricing scheme but then rose by 14.6 Mt CO2-e over the two years following its repeal. However, the NGGI data indicate emissions from electricity generation fell in the late 2010s and the Government expects them to continue to fall through the 2020s due to rooftop solar uptake and large-scale renewable energy supported by state and territory government policies. Five states and territories have renewable energy targets and six states and territories have a net zero emissions target for 2050 or earlier.

Annual mining emissions rose by 16.4 Mt CO2-e between 2013-14 and 2016-17; annual emissions from oil and gas extraction alone increased 68 per cent (15.6 Mt CO2-e).

This was mostly the outcome of increased liquefied natural gas (LNG) production with export volumes of natural and manufactured gas (including LNG) jumping 83 per cent over the same period. Mining emissions will likely continue to rise until 2019-20 when ANZ Research expects LNG export volumes to peak. In 2019, Australia became the world’s largest LNG exporter, ahead of Qatar.

There has been a long-term upward trend in transport emissions but growth accelerated between 2014-15 and 2016-17. Annual transport emissions increased by 4.6 Mt CO2-e over these two years. While domestic air transport emissions growth has slowed, growth in emissions from the road transport (freight and passenger) and “other” (sightseeing, postal, operations) subsectors accelerated over 2015-16 and 2016-17.

Household transport emissions (around three-quarters of total household emissions) jumped 7.2 per cent in 2014-15 but have since fluctuated. Household non-transport emissions recorded their smallest rise over the recorded period in 2016-17.

The consistent decline in manufacturing emissions is in line with falling output.

Intensity still falling, but slower

The utilities industry, as well as having the highest total emissions, has the highest emissions intensity. This is mostly due to the electricity and gas supply subsector.

After falling for six years, utilities emissions intensity rose by a cumulative 3.6 per cent in the two years following the repeal of the carbon pricing scheme. But positive signs for the future are emerging. The 3.4 per cent fall in intensity in 2016-17 will likely be followed by further reductions in the late 2010s and into the 2020s, given the increase in renewables investment, growing share of electricity generation from renewable sources, and the closure of Hazelwood and other coal-fired power stations.

Transport tends to receive less attention for its emissions than the electricity sector. Yet transport has bucked the general trend of falling emissions intensity and recorded a 5.7 per cent rise in intensity between 2014-15 and 2016-17.

The mining industry’s emissions intensity rose 10.6 per cent between 2014-15 and 2016-17. Oil and gas extraction is now more emissions intensive than coal mining in Australia, likely due to fugitive emissions from LNG. ANZ Research expects LNG will continue to grow as a share of Australia’s mining production and GVA for a little while yet, so it is likely mining emissions intensity will continue to rise in the near-term.

Part one of this series outlined Australia’s emissions projections and how these might be met. Click here to read more.

Catherine Birch is a Senior Economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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