The population of Australia has been forecast to grow to 36 million by 2050. That’s another 15 million people using iPods, air conditioners and flat-screen TVs.

In line with that, the demand for power is set to skyrocket. Small wonder finding sources of clean energy has become the new Holy Grail. Australia’s Climate Institute estimates there are already AU$31 billion worth of projects underway.

A number of factors are propelling investment. Climate change is one of the drivers, of course. There is a growing and compelling case which says that future energy needs should not be solely met by the coal-fired power generators which currently provide most of Australia’s electricity.

Australia has set about developing technologies to reduce carbon emissions, including working closely with the Chinese in areas such as post-combustion capture (PCC) of carbon dioxide (CO2) from coal -fired power stations. The PCC process strips CO2 from the flue gases of emissions-intensive industrial plants such as power stations and steel and cement plants and prepares it for long-term geological storage. The CSIRO, Australia’s leading scientific research organisation, has partnered with the Huaneng Group – which generates 10 to establish a pilot plant at a coal-fired power station in Beijing.

Project leader Dr Paul Feron says the collaboration evolved from discussions between the leaders of both countries at the APEC meeting in Sydney in 2007. “Emissions in China are enormous, and getting China familiar and comfortable with this technology is an important contribution towards future emission reductions from coal-fired power stations,” Feron says.

The next level of collaboration will involve the construction of a second pilot plant, which will be transportable so it can be moved around China and tested at different power stations. The focus will be on making the technology more efficient. “The way it currently works, if you capture 90 percent of the CO2, the efficiency of the plant will go down by about a quarter,” Feron says. “That makes it difficult for natural resource-constrained countries like China to adopt this technology.”

Feron says he was impressed by the relative ease with which Australia was able to collaborate with China. “I have been very lucky to be involved, because if you want to make a difference with this technology then you really need to get involved in China, and get the Chinese involved in your activities, and to be able to achieve that gives great satisfaction.”

William Ehmcke, from Connection Research, a market research consultancy specialising in the analysis of sustainability issues, says the development of alternative energy projects is a massive business opportunity. He believes the value of future business in clean, green power is as high as AU$900 billion over twenty years. “In construction we don’t put nails in any more, we put screws in with electric screwdrivers, so we have to charge up those screwdrivers,” Ehmcke says. “If you look through the environment – from the consumer environment to the industrial environment – there is increasing use of energy at different layers.”

As a result, companies that specialise in renewable power have a growing importance in the Australian economy. Australia has already committed to generating 20 percent of its energy from alternative energy sources by 2020, with wind and solar technologies likely to be the big winners.

According to Australian National University Adjunct Professor Hugh Saddler, one of Australia’s leading experts in energy policy, Australia is in a better position than almost any other developed nation to meet its energy needs from sustainable resources. “We just have an abundance of good resources compared to most other developed countries,” he says. “We don’t have the challenges that most other countries have.”

Natural gas is a part of the efficiency solution, and a new coal-seam gas industry has emerged on Australia’s east coast which also has the potential to develop into an export industry. A combined-cycle gas power station sends out less than half the emissions of a coal-fired power station. Australia is also pursuing geothermal energy – known as hot rocks – which produces energy by pumping water into hot spots several kilometres underground, where the natural warmth created by the decay of uranium, thorium and potassium isotopes heats the water. It is then pumped back to the surface, where the resulting steam is used to create electricity.

Central Australia has vast, deep-seated granite systems with high temperatures at depth. Saddler believes geothermal energy has significant potential. “Australia has a very large and promising resource in hot rock and there are a lot of companies exploring for this, particularly in South Australia,” he says.

According to Ehmcke, small, widely distributed alternative energy projects could be more efficient than the large-scale generation currently used. “Coal-fired power stations and the structure of the national grid – with a number of very large industrial-grade generation facilities attached to it – could be more efficient,” he says.
“Therefore we are looking at a lot more small, distributed and renewable forms of energy creation.”

Saddler points out that renewable energy has a financial advantage over other energy technologies. “One of the attractive things about renewable energy resources is that each individual installation is small – they are a lot more modular – so you can put much smaller increments of capacity into the system, which makes more sense financially,” he says.

Motor vehicles produce significant carbon emissions and Australian companies are pursuing the development of the electric car. One of the global innovators in this space is Better Place, a Silicon Valley-based company from California with research and development in Israel. Better Place is committed to providing the recharging infrastructure to make the electric vehicle industry sustainable. It has an operation in Australia, where it is setting up a charging network for electric vehicles. Starting in the Australian Capital Territory (where the national capital Canberra is located), Better Place plans to be operational by 2012.

The Australian investment community will play an increasingly large role in driving alternative energy solutions. Australia’s leading shareholder engagement and investor relations firm, Radar, says its research has found that investors are looking for companies who are reducing their carbon emissions. Divisional director of investor relations, David Greer, says that institutional investors are becoming interested in whether companies are measuring their emissions and, if so, what their emissions are. He expects that in the future a company’s level of emissions will be reported periodically in conjunction with earnings releases. Such a move would certainly focus the minds of Australia’s business leaders.