Shorten’s climate policy would hit more big polluters harder and set electric car target


Michelle Grattan, University of Canberra

A Shorten government would add about 100 high polluters to those subject to an emissions cap, and drastically slash the present cap’s level, under the opposition’s climate policy released on Monday.

Labor would aim for a new threshold under a revamp of the existing safeguards mechanism of 25,000 tonnes of direct carbon dioxide pollution annually, which would be phased in after consultation with industry.

This would be a major reduction from the current cap of 100,000 tonnes. About 140 to 160 polluters come under the existing cap.

The safeguards mechanism was established by the Coalition government to cap pollution for the biggest polluters by setting limits or “baselines” for facilities covered. But Labor says it has been ineffective.

On transport, the policy sets an ambitious target of having electric vehicles form 50% of new car sales by 2030. The government fleet would have an electric vehicle target of 50% of new purchases and leases of passenger vehicles by 2025.

The climate change policy covers industry, transport and agriculture, with the proposed measures for the electricity sector, including an in-principle commitment to a national energy guarantee (NEG) and subsidies for batteries, already announced.

The agriculture sector would not be covered by the expanded safeguards policy.

The government’s emissions reduction fund – recently allocated a further A$2 billion over a decade and renamed – would be scrapped if Labor wins the May election.

The climate policy is the third of three key policy announcements the opposition wanted to make before the election is called, likely next weekend. The others were the wages policy and the announcement of the start date – January 1 – for the proposed crackdown on negative gearing.

The opposition has committed itself to a 45% economy-wide reduction in emissions relative to 2005 levels by 2030, compared with the government’s commitment to a reduction of 26-28%.

Labor’s policy confirms that it would not use Australia’s credits from the expiring Kyoto Protocol to help meet its Paris target, saying this course is “fake action on climate change”. Bill Shorten said on Sunday: “It’s only the Australian Liberal Party and the Ukraine proposing to use these carryover credits that I am aware of.”

Labor says it would “work in partnership with business to help bring down pollution.”

“Labor’s approach isn’t about punishing polluters. It’s about partnering with industry to find real, practical solutions to cut pollution, in a way that protects and grows industry and jobs.”

“There will be no carbon tax, carbon pricing mechanism, or government revenue,” Labor says.

“Rather, Labor will reduce pollution from the biggest industrial polluters by extending the existing pollution cap implemented by Malcolm Turnbull.”

“Pollution caps will be reduced over time and Labor will make it easier for businesses to meet these caps by allowing for industrial and international offsets.”

The expanded scheme’s new threshold would capture an estimated 250 of the biggest industrial polluters – 0.01% of all businesses.

Businesses would be able to earn credits for “overachievement” – reducing pollution below their baselines. They could sell these credits or use them to meet their future cap.

“Tailored” treatment would be provided to emissions-intensive trade-exposed industries (EITEs) such as steel, aluminium and cement. There would be a A$300 million Strategic Industries Reserve Fund “to support these industries in finding solutions to cut pollution and remain competitive”.

A Shorten government would consult with industry and experts on baselines for individual entities and the timing of reduction.

It would also put in place “a well-functioning offset market and reinvigorate the land offset market”.

“Currently, a facility that emits more than its baseline must offset excess emissions by purchasing offsets, primarily from the land sector. But currently businesses cannot access international offsets, or offsets from the electricity sector.

“Labor will make it easier for covered businesses to meet any offset obligations, not only by allowing for the creation and sale of offsets if emissions fall below baselines, but also through the purchase of international offsets and potentially offsets from the electricity sector.

“We will also boost offset supply through revitalising the Carbon Farming Initiative (CFI) – including reforms to strengthen the integrity of the CFI, and increasing land and other sector abatement opportunities.

“This will include exploring the establishment of ‘premium’ land sector credits to provide substantial environmental, biodiversity and other co-benefits, establishing a Carbon Assessment Standard to boost the bankability of offset projects, and re-vitalising offset methodology research and development with an additional A$40 million in funding over four years.

“Labor’s plan will help industry reduce pollution at least cost, and give traditional owners, farmers, the forestry industry and traditional owners new opportunities to earn income.”

On transport – which accounts for nearly 20% of Australia’s emissions – Labor says Australia is now last among western countries for electric vehicle uptake.

“Setting a national target will deliver more affordable electric vehicles into the Australian market and drive the switch to electric vehicles, reducing their cost, creating thousands of jobs and cutting pollution.”

Businesses would get an upfront tax deduction to buy electric vehicles, as part of the ALP’s announced Australian Investment Guarantee.

One aspect of moving quickly to government electric vehicle fleets would be that it would develop a secondhand market, Labor says.

“Labor will also work with industry to introduce vehicle emissions standards, to save Australian motorists hundreds of dollars each year at the bowser while driving down pollution on our roads.

“Australia is now one of the only developed nations without vehicle emissions standards in place. As a result, motorists will pay as much as A$500 each year more at the bowser than they should be, as well as seeing pollution on our roads skyrocket.

“Labor will consult on the timeline and coverage of vehicle emission standards to ensure consumers are made significantly better off, and aim to phase-in standards of 105g CO₂/km for light vehicles, which is consistent with Climate Change Authority advice.”

These standards would be in line with those in the United States but less stringent than those in the European Union.

“These standards will be applied to car retailers to meet average emissions standards, rather than imposing blanket mandatory standards on manufacturers.

“This will allow retailers to meet the standards by offsetting high emissions car sales with low or zero emissions car sales – such as electric vehicles.”



Emily Nunell/Michael Hopkin/The Conversation, CC BY-ND

UPDATE: Reaction

The government has reacted predictably to the Labor climate plan, branding it a “new tax”, ahead of what will be a major Coalition scare campaign in the election.

Scott Morrison said the opposition leader “does not have a plan, he just has another tax.

“What we’ve got here is a ‘re-Rudd’ of a failed policy that costs jobs, that costs businesses, that will cost Australians at least $9,000 a year, with the reckless targets that Bill Shorten will make law.”

On electric cars, Morrison said Shorten needed to explain how in 10 years he would take them from 0.2% of the market to 50% – because if he didn’t achieve his “reckless target […] he has to come back and get that money off you”.

Energy Minister Angus Taylor said the Shorten policy “would be a wrecking ball in the economy.

“It would raise the price of electricity and the price of gas and the price of food and the price of cars. Labor needs to come clean on the detail – not just the mechanism, which we know is the carbon tax.”

The Business Council of Australia welcomed the further details Labor had provided but said there were unanswered questions including “what mechanism will drive and manage the transition to lower-emissions generation in the electricity sector?”

“It remains unclear how abatement will be delivered in the electricity sector and how the various announcements made today will contribute to an economy-wide emissions reduction target,” the BCA said.

It said it had strongly supported the National Energy Guarantee (NEG) and called on the ALP, if elected, “to commit to working with the states and territories to implement the scheme as a credible, market-based mechanism to drive abatement and investment in the electricity sector.”

The Labor party has supported in principle a NEG – the plan the Coalition dumped because of an internal split over it.

The Australian Conservation Foundation gave Labor’s policy a qualified tick, describing it as “a serious policy response to the existential threat of global warming that recognises pollution must be cut across all industry sectors.”

“Labor’s climate change plan does address many of the important challenges Australia has in transforming into a zero-pollution economy,” the ACF said.

But “unfortunately, sections of Labor’s policy platform contain significant wriggle room that big polluters may seek to exploit.

“If it wins government Labor must quickly harden the detail around its policies and resist attempts of industry lobby groups like the Minerals Council of Australia, the Business Council of Australia and the Australian Automobile Association to weaken climate action.”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.

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Labor’s climate policy: a decent menu, but missing the main course


Nicky Ison, University of Technology Sydney

The federal Labor Party this week released the details of its keenly awaited climate policy package.

With a commitment to cutting climate pollution by 45% on 2005 levels by 2030, compared with the Coalition’s 26-28% target, there was never a doubt that Labor’s policy agenda was going to be more ambitious than the government’s.




Read more:
Shorten’s climate policy would hit more big polluters harder and set electric car target


But what exactly does it include, how does it stack up against the scientific imperatives, and what’s missing?

By offering a broad platform, Labor has moved away from a single economy-wide policy solution to climate change, such as a carbon price or emissions trading scheme. Instead, it has opted for a sector-by-sector approach.

This is smart politics and policy. By developing a climate plan for each major sector – industry, electricity, transport, and agriculture and land – it is possible to modernise each sector in a bespoke way, thus driving more innovation and job creation while also cutting carbon pollution.


Emily Nunell/Michael Hopkin/The Conversation

Industry

Labor has taken the politically safe option of expanding the Coalition’s “safeguard mechanism” to lower industrial greenhouse emissions. Under this scheme, big emitters are required to keep their emissions below a prescribed “baseline” level, or to buy offsets if they exceed it.

Labor has lowered the threshold for the scheme, meaning it will now cover all businesses that emit more than 25,000 tonnes of carbon dioxide per year (the cutoff is currently 100,000 tonnes). From there, all of these companies will have to lower their emissions by 45% by 2030 on 2005 levels.

Some details are still to be determined, including the precise trajectories of emissions reductions, the use of offsets (which while welcomed by industry, is considered by many people to be highly problematic), and the treatment of emissions-intensive, trade-exposed industries such as aluminium and cement. As with all complex policies, the devil will be in the detail.

Labor’s policy also includes a “Strategic Industries Reserve Fund”, which would support non-commercial technical innovations to help energy-intensive industries reduce their pollution. The world has already seen significant technical advances, from electrification of gas furnaces, to new cement blends.

But few have been developed, trialled or adopted by Australian industry, and they are not yet as cheap as deploying renewables or energy-efficiency solutions in the electricity sector. The new fund would therefore potentially help drive down emissions in the longer term by opening up access to technologies that are not yet cost-competitive.

Electricity

Labor announced its electricity policy in November 2018, and nothing has changed since. It primarily includes a commitment to adopting the Coalition’s now-abandoned National Energy Guarantee and providing an extra A$10 billion to the Clean Energy Finance Corporation.

Other commitments include plans for energy efficiency, hydrogen power, support for community energy, and establishment of a Just Transition Authority. These are worthwhile next steps, but much more needs to be done to replace Australia’s ageing coal-fired power stations with clean, renewable energy.




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


Transport

Labor’s transport plans offer a clear chance to deliver economic benefits alongside emissions reductions. It has pledged to introduce vehicle emissions standards equivalent to those in the United States (which are not as strict as those in the European Union).

Australia is the only OECD country that does not have vehicle emissions standards, leaving manufacturers free to dump old, gas-guzzling models on the Australian market. Labor calculates that this costs Australian households an extra A$500 per year in fuel costs, compared with other countries.

Alongside this is also a 50% target for electric vehicles (EVs), requirements for new EV charging infrastructure, and tax breaks for businesses that buy EVs. These are sensible first steps towards driving down transport emissions, which are rising rapidly. Indeed, they are the very least a government should be doing, which makes the fact that after six years in government the Coalition won’t have a plan for electric vehicles until mid-2020 very concerning.




Read more:
Labor’s plan for transport emissions is long on ambition but short on details


Agriculture and land

Agriculture is the most difficult of all sectors in which to reduce emissions; it is therefore unsurprising that the lightest-touch policy approach is in this sector. Federal Labor will want to take advantage of all the departmental support it can to properly tackle this tough nut.

What it has done is commit to two main policies: strengthening the Carbon Farming Initiative, and ensuring that Queensland’s land clearing laws are applied across the country. The land clearing laws particularly will help reverse the current widespread land clearing occurring in New South Wales, in response to the state government weakening these laws. And comes in stark contrast to the federal government’s proposal to pay farmers not to chop down trees.

Carbon accounting

The final prong in Labor’s climate strategy is to rule out any creative accounting tricks. The Coalition government is proposing to use carryover Kyoto credits that are a result of the Howard government negotiating a “good deal” for Australia in 1997. Labor has ruled out using these loopholes as part of meeting Australia’s international commitments and has also promised to do more to help our Pacific neighbours. This support may be little help, however, if Labor doesn’t strengthen its support for holding global warming to 1.5℃.

What’s left out?

This package is a solid, technocratic basis for tackling Australia’s rising greenhouse emissions. Unfortunately, there remain some glaring omissions.

The biggest omission is the lack of a plan to keep fossil fuels in the ground. Fossil fuels, particularly the mining and export of coal are Australia’s biggest contribution to climate change. Yet the ALP’s policy contains only two mentions of coal, nothing on coal exports, and no mention of gas. Labor is evidently still sitting on the fence on the future of the controversial Adani coalmine, and on the question of fossil fuel subsidies more generally.

While it might be politically convenient to let the Coalition tear itself apart over coal, the scientific reality is that to have a hope of limiting warming to 1.5℃, Australia needs to rapidly move away from coal both domestically and for exports. This is not something Labor will be able to ignore for long.

There was also no mention of the need to adapt to existing climate change. Given the recent tribulations of Townsville, the Murray-Darling Basin, and drought-stricken farmers, this should surely be a crucial point of emphasis.




Read more:
Townsville floods show cities that don’t adapt to risks face disaster


The policy is also missing the human face of climate change. Labor is choosing to frame climate as an economic and environmental issue. It is both of those things, but it is also a social justice issue. Indeed, those most affected by climate change are some of Australia’s (and the world’s) most disadvantaged people. For instance, the Aboriginal community of Borroloola in the Northern Territory, who are currently fighting fracking on their land, were recently evacuated due to Cyclone Trevor.

Yesterday’s policy announcement was a missed opportunity to put Australians’ health and well-being at the centre of the climate crisis and redress historical injustices by actively supporting Aboriginal and other vulnerable communities like Borroloola to benefit from climate action.

The lack of focus on health is doubly puzzling, given that Labor already announced a Climate and Health Strategy in late 2017, and could easily have drawn attention to it here.

While there is no doubt that Labor is far ahead of the Coalition on climate change, this package is far from what the science (and schoolchildren!) are telling us is needed.

As bushfires, floods, droughts and protests are all set to continue, don’t expect this issue to go away after the federal election.The Conversation

Nicky Ison, Research Associate, Institute for Sustainable Futures, University of Technology Sydney

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

How to neutralise your greenhouse gas footprint


Andrew Blakers, Australian National University

With time running out for us to make deep reductions in greenhouse emissions, you may well be wondering what you personally can do to minimise your own greenhouse footprint.

The average greenhouse emissions per Australian are the equivalent of 21 tonnes of carbon dioxide per year. How can you offset or neutralise your personal share of these carbon emissions in the most cost-effective way?




Read more:
We can be a carbon-neutral nation by 2050, if we just get on with it


There are some places where the government is willing to take the necessary action on your behalf. The ACT government, for example, is on track to eliminate greenhouse gas emissions generated within Canberra by 2045, and indeed by 2020 will make its own electricity sector carbon-neutral.

The latter feat was achieved by contracting several new zero-emission solar and wind farms to produce renewable electricity equivalent to Canberra’s consumption. Canberra retail electricity prices continue to be among the lowest in Australia.

Take advantage of solar and wind

If you don’t live in Canberra, you need another way to neutralise your emissions. Fortunately, the cost of solar photovoltaic (PV) and wind power have both fallen rapidly. Australia has long been in the midst of a boom in rooftop PV, and many Gigawatts of ground-mounted PV and wind farms are being built around the country. This has put Australia on track to reach 50% renewable electricity in 2024. Each Megawatt hour (MWh) of electricity generated by renewables reduces electricity from coal by a similar amount, and therefore avoids about 0.9 tonnes of carbon dioxide emissions.

https://datawrapper.dwcdn.net/7Gd1z/2/

The above pie chart, based on federal government data, shows the various sources of Australian greenhouse emissions in 2017. Electricity production is the largest source and can be neutralised by substituting PV and wind for coal and gas. Emissions from electricity use in commerce and industry, the land sector, industrial processes and high temperature heat is largely beyond your control, however, so it’s perhaps best to focus your attention closer to home.

Cost-effective action

However, putting solar panels on your roof, switching to an electric car, and substituting electric heat pumps for gas water and space heating can (or soon will) be cost-effective steps that you can take to reduce your greenhouse footprint. And in the long term, these will either pay for themselves or even end up saving you money.




Read more:
‘Renewable energy breeding’ can stop Australia blowing the carbon budget – if we’re quick


A 10-kilowatt solar PV system installed on your roof will produce about 14 MWh of electricity per year. Since coal power stations produce 0.9 tonnes of carbon dioxide per MWh this save about 12 tonnes of CO2 emissions per year.

To offset your 21 tonnes of CO2 per year, you would therefore need to install 15kW of solar PV capacity for each person who lives in your house. So if four people live in your house, you would need a 60kW solar system.

But a typical rooftop PV system now has a rating of 5-15kW, and many homes lack the roof space needed to install a larger system. Ways to address this are described below.

Road to success

A typical car produces about 190 grams of CO2 per kilometre of travel, and the average Australian car travels 15,500 km per year, thus producing 3 tonnes of CO2.

Moderately priced electric cars are expected to be widely available in the early 2020s, which can travel about 6,000 km for each MWh of electricity consumed.

Once the premium for an electric vehicle drops below about A$10,000, the lifetime cost of an electric car (including buying, maintaining and charging it) will be competitive with conventional cars.

A 2kW PV panel on your house roof will produce enough electricity for 16,000km of electric car driving per year, thus offsetting your entire emissions from motoring (3 tonnes of CO2), assuming you drive an average amount each year and previously drove a conventional model.

Off the gas

Most natural gas use within a home is for water and space heating. Gas can readily be replaced by electric heat pumps, which move heat from the air outside the home into your hot water tank or reverse cycle air conditioning system. Heat pumps typically move four units of heat for each unit of electricity consumed and can be readily powered by rooftop solar panels, supplemented by electricity from the grid.

For the average household, replacement gas with heat pumps can readily reduce household greenhouse gas emissions by up to 5 tonnes per year, at lower lifecycle cost than using gas. Replacement of gas cookers with electric induction cookers allows elimination of gas altogether from the home.

Fly less

Limiting air travel is one of the most effective tactics to cut your personal emissions. Short-haul flights or flights with few passengers increase the emissions intensity per passenger. A mostly full return trip from Australia to London (34,000km) will typically generate about 4 tonnes of CO₂ per passenger.

When you do decide to fly, think about how you can offset the emissions directly. Adding 1kW to your rooftop PV system can offset one return trip to London for one person every 3 years.




Read more:
Why our carbon emission policies don’t work on air travel


Will it pay for itself?

Now that we’ve looked at these various strategies, let’s now consider a family home with three occupants and one car. A 10kW PV system on the roof can make a substantial reduction in their greenhouse footprint by offsetting 14 tonnes of CO2 per year. Switching to an electric car saves 3 tonnes per year and substituting electric heat pumps for gas saves a further 1- 5 tonnes per year.

An additional 5 kW of rooftop PV is needed to neutralise an average amount of air travel, and to power the electric car and heat pumps. This 15kW system would cost about A$20,000 up front and would last 25 years. However, rooftop PV systems are now so cheap compared with the retail electricity tariff that the money invested is generally recovered within 10 years.

The total emissions savings estimated above are about 25 tonnes per year, per household, which is still significantly short of the 63 tonnes (on average) that this family emits. To be fully carbon-neutral, one option is for the family to invest in a wind or solar farm.

The required share of a wind farm or solar farm is about 10 kW or 20 kW respectively per three-person family, noting that a 3MW wind turbine produces nearly double the amount of electricity per year of a 3MW PV farm (single axis tracking), which in turn produces 40% more electricity per year than an equivalent amount of roof-mounted solar panels.

The up-front cost of this investment would be about A$25,000 per family, and it would return a steady income sufficient to repay the initial outlay (with interest) over the 25-year lifetime of the system.

So in summary, assuming that you have the means to meet the (not insubstantial) upfront costs, doing your part to preserve a living and vibrant planet for our children ultimately has a low or even negative net cost.The Conversation

Andrew Blakers, Professor of Engineering, Australian National University

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

We can be a carbon-neutral nation by 2050, if we just get on with it


Anna Skarbek, Monash University and Anna Malos, ClimateWorks Australia

This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series here.


Strong action on climate change is vital if Australia is to thrive in the future. Lack of consensus on climate policy over the past two decades has cost us dearly. It has harmed our natural environment, our international reputation and our economic prospects in a future low-carbon world.

The next two years will be crucial if Australia is to meet its commitment, along with the rest of the world, to limit greenhouse gas emissions and avoid the worst ravages of global warming.

In 2015, nearly all nations signed the Paris climate agreement. They pledged to limit global warming to well below 2℃ and to reach net zero emissions. By our calculations, Australia needs to reach net zero before 2050 to do its part.

As a first step, Australia has committed to reduce its total emissions by 26-28% below 2005 levels by 2030. Under the Paris Agreement it will have to submit progressively stronger targets every five years. Unfortunately, Australia is not yet on track to meet even its comparatively modest 2030 goal.




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


Falling short

Analysis by ClimateWorks Australia found that although Australia’s emissions have fallen by around 11% economy-wide since 2005, emissions have been steadily climbing again since 2013. In 2013 Australia emitted the equivalent of 520 million tonnes of carbon dioxide. By 2016 that had bounced back up to 533 million tonnes.

While some parts of the economy cut emissions at certain times, no sector improved consistently at the rate needed to hit the overall 2030 target.

Emissions are still above 2005 levels in the building, industrial and transport sectors, and only 3% below in the electricity sector, based on 2016 figures, the latest available. The overall fall was mainly delivered by the land sector, thanks to a combination of reduced land clearing and increased forestation. Increased energy efficiency and the growth of renewable energy also made modest contributions.

Unfortunately, progress in reducing emissions has now stalled in most sectors and reversed overall.

How fast should we be cutting emissions?

We calculate that Australia needs to double its emissions reduction progress to deliver on the 2030 target. We will have to triple it to reach net zero emissions by 2050.

Hitting net zero by 2050 means going much further than the Coalition government’s 2030 target of 26-28%, or the 45% proposed by federal Labor. Australia would need to cut total emissions by 55% below 2005 levels by 2030 (the middle of the range recommended by the Climate Change Authority) to get there without undue economic disruption.

Fortunately, there are enough opportunities for further emission reductions in all sectors to meet our Paris targets. We can probably do better than that, given the falling costs of many key technologies.

The gap to the 2030 target could be more than covered by further activity in the land sector alone, or by the electricity sector alone, or by the combined potential of the building, industrial and transport sectors. Emission reductions from energy efficiency – through better buildings, vehicles and white goods – can even save money in the long term.

Clearly, not all sectors have the same potential to reduce emissions based on current technological progress, but all have significant room for improvement.

We calculated that:

  • the electricity sector was on track to cut its emissions by 21% by 2030, but could cut them by nearly 70%
  • transport sector emissions are set to be 29% above 2005 levels by 2030, but with projected technology improvements could be 4% below
  • the land sector is set to hit 45% below 2005 levels by 2030, but with more support for planting could be 103% below – well into “negative emissions” territory. The land sector would then be sucking up carbon and making up for emissions from other sectors.

How do we get there?

To ensure a smooth, cost-effective transition to a net-zero-emissions economy by 2050, some sectors will need to do more sooner, to avoid putting too much onus on other sectors where emissions savings are harder and more expensive.

This will require major upgrades to Australia’s current policy settings. Since 2013 Australia’s efforts to cut emissions have focused largely on the land sector via the Emissions Reduction Fund (ERF) and the electricity sector through the Renewable Energy Target. With the ERF due to run out of funds soon and no clear energy policy even as our ageing power stations shut down, policy certainty is urgently needed in both these areas to encourage investors.




Read more:
Australia can stop greenhouse gas emissions by 2050: here’s how


Renewable energy is powering ahead and starting to tap into Australia’s huge potential in clean energy resources. However, ongoing policy support is needed to ensure our energy remains affordable and reliable through the transition.

Despite the importance of the electricity and land sectors, we need emission reductions throughout the economy. Fortunately, there is plenty that Australia can do to cut emissions further, in many different ways:

  • in the land sector through revegetation and forestation
  • in electricity by increasing renewables and phasing out coal
  • in industry by bolstering energy efficiency, fuel switching and reducing non-energy emissions
  • in transport by introducing vehicle emission standards and shifting to electric vehicles and low-carbon fuels
  • in construction by increasing standards for buildings and appliances.

With well-targeted policies across all sectors of the economy, we can get back on track and meet our Paris targets.

Australia’s states and businesses are recognising how much they can and should do. For instance, 80% of Australia’s emissions are in states and territories with goals to reach net zero emissions by 2050, while many large companies and universities are pledging to be carbon-neutral or use 100% renewable energy.

There is more than enough opportunity, but we have to act now.The Conversation

Anna Skarbek, CEO at ClimateWorks Australia, Monash University and Anna Malos, Project Manager, climate and energy policy, ClimateWorks Australia

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

The government’s $2bn climate fund: a rebadged rehash of old mistakes


Ian A. MacKenzie, The University of Queensland

Australia’s new flagship Climate Solutions Fund, announced this week by Prime Minister Scott Morrison, will spend more than A$2 billion on cutting greenhouse emissions by 2030.

While action on climate change is welcomed, this announcement seems to be a faithful reprise of the previous Emissions Reduction Fund, which was beset with problems.

The government has put a new name on an existing scheme, while steadfastly refusing to learn from mistakes made along the way. In cruder terms, it’s slapped a gleaming coat of lipstick onto a pig of a policy.

Add to that the A$1.38 billion pledged today for building the Snowy 2.0 scheme – another plan hatched by one of the government’s former incarnations – and there’s not a lot of imagination on display as Morrison’s government scrambles for some much-needed climate credibility ahead of this year’s election.




Read more:
Australia’s Emissions Reduction Fund is almost empty. It shouldn’t be refilled


Currently Australia’s main tool to try and reduce emissions is the Emissions Reduction Fund (ERF), a “reverse auction” that lets businesses voluntarily reduce pollution and be rewarded with taxpayer cash. Successful bidders for funding have to sign a contract to reduce their pollution over several years.

So far, 193 million tonnes of pollution reduction has been secured at an average cost of A$12 per tonne. In total, around A$2.5bn will have been used to help businesses reduce pollution under the ERF’s original incarnation.

The Climate Solutions Fund is basically a rebranding exercise. It will build on the existing ERF but now expands the scope of participants, including allowing farmers to drought-proof their farms and subsidising businesses to pursue energy-efficiency projects.

Experience tells us it’s a bad idea

The aim for any climate policy should be to reduce our emissions to the agreed 2030 levels at the lowest possible cost. Unfortunately this is unlikely to happen with the Climate Solutions Fund.

This fund will inherit many of the ERF’s existing problems.

One of the ERF’s main issues is with its so-called “safeguard mechanism”. This was set up to ensure that large polluters could not cancel out the progress achieved by the fund’s participants. But this has failed: many large polluters’ “benchmarks” (the amount of emissions they are allowed to release before being penalised) have increased over time and, consequently, much of the work done by the fund has indeed been undone. Because of this, the fund has not given good value for money, despite awarding funding to the lowest bidders.

There are deeper problems. The way the funding is awarded – with public funds going to project proponents who promise to do a good job – the participants inevitably know more about the details of the projects than the government does. This “informational asymmetry” may mean that businesses overquote, asking for more money than they would be prepared to accept.

The successful projects that have signed up may not even be genuinely “additional”, in that they may well have gone ahead regardless of whether or not they won government backing. In other words, we could be paying for something that would have happened anyway!

But we know what works

Economists have known for decades the best way to encourage pollution reduction. It involves putting a price on carbon.

Implementing a carbon tax or (more likely) a carbon trading market will give business the flexibility to choose their own pollution control measures, while also ensuring that overall emissions are reined in.




Read more:
One year on from the carbon price experiment, the rebound in emissions is clear


A carbon price will spur industry to invest in cleaner technologies (and increase the potential for jobs growth in these areas) and ensure we meet our climate goals.

Despite prophesies of economic doom, a carbon price can be used to decarbonise the economy, simulate growth in new industries, and redistribute the revenue to ensure equity. It’s using economic levers to help the environment.

Putting lipstick on a pig does not change the fact that it is still a pig.The Conversation

Ian A. MacKenzie, Senior Lecturer in Economics, The University of Queensland

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

Morrison to announce $2 billion over 10 years for climate fund


Random Thoughts

Michelle Grattan, University of Canberra

Scott Morrison will announce $A2 billion over a decade for a Climate Solutions Fund, as the government seeks to counter criticisms that it is not doing enough towards dealing with climate change.

The money will extend the Emissions Reduction Fund (ERF), set up under the Abbott government’s “direct action” program, which at present has only $226 million uncommitted in it. More than $2.3 billion has now been committed under the ERF.

The new money – which will be about $200 million annually starting from January 2020 – will be used to partner with farmers, local government and businesses to reduce emissions. The government gives as examples

  • Remote indigenous communities will be assisted to reduce severe bush fires.

  • Small businesses will be supported to replace lighting, air
    conditioning and refrigeration systems to cut energy costs.

  • Farmers will receive assistance with revegetation and drought-proofing.

  • Local communities…

View original post 407 more words

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.




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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.