Foreword

Summary

Acknowledgments

Introduction

Methodology

The manufacturing sector

The services sector

Agriculture, mining and construction sectors

Conclusions

Appendices

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4 The services sector

Energy consumption in the services sector grew from 159 petajoules in 1989-90 to 249 petajoules in 2005-06 at an average annual rate of 2.8 per cent. Activity in the services sector grew from $287 billion in 1989-90 (at 2005-06 prices) to $500 billion in 2005-06 at an average rate of 3.5 per cent. Without changes to structure and real intensity, the increase in activity alone is estimated to have resulted in energy consumption increasing by 118 petajoules over the analysis period. Structural shifts within the sector from more energy-intensive to less energy-intensive subsectors are estimated to have led to a reduction in energy consumption of 8 petajoules. A reduction in real energy intensity is estimated to have delivered energy savings of approximately 20 petajoules over the period 1989-90 to 2005-06. This is equivalent to a reduction in real energy intensity of 0.8 per cent a year. This chapter discusses trends in activity, structure and real energy intensity in the services sector for the period 1989-90 to 2005-06. The sector is split into seven subsectors: water supply, sewerage and drainage wholesale and retail trade communication services finance, insurance, property and business government administration and defence education, health and community services accommodation, cultural and personal services The definition of these subsectors by ANZSIC code is provided in appendix C. Data sources are presented in appendix D.

Observed trends in energy consumption and activity

Energy consumption in the services sector increased from 159 petajoules in 1989-90 to 249 petajoules in 2005-06 at an average annual rate of 2.8 per cent (figure l). In 2005-06, energy consumption in this sector represented 14 per cent of final energy consumed in Australian industries covered in this report. The wholesale and retail trade subsector accounted for the largest share of the sector’s energy consumption in 2005-06, making up 40 per cent of final energy consumed in the services sector (table 3). Energy use in this subsector grew strongly over the analysis period, from 61 petajoules in 1989-90 to 101 petajoules in 2005-06. According to Pears (2007) this is a reflection of growth in energy-intensive food outlets, and increased use of lighting and airconditioning. Growth in energy consumption in the remaining subsectors was strong, although the government administration and defence and education, health and community services subsectors grew at an average annual rate of less than 2 per cent. Activity in the services sector grew from $287 billion (not shown in table 3) in 1989-90 (at constant 2005-06 prices) to $500 billion in 2005-06 at an average annual rate of 3.5 per cent(table 3). The largest increase in the activity level was in the communication subsector (7 per cent), although it was from a low base of $7 billion in 1989-90 (at 2005-06 prices). This was followed by the growth in the finance, insurance, property and business subsector (4 per cent), the wholesale and retail trade subsector (3.4 per cent) and the education, health and community services and accommodation, cultural and personal services subsectors (both 3.2 per cent). The data also suggest energy consumption in the water supply, sewerage and drainage subsector grew at a significantly higher rate (4.2 per cent a year) than the growth in its activity (0.2 per cent a year)

3 Services sector energy consumption and output   energy consumption output 2005-06 average annual growth rate 1989-90 to 2005-06 2005-06 average annual growth rate 1989-90 to 2005-06   PJ % % $bn % % Water supply, sewerage and drainage 10 4.2 4.2 7 1.4 0.2 Wholesale and retail trade 101 40.4 3.2 100 20 3.4 Communication services 8 3.4 4.4 23 4.7 7.4 Finance, insurance, property and business 31 12.3 4.1 182 36.4 4 Government administration and defence 24 9.7 1.8 38 7.6 2.4 Education, health and community services 45 18.2 1.4 98 19.6 3.2 Accommodation, cultural and    personal services 29 11.8 3.1 52 10.4 3.2 Total services sector 249 100 2.8 500 100 3.5

Factored trends in energy consumption

The change in final energy consumption over the analysis period is decomposed into the activity effect, structural effect and real intensity effect. Trends in each of the factored components and in energy consumption for the period 1989-90 to 2005-06 are shown in figure m. It is clear that increases in the sector’s activity level drove changes in energy consumption, particularly during the period prior to 2001-02. Shifts in the composition of the sector from the late 1990s onward, mostly toward the finance, insurance, property and business subsector, led to energy consumption being slightly lower than it would otherwise have been (structural effect). Note that for almost all of the analysis period increases in energy intensity in the services sector resulted in energy consumption being higher than it would otherwise have been. After 2001-02, consistent savings were made in energy consumption because of a sharp decline in the energy intensity trend. This coincides with the implementation of government policies designed to improve energy efficiency from the late 1990s. These include the minimum energy performance standards for appliances and equipment, energy efficiency standards for new and refurbished buildings, Australian government energy efficiency operations and other energy efficiency measures (DCC 2008). Over the period 1989-90 to 2005-06, consumption of final energy in the services sector increased by 90 petajoules. figure n shows how changes in activity, structure and real intensity affected the change in energy consumption. Based on activity alone, energy consumption would have increased by 118 petajoules, or 28 petajoules more than actual consumption. All subsectors grew in terms of their output and all contributed to the increase in energy consumption. Wholesale and retail trade contributed the greatest share of the increase in consumption because of the increases in activity. The effect of shifts toward less energy-intensive subsectors such as communication services and finance, property, insurance and business resulted in energy consumption being 8 petajoules less than it would otherwise have been. An overall reduction in the energy intensity of the services sector generated net savings of 20 petajoules. More than half of these savings (11 petajoules) were made in the education, health and community services subsector (figure o). The wholesale and retail trade subsector also made significant savings. It should be noted that savings were made in all services subsectors except the water supply, sewerage and drainage subsector. In this subsector, an increase in energy intensity led to an additional energy requirement of 5 petajoules. The factors underpinning this result cannot be identified within the scope of this study and require further investigation.

figure p shows the evolution of actual energy consumption and what energy consumption would have been if energy intensity had remained at the 1989-90 level. In the case of the services sector, energy savings were made after 2001-02. The strong decrease in energy intensity after 2001-02 apparent in figure m was sufficient to overcome losses that had occurred throughout the 1990s. Without the decrease in energy intensity, energy consumption would have reached 277 petajoules (rather than 249 petajoules) in 2005-06. By 2005-06, the net effect of changes in energy intensity since 1989-90 was a reduction in energy consumption of 20 petajoules. This is equivalent to a reduction in real energy intensity of 0.8 per cent a year over the study period.