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Australia needs 75% renewables by 2030 to meet Paris targets, cut costs

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Less than one year after the Australian government agreed to ratify the Paris Agreement on climate change, a new report has warned that Australia risks falling short of its own national emissions targets  without significantly ramping up the electricity sector’s shift to renewable energy.

The report, the first major publication from The Australia Institute’s new Climate & Energy Program, finds that to meet Australia’s unambitious 26-28 per cent by 2030 Paris commitment – and to do so for the least cost to the economy and other key sectors like manufacturing – electricity sector emissions would need to be cut by between 40-55 per cent below 2005 levels by 2030.

The good news, is that this “least cost” emissions reduction approach is eminently doable. The bad news – at least for the Turnbull government and its right-wing anti-renewables rump – is that it will mean building a great deal more renewable energy generation between now and then, and framing policy to support that build-out.

According to the TAI – which uses the summarised results of a number of separate government commissioned analyses to support its findings – using an abatement cost approach to electricity sector targets, and a policy like the Clean Energy Target recommended by the Finkel Review, would lead to as much as 75 per cent renewables by 2030.

TAIchart1

“This analysis of the economic modelling demonstrates meeting (40-55% emissions reduction) targets for the electricity sector with a policy like the clean energy target is likely to require 66-75 per cent of electricity to be supplied by renewables,” said Ben Oquist, TAI’s executive director, in comments on Monday.

“If Australia adopts a weak clean energy target which does not provide a strong signal for renewables, we risk turning Australia’s moderate Paris targets into an extremely expensive task.”

Indeed, the findings echo modelling done by the Finkel Review which showed that – if a CET was to match the Paris climate goals, rather than Australia’s downpayment, then a renewable energy share of around 70 per cent by 2030 would be required.

The report’s findings come at a critical time for the Turnbull government, which appears to be stuck in a dangerous no-man’s land on both climate and renewable energy policy, while under attack from within.

Leading that internal attack is former PM Tony Abbott, who last week declared he would cross the floor and vote against anything remotely resembling a climate change policy, or the smallest subsidy for renewable energy.

As Giles Parkinson put it in this piece last week, Abbott’s declaration of war on everything not only wedges Malcolm Turnbull in a highly uncomfortable policy position, but returns Australian industry and the energy sector to the miserable realisation that nothing much has changed, in terms of investment certainty.

And it reminds us of the uncomfortable reality – highlighted in the report – that the very climate targets we risk failing to meet were set by the same man who now seeks to undermine them: Tony Abbott.

“If Australia is to achieve the Abbott government’s climate targets new energy policies will be required,” report author and TAI director of research Rod Campbell writes.

“Both issues are of high current policy interest. The Australian government is currently considering whether to implement the proposed CET and what targets it might set for the electricity sector as part of its 2017 Climate Policy Review.

“The Opposition has signalled ‘in principle’ support for a CET and has committed to a 50 per cent renewable energy target by 2030, which has been ridiculed by the government and conservative commenters.”

For those who remain confused, Campbell carefully explains why a mechanism like the Clean Energy Target remains so important for Australia, even as large-scale solar and wind farm development are starting to take off. And why any form of policy uncertainty remains so damaging – in particular for electricity prices.

“Electricity generation assets have long economic lives. This means investors need to consider both existing and future carbon-energy policy settings. The apparent incongruity between Australia’s 2030 mitigation targets and the long-term commitments embodied in the Paris Agreement create uncertainty,” the report says.

“Investors do not know whether the unambitious approach embodied in the 2030 targets will persist, or whether policy settings will be modified to give effect to the Paris Agreement’s commitments.

“As the hypothetical scenarios in Figure 9 illustrate, the post-2030 policy settings could remain unambitious, which might translate into a gradual decline in electricity sector emissions under the CET through to 2050 and beyond. TAIchart2

“Alternatively, there may be a rapid increase in the level of ambition, requiring a sharp drop in electricity sector emissions in the 2030s and zero emissions by 2050.

“The uncertainty about post-2030 policy settings could deter investment and increase the cost of capital, with flow on effects for the price of electricity in the market.”

Figure 10 shows how a long-term investment signal approach avoids this uncertainty by setting emissions targets in line with the long-term objective of decarbonisation at or before 2050.

TAIchart3

“Rather than facing the prospect of abrupt future changes in emissions, investors face a long-term emission path that provides them with certainty about policy settings over coming decades.”

The report also reminds readers that under almost any scenario modelled on “reasonable” carbon abatement targets, the vast bulk of Australia’s electricity generation mix is renewable from the mid-2020s on, while coal-fired generation is phased out in the early 2030s. Indeed, coal fares the best under the CET.

“The overall message from the Jacobs modelling for the CCA is clear – a CET-like policy is likely to bring in the largest share of renewables. This would come particularly at the expense of gas, with coal-fired generation also lasting longest under a CET,” the report says.

TAIchartFig13

Source: Jacobs (2017) Modelling illustrative electricity sector emissions reductions policies: Final report

TAIchartFig15 TAIchartFig14

“The government has been consistent in its commitments to Australia’s international emissions targets,” said TAI’s Oquist. “It remains to be seen if we choose to meet those Paris commitments the easy way, or the hard way.

“Unless energy and climate policy are integrated we will have neither reliability nor affordability, let alone the ability to meet our international commitments,” Oquist said.  

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  • Joe

    The quickest way to reach our Paris Agreement commitments is to dump The COALition as soon as possible. Sensible policy can then be implemented. If Two Tongues Turnbull and Banana ‘pee pee’ Joyce are still in charge we will have no hope. These jokers are ‘full steam ahead’ with their oxymorons , of ‘Clean Coalers’, ‘HELE Coalers’, ‘ Liddell Forever Coaler’, ‘Government Built Coalers’ and Adani Mega Coalmine plus anything else that they can think of to do with Coal. Get the roadblocks / The Libbies out of the way so that we can progress.

    • DJR96

      Hang on a sec Joe. Yes, they’re if nothing else foolish for spruiking coal. But why are they doing this? Because they have been lobbied upon from the Minerals Council of Australia and other various resource bodies. So how about directing your disgust and anger at the source. Meanwhile some of us are trying to set the PM and the coalition on the right track. The ALP and Greens may well get to the objective quicker, but I shudder to think at what expense. They’ll invariably make the whole transition cost much more than it should and still not ensure the network remains stable and secure.

      • onesecond

        Why this Mantra lie about the Green approach being more expensive still persists after all the Coalition has done to the opposite with the results being higher electricity prices and less reliability is beyond me. The Greens would give investment certainty and therefore lower the cost for the necessary energy transition and the environmental cost from legacy technologies remarkably.

        • solarguy

          That’s right 1 sec. get the policy right and then it should be hands off the wheel for the most part.

      • Joe

        I have no time what so ever for The MCA. Just because a lobby interest whispers sweet nothings into your ear does not mean that you swallow the crap that they speak. Shame on The Libbies but we know that they get election funding from The MCA and its hangers on so the support of The Libbies has effectively been bought. What is it that people do not want to acknowledge about RE. It is cheaper than sticking with Fossil Fuel. Just ask the Energy Majors, the serious new money is going into RE not FF. Stability and Security is not guaranteed by FF. The February 10 Heatwave had the NSW power system in a near blackout due to FF collapsing in the heat. August 18 in NSW tens of thousands of homes were blacked out, FF couldn’t stop strong winds blowing down powerlines.

      • Mike Shackleton

        Given the current Coalition’s track record on large infrastructure projects such as the NBN, I wouldn’t trust them to deliver the transition that Australia needs. We’ve wasted 4 years with this mob going backwards. States are legislating their own targets, that’s how we will get this done.

        • Joe

          NBN…..National Broadband Nowhere.

          • solarguy

            Yep, what a f&%k up!

          • Joe

            And the NBN top dog, CEO Bill Morrow, collects millions in pay and as well a tidy little bonus after delivering…. another big annual loss. Building Turnbull’s Copper Crapper that will have to be redone with fibre. Please tell me that I am dreaming.

          • solarguy

            Ah no mate the night mare continues.

        • solarguy

          Here, here…….too right!

      • solarguy

        Getting to the source DJR, is the weak heads in the LNP. Their responsible for this mess because of their bloody GREED. And I can’t see what rational you have, implying that Labor and the Greens will make the transition more costly.

      • Gillard and the Greens introduced a carbon price while economic growth expanded and emissions from the affected sectors declined. The uncertainty created by the Coalition is creating an expense.

      • Barri Mundee

        Sure the MCA might have lobbied the Turnbull government but the buck stops with them. “Meanwhile some of us are trying to set the PM and the coalition on the right track”.

        What is that “right track”?

        • DJR96

          Reforming the regulations and market mechanisms, let the industry invest where they’re willing to, and concentrate on ensuring the network remains stable and secure beyond the transition – ie. without synchronous generation.

  • Don McMillan

    None of this is possible as long as we ban natural gas exploration.

    • Your thinking is far too constrained.

      • Don McMillan

        Too late for batteries or renewables. I have worked all my life in the gas industry and we are done. Industry/manufacturing etc needs gas now there are no batteries or anything remotely in place so there is no hope. Hopefully people like yourself and others on the website will show me how it is done. Pls show me I am wrong.

        • I know the solution is not to extract stuff from underground, burn it and release the emissions into the atmosphere. That would be like lighting up a cigarette in a restaurant next to a pregnant women. Dirty!

          • Don McMillan

            Words are easy – action is what we need. Telling factory workers they are going to lose their jobs is distressing. So obviously my years of work has failed. You are confident that you have a solution. If you have the answers – go design – raise money and build these systems. Show me I am wrong.

          • Eb

            Some Australian companies are looking to reduce their gas consumption through the options discussed here: https://arena.gov.au/assets/2017/05/ITP-RE-options-for-industrial-gas-users-Summary.pdf

          • Don McMillan

            Some
            Right or wrong most are lost

          • Barri Mundee

            We need gas – for now- we do not need to extract more from onshore fracking. We need the PM to earn his keep by ensuring, through export controls if the gas companies refuse to budge, that there will be enough gas to for domestic use.

          • Don McMillan

            On an equal gas price basis, the gas producers make more
            money selling to the domestic market compared to exporting LNG because 10% of the gas is required to liquefy the gas. When the Queensland gas producers were offering contracts [2000 – 2010], the domestic gas customers balked at paying the international gas price. At the time, huge investment dollars were allocated in developing CSG resources in NSW and there was an expectation that NSW CSG could even rival QLD CSG projects. A significant component to the gas price is pipeline tariffs therefore locally produced gas is cheaper. The NSW domestic customers expected to be supplied by gas produced in NSW, therefore QLD gas was allocated to the export market.
            Unfortunately, the domestic gas customers did not consider sovereign risk and due to the subsequent bans and moratoriums they are now left exposed to the shortfall in gas supply. Under the Australian constitution the natural
            gas resources are the responsibility of the respective states. Therefore, domestic gas customers should be querying their state government regarding this self-imposed gas shortage.

    • Barri Mundee

      There is no shortage of gas, there is a shortage of will to ensure that OUR gas is available for OUR use and at a fair price.
      There is no need to add to the gas supply even if fracking is completely benign, environmentally speaking.

      • Don McMillan

        It is not our gas, under the oz constitution gas is owned solely by the states not the Aust gov
        So nsw has no rights to Qld gas
        We would not have a problem if states that ban exploration also banned gas including imports

  • howardpatr

    Mad Monk Abbott will apply his “deep understanding of science and engineering” while he struts about Australia on the NO to SSM cause and then give Turnbull his latest policy position on renewable energy.

    Hard to imagine but Abbott and his RWandRNJ colleagues may yet topple Turnbull with climate change being the main factor.

    • Joe

      Just gotta love the pantomime being played out….Turnbull gets knife by Abbott …Abbott gets knifed by Turnbull….Turnbull now looking over his shoulder as Abbott gets ready for …AFTERS !

    • solarguy

      Look if Turdbull gets rolled by Abbott, they have no hope of winning the election.

  • solarguy

    Please I hope no one takes this the wrong way. Centuries ago when we where still mainly living in villages, any psychopath was dealt with swiftly, as they were a liability. In Nazi Germany, those who got in the way of the bastards, even members of their own party, where taken out side and shot.

    Abbott needs to be sacked by Mr T gutless and lets move on, as we haven’t got time for this shit!

    • Bella49

      The psychopaths have traditionally been the ones in charge of the village. It is still the same.

  • Australia needs a leader who will tell us the order and year that each coal fired power station is closing down. The alternative is too costly.

    2022 Liddel
    2023 …., ….
    2024 …., …., ….

    2030 Good job, buddy.

    When we do that we will part of the way forward. Then we remove the oil burners. Yes. There is a lot of work to be done. We are up to it. This is progress.

  • JoeR_AUS

    mean while SSM, Coal, GAS, renewable, real estate, Citizenship blah, blah

    in 2030 there will be 30 million people in Australia, that need to pollute as much as 20 million in 2005 – Paris Climate Agreement

    I think this is a bigger challenge, that nobody of consequence, has realised!