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Challenges at Energy-Water-Carbon Intersections
Citation: PMSEIC (2010). Challenges at Energy-Water-Carbon Intersections. Prime Minister’s Science, Engineering and Innovation Council, Canberra, Australia
The Expert Working Group would like to express appreciation to the Office of the Chief Scientist for both initiating and supporting this work. Special thanks go to the Chief Scientist for Australia, Professor Penny D Sackett, for her leadership, and also to the support staff of the Office for their dedication, skill and patience. We particularly wish to thank Will Howard, Amelia Russin and Sarah White, who have given outstanding service in the final, hectic stages of preparing this report.
We thank Dr Julie Arblaster of the Bureau of Meteorology for producing the analysis of climate
model projections shown in Figures 2.4 and 2.5; Dr Peter Briggs of CSIRO Marine and Atmospheric Research for assistance with graphics and database management; Dr Paul Graham of CSIRO Energy Technology for the energy projections in Figures 4.1, 4.3 and 4.4; and Dr Brian Walker of CSIRO Ecosystem Sciences for information on resilience thinking.
We would also like to thank representatives from the Department of Innovation, Industry, Science and Research; the Department of Agriculture, Fisheries and Forestry; the Department of Climate Change and Energy Efficiency; the Department of Resources, Energy and Tourism; the Department of Sustainability, Environment, Water, Population and Communities; and the National Water Commission for providing information on current government programs.
© Commonwealth of Australia 2010
A report for the Prime Minister’s Science, Engineering and Innovation Council (PMSEIC)
This report has been prepared by the independent PMSEIC Expert Working Group on Challenges at Energy-Water-Carbon Intersections. The views expressed in this report are those of the Expert Working Group and not necessarily those of the Australian Government.
Cover design by Dan Stenhouse.
Challenges at Energy-Water-Carbon Intersections iii
Foreword from the Chair iv
Executive Summary and Recommendations 1
1. Introduction 8
2. Energy-Water-Carbon Intersections 11
2.1 The challenge 11
2.2 Climate change and its implications for Australia 12
2.3 Patterns of energy use, water use and emissions for Australia 15
2.4 Constraints on greenhouse gas emissions and water availability 19
3. An Integrated System Perspective 23
3.1 Connections in the Earth System 23
3.2 Resilience 24
3.3 Knowledge and learning 26
4. Outlook: Challenges and Opportunities 29
4.1 Stationary energy systems 29
4.2 Transport energy systems 33
4.3 Water systems 36
4.4 Land systems 40
4.5 Urban systems 44
5. Recommendations 49
5.1 Consistent principles for the use of finite resources 49
5.2 Smart networks to link demand and supply 51
5.3 Resilient landscapes 53
5.4 Resilient cities and towns 55
5.5 Enhanced knowledge and learning system 57
6. Conclusions 59
Appendix A Australia’s future greenhouse gas emissions 61
Appendix B Examples of departmental responsibilities for energy-water-carbon matters 63
Appendix C Examples of existing activities 65
Appendix D Glossary of terms and abbreviations 68
Appendix E References 72
Foreword from the Chair
This is a vast topic: the energy-water-carbon intersection is the cradle of life and sustains all ecosystems and all human societies. It is also perhaps the most important arena for the continued prosperity and quality of life of the entire world, including Australia, as we enter what can be called the ‘century of the finite planet’. In this era the world is fully connected in many ways: by trade, by information technology, and most fundamentally by sharing a common planetary home with finite natural resources. The twenty-first century will be shaped by the finite nature of our planet and its resources, just as industrialisation shaped the nineteenth and technology the twentieth centuries.
For the whole Expert Working Group charged with preparing this report, it has been a privilege to work on what we believe is the central challenge of our age.
In addressing this task we have been led to base our work on two underpinning concepts. The first is the need for an integrative approach to energy, water and carbon, which together play essential and intersecting roles in the total system formed by the natural environment and human society. The second is the concept of system resilience, embodying the abilities to recover from shocks, to adapt through learning and to undergo transformation when necessary. All of these abilities will be critical as Australia faces the challenges of coming decades, many of which will require transformative changes.
It is inevitable that a study of this nature cannot explore all important issues in the necessary depth. We have had to take a broad approach to important technical questions on the costs and benefits of specific strategies, and the interactions between strategies. Many other high-level questions are worthy of further intensive exploration, including risk analyses of climate change, approaches to the problem of sharing emissions reductions, the effects of potential global oil shortages, and the reliability and longevity of land-based carbon sequestration. Our recommendations include development of the integrative approaches that are needed to answer these and related crucial questions.
We wish to record our appreciation to our colleagues, who have taken up the burdens of day-to-day working life as we have been engaged on this project, and above all to our partners and families, who have supported us throughout and accepted our absences and distractions with grace.
Michael Raupach (Chair)
on behalf of the PMSEIC Expert Working Group on Challenges at Energy-Water-Carbon Intersections
Executive Summary and Recommendations
Intersections between energy, water and carbon
Energy, water and carbon form the cradle of life itself, and sustain us at every level from the cells of our bodies to ecosystems and economies. Together, energy, water and carbon provide the foundation for the evolutionary emergence of new forms from old ones, not only in living organisms but also in human societies and cultures.
New global phenomena are emerging at these intersections. Economic growth has been powered through two centuries by cheap energy based on fossil fuels. This growth has been accompanied by emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs), which are now leading to human-induced climate change. An increasing human population is requiring more water and other natural resources, to the point where demand in many regions is approaching or exceeding the supply from nature. The world is now fully connected not only by trade and information technology, but also by sharing a common planetary home with finite natural resources—realities that will dominate the twenty-first century, as industrialisation dominated the nineteenth and technology the twentieth centuries.
This report analyses the implications of energy-water-carbon intersections for Australia. Our focus is upon the intersections between energy for human use, water for human use and carbon as a contributor to human-induced climate change through emissions of CO2 and other GHGs.
Energy-water-carbon intersections encompass all the exchanges of energy, water and carbon between societal sectors and natural environments. These exchanges connect stationary energy systems, water systems, land systems and food production, transport systems, built environments, industrial systems, and the ecosystems upon which all these aspects of the human enterprise
Intersections between energy, water and carbon arise in multiple ways, involving both supply and demand. On the supply side, energy systems use water; water systems use energy; current energy generation is GHG-intensive; and land uses for food, fibre and energy production all require water. On the demand side, energy consumption and GHG emissions have in the past increased together inexorably as wealth has increased.
The challenge for Australia is unique. We are a developed nation with high growth rates for population, energy use and GHG emissions, approaching those of the developing world. Along with the rest of the world, we face the challenge of largely decarbonising our economy within a few decades if risks from climate change are to be kept acceptably low (decarbonisation is the reduction and eventual elimination of net GHG emissions). We inhabit a dry continent with high water demands for urban, industrial and agricultural uses. We also need water to maintain and repair ecosystems.
The implications of all of these realities need to be addressed to ensure future prosperity for Australia. The connections between energy, water and carbon mean that these challenges are not separate issues: attempts to fix a problem in one area without regard for effects elsewhere can have unintended consequences that may make matters worse overall.
Great challenges also represent great opportunities. Australia can find paths to a future combining a low-carbon economy and the ability to thrive with limited water availability.
A key characteristic of such a future is resilience. This embodies three attributes:
At energy-water-carbon intersections, resilience takes advantage of potential synergies and addresses tensions. Resilient pathways will simultaneously reduce GHG emissions, lower overall water demand, maintain overall environmental quality and allow living standards to continue to improve. In contrast, pathways that are inconsistent with resilience have the potential to satisfy only some of these essential goals, while worsening the outcome for others. Such pathways may lead to undesirable states from which recovery is difficult.
Sectoral and holistic approaches
Across energy, water, land, urban and industrial sectors there are many options to increase Australia’s future energy and water security while lowering emissions, thereby increasing overall resilience. Some of these options can be implemented quickly by exploiting existing technologies. Others involve long-term transformations such as significant technological developments on the supply side, institutional and regulatory changes, or behavioural changes to alter patterns of demand.
While the challenges and opportunities within sectors are great, the linkages between sectors present further, important challenges. Because of these linkages, a whole-of-system approach to energy-water-carbon challenges is critical. This involves both market and non-market strategies.
Market-based strategies incorporate prices on carbon and water that reflect and transmit the full, linked costs and benefits of energy, water and carbon. However, some impediments to change cannot be overcome by markets alone, such as social barriers, institutional distortions, technological inertia and lock-in, and insufficient investment in innovation. Non-market strategies for overcoming these impediments include:
The five recommendations of the Expert Working Group address major components of an overall path to energy-water-carbon resilience for Australia: (1) consistent principles for the use of finite resources of water and carbon emissions; (2) improving the distribution and use of energy and water with smart networks; enhancing the energy-water-carbon sustainability of (3) landscapes and (4) the built environments in cities and towns; and (5) enhancing Australia’s knowledge and learning capabilities to meet new demands for integrative knowledge.
All of the recommendations span sectors and industries. Our focus is on developing the knowledge, systems and approaches needed to address challenges that demand long-term transformations, rather than advocating particular solutions in particular places.
The recommendations cover a range of time scales, from short-term and focused to long-term and transformational. While the recommendations are designed as a complete set, implementation begins with short-term steps. This does not lessen the importance of long-term recommendations, but it does mean that not everything has to be done at once.
Recommendation 1: Consistent principles for the use of finite resources
Energy, water and emerging carbon markets already exist, each with the potential to foster desired technological and behavioural adaptations. However, energy-water-carbon linkages require that these markets, and their non-market environments, all function under consistent guiding principles for the use of finite resources.
The Expert Working Group recommends that consistent principles for finite resource use be developed and implemented for energy, water and carbon. These principles will ensure that (1) markets transmit full, linked, long-term costs to society; (2) accounting is comprehensive and consistent with natural constraints and processes; and (3) markets work together with non-market strategies, including implementation of robust governance arrangements, promotion of behavioural change and effective regulation of use.
Outcomes: The goal is to ensure that finite resources are used effectively, efficiently and in ways that are consistent with long-term sustainability and resilience.
Consistent pricing principles will ensure that the costs of using finite common resources are properly recognised and met rather than hidden and deferred to cause problems in the future. To do this, it is necessary that markets, regulations, institutional arrangements and decisions about infrastructure reveal the full costs and benefits implied by energy-water-carbon linkages. These costs and benefits can then be shared efficiently throughout cycles of production, distribution, consumption and re-use.
Important linkages that can be recognised by market mechanisms include the use of energy (with associated emissions) to supply water, for example through desalination or energy-intensive recycling; the use of water to mitigate GHG emissions, for example through carbon forestry that decreases catchment runoff; and the links between energy (with associated emissions) and water consumption in urban environments.
Comprehensive, rigorous and transparent accounting for energy, water resources, GHG emissions and carbon stocks will enable administrative systems to identify and avoid perverse effects.
Non-market strategies also need to be consistent with principles governing energy, water and carbon markets. These strategies include the regulatory environment, administrative arrangements, communication and education programs, building codes, planning controls and efficiency standards.
Steps to implementation: Implementation of this recommendation begins with (1) an assessment of the essential principles for finite resource use that need to underpin energy, water and carbon management policies. This will lead to (2) development of and agreement on a set of consistent guiding principles for pricing, accounting and non-market strategies; (3) evaluation of the consequences of these principles for governance and regulation; and (4) a timetable for transition from the existing set of arrangements to one that can be relied upon to send clear pricing, accounting and other information to users.
An example of a possible outcome of this process would be a National Energy and Water Efficiency Target scheme, combining state and federal rebates, incentives and regulations affecting purchase decisions under a single point of entry for the public. This would make price and incentive signals consistently visible to the public. The design of such a scheme would flow from the consistent principles called for in this recommendation.
An essential foundation for these principles is a price on carbon, as for water and energy.
A second foundation is a set of national monitoring and accounting systems for energy, water and carbon that are comprehensive, consistent, inclusive of both natural and human components, and appropriately linked. This is addressed in Recommendation 5.
Recommendation 2: Smart networks for energy and water systems
This recommendation proposes the development of parallel smart networks for electricity, gas and water in the urban domain, and the uptake of smart network technology in irrigation. Applied to electric power, a smart grid uses information technology (IT) to improve the efficiency of power generation, transmission, distribution and use. Smart networks can apply the same principles to gas and water systems. Trials of smart network technology for electricity are already under way.
The Expert Working Group recommends (1) the design, testing and assessment of smart networks for electricity, gas and water, through a research and implementation program leading to commercial demonstration; and (2) the application of smart network technology to improve distribution efficiency and water productivity in irrigation.
Outcomes: In urban environments, the program will lead to more efficient distribution, particularly in the effective integration of intermittent and distributed renewable energy sources into existing networks; facilitation of behavioural change through the provision of information on usage rates and costs of water, energy and GHG emissions; more effective markets, which need to evolve together with smart networks, so that real-time information conveys the most appropriate incentives to customers; and cost reductions through the sharing of IT infrastructure between electricity, gas and water networks, particularly for metering.
In the irrigation domain, a benefit from smart networks is improvement of the energy efficiency of water supply in irrigation, which is an important energy-water-carbon linkage. A major further benefit is the improvement of economic water productivity through optimisation of the amount and timing of water given to plants.
Steps to implementation: Implementation of these proposals would begin with pre-deployment studies, leading to full trials. In both the urban and irrigation domains, implementation of this recommendation can be based on partnership with and extension of existing programs.
This recommendation can deliver significant benefits in a relatively short time frame. It also has longer-term aspects, particularly through the use of smart networks to encourage behavioural change and to integrate renewable energy sources into an evolving energy distribution system.
Recommendation 3: Resilient landscapes
In rural Australia, intersection points between energy, water and carbon are strongly linked with landscape productivity and ecosystem health. To meet the resulting challenges, the central need is the development of landscape resilience.
The Expert Working Group recommends a national Resilient Landscapes Initiative, to support the evolution of land systems as resilient producers, water catchments, carbon storages, ecosystems and societies. The initiative will assist communities and industries to resolve tensions and take advantage of emerging opportunities presented by these multiple roles. The initiative will operate through a diverse set of regional projects.
Outcomes: The challenges facing rural Australia over coming decades include production of significantly more food with less water, contribution to major nationwide reductions in GHG emissions, and restoration of stressed land and river ecosystems. This initiative seeks to develop an integrative approach to these challenges. Components for integration include (1) food and fibre production; (2) bioenergy production; (3) soil carbon sequestration; (4) carbon sequestration through forestry; (5) management of water availability and runoff, especially in the presence of water demand from forests and crops; (6) ecosystem health; (7) exploration of alternative production technologies, such as algal biofuels; and (8) rural social development leading to healthy socio-ecological systems. Energy-water-carbon intersections appear directly in the first five of these components and indirectly, but significantly, in the final three.
Steps to implementation: This is a long-term, transformational initiative involving staged implementation over many years, probably decades. Its core is a set of regional focal projects, large enough in number to represent the diversity of Australian landscapes, ecosystems, rural industries and social systems and to provide opportunities for learning and diffusion of successful strategies between projects. These projects will be aimed not only at transformations within their focal regions, but also at subsequent diffusion of ideas and approaches to other regions.
Steps to implement this vision may include:
This initiative will require a whole-of-government perspective that builds on existing developments in rural and regional Australia, farm sector linkages and basic research.
Recommendation 4: Resilient cities and towns
Australians inhabit built environments from great cities to the Red Centre. Meeting the combined energy, water and carbon challenges in our cities and towns will require technological innovation for energy and water supply; development of systems that are resilient to shocks; overall reduction in demand for constrained natural resources, particularly water and GHG emissions; and astute investment in infrastructure. These developments need to occur together.
The Expert Working Group recommends the development of a national Resilient Cities and Towns Initiative, to foster resilient, low-emission energy systems, water systems and built environments by focusing jointly on technological developments in supply and on adaptation in demand as Australia’s urban populations grow. The initiative will operate through a set of demonstration projects, united in a national approach.
Outcomes: This initiative aims to foster the design of resilient energy, water, transport and related urban systems that meet human needs with minimum emissions and environmental impact, while also enhancing urban quality of life. These systems will reshape energy and water supply; recycle energy, water and carbon resources presently discarded as waste; and incorporate efficiency, conservation and demand management measures. The initiative will engage with the economic, social and physical processes driving demand; capitalise on industrial and employment opportunities made available by sustainable technologies; and manage trade-offs in the decarbonisation of the energy economy.
Steps to implementation: As for Recommendation 3, this is a long-term, transformational initiative involving staged implementation over many years. The demonstration projects at the core of the initiative would encompass the diversity of Australian urban environments from major cities to small towns.
Steps to implementation would be similar to the four elements outlined in Recommendation 3, starting with a scoping and evaluation process involving key stakeholders from governments, industry, community and the innovation system, centrally administered by a Commonwealth Government authority. The scoping processes for Recommendation 3 and Recommendation 4 would involve significantly different stakeholders and options, but could be centrally supported by the same government structure.
A program like this would build upon such initiatives as the Renewable Energy Futures Fund, the Prime Minister’s Task Group on Energy Efficiency, the Smart Grid/Smart City Program, the Solar Flagship Program and national initiatives operating in individual sectors.
Recommendation 5: Enhanced knowledge and learning system
All of the foregoing recommendations place high demands on new knowledge and innovation, particularly for integrative understanding of whole-system behaviours. There is a growing gap between the largely compartmentalised knowledge provided by our current innovation system and the kind of cross-disciplinary, cross-sectoral understanding that is needed to enable innovation across energy, water, carbon and related domains. We cannot manage what we do not understand, and we cannot manage what we do not measure.
The Expert Working Group recommends enhancing the development of integrative perspectives across the Australian knowledge system, by (1) establishing a core research effort in integrative systems analysis, to understand and map the connections between energy, water, carbon, climate, agriculture, ecosystems, the economy and society;
(2) including incentives for integrative analysis in existing academic, government and sectoral innovation investment structures; and (3) enhancing support for stable, ongoing delivery of essential information.
Outcomes: Through both short-term and long-term actions, this recommendation will improve Australia’s ability to develop resilience through adaptation and learning, and will address the rapidly emerging need for integrative perspectives that overcome the ongoing compartmentalisation of research funding and organisations into silos representing traditional disciplines and sectors.
In keeping with the principle ‘we cannot manage what we do not understand’, this recommendation will lead to a better understanding of the whole-system characteristics that emerge from energy-water-carbon intersections, including resilience, adaptability, transitions and thresholds. Understanding these characteristics will lead to the identification of potentially successful and unsuccessful pathways, particularly the dead-end pathways that lead to long-term problems for society if action is not taken early and from which escape is difficult. Examples of integrative issues for this effort include the implications of climate change and population growth for the economy, urban amenity, agricultural productivity, ecosystem health and societal wellbeing.
In keeping with the principle ‘we cannot manage what we do not measure’, the recommendation will lead to stable, ongoing, continuous, operational delivery of essential biophysical, ecological, geographic, economic and social information through greatly enhanced support and integration. These kinds of information are crucial for both research and operational goals in integrative frameworks.
Steps to implementation: The first part of the recommendation can be initialised quickly, but is long-term in its ultimate time frame and transformational in intent. It proposes a major enhancement of Australia’s capability through the establishment of a national program for integrated systems analysis, based on existing successful international models. A significant part of the mandate of the program will be the education and training of researchers and practitioners in integrated systems thinking.
The second part of the recommendation proposes the rapid incorporation of integrative perspectives into the evolution of the current innovation system. A specific action to do this would be to include a priority for integrative analysis in the National Research Priorities, which would encourage shifts in funding criteria by the Australian Research Council and in other government research funding initiatives. A further action in support of the second part of the recommendation would be to implement a research-coalition model for linking the diverse existing providers of energy, carbon and water research with the users of that research. Such a model can encourage both fundamental and applied research with appropriate overall priority setting and selection.
The third part of the recommendation proposes enhanced support for and integration of essential biophysical, ecological, geographic, economic and social information. These kinds of information are presently supplied by numerous systems with varying levels of continuity and linkage to other systems. The important need is not to bring all of these into a single ‘super-system’, but rather to ensure stability of funding, effective delivery of information and effective connectivity between different kinds of information from different systems.
Energy, water and carbon are, together, the foundations of life. They are also at the heart of the economic, social and environmental health of all human societies. The intersections between energy, water and carbon are deep: almost any change in one of these domains has consequences for the other two.
Australia faces major challenges at energy-water-carbon intersections. With the rest of the world, we need to mitigate and adapt to climate change caused by increasing greenhouse gas (GHG) emissions, if risks from climate change are to be kept acceptably low. We must cope with limited water availability, while maintaining an increasing population and producing more food. These challenges will demand transformational responses. Mitigation of climate change will require a nearly complete decarbonisation of both the Australian and global economies in a time frame of a few decades, particularly in the energy generation, transport and land sectors. Water systems will need to distribute, use and re-use Australia’s limited water more efficiently. Australia’s landscapes collectively need to function as producers, watersheds, carbon stores, healthy ecosystems and vibrant societies, while ensuring that each of these functions coexists with the others. Cities and towns, which provide homes for most of the Australian population, need to evolve to reduce GHG emissions, to use less water per person and to house a population that is still growing, while maintaining and enhancing quality of life.
This report considers the implications of challenges at energy-water-carbon intersections. Because the connections between energy, water and carbon are multiple and fundamental, we adopt an integrative perspective throughout. The emphasis is on the total system formed by the natural environment and human society, in which energy, water and carbon play essential and intersecting roles. To address the changes that will be needed in this whole system because of challenges at energy-water-carbon intersections, we build upon the concept of resilience. A resilient system can recover from shocks and disturbances, adapt through learning and undergo transformation when necessary.
Using the need for an integrative perspective and the concept of system resilience as underpinning themes, we offer five recommendations, each addressing a broad part of the picture:
Each of these recommendations spans sectors. Our focus is on developing the knowledge, systems and approaches needed to address challenges that demand long-term transformations, rather than advocating particular sectoral solutions in particular places.
Section 2 of this report describes the intersections between energy, water and carbon, including the realities that shape the system, the implications of climate change, recent trends in Australia’s GHG emissions and water use, and constraints on GHG emissions and water availability. Section 3 examines the integrative perspectives that are essential to meet intersecting energy-water-carbon challenges, including the Earth System view; resilience as a critical concept for working with connected, evolving systems; and the critical role of knowledge and learning. Section 4 analyses five sectors that play central roles in energy-water-carbon intersections: stationary energy, transport energy, water systems, land systems and urban systems. Section 5 describes our five recommendations in detail, noting that all recommendations are trans-sectoral. Finally, Section 6 offers conclusions, including an indication of topics that require further development and analysis. Several Appendices are provided and contain supporting material, including a glossary of terms and abbreviations.
Terms of Reference
With a planning horizon of 20 years:
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