Climate change

September 3, 2010

Accuracy of ABARE Energy Projections

by Barry Brook

Download the printable 13-page PDF (includes appendix) here.

By Peter Lang. Peter is a retired geologist and engineer with 40 years experience on a wide range of energy projects throughout the world, including managing energy R&D and providing policy advice for government and opposition. His experience includes: coal, oil, gas, hydro, geothermal, nuclear power plants, nuclear waste disposal, and a wide range of energy end use management projects.

Introduction

The Australian Bureau of Agricultural and Resource Economics (ABARE) is an Australian government economic research agency that provides analysis and forecasting of, among other things, our energy production and usage. ABARE’s projections have been criticized by some hoping for large scale changes in our energy sector as unreliable, biased towards the fossil fuel industry, and as underestimating the contributions that will be achieved in the future by renewable energy, energy efficiency, smart grids and the like.

To test these criticisms I have compared ABARE’s projections [1] for the year 2004-05 with the actual figures for 2004-05 [2] [3] [4] [5] [6].  I have compared the following: primary energy production, electricity consumption, resource reserves, and CO2 emissions.  I also comment on what was being advocated by green energy proponents in 1990, and point out how little has changed.  The same arguments are being repeated again now by the same sorts of groups with similar beliefs and agendas.

The reason I’ve used the year 2004-05 for the comparison is because ABARE’s 1991 projections were for the period 1990-91 to 2004-05.  I have my own hard copies of that and earlier reports but not of later reports so I used this readily available source.

I make two points:

  1. ABARE’s projections are the best we have to work with.  We can’t do better than follow their projections.
  2. The arguments about what can really be achieved with renewable energy, energy efficiency improvements, smart grids and the like, have all been had before.  Twenty years later, nothing has changed.

These ideas proved excessively optimistic in the past, as shown here, and people with sound engineering judgement and experience are warning against repeating the same mistakes.  The effective solution is not to try to apply draconian methods.  The priority should be on developing rational policies, largely aimed at facilitating rational fuel switching.

Primary energy production

Table 1 compares ABARE’s 1991 projection of Australia’s 2004-05 primary energy production with the actual production in 2004-05.

Table 1: Primary Energy Production 2004-5: ABARE 1991 Projection, and Actual Production

Points to note:

ABARE’s 1991 projections of Australia’s primary energy production in 2004-05:

  • underestimated total energy production by 22%
  • significantly underestimated the 2004-05 production of fossil fuels except oil.  It overestimated the production of oil by 8%, which most would consider good forecasting for a 15-year projection.
  • underestimated uranium production by 11%
  • overestimated the hydro-electricity production by 18%

Electricity generation

Table 2 compares ABARE’s 1991 projection of Australia’s 2004-05 electricity generation with the actual generation in 2004-05.

Table 2: Electricity Generation 2004-5: ABARE 1991 Projection, and Actual Generation

Points to note: ABARE’s 1991 projections of the electricity demand in 2004-05

  • underestimated the electricity demand in 2004-05
  • overestimated the amount by which energy efficiency improvements would reduce demand growth.
  • underestimated the fossil fuel generated electricity by 12%
  • overestimated hydro-electricity generation by 18%

Resource reserves

Table 3 compares our known economically recoverable energy resources in 1989 and 2009.  This is not a comparison of ABARE’s projections but is interesting to see how our estimated energy resources have changed over that 20 year period.

Table 3: Known, economically recoverable energy resources in 1989 and 2009 (PJ).

Points to note:

  • ABARE’s figures for known mineral and energy reserves in 1989 were based on reports by the Bureau of Mineral Resources (BMR) and Department of Primary Industries and Energy (DPIE).  Now they come from Geoscience Australia (formerly BMR).  ABARE does not undertake its own estimates of resource reserves, so are not accountable for errors.
  • Over the intervening 20 years, our estimates of known economically recoverable resources have been revised.  Coal has been revised down and oil, natural gas and uranium have been revised up by 39%, 220% and 145% respectively.
  • Known uranium resources have increased by a factor of nearly 2.5 in 20 years and we’ve hardly even looked.  There is little activity in uranium exploration being undertaken.  Most of Australia is locked up against uranium exploration.

CO2 emissions

Table 4 compares ABARE’s 1991 projection with the actual CO2 emissions from Australian energy consumption for the year 2004-05.  ABARE’s 1991 projection of 379 Mt is for the ‘Business as Usual’ (BAU) case.  ABARE also defined what we’d have to do to achieve the government’s target (20% below 1988 levels by 2005) and what would be needed to achieve a ‘half way’ target.

Table 4: ABARE’s 1991 forecast with the actual CO2 emissions in 2004-05 from Australia’s energy consumption.

Points to note:

  • ABARE underestimated by 4% (based on BAU).  This is excellent given the state of knowledge 20 years ago.
  • The government set an extremely low target but made it impossible to achieve by banning nuclear power from being an option.  Nuclear was not even to be considered in analyses by government departments.
  • There was strong pressure by the green lobby groups at the time to set lower targets and for governments to mandate stringent regulations for energy efficiency improvements and renewable energy, but no nuclear.
  • The same groups are still advocating the same failed policies now.
  • Some people never learn!

See Attachment 1, an extract from the 1991 ABARE report.  It is fascinating to be reminded how much we knew, the policies, the CO2 emissions reduction targets, and the realities.  It demonstrates little has changed in 20 years.

Conclusions

ABARE’s projections are good.  I am not aware of any organisation that has made consistently better forecasts of Australia’s energy demand and supply.

I believe the consistently optimistic pressure from green advocacy groups, pushing for projections that align with their beliefs of what governments should do, influenced ABARE to underestimate energy demand, underestimate fossil fuel demand, overestimate renewable energy contribution and over-estimate how much energy efficiency improvement can be achieved over the projection period.

References

[1] ABARE (1991) Projections of Energy Demand and Supply; Australia 1990-91 to 2004-05, ISBN: 0 664 13716 9

[2] ABARE (2006) energy update

http://www.abare.gov.au/publications_html/energy/energy_06/energyupdate_06.pdf

[3] ABARE (2006), Australian energy: national and state projections to 2029-30

http://www.abare.gov.au/publications_html/energy/energy_06/nrg_projections06.pdf

[4] ABARE (2007), Table A Update 07, Table A1 Australian energy supply and disposal, 2004-05 – energy units,

http://www.abare.gov.au/interactive/energy_july07/excel/Table_A_update_07.xls

[5] ABARE (2009), Energy in Australia 2009

http://www.abareconomics.com/publications_html/energy/energy_09/auEnergy09.pdf

[6] ABARE (2010), Energy in Australia 2010

http://www.abare.gov.au/publications_html/energy/energy_10/energyAUS2010.pdf

Attachment 1

(Download the 8-page PDF of the ABARE extract here)
Extract from: ABARE (1991)

Projections of Energy Demand and Supply: 1990-91 to 2004-05, pp 31-37.

“4. Greenhouse gas reduction: an illustrative scenario”

Here I attach a chapter “Greenhouse gas reductions: an illustrative scenario” extracted from the 1991 ABARE report.  It makes fascinating reading.  It shows:

1.  how much we knew back then;

2.  how little has changed;

3.  we knew the targets were impossible given the policies being advocated;

4.  we knew that renewable energy and energy efficiency could not make significant improvement over and above what was already included in the Business as Usual (BAU) projections;

5.  we knew then that if we wanted to really cut GHG emissions we had to go nuclear.

But politics dictated nuclear could not be on the agenda.  The reason was Labor needed the Green vote to hold onto power.

Many conclude the Greens have been the cause of the delay all along!!

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