Draft Energy Emissions Reduction and Resilience Plan

Tasmania’s Climate Change (State Action) Act 2008 (the Act) sets out how the government must take action on climate change. Under the Act, Tasmania’s emissions reduction target is to achieve net zero greenhouse gas emissions, or lower, in Tasmania from 30 June 2030. To help achieve this goal, the Act requires the government to develop five‑yearly sector-based Emissions Reduction and Resilience Plans (Plans) in consultation with business and industry. The Plans will support a practical and balanced approach for our key sectors to reduce greenhouse gas emissions and build resilience to climate change.

The Plans must support greenhouse gas emissions reduction, the transition to a low emissions economy, and resilience to climate‑related risks. The legislation also requires that the objects of the Act are taken into account during the development of the Plans. The objects of the Act include supporting emissions reduction, adaptation, and a consultative, partnership approach to action on climate change.

Plans must be developed for the following sectors:

• energy
• transport
• industrial processes and product use
• agriculture
• lane use, land use change and forestry
• waste
• any other sector or sub-sector determined by the Minister (the government has committed to develop a Plan for government operations).

A whole-of-economy roadmap outlining the links and cross cutting issues between all sectoral plans and Tasmania’s first statewide climate change risk assessment will also be developed.

Delivery and timeframes

Under the Act, the Plan for the energy sector is to be prepared by November 2024. The Minister for Energy and Renewables, as minister responsible for climate change, is to consult with each relevant portfolio Minister, and with business and industry representatives, to develop the Plans. The Minister is also required to publicly consult on each draft Plan.

The Plans are to be tabled in Parliament and updated at least every five years.

This work is being led by the Climate Change Office in ReCFIT in collaboration with relevant portfolio agencies.

Why sector-based emissions reduction and resilience planning?

The latest data^[1] show that Tasmania recorded net zero greenhouse gas emissions for the first time in 2014 and has maintained its net zero status in the nine reported years since. Our emissions profile is largely due to the carbon sink in our managed forest estate and our longstanding investment in renewable electricity generation.

However, our emissions profile is not guaranteed into the future. Emissions are influenced by a range of factors such as population growth, major bushfire events, changes in consumer demand, market forces and technological advancements. We know we must do more to maintain our net zero status by reducing emissions in all our sectors.^[2]

The AR6 Synthesis Report: Climate Change 2023 by the Intergovernmental Panel on Climate Change (IPCC)^[3] confirms that humans are causing global warming and makes it clear that we need to act now. Global temperatures are now 1.1˚C above pre-industrial levels and are likely to reach 1.5˚C above pre‑industrial levels in the early 2030s. In Tasmania, the environmental, economic and social impacts of climate change are already affecting out businesses, industries, communities, built environment and our natural values. It is important that we adapt effectively to a changing climate and build strong, resilient communities, while continuing to reduce our emissions.

A consistent theme from consultation on the government’s action on climate change is that partnership between government and industry is the preferred approach to support emissions reduction and build resilience in Tasmanian businesses and industries.

Purpose of this consultation draft Plan

This draft Plan has been developed to support the public to provide feedback on priority areas and future opportunities for the energy sector. These priorities and opportunities have been identified through targeted consultation with business and industry. The proposed priority areas and future opportunities are outlined in the section “Priority areas for reducing emissions and building the resilience of Tasmania’s energy sector”.

Funding for the sectoral plans

The feedback from consultation on all plans will help us identify the priority actions to deliver with the available funding, as well as future funding priorities to inform budget and planning processes over the five‑year life of the plans.

This will build on the significant investment that has already been committed to increase Tasmania’s renewable electricity generation capacity and increase energy efficiency.

The Tasmanian Government will also seek to maximise the opportunities for Tasmania through relevant Australian Government initiatives, including the development of national sectoral decarbonisation plans.

[1] Tasmania’s latest reported greenhouse gas emissions were released in April 2024 as part of the Australian Government’s National Greenhouse Accounts 2022 and State and Territory Greenhouse Gas Inventories 2022. The Australian Government reporting framework is consistent with UNFCCC and Paris Agreement reporting rules. National inventory reporting runs two years behind the current date, and represents the most recent official data in Australia on annual emissions.

[2] Point Advisory and Indufor 2021, 2021 Update of Tasmania’s Emissions Pathway Review – technical report (prepared for the Tasmanian Climate Change Office) www.recfit.tas.gov.au/__data/assets/pdf_file/0009/492093/Tasmanian_Emissions_Pathway_Review_-_Technical_Report.pdf

[3] IPCC 2023, Climate Change 2023: Synthesis Report - Summary for Policymakers, www.ipcc.ch/report/ar6/syr/

Timeline

• November 2023: Targeted consultation with government, business and industry. We undertook consultation with relevant government, business and industry representatives in November 2023, including two workshops, and one-on-one meetings.
• Mid-2024: Public consultation on the draft plan. The feedback from consultation with government business and industry will inform the development of the Emissions Reduction and Resilience Plan - Energy.
• November 2024: Development and release of the final plan. We will analyse all submissions received and undertake further targeted consultation as required to develop the final Plan. The Plan is due to be prepared by November 2024 as required under the Act.

Key themes from consultation with government, business and industry

In late 2023 we consulted relevant government, business and industry stakeholders. Participants told us what they are doing to reduce emissions and build resilience in the energy sector, the barriers and opportunities for further action, and how the government could support the sector to take action on climate change. Participants voted on the priority areas for action.

Key themes included:

• Increasing renewable electricity generation to meet new demand and maintain Tasmania’s low emissions electricity generation status.
• Minimising importing emissions-intensive electricity from other jurisdictions.
• Supporting the development of renewable alternatives other than electrification (including bioenergy and green hydrogen).
• Supporting fuel switching from emissions intensive fuels to renewable alternatives.
• Collaborating between government and Tasmania’s large emitters to support emissions reduction and resilience-building opportunities.
• Information sharing, engagement and education in emissions reduction and resilience for Tasmania’s small to medium-sized enterprises (SMEs) in the sector.
• Reducing the risk of the transition to renewable fuels (including skills and training, market changes, updating regulatory frameworks and increased disclosure requirements for businesses).
• Exploring opportunities to increase business readiness for physical climate impacts, including severe weather events, bushfire risks, and changes in weather patterns.

The sectors identified for the development of Plans are based on the sectors identified in the United Nations Framework Convention on Climate Change (UNFCCC) greenhouse gas reporting framework.

The energy Plan will consider the emissions directly accounted for in the energy sector under the UNFCCC framework and will consider other energy-related emissions where relevant. These will also be considered as part of the relevant Plans, for example for transport, industrial processes and product use (IPPU), and agriculture.

The Plan will also consider how we can build resilience to the impacts of climate change on our energy sector, and how the sector can be supported in the transition to net zero.

The future opportunities identified in the Plans for each sector will be combined and inform the development of Tasmania’s next climate change action plan. Preparation of the next plan will include the identification of priorities and gaps not addressed through the development of the sector-based Plans.

The use of carbon offsets will not be considered in the Plan for Tasmania’s energy sector. The Plan will focus on practical actions businesses and industry can take to reduce emissions within their organisation, and contribute to lower emissions from Tasmania’s energy sector.

Priority areas

Through targeted consultation, research and analysis, we have identified key priorities and future opportunities to reduce emissions and build resilience in Tasmania’s energy sector. The key themes highlight that there is no single solution to reduce emissions and build resilience in the energy sector. A flexible approach is required to meet the diverse needs of all Tasmanian energy users and ensure we can make the most of opportunities presented by existing and emerging technologies.

We have grouped the key themes into five priority areas for action:

1. Increasing the availability of renewable energy sources in Tasmania.
2. Supporting Tasmanian homes and businesses to transition to renewable energy alternatives and improve energy efficiency.
3. De-risking the transition to a low emissions economy.
4. Driving action through partnerships, collaboration and information sharing between governments, industry and key stakeholders.
5. Building the resilience of our energy sector to the physical impacts of climate change.

The future opportunities in this draft Plan are intended to guide public consultation to help us prioritise actions to progress under the final Plan.

Consultation questions

To help us develop the final Plan for the energy sector, we want to hear your thoughts about the priorities and future opportunities outlined on the following pages.

1. What future opportunities do you think will have the most impact in the energy sector in Tasmania?
2. Are there any priorities or future opportunities for the energy sector missing from the draft Plan?
3. How can we collaborate to reduce emissions and build resilience in the energy sector?

Conversion to renewable alternatives

To make the most of the opportunities from securing sufficient supply of renewable electricity or other renewable fuel sources, it is important to support households, businesses and industry to adopt renewable energy technologies to replace their fossil fuel use. These renewable alternatives include electrification, particularly for low to medium-temperature process heat in manufacturing, bioenergy for high-temperature process heat, and renewable hydrogen, biogas and synthetic gas substitutes as likely alternatives for the remaining gas use (where electrification is not an option).

Challenges

• New technologies may have high up-front costs to install and commission, and come with additional investment risks. Existing energy generation is likely to be cheaper, readily available, and compatible with existing infrastructure and equipment.
• The level of industry experience in generating electricity or heat using new renewable fuels, such as hydrogen and bioenergy, remains low and businesses often have a low appetite for change. For example, while some forms of bioenergy can be produced relatively cheaply, the higher capital costs and the more complex equipment are barriers to adoption.
• The manufacturing industry is the major user of natural gas in the state, and an accelerated transition away from gas may result in perverse outcomes and negative impacts on these existing users. For example, users who are unable to transition may face unaffordable transmission costs, or gas users may be forced to revert to more emissions-intensive fuel sources.

Energy efficiency

While not a direct replacement for fossil fuels, energy efficiency also presents an important opportunity for businesses and households to initially reduce the amount of fossil fuels they use. Continued energy efficiency improvements can result in a reduction in the total energy required from alternative sources and potentially in the size and investment required for new equipment.

Both targeted consultation and the Tasmanian Emissions Pathway Review identified energy demand reduction measures for manufacturing as a key emissions reduction opportunity. Implementing energy efficiency opportunities permanently reduces energy use, which can lower emissions, increase business productivity and reduce energy costs.

Challenges

• There are often significant costs associated with improving energy efficiency, particularly when it requires the replacement of appliances and equipment.
• Users can be hesitant to change technologies from what they are familiar with. New technologies may have different operating and servicing requirements which can cause added uncertainty.
• Many Tasmanians are on low incomes, including various forms of government assistance, and have limited funds to invest in capital improvements to their homes.
• People living in rented accommodation have little ability to influence the energy efficiency of their homes. They also have limited options to switch large energy-using appliances, as capital improvements for heating and hot water systems are the responsibility of the landlord.

Current action

The government has a range of initiatives to support Tasmanians to transition their fuel use to renewable alternatives and improve energy efficiency.

The government’s commitment under the Bioenergy Vision will promote the option of renewable gases in key infrastructure projects, as well as building both industry and community familiarity with renewable gas.

As set out in the Tasmanian Renewable Hydrogen Action Plan, the government will work with the existing natural gas distribution network infrastructure owner to support the domestic uptake of hydrogen. Opportunities could include hydrogen blending at up to 10 per cent and potential trials of higher hydrogen blends in Tasmania’s hydrogen-compatible gas distribution networks.

The government also has a range of measures in place to improve residential and commercial energy efficiency in Tasmania, including:

• The Energy Saver Loan Scheme (ESLS) provides interest-free loans of up to $10,000 for Tasmanians to invest in energy efficient products, including solar panels, battery systems, reverse cycle air conditioning (heat pumps), insulation, and efficient electric hot water systems.
• The Business Energy Efficiency Scheme offers loan interest subsidies to eligible businesses.
• The No-Interest Loan Scheme (NILS). This scheme assists concession‑holders with subsidies of up to 50 per cent toward the cost of energy efficient appliances, and a no‑interest loan for the balance.
• The Business Resource Efficiency Program (BREP) aims to help Tasmanian small and medium‑sized businesses reduce their consumption of resources, minimise waste streams and resultant greenhouse gas emissions, reduce operating costs, drive productivity gains, and provide practical and tailored information about ways to improve their resource efficiency.
• Energy Efficiency Audits providing $1,000 per small business.

Pathway forward

Future opportunities should be prioritised to best assist users to overcome the range of challenges, outlined above, and complement the work government is currently undertaking in this area.

Tasmanian businesses and industries are responsible for a large proportion of our emissions, and will play an essential role in ensuring we achieve our legislated target of net zero emissions, or lower, from 2030. A number of these businesses are considering transitioning to renewable fuels, however the capital costs remain prohibitive. Tasmania’s largest emitters, subject to the Safeguard Mechanism, will be considering their options to reduce emissions. Cost will be a key consideration in deciding whether to purchase offsets instead of making capital upgrades.

Through consultation, we have identified opportunities that would reduce the capital costs for these businesses, and help ‘tip the scales’ in favour of converting to low emissions operations. Options being considered are focused on achieving the best value for money with respect to emissions reduction outcomes. These options include a competitive grants program and the expansion of successful existing programs that will support businesses and industries to undertake projects that will reduce emissions, build resilience to climate change, and manage the transition to a low emissions economy.

Opportunities identified also consider how to support businesses to address other barriers to conversion. These barriers may include regulations, and the level of expertise and understanding required to install and commission new technologies.

Improving energy efficiency and energy conservation techniques for households, business and industry will also be key to reducing emissions. Improvements include demand management investments for industries such as manufacturing. It is important that consumers understand their energy use to ensure they can make more informed energy choices. In a manufacturing context, identifying energy efficiency measures is likely to require a detailed assessment of a business’s energy use. This assessment will provide an understanding of how energy is used and identify opportunities to improve energy performance.

Increasing access to energy savings upgrades will also improve the energy efficiency of businesses and households and may assist them to invest sooner. For some household and business users, the cost of converting gas appliances to electric is likely to be a barrier in the short-term. The cost may be less of a barrier over time as equipment nears the end of its life and users budget for replacement.

The energy sector is undergoing a transition, both locally and globally, from fossil fuel generation to renewable energy sources. This transition is creating both risks and opportunities for Tasmania’s businesses.

Transition risks are the risks and challenges associated with the transition to a low emissions economy. They can arise from changes in policy, shifts in market preferences, and technological advancements. As energy markets and climate conditions change, businesses and industry will need to consider the impacts and how they will respond.

Tasmania’s renewable electricity generation will allow some businesses to take advantage of international demand for low emissions products and services. Organisations who cannot transition to renewable fuels face a range of risks, including escalating fuel and network costs, supply shortages and stranded assets.

Additional challenges for Tasmania include:

• the skills and capabilities of the local workforce
• the low level of industrial experience with emerging technologies
• the ability to report on emissions and sustainability practices
• capacity to undertake strategic business planning and implement new technologies.

Investment in the capacity and capabilities of the current workforce, and attraction and training of new workers, can support businesses in this transition.

Tasmania is also reliant on a range of imported fuels such as natural gas, LPG, and liquid fuels. The transition may impact consumers through an increased likelihood of commodity shortfalls and price volatility driven by external events.

Current action

The Tasmanian Government is undertaking a range of work, both domestically and nationally, to improve resilience to the impacts of the transition to a low emissions economy. The government contributes to national energy policy and programs to support the interests of Tasmanian energy consumers as the energy sector transitions, including:

• Development of a new National Energy Transformation Partnership which aims to provide a framework for national alignment and cooperative action by governments to support the smooth transformation of Australia’s energy sector. This includes work on a National Energy Workforce Strategy.
• Development of a range of reforms to improve the functioning of the east coast gas market, as the transition impacts investment in gas developments, supply risks and changes in gas transportation requirements, including implementing measures to help to address the risk of forecast gas supply shortages.

Tasmanian Government policies and programs to support the transition for the energy sector include:

• The Tasmanian Future Gas Strategy sets outs a range of government actions to support the transition away from fossil gas and reduce emissions, including a commitment to supporting on-island production of renewable fuels which has the potential to strengthen Tasmania’s energy security by reducing our reliance on imported natural gas and LPG.
• The Bioenergy Vision explores a range of options to use bioenergy to displace fossil fuels used in heat generation and the production of transport fuels.
• The Tasmanian Renewable Hydrogen Action Plan aims to position Tasmania to benefit from the emerging global hydrogen industry, including opportunities for commercial exporting of renewable hydrogen by 2030.
• The Tasmanian Advanced Manufacturing Action Plan 2024 outlines government actions to support the state’s advanced manufacturing sector, including a focus on sustainability and skills development.
• The Enabling Business Grant Program aims to support Tasmanian small businesses to grow, adapt and innovate by providing grants of between $2,500 - $10,000 for capital purchases. This includes the purchase of equipment that will result in environmental improvements or efficiencies.

Pathway forward

The future opportunities identified focus on building resilience, so that Tasmania’s energy sector and businesses continue to operate successfully in the changing environment. Future opportunities will support individual businesses to take advantage of the changing markets, for example accessing potential new revenue streams available from carbon markets, and to mitigate against risks. Promoting information sharing, developing resources to inform planning and decision making, and supporting customers to better understand and manage their energy use will also be important for a smoother transition.

The government understands the need to consider the risk of supply shortfalls and reduced reliance on imported fuels. Ensuring the current workforce has the capacity and capabilities to support the transition will also be critical. Opportunities such as the development of an industry training centre will help to create a skilled renewable energy workforce and ensure essential industries, such as electrical skills, are developed in the state.

Implementation

After the final Plan for the energy sector is published, we will continue to engage with key partners and the community on the development and implementation of future opportunities as required.

We will keep stakeholders and the community informed through the Climate Change Office website, newsletter and social media.

We encourage you to sign up for our newsletter through our website: recfit.tas.gov.au/cc_newsletter and follow the Climate Change Office on Facebook to stay informed about opportunities to participate in programs relevant to you.

Reporting

We will prepare a climate change activity statement, showing the status of each sectoral Plan and progress on future opportunities, and the status of initiatives in the climate change action plan.

We will also prepare a greenhouse gas emissions report detailing Tasmania’s emissions for each sector.

These reports will be prepared each year and will be tabled in Parliament, as required under the Act.

As outlined in this draft Plan, we will work on improving our data capability to determine the impact of different measures in this Plan, and other relevant strategies, on Tasmania’s energy sector emissions.

Review

The Tasmanian Government is committed to a co-ordinated, whole-of-government response to climate change. Together with the Action Plan and the delivery of Tasmania’s first statewide climate change risk assessment, the development of the sector-based Plans is a strategic priority for the government that will be delivered in consultation with business, industry, and portfolio Ministers.

However, we recognise that there is significant overlap between IPPU and other sectors, and that there are parts of Tasmania’s communities, businesses and industries that may not be comprehensively covered by the sector-based Plans.

We will prepare and publish a report outlining the links between all sectoral plans and the climate change risk assessment. The report will also identify future focus areas to inform policies and programs, including Tasmania’s next climate change action plan.

The Plans are to be updated at least every five years.