The closure of Australia’s dirtiest coal-fired power plants is one of the major “non-negotiables” of the nation’s low-carbon transformation, a new report has found, if the Abbott government is to have any chance of meeting its own “soft” 2030 emissions target.
The report, released on Monday by RepuTex, finds that to meet a target of 26-28 per cent reductions on 2005 levels by 2030, Australia’s most emissions intensive brown-coal fired generators – including Loy Yang A and B, Hazelwood and Bayswater – would have to be shut down, while the mining and land-use sectors would also face major transformations.
But it says this will not happen with the current suite of policies, including the emissions reduction fund and the renewable energy target. Stronger policy incentives would also be needed, the report says, to help drive this transformation.
An energy market of the future – indeed, a not-too distant future – with less baseload coal power is a reality that the Abbott government is yet to get its collective head around; even despite the fact that the generators themselves seem to be coming to terms with it, as is the WA government.
As reported here in June, the French owner of Victoria’s Hazelwood brown coal generator – the dirtiest power station in Australia, and third-dirtiest in the world – has signalled a big push against coal-fired generation, calling for a switch from coal to gas, and for a significant carbon price to be imposed to hasten that transition.
Engie – which owns plants ranging from coal, gas and nuclear, to increasing investments in wind, solar and hydro – is also forecasting the decline of centralised fossil fuel generation.
Bret Harper, RepuTex’s head of research, says this is an idea Australia needs to embrace.
“The electricity generation, mining, and land-use sectors will contribute over 50 per cent of Australia’s emissions growth to 2030, while at the same time these sectors represent our greatest opportunity for emissions reductions,” Harper said in comments accompanying the new report.
“Meeting the government’s target lives or dies on the back of these sectors. If these sectors specifically are not transformed, the government’s new target will not be met,” he said.
The report warns that, despite the Abbott government adopting a “soft” emissions target in comparison to its global peers, it will still require a significant shift in the Australian economy to meet the goal, as well as new policy intervention.
“Together, we estimate the electricity generation, coal mining, LNG, and forestry sectors can reduce emissions by almost 3,000 million (3 billion) tonnes by 2030. This is more than Australia’s entire national emissions over the past five years,” said Harper.
“The abatement opportunity in these sectors is immense, however, current policy fails to provide a large enough, or sustainable enough, incentive to drive that change” he said.
On the contrary, the report finds that under current policy – including the Emissions Reduction Fund and the newly pared back Renewable Energy Target – emissions intensive activities such as brown-coal generation will be locked into the economy, and even grow, at the expense of cleaner fuels.
“Due to increasing gas prices and growing demand, market dynamics favour brown-coal generation, which is the lower priced dispatachabe generator in Australia,” said Harper.
“As demand returns, we see brown-coal increasing its output, and even if demand falls, we expect high cost black-coal will be the next to exit, so emissions will increase as brown-coal generators pick up any gap.
“This is the opposite of what needs to occur to meet the government’s new target. An orderly shift from inefficient, and aging, coal plants would instead trigger a transition to gas or renewables generation, and create room for large-scale renewables to grow beyond the current RET,” he said.
This is a point RepuTex has made before, in an earlier report this year, which found that the Abbott government’s key policy provided “a significant amount of headroom” for some of the country’s biggest emitters.
More specifically, the early August report found that, after all rules and concessions are applied, not one of Australia’s 20 heaviest polluting facilities was expected to exceed their baseline – despite almost all being forecast to grow their emissions over the next 10 years.
“With baselines set so high, we project that emissions will actually grow under the safeguard scheme – by around 20 per cent – so the policy will fail to curb emissions growth, let alone assist in reducing emissions to meet our new post-2020 emissions target,” Harper reiterated this week.
In comparison, RepuTex estimates that the abatement potential from these sectors could grow by more than 10 times under new emissions compliance policies – be it the government’s emissions baseline scheme or the ALP’s emissions trading scheme.
According to RepuTex, government emissions projections indicate that Australia will be required to reduce cumulative emissions by over 2,500 million tonnes (2.5 billion) between 2015 and 2030 to meet the new emissions target, while RepuTex’s forecast estimates that figure at well under 2,000 Mt due to reduced economic activity over the outlook period.
“While it is a sizeable task, early action will have a compounding effect on the abatement challenge, so it will become easier to reach the goal as action occurs to progressively reduce emissions,” said Harper.
The report also points to the forestry sector as another key player, and key focus of new investment, if Australia is to meet its pledge.
“The emissions reduction potential of the forestry sector is almost as large as the electricity and mining sectors put together, with almost half of all analysed abatement opportunities expected to be derived from forest management, avoided deforestation, and reforestation activities,” said Harper.
“Forestry is clearly Australia’s emissions ace-in-the-hole, and enables Australia to fulfill its abatement challenge through domestic investment, which drives co-benefits such as job creation.”
“So economically and environmentally, forestry will need to be the cornerstone of Australia’s transition to being a low-carbon economy,” he said.