How the IEA rates Australia’s energy transition

The IEA’s Australia 2023 Energy Policy Review commends Australia’s recent progress toward a sustainable renewable energy future but says a lot of work is still needed to complete the job.

It has been five years since the International Energy Agency (IEA) last conducted an Australian Energy Policy Review.

Since 2018, Australia has experienced an explosion in rooftop solar installation; the closure (actual and planned) of many coal-fired power stations; a domestic natural gas supply crisis; and increasingly ambitious targets to switch from fossil fuels to renewable sources of energy and industrial materials.

The IEA has now delivered its Australia 2023 Energy Policy Review. It’s a largely positive appraisal of Australia’s progress towards a sustainable renewable energy future, but with caveats and concerns.

“Since the last review, Australia has continued to achieve remarkable growth in solar PV and now aims for clean electricity sources to account for over 80% of its power mix by 2030,” IEA Executive Director Dr Fatih Birol said in his foreword.

But, in the very next sentence, Dr Birol warned: “To adapt to this change, Australia’s power system needs to quickly enhance its flexibility through interconnections, storage and a diverse renewables portfolio.”

The Australian Government is praised for raising its climate ambitions, doubling the target for emissions reductions by 2030 and setting the goal of reaching net zero emissions by 2050.

The IEA said: “Hitting the target would mean Australia could decrease its energy consumption while GDP continues to increase.”

However, the review also includes more sobering commentary, for example:

  • “There is a need to accelerate action and annual improvement rates … to bring Australia back on track to reach its target and closer to net zero.”
  • “Considerable uncertainty remains on the pace of clean energy investment at the right time and in the right place.”
  • “The net zero commitment requires a faster trajectory and increased efforts in energy efficiency and renewable energy.”

ARENA’s changing role

Port Kembla steelworks feature image
ARENA will play a key role in the Powering the Regions Funds’ Industrial Transformation Stream

The IEA also notes that in July 2022, ARENA’s mandate expanded to include and support energy efficiency measure.

It also acknowledges ARENA’s role in supporting research, development and demonstration (RD&D). However, it questions whether the level of funding matches the Australian government’s ambition to reach net zero emissions by 2050.

To help with this, since April, ARENA has in the May Federal Budget been allocated increased resources:.

There is $400 million over four years to deliver the Powering the Regions Fund’s Industrial Transformation Stream. The program will support industrial decarbonisation.

And funding to design and support the $2 billion Hydrogen Headstart initiative. The program aims to position Australia as a renewable hydrogen early mover and global leader.

What is the IEA Policy Review?

The IEA was created in 1974 in response to major disruptions to oil supply at the time.

Since then, its mandate has expanded to include a wider range of energy issues. Climate change mitigation, decarbonisation, energy affordability, reliability and sustainability are now major objectives.

That mission expanded further in 2022 when the IEA’s 31 member countries (the IEA also includes 11 association and 4 accession countries) agreed it should “guide countries as they build net-zero emission energy systems.”

IEA produced information includes collection of data, analysis of technologies and energy sectors and reviews of member country energy policy. The latter include recommendations for governments.

“Our in-depth reviews are an essential IEA tool for providing insight and advice to governments on how to best achieve their energy and climate goals,” said Dr Birol.

THE IEA produces individual member country Energy Policy Reviews at five-yearly intervals.

An international team of seven experts from six IEA-member countries visited Australia between 27 June to 4 July 2022. Between them, the team visited 82 organisations, including ARENA.

The IEA published its Australia 2023 Energy Policy Review on 19 April 2023.