Exploring energy policy scenarios for the Northern Territory (of Australia) to transition to a low carbon economy by 2050

Ada Shereen Hosein

The Northern Territory (NT) of Australia has one of the highest rates of solar insolation in Australia which can be a catalyst for future energy development. In addition, it has a unique set of circumstances which present both challenges and opportunities for the development of its energy policies and require customised energy planning solutions and policies. This study explores the potential for long-range renewable energy (RE) planning and climate policies for the NT to transition to a low-carbon economy by 2050, while achieving sustainable economic growth. A literature review was conducted to explore the range of challenges and opportunities faced by the NT; the energy policy landscape for low-emissions technologies; key factors influencing the effectiveness of energy policies; energy policy analysis tools; and energy models used to inform energy policy. A mixed methods approach was used for this study. Qualitative data was collected through an expert stakeholder survey and interviews, analysed using the NViVO software, then used for the development of three hypothetical policy scenarios: business-as-usual (BAU), High Industry Growth (HIG) and Renewable Energy Export (REE)), as well as for input data for the Low Emissions Analysis Platform (LEAP) energy modelling tool. The results of the LEAP simulations were analysed and used to recommend potentially effective low emissions/renewable policy areas for the NT. Findings from a PESTLE analysis conducted on the survey and interview responses indicate that many of the key barriers and potential opportunities for renewable energy development fall primarily within political, economic and legislative factors, demonstrating a policy gap in the NT. Findings from the LEAP simulations indicate that under the HIG scenario, energy demand from a digital/data centre industry would be around 334.1 PJ by 2050 (compared to 208.5 PJ in the BAU) and could be met largely with 41GW of installed solar capacity and 25.5 PJ of biofuels, yield net benefits of $13.6 million, and result in emissions of around 700 kt CO2-e by 2050 (compared to 15.1 Mt CO2-e in the BAU). Policies directed primarily at the industry and transport sectors such as carbon taxes, financial incentives for electric vehicle (EV) purchases and standards that facilitate and accelerate large-scale renewable energy generation could potentially meet the high energy demand with renewable sourced energy and reduce sector emissions. Under the REE scenario, energy demand from a renewable energy export industry would be around 651.6 PJ by 2050, of which 304.3 PJ would be for the export market. This could be met by around 97 GW of installed solar capacity, yield net benefits of $30.8 million and see emissions reduced to around 159 kt CO2-e by 2050. A range of potential policy mechanisms can be applied across all sectors in the NT, however technology-specific policies applied primarily to the industry and transport sectors are likely to have a more significant impact on a lower emissions economy. These include hydrogen bus trials, lower taxes for fuel cell electric vehicles (FCEVs), collaborations between governments, fleet operators and consumers, support for training/education programs, collaborative technology research and pilot programs. Sensitivity analyses were also conducted to explore variations in the carbon price, fuel supply mix optimization, and lower or higher industry demand growth. These results showed that slight variations in inputs and assumptions can affect the need and timing of appropriate policies to support a desired outcome or goal. In conclusion, a low-emissions economy based on an industry powered by renewable energy is possible with the support of a range of effectively timed energy and climate policies, and effective energy transition policies for the NT need to be developed with careful consideration of the unique circumstances and existing barriers in the NT. In reality, the future is likely to be a combination of elements in both HIG scenario and a REE scenario. If implemented and sequenced appropriately, energy policies can be effective in laying the groundwork for a smoother transition to low-carbon economy in the NT. Study limitations include a lack of available NT data, rapidly changing energy environment (advancements and cost reductions in technology), and limitations of the LEAP modelling tool such as its inability to model energy storage options and carbon price escalation. Recommendations for future research include developing additional scenarios with different assumptions, adopting a multi-criteria decision analysis (MCDA) approach to stakeholder responses, evaluating the effectiveness of recently implemented renewable energy, EV, and climate policies by the NT Government, and developing an NT-specific LEAP modelling tool as NT data becomes more available.

Exploring energy policy scenarios for the Northern Territory (of Australia) to transition to a low carbon economy by 2050

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