The Hidden Cost of Compressed Air Leaks in Australian Industry (2026)

1Key findings (quotable)

• Compressed air is roughly 16% of the electricity used at a typical Australian manufacturing site (A2EP).
• Across a compressed air system, 80 to 90% of the energy put in is ultimately lost as heat, friction and leakage (A2EP).
• The US DOE reports that leaks can sometimes waste 20 to 30% of a compressor’s output; this report applies that band as its modelling assumption for everyday, unaudited plants.
• Put those together and compressed air leaks waste on the order of 4% of all the electricity an Australian manufacturing plant buys, money spent compressing air that never does a useful thing (16% x about 25%). That is an aggregate average across plants; an individual site varies with its motor-energy mix and maintenance state.
• Scaled to the national manufacturing electricity bill, that waste is on the order of $220 to $330 million a year across Australian factories on a deliberately conservative basis, and the equivalent of roughly 740 to 1,100 GWh of electricity thrown away annually (about 0.5 to 0.7 million tonnes of CO2-e at the national grid factor).
• A single 3 mm leak at 7 bar leaks about 7.3 litres of free air per second and costs roughly $3,500 to $6,900 a year in wasted electricity. Most plants have dozens.
• Almost none of it shows up as a line item. It hides inside the power bill, which is why it survives for the life of the plant.

3The per-leak economics

A leak is just an orifice bleeding compressed air to atmosphere. Its cost is calculable from the orifice size and line pressure using choked-orifice (sonic) flow per ISO 6358, the same method behind the CAS leak-cost calculator.

• A 3 mm leak at 7 bar(g) discharges about 7.3 L/s of free air.
• Supplying that continuously needs roughly the output of a small dedicated compressor running around the clock.
• At a commercial and industrial tariff benchmark of $0.30/kWh (2025-26, indicative; actual rates vary by state, retailer and contract), that single leak costs about $3,500 to $6,900 a year depending on operating hours.

Because flow through a leak scales with the orifice area, cost scales with the square of the leak diameter. A 6 mm leak costs roughly four times a 3 mm one. Modelled across common leak sizes (anchored to the validated 3 mm figure, scaled by orifice area, $0.30/kWh, 7 bar; the range reflects 4,000 to 8,000 operating hours a year):

A plant that has never run a leak survey typically has dozens of leaks across this range, which is how the system-level 20 to 30% waste figure accumulates. The model is reproducible: free-air flow is choked-orifice (sonic) flow per ISO 6358, and cost is flow x operating hours x specific power (about 0.11 kWh per m³ of free air) x tariff.

5The national picture (original modelled estimate)

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The defensible national finding does not depend on a contested total. Leaks waste roughly 4% of every kilowatt-hour Australian manufacturing buys (16% compressed-air share x about 25% leak fraction). That ratio holds whatever the absolute electricity figure turns out to be.

Put a confirmed primary figure behind it and a dollar total follows. Australian manufacturing (ANZSIC Division C) consumed 194.2 PJ of electricity in 2023-24, which is 53,950 GWh (DCCEEW, Australian Energy Statistics 2025, Table F). About 57% of that, 111 PJ, is the basic non-ferrous metals subdivision, dominated by aluminium smelting, where electricity goes into electrolysis rather than into the kind of motor and compressed-air loads the 16% rule of thumb describes. So the conservative national model excludes smelting and works from the remaining 82.9 PJ (about 23,000 GWh) of manufacturing electricity:

So on the conservative basis, Australian factories spend on the order of $220 to $330 million a year compressing air that leaks straight back out, wasting 740 to 1,100 GWh of electricity. At the national grid Scope 2 factor of 0.62 kg CO2-e per kWh (DCCEEW National Greenhouse Accounts Factors 2025), that is roughly 0.5 to 0.7 million tonnes of CO2-e a year (about 460,000 to 680,000 tonnes), emissions with zero production attached to them.

The $0.30/kWh benchmark is a blended, indicative commercial and industrial rate; very large sites on negotiated contracts pay less per kilowatt-hour. The finding is robust to that assumption: even at a heavy-industry tariff of $0.18/kWh, the central conservative estimate is still about $166 million a year of pure waste. What the $0.30/kWh benchmark means for a single machine’s annual electricity bill is set out in the air compressor running costs guide.

Two independent builds point the same way. A bottom-up cross-check, multiplying the ABS count of operating manufacturing businesses by employment size (15,478 sites of 5 to 19 employees, 6,616 of 20 to 199, and 538 of 200-plus, at 30 June 2025) by the per-plant waste figures above, lands at $114 to $171 million a year while deliberately ignoring the 68,031 micro and non-employing businesses that have little or no compressed-air plant. That the narrower bottom-up build sits just under the top-down range is the expected direction and supports the headline.

Where the waste sits, by sector

The same conservative model, distributed across manufacturing subdivisions (16% share x 25% leak fraction x $0.30/kWh; aluminium smelting excluded):

Food and beverage alone, the sector with the densest compressed-air use, carries close to $80 million a year of leak waste on this model. (Including aluminium smelting in the base, which the share assumption does not really fit, would roughly double the national total to about $650 million; the report leads with the conservative figure and flags the upper bound rather than the reverse.)

7Methodology and sources

Figures are reproducible from the stated inputs, and the national model is published as a runnable script (leak_cost_distribution_model.py). Leak flow is choked-orifice (sonic) flow per ISO 6358 at the stated orifice diameter and gauge pressure. Energy cost uses the $0.30/kWh 2025-26 commercial and industrial benchmark (indicative and blended; rates vary, large industrial sites on negotiated contracts pay less, and the national section states the $0.18/kWh sensitivity). Compressed-air share of site electricity (about 16%) and system energy loss (80 to 90%) are from the Australian Alliance for Energy Productivity (A2EP). The 20 to 30% leak fraction is modelled on the US DOE Sourcebook statement that leaks can sometimes waste 20 to 30% of a compressor’s output; CAS applies it as the unaudited-plant assumption. National manufacturing electricity is the DCCEEW Australian Energy Statistics 2025 Table F figure for ANZSIC Division C, 2023-24; the business count and size distribution are from the ABS Counts of Australian Businesses, July 2021 to June 2025, at 30 June 2025; the grid emission factor is the DCCEEW National Greenhouse Accounts Factors 2025. The national model is deliberately conservative: it excludes aluminium smelting from the electricity base, and the bottom-up cross-check excludes all businesses below 5 employees.

9About Compressed Air Solutions

Compressed Air Solutions is Australia’s independent reference for specifying, sourcing and maintaining industrial compressed air. It carries no stock, installs no equipment and runs no service contracts. The analysis here is vendor-neutral and built on Australian standards. Browse the full CAS resources library or start at compressedairsolutions.com.au.