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No motivation for energy efficiency research

Australian industries’ energy costs are too low to warrant major research expenditure on greater energy efficiency and/or to minimise emissions, ATSE says.

In its response to the Garnaut Climate Change Review Issues Paper 4 (Research and Development: Low Emissions Energy Technologies), The Australian Academy of Technological Sciences and Engineering says electricity (and gas) markets do not operate efficiently and provide little or no incentives for investment in low-emission technologies.

“Suppliers sell into a regulated market where demand sets price. They do not compete on the basis of product differentiation but, instead, on cost and reliability — a much weaker driver of innovation. They rely very much on their engineering suppliers to provide new technology. Their assets are long lasting, so major improvements are difficult.

“While they may espouse a commitment to energy efficiency and reductions in emissions, this has more to do with corporate social responsibility than economics. Improvements in energy efficiency can reduce peak demand, but will also reduce revenues. Emissions reductions will raise supplier costs.”

ATSE says that, prior to privatisation, government generators commissioned significant research from organisations such as universities, through to substantial demonstration projects. These projects were then taken up by manufacturers and supplied to the industry together with internationally sourced technology.

Since privatisation, some technology development has continued, but R&D has fallen sharply and, in ATSE’s view, the electricity and gas sectors in Australia are unlikely to lead investment in the development of low-emissions technologies, and certainly not on a scale and in a timeframe that will meet our needs.

“Even big well-resourced energy companies such as some of the mining companies are reluctant to embark on major process research programs in their own right. They would much rather their suppliers make this type of investment. There have been some instances where resource companies have had to sell the results of successful innovation to their competitors, in order to justify their R&D investment in the first place.”

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