As Paris talks, Australia’s energy emissions are going in the wrong direction

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Australia’s energy emissions are changing at about the rate required, but going away from the target, not towards it.

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pitt&sherry + The Australia Institute

As all readers will know, publication of this report comes during the first week of the crucial UN Climate Change Conference (COP21 under the UNFCCC) in Paris. For that reason, we devote most of the full report to looking at overall trends in Australia’s energy combustion emissions, including changes since 2004-05, the reference year chosen by the Australian government for its official 2030 emissions reduction target.


Energy combustion emissions covered by CEDEX® include all emissions arising from the generation of electricity in the National Electricity Market (NEM), all emissions from the combustion of petroleum products within Australia, i.e. excluding international ship and aircraft bunkers, and all emissions from the combustion of natural gas by gas consumers (i.e. not including emissions from the gas industry’s own use of gas – see below) in NSW, Victoria, SA and Tasmania. All data are reported as moving annual totals, so as to remove seasonal effects on consumption of relevant products, and in terms of the changes since June 2009.

The emissions reported by CEDEX® reached their historical maximum in December 2008, i.e. in the calendar year 2008. By June 2009 the annualised total, i.e. total for financial year 2008-09, had fallen by 0.7%. The financial year 2008-09 is also the year in which Australia’s total emissions from fossil fuel combustion, as reported in Australia’s National Greenhouse Gas Inventory, reached their historic maximum.

Changes in the total of these emissions are shown in Figure 1. As the last four CEDEX® reports have described, total emissions have been increasing strongly since July 2014, largely driven by increases from electricity generation. The increase in electricity emissions has been caused by increased supply from black and brown coal generators, and reduced supply from hydro and gas generators, as discussed in almost every issue of CEDEX® Electricity Update over the past twelve months.

But Figure 1 also shows that petroleum emissions continue to grow, though more slowly than they did before 2013, and natural gas emissions also appear to be increasing. As Figure 3 shows, continuing growth in emissions from petroleum is mainly driven by increased consumption of diesel fuel. Diesel consumption has also been regularly examined in previous CEDEX® Reports; we discuss both diesel and aviation fuel again, later in this Report. We also briefly discuss the rather intriguing increase in emissions from gas consumption.

Stepping back from this detail we see that, while the Prime Minister has told the world that Australia will reduce its emissions by 26 to 28 per cent by 2030, the energy emissions reported by CEDEX® have increased by 3.5 per cent per cent in the 15 months since June 2014 alone. In 2012-13, the most recent year for which the national emissions inventory has been completed, emissions reported by CEDEX® were 58% of the national total. Assuming as an approximation that this proportion still applies then, in just 15 months, Australia’s emissions have increased by 2 per cent.

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A somewhat longer term perspective on what Australia’s emissions reduction target means is provided by Figure 2. It starts from 2005-06, not 2004-05, the reference year for the reductions target, because most of the data on which CEDEX® is based were not publicly available until a year later. (Note that the small difference in petroleum emissions trends between the two Figures is caused by different treatments of aviation fuel data, also imposed by input data limitations.) Even so, natural gas data were not available, but that does not greatly affect the conclusion.

In summary, CEDEX® emissions were 6 per cent less in 2005-06 than in the year to September 2015. Moreover, as national emissions inventory data show that the emissions which CEDEX® reports increased between 2004-05 and2005-06, 6 per cent is an underestimate of the increase which has occurred since 2004-05.

What is worse, CEDEX® cannot report what is probably Australia’s fastest growing source of emissions – those associated with processing natural gas for export as LNG, because none of the required data are publicly available.

Making a rough estimate, in the absence of a full national inventory, the Prime Minister’s emission reduction target will require Australia’s emissions to fall from current levels by an amount which is around 160 Mt CO2-e, possibly slightly more. This would require an average annual reduction of about 11 Mt CO2-e every year from now until 2030. Almost all of this will have to come from energy; all other sources accounted for only 177 Mt CO2-e or 32 per cent of the total in 2012-13. Yet energy related emissions are at this moment increasing, rather than decreasing, by about 10 Mt CO2-e each year. Australia’s energy emissions are changing at about the rate required, but going away from the target, not towards it!

Australia will need fundamental changes in not only in the way to generates and consumes electricity, but also in its use of petroleum products for transport and mobile equipment, if it is to have any chance of meeting its 2030 emissions reduction target.

National Electricity Market update to November 2015

Only one story: strong demand growth for Queensland gas production NEM data to the end of November 2015 show that the only significant changes since last month are those being driven by the ramp up of electricity consumption to support gas seam gas production in Queensland, which has been discussed in previous CEDEX® Electricity Updates. There has been virtually no change in demand in any other state, with the exception of a small increase in Tasmania (Figure 7).

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Increased demand in Queensland has been served by an increase in output from black coal generators in that state (Figure 8). The position of the coal generators has been strengthened by the continuing fall in gas generation, as the gas is now going to the LNG plants, the second of which made its first shipment in October.

Increased Queensland demand has also meant that the lower cost Queensland coal generators have reduced exports to NSW, allowing the NSW coal generators to achieve a modest gain in market share. Meanwhile, there was a small drop in output from the Victorian brown coal generators. The overall outcome was virtually no increase in emissions, despite an increase in the coal share of generation, as black coal substituted for brown, i.e. the reverse of the trend which has been seen for some months past (Figure 9).

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There was a modest increase in wind generation, all in NSW, as the Taralga wind farm reaches full capacity. As previously explained, little or no additional output is likely for at least a year, as the effect of the construction freeze of the past two years flows through.

Looking to the future, the absence of any demand growth other than for gas production is the only hopeful sign in the otherwise gloomy outlook for Australia’s prospects of achieving significant emissions reductions. It is ironic, to say the least, that production of coal seam gas for export as LNG, may increase Australia’s emissions from coal fired electricity by as much a 9 Mt CO2-e annually by 2020.

This is an edited extract of the latest CEDEX report from pitt&sherry + The Australia Institute. Reproduced here with permission

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