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Situation and outlook: Australia has one of the world’s most urbanised populations (UN DESA, 2010), with around 90 per cent of Australians living in urban settings and 69 per cent in the major cities (ABS, 2010). The trend for a progressively greater fraction of the Australian population to live in cities and towns is likely to continue, according to the Intergenerational Report (Australian Government, 2010).

Urban environments are points of confluence for the exchange of goods, money and ideas. They are industrial, commercial and transport hubs, with accompanying intense usage of energy and non-agricultural water. Urban environments are also points of confluence for vulnerabilities, because of the closely connected nature of water, energy, transport, food, health, education, social and other vital systems for urban life support. Increasing connectedness increases the risk that a failure in one of these systems can cascade through to others, leading to consequences which greatly amplify the initial problem. Great damage can be caused by cascades, which may be rapid and highly visible, such as gridlock in a major city caused by a single failure in a transport system, or slow and often unnoticed, such as the pressures on services and quality of life caused by uncontrolled urban sprawl.

Energy, water and carbon, with carbon a driver of climate change, intersect in the urban environment through several key vulnerabilities, many of which also indicate opportunities for transformation:

  1. Current and expected warming trends increase the frequency, and probably the duration, of extreme events such as heatwaves (CSIRO and Bureau of Meteorology, 2010). In the context of an ageing and thus more vulnerable population, this places pressure on services such as emergency medicine, through greater incidence of heat-related illnesses, and highlights the need for adaptive strategies for local climate control (O’Brien and Baime, 2010). Such strategies could include rooftop lawns and gardens.

  2. More intense and longer heatwaves increase the risk of catastrophic bushfires, which will have increasingly devastating consequences as more urban Australians inhabit forested rural environments on the fringes of cities. The Victorian Black Saturday (7 February, 2009) bushfires, which were essentially uncontrollable firestorms in the record fire weather of that day, provide a vivid picture of events which are likely to become more frequent.

  3. The cities and towns of southern Australian regions are projected to experience decreasing rainfall as climate change proceeds (Section 2), putting urban water supplies under pressure from both demographic and climate trends (Section 4.3). These pressures increase the
    viability of energy-intensive water sources such as desalination and recycling (Figure 4.7),
    with associated energy and social implications.

  4. The largest Australian urban centres are coastal, so critical infrastructure will be affected by rising sea levels (DCC, 2009b).

  5. Efforts to move away from fossil-fuel powered vehicles towards electric vehicles will place increased pressure on stationary energy supplies, which are currently dominated by coal-powered plants (Sections 4.1 and 4.2).

  6. Increasing urban populations are driving a high demand for affordable housing. This demand is largely being met by expansion of urban areas at the fringes of cities and towns, increasing the dependence of urban Australians on private vehicles and the freeway systems necessary to avoid congestion.

  7. Rapid growth of cities and associated energy demand is increasing the urban ‘heat island’ effect and demand for cooling. Together with the general warming trend from climate change, this is leading to increasing dependence on air conditioning, which is a prime example of maladaptation—an immediate, local response to a problem which actually makes the problem worse at large scales and in the long term.

Figure 4.7: Greater Adelaide’s current and projected water supply from all sources for both drinking and non-drinking purposes, showing expected increased reliance on recycled stormwater and wastewater (Government of South Australia, 2009).

Efforts to increase urban resilience and sustainability: Prompted by considerations such as those above, local and municipal governments are increasingly endeavouring to take a holistic approach to urban sustainability and to translate this into practical measures in urban design and function. This includes adaptation to climate change, mitigation of urban GHG emissions, and many other steps toward environmental sustainability and the reduction of urban ecological footprints (for example, City of New York, 2007; Dhakal and Betsill, 2007; Dhakal and Shrestha, 2010; Rosenzweig and Solecki, 2010). Table 4.2 indicates some international organisations dedicated to providing networking and support to assist these efforts.

Organisation and URL


The Urban Climate Change Research Network (

Integrating climate risk into city development policies

Climate Mayors

Building local government capacity for adaptation and mitigation (includes a number of Australian and New Zealand cities)

ICLEI, the Local Governments for Sustainability Network (

International association of local governments and organisations who have made a commitment to sustainable development, providing technical and information services to build capacity for sustainable development at local level, with a focus on intersections between energy, carbon, water and society.

Global Carbon Project, Urban and Regional Carbon Management Theme

Place-based and global research on carbon management and sustainable development in urban environments

Table 4.2: Some international networks providing support for urban sustainability efforts by local and municipal governments.

Opportunities: Energy-water-carbon intersections in urban environments create many opportunities for enhancing urban sustainability (see Section 5, Recommendation 4).

  1. Planning regulations: Urban planners have the opportunity to create spaces which minimise energy consumption and water runoff, through attention to issues such as building density, green space and transport. Similarly, reform of revenue regimes such as stamp duty can encourage purchase of more efficient housing by lowering barriers to relocation.

  2. Building standards: Appropriate building standards can encourage design which maximises energy and water efficiency. Proposals for efficient buildings in the residential and
    non-residential sector include the Lend Lease Efficient Building Scheme ( and the Building Efficiency Disclosure Scheme of the Australian Government Department of Climate Change and Energy Efficiency ( This measure was passed by the Australian Parliament in June 2010 and mandates efficiency disclosure, initially for commercial structures and later for other non-residential buildings such as hotels, schools and hospitals.

  3. Engineering and design of sustainable buildings: Because residential and commercial energy consumption is such a significant proportion of Australia’s overall energy profile (around one-fifth in 2007-08; ABARE, 2010a), urban buildings represent an opportunity for energy and emissions minimisation (New York Academy of Sciences, 2010). Sustainable buildings can provide multiple benefits through a wide range of technologies, for example:

    • local climate control from reflective surfaces and vegetated roofs

    • reduced energy demand through insulation and building design to promote the use of passive solar winter heating and protection from summer solar heat loads

    • use of below-ground thermal inertia for both cooling and heating

    • replacing inefficient (electric resistive) residential hot water systems with more efficient or renewable energy sources (DEWHA, 2008; Kenway et al, 2008; also see Section 4.3)

    • local collection of rainwater and minimisation of stormwater runoff.

  1. Demand reduction: Social and behavioural adaptation in energy and water consumption can be encouraged by making information available to consumers through smart networks (see Section 5, Recommendation 2) and education campaigns.

  2. Public transport and alternative transport options: Increasing access to affordable, safe and regular public transport is a key means of reducing vehicular GHG emissions, local pollution and congestion. Similarly, increasing the availability of bicycling and walking as transport options through urban design and road planning increases amenity and brings health benefits. Reducing reliance on cars also means less valuable city space has to be devoted to parking. Some transition from car-dependence can be achieved through car-share
    ( and short-term car-hire schemes ( Fee-based measures such as tolls and parking can further reduce car dependence, and (if the measures are time-sensitive) can also reduce congestion, itself a source of energy use and emissions (see London congestion charges—, and peak and off-peak tolls for New York bridges and tunnels—

  3. Integration of electric vehicle use with the electricity grid: Initiatives such as ‘Smart Garage’ ( can manage the charging of electric vehicles from the electricity grid, together with their use as sources of stored energy when needed.

  4. Flexible work patterns: ‘Teleworking’ and staggering of working hours can reduce transport congestion (Council of Australian Governments, 2006) and can also reduce the need for expensive, possibly fossil-fuel-intensive, peak stationary power. A pilot flexible work hours program in Brisbane showed a reduction in peak-hour travel and an overall reduction in vehicle kilometres travelled (Queensland Government Department of Transport and Main Roads, 2009).

  5. Urban design and layout: Opportunities are present in urban design to maximise access to non-motor transport, and place services and amenities strategically to increase the overall energy efficiency of urban living (e.g. City of Sydney, 2007). Through urban renewal and creative use of options, some redesign is possible, even in already densely-developed cities.

  6. Urban cooling with vegetation: Strategic placement of vegetation in urban environments provides one means of providing local climate control, as a well as a use of stormwater (Coutts et al, 2010; O’Brien and Baime, 2010). This strategy presents a possible tension because it requires water for irrigating vegetation, but use of local stormwater runoff can provide a solution.

  7. Recycling of energy and water, and reduction of GHG emissions: The concentration of stormwater and sewage streams provides opportunities for water, energy and materials recovery from waste (e.g. Project Neptune, GHG emissions associated with water supply also arise from CO2, methane, and nitrous oxide escape from reservoirs and wastewater facilities (Hall et al, 2009).

5. Recommendations

This section describes in detail the recommendations of the Expert Working Group.

Key points

  • The five recommendations of the Expert Working Group address major components of an overall path to energy-water-carbon resilience for Australia. These include:

    • (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 in urban and agricultural settings;

    • (3) Enhancing the resilience and sustainability of Australian landscapes in meeting energy-water-carbon challenges;

    • (4) Enhancing the resilience and sustainability of the built environments in Australia’s cities and towns; and

    • (5) Enhancing Australia’s knowledge and learning capabilities to meet not only sectoral challenges, but also new demands for integrative knowledge about the whole system formed by energy, water, carbon, ecosystems, the economy and human society.

  • Each of these recommendations spans 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.

5.1 Consistent principles for the use of finite resources

Background: Water is a finite, renewable resource. Emissions of CO2 to the atmosphere also constitute a finite, essentially non-renewable resource, because there is a global cap on the amount that can be emitted before risks from climate change become unacceptable (see Box 2.1).

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. These consistent principles are needed to ensure that markets, regulations, institutional arrangements and decisions about infrastructure reflect the full costs and benefits accruing from societal uses of energy, water and carbon.

Recommendation 1

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.

Markets and pricing: Consistent pricing principles will ensure that the costs of using finite common resources are properly recognised and met, rather than being 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 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 energy use and associated carbon emissions resulting from water supply through desalination or energy-intensive recycling; the water requirement of some biosequestration strategies, such as the reduction in catchment run-off from carbon forestry; and links between energy consumption, emissions and water consumption in urban environments.

It follows that an essential foundation for the consistent principles envisaged here is a price on carbon, as for water and energy.

Accounting: Comprehensive, rigorous and transparent accounting for energy, water and GHGs (both sources and sinks) is critical to enable administrative systems to properly regulate the use of finite resources and to identify and avoid perverse effects.

Accounting systems need to: (1) identify interactions—for example, plantation forestry to sequester carbon can reduce catchment water availability; (2) recognise constraints on water availability and GHG emissions; and (3) be consistent with the biophysical processes that determine resource availability—for example to ensure hydrological integrity and to avoid double counting in surface water and groundwater accounts.

An additional foundation for this principle is a set of adequate national monitoring and accounting systems for energy, water and carbon which are comprehensive, consistent, inclusive of both natural and human components, and appropriately linked. This is addressed in Recommendation 5.

Non-market strategies: Markets alone cannot overcome impediments to change such as social barriers, institutional distortions, technological inertia and lock-in, and failure of research and development to deliver appropriate knowledge or to be implemented to full potential. Therefore, market strategies require parallel non-market strategies. These may include:

  • a regulatory environment that sets the availability of public-good resources such as water and limits GHG emissions

  • administrative arrangements that govern market processes

  • promotion of behavioural change through communication, including the provision of eal-time information, and through education programs that are designed to assist communities and businesses to understand the consequences of their actions (see Recommendation 2)

  • regulated standards that influence investment decisions, such as appliance efficiency criteria, building codes and planning controls.

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 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.

The principles established by this process will ensure consistency for many possible initiatives. Examples include:

  • The establishment of a National Energy and Water Efficiency Target scheme. This scheme would combine state and federal rebates, incentives and regulations affecting purchase decisions under a single point of entry, making price and incentive signals consistently visible to the public. The design of such a scheme would be shaped by the consistent principles called for in this recommendation.

  • The updating of the Australian Energy Regulator’s National Electricity Objective to specifically reflect the principles called for in this recommendation. The current objective is To promote efficient investment in, and efficient operation and use of, electricity services for the long term interests of consumers of electricity with respect to (a) price, quality, safety, reliability, and security of supply of electricity; and (b) the reliability, safety and security of the national electricity system’. The update would ensure that environmental, water and emissions reduction goals are placed on an equal footing with economic and consumer-oriented objectives. Such a step would embed environmental concerns into the organisational culture that implements the regulatory framework.

  • The establishment of an ‘Environment and Sustainability’ panel. This panel would complement the ‘Reliability’ and ‘Consumer Advocacy’ panels that are currently hosted by the Australian Energy Market Commission (AEMC). The ‘Environment and Sustainability’ panel would monitor, review and report on sustainability concerns such as efficiency, GHG reduction, renewable energy and cogeneration, and water use.

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