Sustainable energy sector development using systems thinking and system dynamics analysis

Sustainable energy sector development using systems thinking and system dynamics analysis

The energy sector is a dynamically-complex system, which comprises various interacting components and involves a diverse array of stakeholders. The development of the sector in a sustainable manner requires a comprehensive understanding of its components and their interactions. Previous efforts to improve energy systems mainly use silo approaches that focus on a particular system’s components and neglect their interconnected nature. As a result, our ability to understand the system and/or mitigate undesirable outcomes is limited. We have adopted a systems-thinking approach to construct a conceptual model of the Australian energy sector as a case study. The model visualises energy systems as a whole and identifies feedback mechanisms likely to influence the behaviour of the sector. The conceptual model can serve as a common language for achieving a better understanding of the sector and alignment of stakeholder’s view. It can also serve as a solid foundation to identify key leverage points for systematic intervention strategies towards the development of a sustainable energy sector. At this stage, systems thinking represents the qualitative tool.

To provide a complete analysis and test the feedback loops, empirical analysis and simulation modelling is required which represents the quantitative modelling that enables an in-depth investigation of the system dynamics of the energy sector. Thus, we have adopted a system dynamics approach to construct an integrated model for analysing the behaviour of the energy sector. Although the Australian energy sector is used as a case study, the model can be used in any country or the world as a whole and for any energy resource. Research findings indicate that there are significant risks in setting policies associated with energy security and environmental interventions in Australia. This is especially so in the case of oil and gas components, and the resulting CO2 emissions of energy use. The current trajectory of the Australian energy sector is unsustainable and the growth is not being controlled. Limits to growth are not far due to excessive fossil fuel extraction, high emissions, and high energy dependency. With the current growth, Australia’s global CO2 emissions footprint will increase to unprecedented levels reaching 12% by 2030 (9.5% for exports and 2.5% for domestic). Oil dependency will account for 43% and 47% of total consumption by 2030 and 2050. By 2032, coal will be the only fossil fuel resource available in Australia. Expansion of investment in coal and gas production is a large risk. We have found that improving only 1% of energy efficiency would result in 101k/331k GWh energy productivity (5% and 14% of total energy consumption) and reduce domestic CO2 emissions by 15.3/50 Mt CO2-e (4% and 10% of total domestic emissions) by 2030/2050. Switching to renewable energy for transportation and therefore saving 5% per year of current oil consumption may decrease dependency on oil to half by 2030 and to zero by 2050, and reduction in domestic CO2 emissions by 74.1/198 Mt CO2-e (18% and 41% of total domestic emissions). Switching to renewable electricity by 3% annually may lead to 60.8/129 Mt CO2-e reduction in domestic CO2 emissions (15% and 27% of total domestic emissions) by 2030/2050. Electrification of other sectors, mainly the manufacturing sector, using renewable energy by 4% annually may lead to 43.3/106 Mt CO2-e reduction in domestic CO2 emissions (11% and 22% of total domestic emissions) by 2030/2050. Improving energy efficiency, switching to renewable energy for transportation, switching to renewable electricity, electrification of sectors that do not run on electricity by renewable energy could achieve zero domestic CO2 emissions by 2050 while energy consumption stays almost stable (0.5%/year). This process may be accelerated by improving energy efficiency by more than 1%.