I can’t see the logic in Federal Resources Minister Martin Ferguson putting such a huge weight on coal with carbon capture and storage (CCS) as a source of energy (AFR, 22 October, subscription only). He talks with pride about the government’s $2.8b investment in CCS and says that alternative investments must stand on their own feet in terms of cost effectiveness but then makes an unambiguous commitment to coal without considering any role for nuclear power than as a further source of exports. I assume he is driven by Australia’s huge coal exports. These were worth 24.7b in 2007/08 (here). In an economy worth $1.1 trillion that is about 2.2% of GDP.
Consider the following hypothetical. Cutting all carbon emissions from the electricity sector – by for example using nuclear power – would achieve carbon emission savings of 192 MtCO2e. This would be about enough to realize the 15% reduction over emissions in 2000 that the Rudd Government has set as an intermediate target should the rest of the world agree to a long-term 450 ppm GGE target. This requires a 194 MtCO2e or 29% below bau in 10 years.
It is hypothetical because Australia cannot possibly build the required number of nuclear power stations in that time but it does suggest the scope of nuclear power in dramatically reducing our longer-term carbon emissions. The savings could be much larger than this if a significant fraction of the car fleet was electrified and electricity substituted more for directly-consumed fuels.
Background data
Tracking to Kyoto and 2020 released by the Department of Climate Change provides information on recent past carbon emission experience and the projected future to 2020.
On average from 2008-2012 Australia’s greenhouse emissions will be around 583 MtCO2e. Of these 72% originate in the energy sector with most of these (293 MtCO2e or 50% of total) coming from the the stationary energy (mainly electricity) sector. This sector includes fuels directly combusted in industry and in the household sector.
Without the Carbon Pollution Reduction Scheme (CPRS) emissions by 2020 would be 664 MtCO2e or 120% of 2020 levels. Emissions would grow in every sector except for land use and forestry. Emissions in the stationary energy sector would grow by 24% to 295 MtCO2e over year 2000 levels without a CPRS.
Australia’s current Kyoto target is to hit 108% of 1990 emissions levels by 2012. This should be achieved without purchasing international carbon credits. The reason for hitting this target lies almost entirely in the land use sector where 2008-12 emissions being only 22% of 2000 levels. Emissions have continued to grow strongly in the energy and industrial sectors and slightly in agriculture.
The CPRS White Paper targets between 5-15% reductions below 2000 levels by 2020 with a 25% reduction by 2020 if a comprehensive international agreement is signed agreeing to 450 ppm Co2e or lower. The CPRS will be phased in from July 2011 with emission permits costing $10 per tonne in 2011/12 and with full marketing of quotas from July 2012.
A national emissions trajectory will set caps on emissions from 2012/13 with the starting point being 107% of 2000 emissions in 2012/13. Actual emissions could be higher or lower than this with banking or international trade in permits.
Consumption in the stationary energy sector consists mainly of electricity consumption but the direct consumption of fuels is growing very strongly. Electricity consumption over the period 2000 to 2020 will grow 9% to 192 MtCO2e but the directly consumed fuels growth is 24% to 119 MtCO2e. The slow electricity sector growth reflects energy efficiency measures, slower economic growth after 2009 and expanded renewable energy targets.
- A 5% reduction over 2000 levels by 2020 would require emissions cuts of 138 MtCO2e or 21% below emissions without a CPRS (with business as usual, bau) in 10 years.
- A 15% reduction would require emission cuts of 194 MtCO2e or 29% below bau in 10 years.
- A 25% reduction would require emission cuts of 249 MtCO2e or 38% below bau in 10 years.
If the agricultural sector is excluded from the CPRS – it will be reviewed in 2015 – and its emissions grow to be 86 MtCO2e by 2020 then these required percentage reductions grow to be 24%, 34% and 43% respectively.
These are very large cuts and, of necessity, they will need to be concentrated in the stationary energy sector and to a much less extent transport.
As the ALP has ruled out nuclear, and CCS is a pipe dream, hc’s electric cars will have to run on his very own La Trobe coal in Vic and ditto for NSW (Hunter Valley), unless they are content to wait for the wind to blow or the sun to shine.
Harry, I’m confused.
The opposition keep on saying that “people won’t like it when their electricity bills rise by 30%”, and that is when people will wake up and become Coalition voters once again.
I remember you posted them a while ago, but what are the price elasticities of demand for energy in Australia? Will a 30% increase in energy prices result in an equivalent increase in bills?
I thought the whole point of price rises was to have people substitute away from using carbon-intensive energy?
The politics of the price rises should be no different than when the GST came into effect. Prices went up and people got income tax cuts and pension rises to compensate.
Of course the fact that electricity bills will rise at all shows what a nonsense it is to compensate the power utilities with cash or free permits for damage to them that will not occur.
If ten per cent of the national fleet were converted to electric vehicles the electricity generation supply would have to double.
And the power would come from…..