Modelling done for the Climate Institute indicates that without big policy changes Australia’s path to zero emissions from the electricity sector by 2050 would mean huge disruption after 2030.
The report, “A Switch in Time: Enabling the electricity sector’s transition to net zero emissions”, warns that a weak policy now means big adjustments later, and calls for a range of initiatives including a program to progressively shut down power stations.
Electricity emissions are about 30% of Australia’s total emissions. They have risen by 5.5% in the past two years due to some increasing demand and the scrapping of Labor’s carbon price.
Climate Institute CEO John Connor said the modelling found that a modest carbon price rising to $40 per tonne by 2030 would result in emissions reductions similar to the Coalition government’s 2030 target of 26-28% below 2005 levels.
But “this would result in almost no replacement of existing high-carbon power stations with clean energy; a 60% collapse in projected clean energy growth from 2020 followed by stagnation through most of the 2020s, and 98% of the sector’s 30 year carbon budget used up in the first 10 years”.
This meant that the action on climate after 2030 would have to be more extreme, Connor said.
“More than 80% of the coal-fired generation fleet would have to be closed in less than five years, and new clean energy capacity would have to jump four fold and keep rising. The impact of such a disruptive shift would be felt across the economy.”
The government currently has a “direct action” policy, while Labor is crafting a new version of emissions trading and related policies with the details still to be announced. The government plans a 2017 review of the policies needed for its 2030 and longer term targets.
The Climate Institute calls for the systematic retiring of existing high carbon generators on a timeline that would have them all stopped by 2035. The policy should facilitate replacing them with zero or near zero emission energy, it says.
There should be a well funded structural adjustment package for communities affected by the closures; energy efficient policies to minimise costs to energy users and further reduce emissions; and a carbon pricing mechanism capable of scaling up over time that provides a signal to investors.
“There is a low probability that a price of sufficient strength and reliability will emerge quickly”, so the other measures proposed would be needed to deliver a timely transition, the report says.
The report estimates the additional cost to build and operate the new power infrastructure would be about $50 billion over the 30 years 2020-2050. But it argues the disruptive costs to jobs, communities and energy security of other approaches would be more than this.
The preferred approach would represent an increase in retail energy prices of 3% a year although bills would not go up by this much if energy efficiency was improved.
The report says that while both major political parties “have acknowledged the need to achieve net zero emissions, existing climate and energy policies provide no prospect of reaching this goal”.
The research was done by leading electricity market modeller Jacobs to test the ability of policy options under discussion to reduce electricity emissions in line with the Paris commitment to limit global warming to 1.5-2°C.
The Conversation has asked 20 academics to examine the big ideas facing Australia for the 2016 federal election and beyond. The series examines, among other things, the state of democracy, health, education, environment, equality, freedom of speech, federation and economic reform.
The past two years have been the hottest on record globally, yet Australian climate policy is frozen in the past. Might this election campaign see real competition about how to tackle global warming? So far, the signs aren’t good.
Questions about Malcolm Turnbull’s leadership on climate first arose last year. In opposition, he was an articulate and forceful counterpoint to Tony Abbott’s climate policies.
But, as prime minister, Turnbull then barely budged from the Abbott narrative until his belated rescue of the Clean Energy Finance Corporation and Australian Renewable Energy Agency, which faced the axe until late last month.
Observers puzzle about his motives. What hold do the Coalition’s sceptics have over him? Is he waiting for an electoral mandate, or for next year’s scheduled climate policy review? Or is there simply no deeply felt agenda to be revealed?
Having failed to take the initiative, Turnbull is now on the back foot, trapped between the demands of the Paris Agreement, pressure from Labor and the Greens, and the dragging rump of his own party. Here are six suggestions that, together, would make Australian climate policy relevant to the challenges this nation faces.
1. An end to wedge politics
Those countries with successful climate policies and strong track records on cutting emissions – such as Germany – also have deeply ingrained cross-party support on this issue. By contrast, Abbott used climate change as an ideological wedge, creating policy turbulence, public dismay and investor confusion.
When he took the top job, Turnbull promised to foster a more civilised political culture. Nowhere is this more needed than in talking about climate policy. It would be a game-changing departure for Turnbull to use his authority as prime minister to take the heat out of Australian climate politics by calling for only respectful and constructive debate on this issue, with any bitter divisions to be left to other parts of the electoral agenda.
2. A climate target with teeth
The Paris Agreement requires all countries to ratchet up their climate targets and mitigation efforts every five years. It emphasises the gap between countries’ current pledges and the emissions reductions needed to hold global warming well below 2℃ and close to 1.5℃, as the agreement demands. It calls on wealthy developed countries to help vulnerable states resist the intensifying impacts of global warming.
With currently implemented policy measures, Australia’s emissions are set to increase substantially to more than 27% above 2005 levels by 2030, which is equivalent to an increase of around 61% above 1990 levels.
At the same time, Australia’s 2020 renewable energy target (RET) must be restored and enhanced. Its downgrading from 41,000 GWh to 33,000 GWh spooked investors and made rapid emissions reductions much harder to deliver.
3. End the carbon price phobia
The lead weight of Abbott’s carbon tax scare campaign must be cut loose. This is a tough ask for the Coalition, but an unavoidable one. Effective rapid mitigation, adaptation and our contributions to global climate finance will all require greater public funding.
While it existed, Australia’s modest carbon price raised A$6.6 billion during 2012-13. It cut emissions effectively and had no significant negative economic impact. Its proven performance makes it a palatable political sell.
Carbon pricing could be part of a national emissions trading scheme. That’s a policy that Turnbull supported in 2009 and which will be deployed in more than 40 countries, including China, by 2020. Or emissions could be taxed directly to fund an expanded version of the Direct Action Plan, redesigned to require the participation of major emitters.
4. A federal approach to cutting emissions
One of the clear failures of the Australian emissions trading scheme – even before it failed to appear – was the way it encouraged the states and territories to abdicate their mitigation responsibilities to Canberra. A new approach is required to mobilise effort in a federal system in which major emissions sources are geographically dispersed, and the impacts of shutting mines and power plants are felt locally.
Substantial Commonwealth funding to the states should be a prominent part of a national climate policy. But its delivery should be contingent on them meeting tough sub-national emissions targets, through measures such as ending land clearing, reafforestation, enhancing carbon farming and retiring dirty power stations. It would create an incentive for state governments to embrace aggressive climate policies and reward the best-performing states, while fiscal penalties could be applied if targets were not met.
5. Unite climate and energy policies
Australia’s climate and energy policies have been developed in isolation and are largely estranged from one another. National and state governments have pursued fossil energy as if climate change didn’t exist – as the recent approval of the Carmichael mine in Queensland attests. Yet production of coal and gas exports is a growing source of domestic (and embodied) emissions. Australia’s climate policy has also ignored the huge emissions from our exported fossil fuels.
The two policy domains must be harmonised – with mitigation as the overarching goal. A moratorium on new coal and gas export projects, and a levy on existing ones, should be announced immediately, with a planned national approach to withdrawing from fossil fuel extraction scheduled to avoid the economic chaos associated with the collapse of investment in “unburnable” carbon.
6. Play up the positives
So far, this discussion has been about political pain. The Paris climate conference showed that a new positive narrative can (and must) predominate. The main message coming from Paris was that the Age of Carbon is over: the transition to an economically attractive post-carbon future has begun.
Cutting emissions and boosting Australia’s climate resilience will deliver many direct and indirect benefits. Europe’s experience shows how the switch to renewable energy creates new and enduring sources of employment, while tackling global warming has significant health co-benefits.
Ironically enough, the Paris climate summit showed that the issue is less and less the preserve of national governments. Climate policy is being shaped and driven by a wide range of actors – including investors in the banking, insurance, construction and transport industries, as well as sub-national and local governments.
Inclusive, creative and positive discussions about climate change have been all too rare in Australia. A national climate summit, involving federal, state, territory and local governments, key industry sectors and civil society representatives, is a necessary part of the preparation for Australia’s 2017 climate policy review.
This summit would help deepen public understanding of the social and economic positives of a post-carbon Australian economy. As the culmination of structured national discussions and accompanied by concrete promises of funded outcomes, it would further turn the tide of Australian climate politics from cynical opposition to rapid action.