Labor’s policy can smooth the energy transition, but much more will be needed to tackle emissions


Frank Jotzo, Crawford School of Public Policy, Australian National University

The Labor party’s energy policy platform, released last week, is politically clever and would likely be effective. It includes plans to underwrite renewable energy and storage, and other elements that would help the energy transition along. Its approach to the transition away from coal-fired power is likely to need more work, and it will need to be accompanied by good policy in other sectors of the economy where greenhouse emissions are still climbing.

The politics is quite simple for Labor: support the transition to renewable electricity which is already underway and which a large majority of Australians support, and minimise the risk that its proposed policy instruments will come under effective attack in the lead-up to the 2019 election.




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By aiming for 50% renewables at 2030, the party has claimed the high ground. That goal and perhaps a lot more is achievable, given that the large investment pipeline in electricity consists almost entirely of wind and solar projects, and that new renewables are now typically the cheapest options to produce energy with new plants.

The question then is what policy instruments Labor would use to facilitate the transition from coal to renewables.

NEG games

The government’s abandoned National Energy Guarantee (NEG) policy is now a political asset for Labor. If the Coalition were to support it under a Labor government, the policy would effectively be immune to political attack. If the Coalition were to block it, Labor could blame many future problems in electricity on the Coalition’s refusal to endorse a policy that it originally devised.

The NEG has many warts. Some of the compromises in its design were necessary to get it through the Coalition party room. That no longer matters, and so it should be possible to make improvements. One such improvement would be to allow for an explicit carbon price in electricity under the NEG, by creating an emissions intensity obligation for electricity generators with traded certificates. This is better than the opaque model of contract obligations on electricity retailers under the original version.

Underwriting renewables

But the real action under a Labor government might well come from a more direct policy approach to push the deployment of renewables. In his energy policy speech last week, Shorten foreshadowed that Labor would “invest in projects and underwrite contracts for clean power generation, as well as firming technologies like storage and gas”.

As interventionist as this sounds, it has some clear advantages over more indirect support mechanisms. First, it brings the costs of new projects down further by making cheap finance available – a tried and tested method in state-based renewables schemes. Second, it allows for a more targeted approach, supporting renewable energy generation where it makes most sense given demand and transmission lines, and prioritising storage where and when it is needed. Third, it channels government support only to new installations, rather than giving free money to wind farms and solar plants that are already in operation.

Managing coal exit

Where renewables rise, coal will fall. Labor’s approach to this issue centres on the affected workers and communities. A “just transition authority” would be created as a statutory authority, to administer redundancies, worker training, and economic diversification.

This is a good approach if it can work effectively and efficiently. But it may not be enough to manage the large and potentially rapid shifts in Australia’s power sector.

Contract prices for new wind farms and solar plants now are similar to or lower than the operating costs of many existing coal plants. The economics of existing coal plants are deteriorating, and many of Australia’s ageing coal power plants may shut down sooner than anticipated.

All that Labor’s policy says on the issue is that all large power plants would be required to provide three years’ notice of closure, as the Finkel Review recommended. But in practice this is unlikely to work.

Without any guiding framework, coal power plants could close very suddenly. If a major piece of equipment fails and repair is uneconomic, then the plant is out, and operators may find it opportune to run the plant right until that point. It’s like driving an old car – it runs sort of OK until the gearbox goes, and it’s off to the wreckers right then. It is unclear how a three-year rule could be enforced.

This is effectively what happened with the Hazelwood plant in Victoria. That closure caused a temporary rise in wholesale power prices, as new supply capacity gradually fills the gap.

One way to deal with this would be to draw up and implement some form of specific exit timetable for coal power plants. This would give notice to local communities, provide time to prepare investment in alternative economic activities, and allow replacement generation capacity to be brought online. Such a timetable would need a mechanism to implement it, probably a system of carrots and sticks.

Batteries, energy efficiency and the CEFC

Most public attention was given to a relatively small part of Labor’s energy policy platform: the promise to subsidise home batteries. Batteries can help reduce peak demand, and cut electricity bills for those who also have solar panels. But it is not clear whether home batteries are good value for money in the system overall. And the program would tend to benefit mostly upper middle-income earners.




Read more:
Labor’s battery plan – good policy, or just good politics?


Labor’s platform also foreshadows a renewed emphasis on energy efficiency, which is economically sensible.

Finally, Labor promises to double the Clean Energy Finance Corporation’s endowment with another A$10 billion, to be used for revolving loans. The CEFC is already the world’s biggest “green bank”, co-financing projects that cut emissions and deliver financial returns. Another A$5 billion is promised as a fund for upgrading transmission and distribution infrastructure. These are big numbers, and justifiably so – building our future energy system will need massive investments, and some of these will be best made by government.

Big plans for electricity, but what about the rest?

Overall, Labor’s plan is a solid blueprint to support the electricity transition, with strong ambition made possible by the tremendous technological developments of recent years.

But really it is only the start. Electricity accounts for one-third of national greenhouse emissions. Emissions from the power sector will continue to fall, but emissions from other sectors have been rising. That poses a huge challenge for the economy-wide emissions reductions that are needed not only to achieve the 2030 emissions targets, but the much deeper reductions needed in coming decades.

A national low-carbon strategy will need to look at how to get industry to shift to zero-emission electricity, how to convert road transport to electricity or hydrogen, and how to tackle the difficult question of agricultural emissions. More pre-election announcements are to come. It will be interesting to see how far Labor will be willing to go in the direction of putting a price on carbon, which remains the economically sensible but most politically charged policy option.

As difficult as electricity policy may seem based on the tumultuous politics that have surrounded it, more seismic shifts are waiting in the wings.The Conversation

Frank Jotzo, Director, Centre for Climate Economics and Policy, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Four ways our cities can cut transport emissions in a hurry: avoid, shift, share and improve


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Urgent and radical change in urban transport policies and practices will benefit the planet and future generations.
blurAZ/Shutterstock

Hussein Dia, Swinburne University of Technology

The UN Intergovernmental Panel on Climate Change recently warned that global warming could reach 1.5℃ as early as 2030. The landmark report by leading scientists urged nations to do more to avert an impending crisis.

We have 12 years, the report said, to contain greenhouse gas emissions. This includes serious efforts to reduce transport emissions.




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New UN report outlines ‘urgent, transformational’ change needed to hold global warming to 1.5°C


In Australia, transport is the third-largest source of greenhouse gases, accounting for around 17% of emissions.
Passenger cars account for around half of our transport emissions.

The transport sector is also one of the strongest factors in emissions growth in Australia. Emissions from transport have increased nearly 60% since 1990more than any other sector. Australia is ranked 20th out of 25 of the largest energy-using countries for transport energy efficiency.

Cities around the world have many opportunities to reduce emissions. But this requires renewed thinking and real commitment to change.

Our planet can’t survive our old transport habits

Past (and still current) practices in urban and transport planning are fundamental causes of the transport problems we face today.

Over the past half-century, cities worldwide have grown rapidly, leading to urban sprawl. The result was high demand for motorised transport and, in turn, increased emissions.

The traffic gridlock on roads and motorways was the catalyst for most transport policy responses during that period. The solution prescribed for most cities was to build out of congestion by providing more infrastructure for private vehicles. Limited attention was given to managing travel demand or improving other modes of transport.




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Stuck in traffic: we need a smarter approach to congestion than building more roads


Equating mobility with building more roads nurtured a tendency towards increased motorisation, reinforcing an ever-increasing inclination to expand the road network. The result was a range of unintended adverse environmental, social and economic consequences. Most of these are rooted in the high priority given to private vehicles.

What are the opportunities to change?

The various strategies to move our cities in the right direction can be grouped into four broad categories: avoid, shift, share, and improve. Major policy, behaviour and technology changes are required to make these strategies work.

Avoid strategies aim to slow the growth of travel. They include initiatives to reduce trip lengths, such as high-density and mixed land use developments. Other options decrease private vehicle travel – for example, through car/ride sharing and congestion pricing. And teleworking and e-commerce help people avoid private car trips altogether.




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City-wide trial shows how road use charges can reduce traffic jams


Shanghai’s Hongqiao transport hub is a unique example of an integrated air, rail and mixed land use development. It combines Hongqiao’s airport, metro subway lines, and regional high-speed rail. A low-carbon residential and commercial precinct surrounds the hub.

Layout of Shanghai Hongqiao integrated transport hub.
Peng & Shen (2016)/Researchgate, CC BY

Shift strategies encourage travellers to switch from private vehicles to public transport, walking and cycling. This includes improving bus routes and service frequency.

Pricing strategies that discourage private vehicles and encourage other modes of transport can also be effective. Policies that include incentives that make electric vehicles more affordable have been shown to encourage the shift.

Norway is an undisputed world leader in electric vehicle uptake. Nearly a third of all new cars sold in 2017 were a plug-in model. The electric vehicle market share was expected to be as much as 40% within a year.

An electric vehicle charging station in the Norwegian capital Oslo.
Softulka/Shutterstock



Read more:
The new electric vehicle highway is a welcome gear shift, but other countries are still streets ahead


Share strategies affect car ownership. New sharing economy businesses are already moving people, goods and services. Shared mobility, rather than car ownership, is providing city dwellers with a real alternative.

This trend is likely to continue and will pose significant challenges to car ownership models.

Uber claims that its carpooling service in Mumbai saved 936,000 litres of fuel and reduced greenhouse gas emissions by 2,662 metric tonnes within one year. It also reports that UberPool in London achieved a reduction of more than 1.1 million driving kilometres in just six months.

UberPool is available in inner Melbourne suburbs. Trip must begin and end in this area.
Uber

Improve strategies promote the use of technologies to optimise performance of transport modes and intelligent infrastructure. These include intelligent transport systems, urban information technologies and emerging solutions such as autonomous mobility.

Our research shows that sharing 80% of autonomous vehicles will reduce net emissions by up to 20%. The benefits increase with wider adoption of autonomous shared electric vehicles.

Autonomous vehicles can offer first- and last-kilometre solutions, especially in outer suburbs with limited public transport services.
Monopoly919/Shutterstock



Read more:
Utopia or nightmare? The answer lies in how we embrace self-driving, electric and shared vehicles


The urgency and benefits of steering our cities towards a path of low-carbon mobility are unmistakable. This was recognised in the past but progress has been slow. Today, the changing context for how we build future cities – smart, healthy and low-carbon – presents new opportunities.

If well planned and implemented, these four interventions will collectively achieve transport emission reduction targets. They will also improve access to the jobs and opportunities that are preconditions for sound economic development in cities around the world.The Conversation

Hussein Dia, Chair, Department of Civil and Construction Engineering, Swinburne University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Fresh thinking: the carbon tax that would leave households better off



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The UNSW climate dividend proposal will be launched on Wednesday by the Member for Wentworth Kerryn Phelps.
Shutterstock

Richard Holden, UNSW and Rosalind Dixon, UNSW

Today, as part of the UNSW Grand Challenge on Inequality, we release a study entitled A Climate Dividend for Australians that offers a practical solution to the twin problems of climate change and energy affordability.

It’s a serious, market-based approach to address climate change through a carbon tax, but it would also leave around three-quarters of Australians financially better off.

It is based on a carbon dividend plan formulated by the Washington-based Climate Leadership Council, which includes luminaries such as Larry Summers, George Schultz and James Baker. It is similar to a plan proposed by the US (and Australian) Citizens’ Climate Lobby.

How it would work

Carbon emissions would be taxed at A$50 per ton, with the proceeds returned to ordinary Australians as carbon dividends.

The dividends would be significant — a tax-free payment of about A$1,300 per adult.

The average household would be A$585 a year better off after taking account of price increases that would flow through from producers.




Read more:
Trying to measure the savings from the carbon tax is a mug’s game


If those households also cut their energy consumption as a result of the tax they would be even better off.

And the payment would be progressive, meaning the lowest-earning households would get the most. The lowest earning quarter would be A$1,305 a year better off.

Untaxed exports, fewer regulations

For energy and other producers making things to sell to Australians, the tax would do what all so-called Pigouvian taxes do — make them pay for the damage they do to others.

But Australian exporters to countries without such schemes would have their payments rebated.

Imports from countries without such schemes would be charged “fees” based on carbon content.




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This means Australian companies subjected to the tax wouldn’t be disadvantaged by imports from countries without it, and nor would importers from countries with such a tax.

The plan would permit the rollback of other restrictions on carbon emissions and expensive subsidies.

Our estimates suggest the rollbacks have the potential to save the Commonwealth A$2.5 billion per year.

It’s working overseas

Our plan is novel in the Australian context, but similar to one in the Canadian province of British Columbia which has a carbon tax that escalates until it reaches C$50 per ton, with proceeds returned to citizens via a dividends.




Read more:
Taxpayers will back a carbon tax if they get a cheque in the mail


Alaska also pays long-term dividends from common-property resources. The proceeds from its oil reserves have been distributed to citizens since 1982, totalling up to US$2,000 per person.

It could be phased in

We would be open to a gradual approach. One option we canvass in the report is beginning with a A$20 per metric ton tax and increasing it by A$5 a year until it reaches A$50 after six years.

The dividends would grow with the tax rate, but the bulk of households would immediately be better off in net terms and much better off over time.

And it would be simple

Our plan doesn’t create loopholes or incentives to get handouts from the government, as have previous plans that directed proceeds to polluters.

It will not satisfy climate-change deniers, but then no plan for action on climate change would do that — other than perhaps the governmment’s direct action policy, which provides a costly taxpayer-funded boondoggle to selected winners.




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But for those who understand that climate change is real, our plan balances the important benefits we gain from economic development and associated carbon emissions against the social cost of those emissions.

It does it in a way that provides compensation to all Australians, but on an equal basis, making the lowest-income Australians substantially better off.

It is the sort of policy that politicians who believe in both the realities of climate change as well as the power and benefits of markets ought to support.The Conversation

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW and Rosalind Dixon, Professor of Law, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

47% say prioritise cutting power bills: Ipsos


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The poll found stark differences between voting intentions and attitude to energy policy.
Shutterstock

Michelle Grattan, University of Canberra

Fresh focus will turn to the energy debate this week, with a Fairfax
Ipsos poll showing 47% of Australians support giving the main priority
to cutting bills, and Labor expected to release details of its energy
policy.

The Ipsos poll found 39% want the federal government to give the main
priority to reducing carbon emissions, while 13% were most concerned
with reducing the risk of blackouts.

In a highly interventionist approach, the government is concentrating
on wielding what it calls “a big stick” to force power companies to
lower prices.

Ipsos found a big difference in priorities according to which party
people supported. Among Coalition voters, 58% prioritised reducing
bills, compared with 22% who nominated cutting emissions and 20% who
opted for reducing the risk of blackouts.

But a majority of Labor voters put reducing emissions top (53%), with
36% opting for giving priority to cutting power prices and only 11%
nominating reducing the blackout risk. Three quarters of Greens voters
gave top priority to cutting emissions.

Voters outside capital cities are more likely to give priority to
cutting bills than urban voters. People aged 40-54 are more likely
than other age groups to be concerned with reducing bills, as are
those on incomes under $100,000 compared with people with higher
income.

Younger voters are more likely to give priority to cutting emissions
than older age groups.

The Ipsos poll has Labor leading in two-party terms 52-48%.

Bill Shorten on Thursday addresses BloombergNEF with a speech billed
“Labor’s plan to tackle Australia’s energy crisis”. The address will
be followed by a question and answer session.

Labor’s shadow cabinet will consider the ALP policy before the speech.

Labor has previously flagged it is open to incorporating aspects of
the National Energy Guarantee that the Coalition abandoned in its
internal meltdown that ended in the change of leadership.

Fairfax Media reported at the weekend that Labor’s policy “is modelled
on the guarantee, but the party is also working towards a much broader
set of measures as it seeks to compete with the government’s pledge to
bring down power prices and shore up supplies.”

The ALP is committed to cutting emissions by 45% by 2030 off a 2005 baseline.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Children in the car era: bad for them and the planet


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Children’s travel needs are a big factor in private car use.
Pablo Rogat/Shutterstock

Hulya Gilbert, University of South Australia; Andrew Allan, University of South Australia; Carolyn Whitzman, University of Melbourne, and Johannes Pieters, University of South Australia

Children today spend more time in cars than previous generations. They also spend less time playing on the streets and in unstructured and unsupervised activity outdoors. The lack of opportunities for physical activity and the loss of freedom to explore their local neighbourhood is bad news for children’s physical, social and mental well-being.




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Though equally important, the environmental cost of these trends is not well understood. As rapid urbanisation extends across the globe, transport planning continues to be challenging. Transport is one of the biggest sources of greenhouse gas emissions. And 46% of transport-related emissions come from private vehicles.

We know surprisingly little, however, about the detailed reasons for individual private car use. An international study highlights that households with children have higher rates of car ownership and use. In Australia, official statistics on transport pay a great deal of attention to the “journey to work”, but car travel that can be attributed to child-related activities has not been fully explored.

Research on children’s travel patterns tends to focus on the “journey to school”. While school trips are important, this provides only a narrow image of children’s actual travel patterns. They also make many trips to non-school destinations and extracurricular activities such as sport, music and dance classes.

We recently reviewed local government policies related to sustainable mobility and child-and-youth-friendly cities. Our review found little consideration of children and young people in transport planning policies across Australia. This is despite the fact that the decline in their walking and cycling rates was widely recognised.




Read more:
Australian cities are far from being meccas for walking and cycling


Why are walking and cycling rates decreasing?

Several factors contribute to lower rates of walking and cycling among children and their limited use of public transport. These range from urban form to social and economic conditions.

Australian suburbs typically have low density and segregated land uses, which privilege the car over other travel modes. This situation is worse in outer suburbs which have limited public transport and poor provision for walking and cycling. These outer suburbs are also more likely to have lower socio-economic status and a larger proportion of families with children.

All together, these suburban conditions add to the social disadvantage resulting from limited access to services and activities that are critical for families with children. This further encourages private car use.




Read more:
Designing suburbs to cut car use closes gaps in health and wealth


Changing social structures mean families usually are on tight schedules. These changes include increases in employment for women and in the number of both single-parent families and families where both parents are in paid work. Because the car is relatively cheap and easy to use for individual mobility in Australian cities, it is generally the uncontested way to manage these schedules.

In addition, the increased individualisation as a common characteristic of Western societies usually means parents are expected to provide strict supervision of children’s movements. In the conditions described above, the most practical way to do this is usually to drive them in a car.

Of course this increases the number of cars on our streets, particularly around schools and other common destinations for children. This then perpetuates parents’ concerns about traffic safety, leading in turn to even more private car use.

Notice the difference? Drop-off time at an inner-city Copenhagen school.
Hulya Gilbert, Author provided



Read more:
Young people want walkable neighbourhoods, but safety is a worry


Child-centred sustainable mobility

What is perhaps most striking about the trend towards chauffeuring children is that these facts are seemingly becoming accepted as unavoidable outcomes of modern society. They are largely ignored in transport planning.

We have argued that children have a pivotal role in sustainable mobility. Greater attention to the mobility needs of families with children will produce many social and environmental benefits.

The importance of children’s role in sustainable mobility can be grouped under two themes.

First, children’s needs in today’s lifestyles mean they have an active role in contributing to increased private car use. The daily lives of families with children offer a good example of the context in which carbon-intensive travel patterns occur. If their mobility needs can be met more sustainably (even partially) we are likely to achieve significant carbon savings.

Second, and perhaps more importantly, children have a role as catalysts for behavioural change towards sustainable cities. This is because childhood is a key stage for establishing sustainable travel habits as opposed to “trying to modify already ingrained habits later in life”.

A better understanding of children’s travel patterns would provide a solid foundation for sustainable mobility policies. Planning and transport policies that are responsive to children’s specific needs are likely to have more effective and longer-lasting outcomes, with many related benefits for social sustainability and public health.The Conversation

Hulya Gilbert, PhD Candidate, University of South Australia; Andrew Allan, Senior Lecturer in Urban and Regional Planning, University of South Australia; Carolyn Whitzman, Professor of Urban Planning, University of Melbourne, and Johannes Pieters, Lecturer, Regional and Urban Planning Discipline, University of South Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why NZ’s emissions trading scheme should have an auction reserve price



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New Zealand’s emission reduction target for 2030 is to bring emissions to 30% below 2005 levels, and to be carbon neutral by 2050.
from http://www.shutterstock.com, CC BY-ND

Suzi Kerr, Victoria University of Wellington

While people’s eyes often glaze over when they hear the words “emissions trading”, we all respond to the price of carbon.

Back in 2010, when the carbon price was around NZ$20 per tonne, forest nurseries in New Zealand boosted production. But when prices plunged thereafter, hundreds of thousands of tree seedlings were destroyed rather than planted, wiping out both upfront investment and new forest growth.

Emission prices have since recovered but no one knows if this will last. With consultation underway on improving the New Zealand Emissions Trading Scheme (NZ ETS), the government should seriously consider a “price floor” to rebuild confidence in low-emission investment.




Read more:
A new approach to emissions trading in a post-Paris climate


How a price floor works

If we want to make a smart transition to a low-emission economy, we need to change how we value emissions so people make the investments that deliver on our targets. Implementing a reserve price at auction – or a “price floor” – is a powerful tool for managing the risk that emission prices could fall for the wrong reasons and undermine much needed low-emission investments.

In New Zealand’s ETS, participants are required to give tradable emission units (i.e. permits) to the government to cover the emissions for which they are liable. A limit on unit supply relative to demand reduces total emissions and enables the market to set the unit price.

In the future, the government will be auctioning emission units into the market. A reserve price at auction, which is simple to implement, can help avoid very low prices. If private actors are not willing to pay at least the reserve price, the government would stop selling units and the supply to the market would automatically contract.

The government’s current ETS consultation document suggests that no price floor will be needed in the future because a limit on international purchasing will be sufficient to prevent the kind of price collapse we experienced in the past. However, that assessment neglects other drivers of this risk.

When low ETS prices are a pitfall

Ideally, ETS prices would respond to signals of the long-term cost of meeting New Zealand’s decarbonisation goals and achieving global climate stabilisation. With today’s information, we generally expect ETS prices to rise over time. For example, modelling prepared for the New Zealand Productivity Commission suggests emission prices could rise to at least NZ$75 per tonne, possibly over NZ$200 per tonne, over the next three decades.

However, ETS prices could also fall because of sudden technology breakthroughs or economic downturn. Even though some low-emission investors would lose the returns they had hoped for, this could be an efficient outcome because low ETS prices would reflect true decarbonisation costs. Technological and economic uncertainty imposes a genuine risk on low-emission investments that society cannot avoid.

But there is another scenario in which ETS prices fall while decarbonisation costs remained high. This could arise because of political risk. For example, if a major emissions-intensive industrial producer was to exit the market unexpectedly and it was unclear how the government would respond, or if a political crisis was perceived to threaten the future of the ETS, then emission prices could collapse and efficient low-emission investments could be derailed.

Even when remedies are on the way, it can take time to correct perceptions of weak climate policy intentions. The New Zealand government’s slow response to the impact of low-quality international units in the ETS from 2011 to mid-2015 is a vivid example of this.

A simple and effective solution

With a price floor, an ETS auction will respond quickly and predictably to unpredictable events that lower prices. A price floor signals the direction of travel for minimum emission prices and builds confidence for low-emission investors and innovators. It also provides greater assurance to government about the minimum level of auction revenue to expect.

It is important to note that ETS participants can still trade units amongst each other at prices below the price floor. The price floor simply stops the flow of further auctioned units from the government into the market until demand recovers again and prices rise.

We have three good case studies overseas for the value of a price floor.

  1. The European Union ETS did not have a price floor for correcting unexpected oversupply and prices dropped because of the global financial crisis, other energy policies and overly generous free allocation. It now has a complex market stability reserve for this purpose, although that operates with less ease and transparency than a reserve price at auction.

  2. To counteract low EU ETS prices, the UK created its own price floor as a “top up” to the EU ETS. Although this did not add to global mitigation beyond the EU ETS cap, it did drive down coal-fired generation in the UK.

  3. California’s ETS was designed in conjunction with a large suite of emission reduction measures with complex interactions. Its reserve price at auction has ensured that a minimum and rising emission price has been maintained, despite uncertainties about the impact of other measures.

Keeping NZ on track for decarbonisation

In New Zealand, the Productivity Commission supports the concept of an auction reserve price in its final report on a transition to a low-emissions economy.

The only potential downside of a price floor is the political courage needed to set its level. It could be set at the minimum level that any credible global or local modelling suggests is consistent with New Zealand and global goals. The Climate Change Commission could provide independent advice on preferred modelling and an appropriate level. The merits of a price floor warrant cross-party support.

If the market operates in line with expectations, then the price floor has no impact on emission prices. But the price floor usefully guards against price collapse when the market does not go to plan.

The government, ETS participants and investors need to understand that international purchasing is not the only driver of downside price risk in the NZ ETS. A price floor would strengthen the incentives for major long-term investments in low-emission technologies, infrastructure and land uses in the face of uncertainty.

To reach New Zealand’s ambitious emission reduction targets for 2030 (a 30% reduction below 2005 levels) and beyond, bargain-basement emission prices need to stay a thing of the past.

This article was co-authored with Catherine Leining, a policy fellow at Motu Economic and Public Policy Research.The Conversation

Suzi Kerr, Adjunct Professor, School of Government, Victoria University of Wellington

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia is not on track to reach 2030 Paris target (but the potential is there)



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Australia’s energy emissions fell slightly due to renewable energy, but it’s not enough.
Jonathan Potts/Flickr, CC BY-NC-SA

Anna Skarbek, Monash University

While Australia is coming to terms with yet another new prime minister, one thing that hasn’t changed is the emissions data: Australia’s greenhouse gas emissions are not projected to fall any further without new policies.

Australia, as a signatory to the Paris Agreement on climate change, has committed to reduce its total emissions to 26-28% below 2005 levels by 2030, and reach net zero emissions by 2050.




Read more:
Why is climate change’s 2 degrees Celsius of warming limit so important?


New analysis by ClimateWorks Australia has found Australia has three times the potential needed to reach the federal government’s current 2030 target, but this will not be achieved under current policy settings.

Energy is not the only sector

Australia’s emissions were actually falling for more than half a decade, but have been steadily increasing again since 2013. If Australia sustained the rate of emissions reduction we achieved between 2005 and 2013, we could meet the government’s 2030 target. But progress has stalled in most sectors, and reversed overall.

Emissions are still above 2005 levels in the industry, buildings and transport sectors, and only 3% below in the electricity sector. It is mainly because of land sector emissions savings that overall Australia’s emissions are on track to meet its 2020 target, and are currently 11% below 2005 levels.

Despite the current focus on the energy market, electricity emissions comprise about one-third of Australia’s total greenhouse emissions. So no matter what policies are proposed for electricity, other policies will be needed for the other major sectors of industry, buildings, transport and land.

Fortunately, Australia is blessed with opportunities for more emissions reductions in all sectors.




Read more:
Keeping global warming to 1.5 degrees: really hard, but not impossible


ClimateWorks’ analysis assessed Australia’s progress on reducing emissions at the halfway point from the 2005 base year to 2030, looking across the whole of the economy as well as at key sectors.

We found emissions reductions since 2005 have been led by reduced land clearing and increased forestation, as well as energy efficiency and a slight reduction in power emissions as more renewable energy has entered the market. But while total emissions reduced at an economy-wide level, and in some sectors at certain times, none of the sectors improved consistently at the rate needed to achieve the Paris climate targets.

Interestingly, some sub-sectors were on track for some of the time. Non-energy emissions from industry and the land sector were both improving at a rate consistent with a net zero emissions pathway for around five years. The buildings sector energy efficiency and electricity for some years improved at more than half the rate of a net zero emissions pathway. These rates have all declined since 2014 (electricity resumed its rate of improvement again in 2016).

Looking forward

Looking forward to 2030, we studied what would happen to emissions under current policies and those in development, including the government’s original version of the National Energy Guarantee with a 26% emission target for the National Electricity Market. Our analysis shows emissions reductions would be led by a further shift to cleaner electricity and energy efficiency improvements in buildings and transport, but that this would be offset by population and economic growth.

As a result, emissions reductions are projected to stagnate at just 11% below 2005 levels by 2030. Australia needs to double its emissions reduction progress to achieve the federal government’s 2030 target and triple its progress in order to reach net zero emissions by 2050.

So, while Australia is not currently on track to meet 2030 target, our analysis found it is still possible to get there.




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The gap to the 2030 target could be more than covered by further potential for emissions reductions in the land sector alone, or almost be covered by the further potential in the electricity sector alone, or by the potential in the industry, buildings and transport sectors combined. Harnessing all sectors’ potential would put us back on track for the longer-term Paris Agreement goal of net zero emissions.

Essentially this involves increasing renewables and phasing out coal in the electricity sector; increasing energy efficiency and switching to low carbon fuels in industry; increasing standards in buildings; introducing vehicle emissions standards and shifting to electricity and low carbon fuels in transport; and undertaking more revegetation or forestation in the land sector.

The opportunities identified in each sector are the lowest-cost combination using proven technologies that achieve the Paris Agreement goal, while the economy continues to grow.




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Australia can get to zero carbon emissions, and grow the economy


In the next two years, countries around the world, including Australia, will be required to report on the progress of their Paris Agreement targets and present their plans for the goal of net zero emissions. With so much potential for reducing emissions across all sectors of the Australian economy, we can do more to support all sectors to get on track – there is more than enough opportunity, if we act on it in time.The Conversation

Anna Skarbek, CEO at ClimateWorks Australia, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.