How electricity can reduce emissions and save money

In Energy Matters weekly podcast, Road to Zero, we have asked insiders in the renewable energy industry about the trends to watch in 2022. Time and time again, the concept of electrification has emerged as a major trend – so what does it mean?

“Electrify everything” is the cry of a growing number of energy experts who say that electrifying as many aspects of our lives as possible is the cheapest and fastest way to reduce emissions. For Australian home and business owners, going for electricity can also mean huge savings.

In this article, we will discuss what electrification entails, what benefits it has, potential obstacles to its success, and some notable alternatives.

What is electrification?

While much of the discussion about climate solutions has revolved around the supply side – that is, generating more renewable energy – electrification focuses on the demand side, or reducing our need for fossil fuels.

Electrification means that the large amount of technology that uses fossil fuels (coal, oil and natural gas) is replaced by technology that uses electricity as an energy source.

In households, this would mean replacing petrol cars with electric vehicles, gas and wood-fired heaters with heat pumps, gas dryers with electric dryers, gas stoves with induction hobs and so on.

For the transport, commercial and industrial sectors, this would involve the electrification of light, medium and heavy vehicles, commercial buildings (space heating, water heating and cooking) and industrial processes (heating and raw materials).

How does electrification reduce emissions?

Upgrading the demand side’s machines and appliances to electrical alternatives at the next retirement offers great potential benefits for our environment. However, the environmental benefits of electrification vary depending on the resources used to generate electricity.

Significant emission reductions through electrification are only possible through decarbonisation of the electricity grid and a broad adoption of distributed renewable energy production – such as solar cells on the roof and battery storage.

In Australia, where coal still dominates the electricity grid, electricity production is still our biggest source of emissions. Fortunately, the share of renewable energy is steadily increasing, and by 2030, 69% of the electricity market is estimated to be renewable. Technology that uses electricity as a fuel source consequently results in lower carbon dioxide emissions on average than those that use fossil fuels directly.

Experts say that the electrification of our public and private transport sector will result in significant emission reductions regardless of how electricity is generated – and this even when emissions from battery production are taken into account. The reason for this is simple – electric cars are much more efficient than petrol and diesel cars.

According to Stephen Corby from Cars Guide, a gasoline or diesel vehicle with an internal combustion engine with good efficiency will extract about 40 percent of the available energy from fuel, while the other 60 percent is lost due to heat and friction. However, an electric car is about 90 percent efficient when it converts coal-fired energy into power.

Another good news is that more than 30 per cent of Australian households now have solar cells on their roofs – and that number is growing continuously. For these households, the transition to fully electric appliances and, over time, electric vehicles means that they will achieve an exceptionally small carbon footprint.

If you combine a completely electric home with solar energy on the roof AND a home battery, these homes are essentially carbon dioxide-free homes. This means that over a year, the home’s energy use from carbon dioxide sources will be equal to or less than the amount of renewable energy it produces.

A completely electric carbon dioxide free home in Victoria

As you can see, we do not need a completely renewable network to start reaping the environmental benefits of electrification – but as we continue to phase out our dirtiest power plants and replace them with cleaner alternatives, electrification will become an increasingly effective strategy to reduce emissions.

What are some other benefits of electrification?

Not only would electrification help us reach our emissions targets – switching to efficient electrical alternatives for our cars and appliances could save thousands of dollars each year in operating costs.

This applies regardless of whether you have installed solar energy or not – even if households with solar energy undoubtedly achieve the greatest savings.

Savings in the home

A case study conducted by Sustainability Victoria last year analyzed annual performance data for gas and electrical appliances without the associated benefits of solar energy. The study showed that efficient electrical appliances were still generally cheaper to use than efficient gas appliances, saving hundreds in energy costs annually.

What about solar energy households?

In 2021, Environment Victoria released a report revealing that an efficient solar-powered home in Geelong saved $ 1,901 per year, reducing bills by 75% from a single dual-fuel home (electric and gas). Without solar energy, a fully electric home turned out to save $ 905 annually compared to a basic dual fuel home.

If you already have solar energy but still use gas in your home, upgrading your appliances to energy-efficient electricity options can more than double your savings on your electricity bill. In the same study by Environment Victoria, solar-powered Geelong households lowered their annual energy bill on average from $ 1,432 to $ 618 by switching from dual-fuel to all-electric.

If you are building, the perfect scenario for low energy costs is to use solar energy from the beginning. Replacing a mixed fuel house with all-electric can be costly but can also be done gradually, replacing appliances as they age or as you renovate.

Savings on the road

Switching to an electric car saves Australians an average of about $ 1,600 in fuel costs annually – which is about 70% cheaper compared to a car with a petrol or diesel-powered internal combustion engine, according to the Electric Vehicle Council. If you charge your car with solar-generated electricity, these savings will be even greater.

In addition to fuel savings, electric cars are cheaper to maintain than petrol or diesel cars. They have much fewer moving parts (no engine, no transmission, no exhaust system) so there are fewer opportunities for something to go wrong.

Barriers to electrification

So now we know the benefits of electrification, but what is holding us back from electrifying everything?

Experts agree that most barriers are economic and political rather than technical, although there are some technical barriers to heavy transport and industrial sectors.

For households, we have already talked about managing the advance costs for the transition to fully electrical appliances, but for families with lower incomes, this transition may be out of reach without government loans and subsidies.

The advance cost for electric cars compared to petrol and diesel cars is currently higher, but price parity is expected in the coming decade as battery technology continues to improve and mass production drives down costs. Meanwhile, government subsidies (such as WA’s $ 3,500 discount on electric cars) can help make the advance costs of electric cars more affordable.

When it comes to infrastructure, we need to upgrade the grid and integrate large-scale energy storage so that it can handle all this extra electricity need. We also need more charging stations for electric cars to combat “range anxiety”

Although there is a considerable cost to the task, Griffith and The Australia Institute’s discussion paper called “Castles and Cars” argue that government investment to help households make the transition to a fully electric lifestyle more than pays for itself.

“As this electrification continues past the breaking point, we are predicting gigantic economic savings for the Australian economy. This should be understood as an investment that pays huge dividends to our households and the country as a whole, not as an expense that ‘costs too much.’

In some cases, outdated rules stand in the way of progress. In Victoria, for example, the Victorian Planning Code (VPP) states that “where available” residential areas must be linked to “satisfaction of the relevant gas supply agency” .22 (Clause 56.09-2) Failure to comply with these rules may affect a developer’s ability to procure building permits.

Alternatives to electrification: biogas, hydrogen & carbon capture and storage

When we talk about electrification as a way to reduce emissions, there are of course other paths to carbon dioxide emissions that justify discussion.

Green hydrogen

Of all the technologies discussed, green hydrogen is possibly the most attention and its development in Australia has been backed by industry and government. Green hydrogen is hydrogen fuel that is created with renewable energy instead of fossil fuels. On paper, it sounds good – it has the potential to provide clean power for manufacturing, transportation and more – and its only by-product is water.

However, the technology has its drawbacks. One downside is unavoidable efficiency losses and then of course there is the cost. Although there are government strategies aimed at reducing costs through economies of scale and innovations in the efficiency of the electrolyser, hydrogen is currently very expensive to produce. Compared with electrification for the transport sector, the requirement for infrastructure to create a network for hydrogen refueling also lags far behind.

However, most experts agree that green hydrogen has its place alongside electrification in a future of clean energy, filling the gaps in areas that are particularly energy-intensive or difficult to electrify such as steelmaking, long-distance transport, as a seaborne export product and in chemical raw material applications such as ammonia / fertilizer production.


The production of biogas – also known as “green gas” or biomethane – is another way of decarbonizing the gas network. Green gas is produced by taking methane (the main component of natural gas) and “scrubbing” it on carbon dioxide. The methane is then injected into the gas network, where it can be used instead of natural gas.

According to The Climate Council (CC), the shortcomings of biogas include that it is not enough, that it is not enough to reach net zero and that it is used as a smokescreen for the gas industry to delay real measures against climate change.

CC acknowledged that there are certain tasks that are easier to perform with biogas than electrification, namely its use as a chemical raw material and in the refining of certain metals.

Carbon dioxide capture and storage (CCS)

Carbon dioxide capture and storage (CCS) involves capturing, transporting and storing greenhouse gas emissions from fossil fuel power plants, energy-intensive industry and gas fields by injecting the captured greenhouse gases back into the ground. CC and many environmental groups are scathing in their assessment of the technology, which they claim is untested, expensive and “an attempt to extend the life of polluting fossil fuels in our energy system”.

The points

Although there are some obstacles to contend with, data show that the electrification of * almost * everything is the cheapest and fastest way to reduce emissions.

A transition to electrical engineering would transfer most emissions to the power sector. This enables decision makers to focus on reducing carbon dioxide emissions in our electricity grid to reduce emissions, rather than focusing on countless avenues for each sector.

However, there is a role for other technologies such as biogas and green hydrogen in our energy future. These technologies can complement electrification to provide the best possible results for emission reductions.

Electrification also gives households and companies an opportunity to reduce their energy bills right now, especially in combination with solar and batteries on the roof.

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