Australia will need to stay at the cutting edge of technology to take advantage of the trend toward cleaner energy, a senior RBA official says.
The rapid growth in energy demand of the past couple of decades is unlikely to be sustained, RBA head of economic analysis Alexandra Heath said in a speech on Tuesday.
The growth has been partly driven by rapid industrialisation and urbanisation in emerging economies, notably China.
"However, economic growth is expected to slow as these economies mature," Dr Hearth said.
Growth in China has already begun to shift toward the less energy-intensive services sector, which produces half China's gross domestic product but uses only 10 per cent of electricity production.
At the same time, energy use is becoming more efficient.
"Increasingly, government policies designed to address environmental concerns have also played a role, particularly as awareness of the impact of climate change has grown," Dr Heath said.
Despite this, global demand for energy will continue to rise for the foreseeable future, although policy changes will skew demand toward lower-emission fuels like natural gas, as well as renewable energy, Dr Heath said.
Demand from China and India will support demand for thermal coal over the medium term.
"However, demand for coal is not likely to increase significantly from current levels," Dr Heath said.
Rising supply and slowing demand growth have caused the price of Australia's energy commodities to soften.
"This has posed challenges for less efficient Australian producers, and raises questions about the potential for Australia to supply the future increase in demand for energy," she said.
Use of renewable energy sources including hydro, wind and solar is expected to grow rapidly as technology drives prices down and government policies support their widespread adoption to meet emission targets, Dr Heath said.
"Australia has an abundance of renewable energy sources, and there is significant potential for future development in these technologies," she said.
"It is important that Australian companies remain at the forefront of developing expertise in these fields, not just for the environmental benefits that they will bring, but to be able to export these technologies to other countries."
