How Australia can meet 2°C target at no net cost to business | RenewEconomy

How Australia can meet 2°C target at no net cost to business

Australia has numerous opportunities to cut emissions at a “cost saving” to investors, including distributed solar PV, fuel efficiency and forestry.

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Officials applauded the Paris climate pact in December. Credit: UNFCCC/Flickr
Officials applauded the Paris climate pact in December. Credit: UNFCCC/Flickr
Officials applauded the Paris climate pact
Credit: UNFCCC/Flickr

Background

In becoming a signatory to the Paris Agreement, the federal government has accepted the risk of a significant future liability as Australia begins to transform its economy. At the same time, debate continues over the design of policy to meet Australia’s current and future emissions targets, including which emission reduction opportunities should be pursued, and the cost of transitioning to a 1.5-2 degree aligned emissions trajectory.

While Australia’s policy environment remains uncertain, scrutiny of the impact of climate risk on Australian businesses has grown, with the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) affirming that companies will be required to systematically monitor, disclose and discuss the risks of climate change, in line with a 1.5-2 degree pathway under the Paris Agreement.

This has led to the more critical analysis of science based targets by Australian businesses as many high emitting companies seek to understand the potential cost and impact of transitioning to a 1.5-2 degree constrained pathway.

As decision makers seek robust figures from which to make more informed decisions, in this study, we provide a quantitative basis for identifying emissions reduction opportunities across the Australian economy, in the form of a marginal abatement cost (MAC) curve.

Analysis identifies over 150 greenhouse gas (GHG) abatement opportunities across 10 sectors of the economy, measuring the size and cost of each activity, and the potential for activities to contribute to a series of emissions reduction targets, and policies, under the Paris Agreement.

By providing a detailed view of abatement potential and costs by industry, the MAC curve provides key insights of which sectors are likely to contribute large-scale emissions reductions under the Paris Agreement, and the most effective levers to capitalise on abatement opportunities. In this way, modelling aims to support decision makers as they begin to explore the steps needed to meet a 1.5-2 degree target, and cost of transitioning the Australian economy.

Key findings – Meeting a 2°C target under the Paris Agreement

This article draws on our full market study, titled “Meeting a 2°C target: A cost curve for emissions reductions in Australia to 2030”. To view the full report, please click here.

Below, we summarise some notable findings:

Australia has ample domestic abatement to meet a 2-degree target under the Paris Agreement, with around 600 million tonnes (Mt) of emissions reductions available across the economy by 2030. This is equivalent to Australia’s emissions in 2005, the baseline year for Australia’s contribution to the Paris Agreement.

Australia is therefore able to easily meet a 45 per cent cut in emissions (abatement of 265 Mt) by 2030, the target recommended by the Climate Change Authority to contribute to limiting global warming increases to less than 2-degrees Celsius.

Chart 1: Marginal abatement cost (MAC) curve for Australia in 2030

Source: RepuTex Carbon, 2017
Source: RepuTex Carbon, 2017

Such a cut could be reached by implementing all abatement measures below $20 per tonne of carbon dioxide equivalent (CO2-e) in 2030, representing the marginal cost to industry of meeting the 2 degree target. Modelling indicates the marginal cost would rise to $60 per tonne of CO2-e to meet a target consistent with limiting warming to 1.5 degrees.

Notably, analysis indicates that Australia has a considerable number of opportunities to reduce emissions at a “cost saving” to investors, with 40 per cent of all emissions reduction activities within the MAC identified as providing a positive return to investors.

This includes activities such as distributed solar photovoltaics (PV), fuel efficiency and farm forestry, which provide a benefit to the investor of buying less energy or improving resource efficiency.

Should all negative cost opportunities be implemented, we estimate that that the total benefit would represent approximately $13 billion in savings in 2030. These savings are larger than the total cost of implementing all emissions reduction activities to meet a 2-degree target ($2 billion), indicating that, in theory, Australia could meet a 2-degree target at no net cost to investors.

In practice, this would require aggressive policy settings to create incentives for industry capture these emissions reductions. This is best able to occur by incentivising high emitting companies, consumers, and governments to be accountable for their greenhouse gas emissions, and by reducing the upfront and net costs of action.

The Land-use, Land use change and Forestry (LULUCF) sector, along with the Electricity sector, offers the greatest volume of abatement potential in Australia by 2030, contributing over 80 per cent of all emissions reductions opportunities. Interestingly, these two categories have very different average marginal cost profiles, indicating that different pricing and/or policy measures may be necessary to effectively capture abatement from these emission sources.

Individual states are well positioned to regulate certain abatement activities. However, opportunities between states differ based on the individual histories and resource availability.

In general terms, the states with the largest (non-desert) land area are likely to have the biggest abatement profiles, while those with the most expensive energy are likely to have the cheapest abatement. The opposite holds for states and territories with low energy prices and small areas. In this context, the largest abatement opportunities at a state level involve change to land use in pastoral states such as Queensland, South Australia, and Western Australia.

The states have a number of ‘low hanging’ policy opportunities available in the event that policymakers seek to take action in the absence of federal policy, or seek to better capitalise on available investment opportunities.

Building the cost of a 2°C target into decision making

The government is under increasing pressure to set a long-term target that better aligns with climate science as part of its 2017 climate policy review. In parallel, scrutiny of business risk management processes by ASIC and APRA has recently increased.

APRA – which oversees banks, credit unions, building societies, and insurance firms – has called for companies and investors to model the impact of 2-degree target on their businesses and portfolios. This raises the stakes for industry to better understand the cost of meeting a 2-degree target, and identify which sectors will carry the largest burden to reduce emissions.

In the absence of a carbon price signal, we view a long-term marginal cost of abatement of $20 to $60 per tonne as key reference point for investors. This represents the indicative cost per tonne of activities needed to meet Australia’s obligations under the Paris Agreement.

However, it is important to note that not all sectors will share the cost abatement equally. As this MAC curve indicates, there will be winners and losers. Moreover, Australia’s inevitable step up in ambition under the Paris Agreement will come at a notable cost increase as large-scale opportunities in more expensive sectors are captured.

To download a free summary report of our new market study “Meeting a 2°C target: A cost curve for emissions reductions in Australia to 2030”, please click here.

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23 Comments
  1. Alastair Leith 3 years ago

    Worth noting that Australia’s pledge to Paris is not equivalent with keeping the world below 2.0º C. Not even close. UK is further advanced than Australia and Kevin Anderson says rich nations need to be decarbonising at 10% per annum to even have a low chance of peaking below 2.0º C.

    http://carbonneutralshef.weebly.com/delivering-on-2-degrees—kevin-anderson.html

    • Joe 3 years ago

      Australia under current COALition Federal Government can’t be genuine about the Paris commitment. I mean how can they be when they are piling in on the Adani Carmichael mega coalmine. The Windmill Commission would be a joke if it wasn’t reality and us taxpayers have the privilidge of paying to keep the farce running.In Australia coal is still King. Despite the spin from Joshie and Big Mal our emissions are still rising. Our Paris commitment is just Greenwashing by the COALition.

      • Alastair Leith 3 years ago

        Even blowhard Barnaby Joyce, Josh who-walks-two-sides-of-the-street Frydenberg and our agile PM can’t save coal now. First wind and now utility PV is cheaper than new coal most sunny places in the world, at some PV point will be cheaper even via a network than existing coal. Coal is a sunset industry no matter what.

        • Joe 3 years ago

          I see now that QLD Premier Annastacia is apparently having second thoughts on the “royalty subsidy” that was promised to Mr Adani. The political blow back on QLD Labor has arrived. A living GBR, averting dangerous climate change, preserving land and water resources, respecting Native Title Rights of our First Australians are all not compatible withThe Adani Carmichael mega coalmine. What is it that the Federal COALition don’t understand ?

  2. ROBERT NEILL 3 years ago

    We will not save this earth until the completely unnecessary and vastly destructive & polluting global industry of farming & slaughter of 70,000,000,000 animals each year for humans to eat ends. Its the No1 of greenhouse gas emissions (50%) deforestation, soil depletion, river and ocean deaths, and human cancer, disease and death.

    • Ren Stimpy 3 years ago

      That is completely false. It’s nowhere near No1 of greenhouse gas emissions.
      Fossil fuels (electricity and transport) are No1 of greenhouse gas emissions by a long way.

      I think you are a fossil fuel operative trying to cast blame onto other industries. Btw I do think the livestock industry does need to reduce it’s methane emissions. There have been some scientific breakthroughs in recent years and they need to start applying them.

      • Alastair Leith 3 years ago

        You’re quite wrong Ren, but it’s probably not willful ignorance on your part, as even the IPCC is loathed to make the facts available in a coherent way. The accounting can be done in various ways, and the existing UNFCC methodology of assigning emissions to sectors pretty much makes a mockery of the facts for countries like Australia and the global emissions.

        These are numbers you’d be used to seeing, the NIR numbers which peg Ag sector at 14% by obscuring many of the emissions (especially land clearing into another category) and offsetting ag sector emissions with Forest Sinks… how nice, why can’t stationary energy lay a claim on forests, after all most forests left in Australia are only there because the land clearers for agriculture didn’t want the land as it was too sloped or poor soil/rain/climate.
        https://uploads.disquscdn.com/images/c5dadb1bce8940f01a779ad82aca236eac4aa3543fcbedfd7dac3b3c6fc4a9bb.png

        Here’s exactly the same data but recategorised using ANZSCI categories used for other industry based national accounting. See how ag is starting to appear more significant.

        https://uploads.disquscdn.com/images/cd3fa0b67530dfc0cb6a3491277f77f91609605913818f22e44b3e6ecee11a0f.png

        And that’s without considering that methane and CO act as precursors to tropospheric ozone, another potent GHG. And in Short Term Climate Pollutants (STCPs) like CO, black carbon, etc and you start to get even worse emissions because of mass savannah burning to promote green fodder.

        Here’s what the ZCA Land Use Report from Beyond Zero Emissions pegged Land Use sector emissions at:
        44% of national total using GWP100 and 56% of total using GWP20!

        https://uploads.disquscdn.com/images/b80fa3241a0ae1124116c34dc785e4121ffea128233e52707d0981fbf097fe5f.png

        There’s a reason why many climate scientists have emphasised CO2 emissions over all other shorter lived GHG emissions, because if we only address short term pollutants, yes it slows global warming for a a couple of decades but in the long run we still cook the planet. So the plan was deal with CO2 and when that seems to be under control, work on short term warming from methane, CO, black carbon (becoming more recognised in latest IPCC AR5).

        But we are now in a climate emergency. We must act on methane (which has more than tripled since pre-industrial levels and most of it is anthropogenic compared to less than doubling of CO2) and other STCPs at the same time as we act on CO2 to buy ourselves more time to get fossils kept in the ground and slow warming. Halving methane emissions today would be equivalent in terms of reduced warming as having zero CO2 emission from now until 2050 — that’s nothing to sneeze at.

        • Ren Stimpy 3 years ago

          Chart battle!

          https://uploads.disquscdn.com/images/8ec57370a616c877be255226fc8abea4deca5caba8d250e3332069111e429640.png

          – Livestock and manure methane accounts for 5% of world GHG emissions.

          (The radiative forcing increase caused by methane emissions increase is quite low in comparison to the rf increase caused by CO2 emissions increase
          https://uploads.disquscdn.com/images/01611f34f4b0186e0e52d2c58d0a88c15c787fd1099fba4438933e2d7d6cafa1.png
          )

          – Add the portion of C02 from an 18% total caused by deforestation that is attributable to livestock. Assume half or 9%, the other half being for crops.

          – Add the portion of N20 from a 6% total caused by agricultural soils that is attributable to livestock. Assume half or 3%, the other half being for crops.

          5% + 9% + 3% = 17%

          So ROBERT NEILL’s claim that “farming and slaughter of 70,000,000,000 animals each year” is “the No1 of greenhouse gas emissions (50%)” is simply wrong, dangerously wrong.

          I have a number of other points Alastair, I’ll have to keep adding replies to this comment as I remember them.

          • Ren Stimpy 3 years ago

            – One of the reasons climate scientists emphasise reduction in long-lived CO2 is because burning fossil fuels also produces short-lived sulfates which have a negative radiative forcing, temporarily offsetting the greenhouse effect of non-temporary CO2. A climate time bomb when we finally kick fossil fuels.

            – If we reduce livestock we will have to increase cropping to supply the world’s protein. It’s not as simple as reducing deforestation to the amount that livestock causes. A lot of that deforestation and GHG (in fact more NO2 and probably CO2) would persist such as soy/rice/corn/etc reqs that would need to be increased to replace livestock as a protein source. Assuming anybody wants to eat the tasteless gunk rather than meat.

            – Population normalises (fertility rate goes below 2.1) when child survival beyond the age of 15 improves. Protein improves child survival. Want to keep world population under control? Provide protein. Greenies who simultaneously complain about livestock and population need to give themselves a good uppercut for being such ignorant nongs.

            – (Politics) Suggesting that we all quit meat will raise the ire of 75% of the potential voting public! That suggestion is basically going to ensure most people throw their hands up on climate – if it’s all about meat (it’s not) it can’t be solved!! (It can!). Greenie bleeding hearts spewing fake numbers are destructive to the solution.

          • Ren Stimpy 3 years ago

            Fossil fuels (CO2) are responsible for 60% of emissions worldwide, but 80% of emissions in developed countries like the US and Australia.

            https://www.skepticalscience.com/animal-agriculture-meat-global-warming.htm

            Note to the Greens. Every country on Earth wants to be a developed country.

          • Alastair Leith 3 years ago

            I think that skeptical science page is misleading and not a single moderator or John Cook himself (who has little to do with the site these days I gather) have bother to respond to my sense of the misinformation on that page.

            It’s not a one size fits all measurement on GHG emissions. Everybody who understands the issue of timeframes well knows that. Some prefer to focus on CO2 at the exclusion of other GHG emissions. For reasons I’ve outlined above that is a dangerous position to be taking now we are in dangerous climate change already and BAU will see us lose over 90% of endemic indigenous species by 2070 on BAU (CC presentation by CSIRO researcher 2016). BAU is continued land clearing for livestock (currently rampant in QLD and legislation currently before NSW parliament about to see potential for more).

          • Alastair Leith 3 years ago

            Every child wants a pony. If you are familiar with the work of Beyond Zero Emissions, it’s not about everyone living in caves! Some states in the world already have net 100% RE. That also was considered lunacy by (guessing) 99% of the population thirty years ago.

          • Alastair Leith 3 years ago

            1) I know. If we ceased all human GHG emissions today we’d still see another ~0.2º increase from the loss of cooling aerosols that come out of coal smoke stacks and aircraft (and another ~0.3 or higher from climate lag effects from short term positive feedbacks like loss of albedo as glaciers and sea ice retreat).

            But that is not actually the main reason for emphasis on CO2 in the literature I’ve read. The papers advocating ignoring short term GHG mitigation until CO2 is sorted are making this a simple argument. It’s that if we allow mitigation of short term warming gases to come at the cost of long term warming (i.e. CO2) then while we’d see a reduction of warming relative to BAU, once that effect had passed the CO2 would still have been building in concentration all that time. If prices were put on methane and CO2 then it’s conceivable that price signals would reward, say methane mitigation over CO2. So it’s actually the opposite of your idea that it’s about the short term cooling sulphates, it’s all about eyes on the main game.

            The problem with this argument is that we’ve run out of time to wait for CO2 to get sorted before we act on all the shorter lived emissions. Methane is responsible for one third of anthropogenic global warming to date. Given that arctic tundra is now melting and the feedbacks will be horrendous once they scale to ten times human emissions then we need to take every short term cooling mitigation measure we have.

            2) THE PROTEIN MYTH. I might redirect you to others who’ve spent a good deal of time deconstructing that one. Will return with links. Suffice to say that everything you’ve claimed is demonstrably false.
            a) The human need for protein is 10% by calorie of an otherwise balanced diet. Animal protein is harder to digest (consumes more energy) than plant and does significant metabolic damage in the process. It’s “cancer’s favorite food” US physician Dr McDougall likes to say. Leafy greens and seeds contain enough protein for human cell growth even before we get to broadscale cropping of grains. The world record holder for multiple clean-lift competitions is vegan. Carl Lewis credits veganism in getting him wins at his third olympics. Silverback gorillas (who we physiologically resemble more than 99.99% of other species) are essentially vegan and don’t do cropping.

            b) Globally, land clearing is largely for animal production, almost totally in Australia. 60% of Australia’s land mass is under agricultural production — 58% is under livestock production (that is 97% BTW source: Neglected Transformational Responses: Implications of Excluding Short Lived Emissions and Near Term Projections in Greenhouse Gas Accounting). More than half our cropping is to feed animals and export grain. South American soy production is almost entirely to feed livestock and other animals. Your claim that plant based wholefood diets would result in a similar amount of land clearing and deforestation and resource depletion is false. To give you some idea, look at this emissions graph:
            https://uploads.disquscdn.com/images/68f43e41bb83bff20f397f8356f5374cd9440fa926eb776ce6f1b5ca62b1847a.png

            And this conversion rate graph:
            https://uploads.disquscdn.com/images/d53649b98c166ffbc905c02ab1c48d39d90f7e08ee32cc0ca5ec198857196bbd.png

            Source:
            Terrastendo, Paul Mahoney.

            3) Again the protein myth, this time in one of the most perverse twists I’ve ever come across linking it to fertility rates. Animal protein is not an ideal protein source for humans (other than human breast milk).

            Aid physicians in Africa found that children were so malnourished that they couldn’t even digest standard aid-issue protein biscuits. So they introduced spirulina (other places are using indigenous blue-green algae) to get the children a source of protein and other essential nutrients so they could digest food. On population it’s clear infant mortality is important and that female emancipation (education and employment and career prospects) is the biggest driver of fertility rate reduction but consumption of animal foods is 100% irrelevant to infant and child mortality. Balanced vegan diets are just more healthy at any age, it’s a fact that vegans live longer.

            4) These are not fake numbers. I challenge you to read the Land Use Report and fault any numbers in it. One of the lead others was a senior scientist with the Queensland Government Ag Dept and is acutely aware of the seriousness of land clearing in Australia and the reasons for it. All sources are declared, and a paper that followed and drew from the LUR work extensively it was peer reviewed.
            http://ijc.cgpublisher.com/product/pub.185/prod.269
            http://www.bze.org.au/landuse

            Your comment on politics is essentially that people can’t handle the truth, so you’d prefer to call it lies. There’s a lot of vested interests involved in keeping the livestock and dairy industry protected from climate action. Many of the responses like yours remind one of the things people used to say about fossil fuel use, ‘well you can’t stop people using cars/energy/planes’. Just because the world is full of hardship doesn’t mean we should bury our collective head in the sand on Land Use sector emissions.

          • Ren Stimpy 3 years ago

            1) According to the radiative forcing calcs (NOAA AGGI) CO2 has contributed 14 times the warming that methane has since 1990. If it’s not obvious in the chart above here are the numbers – difference between 2016 AGGI index and 1990 index
            Methane 0.507 – 0.459 = 0.048
            CO2 1.985 – 1.292 = 0.693
            (The AGGI doesn’t account for that warming bounce which will occur when cooling aerosols are eliminated along with fossil fuels.)

            Livestock methane emissions are only about a third of the total methane emissions. The other two thirds of methane are from fugitive emissions related to energy (solved when fossil fuels are ended), waste and heating systems.

            2) There’s been a revolution in meat consumption in the last 30 years where poultry and pork have replaced the growth of read meat consumption, although it’s a health related trend with nothing to do with climate change. According to your livestock emissions charts the ramping of that white meat replacement for red meat trend could keep livestock emissions at their current levels. Chicken meat has 10 times less emissions than beef. Here chooky chooky chooky come and get your dinner invitation.

            3) Anything that improves child survival and life expectancy will cause fertility rates to return to normal and population growth will tend to stabilise around the replacement rate. As you said a minimum 10% of calories in the diet should be protein for good health. In terms of digestive health – seeds, pulses and some grains are far harder to digest than animal protein. I can upload some of my farts to SoundCloud if you don’t believe me. Firstly, humans are omnivores, descended from hunter-gatherers. We’re not herbivores, our ancestors preferred meat and animal products when available. Having said that we’re not carnivores either – we also need vegetable matter for vitamins, minerals, carbs and energy, but seeds and other vegetable matter were the second choice of our ancestors when meat was available, probably because our species evolved with a hell ton of barbecue craving taste buds. Mmmmmmmmbarbecue.

            I agree that female education and employment is important to population stability, but health and life expectancy are the key things. Removing meat and animal products as part of that 10% protein requirement would be quite detrimental to both.

            4) My politics comment was mainly a world politics comment, that’s why I quoted the US election results above. Really mainly the only ones from that pool of voters who would be open to a vegetarian diet would be the 2 million Jill Stein voters (including the ones who sneak a turkey leg when everyone else is asleep). Perhaps a few million Clinton voters would give it a try. The remaining 200 million voters would just get angry at the suggestion of vegetarianism and, by association, angry at climate change action in general. Maybe one year a long long time into the future in political atmosphere far far away, everyone will be a vegetarian, but I guarantee it won’t happen in this century. We’re running out of time to solve climate change, we need to put of the vast majority our resources and time and money into the largest and most solvable parts of the problem, which are the transformation of electricity generation and land transport along with energy efficiency.

      • Alastair Leith 3 years ago

        On those scientific breakthroughs, i.e. a trail of a feed supplement of a particular seaweed where 4% by diet provided for 70% reduction in EF methane (or thereabouts) it’s not really applicable on most Australian livestock production because it’s on rangelands and those animals don’t see daily hand feeding; they barely see humans at all except for muster. Also we don’t have a seaweed industry let alone on that kind of scale, that would be a big ask to generate that much feed from a non-common seaweed and emissions from enteric fermentation and manure still would be present, but improved.

        So costs would be prohibitive. What they could do is put all animals on improved pastures and let the rangelands forest regenerate. According to one (unpublished) paper I’ve read would actually offset the emissions, and a former lead scientist in QLD dept of ag, Gerard Wedderburn Bisshop read that paper for me and said it was excellent work. Not sure how the paper ascertained the emissions, even the experts can’t agree on accounting methodologies.

        • Ren Stimpy 3 years ago

          Couldn’t the seaweed be developed into a concentrate and administered to the animal along with all the other long-lasting livestock additives they receive to improve productivity?

          • Alastair Leith 3 years ago

            Doubt it, currently trials are for daily feed. It’s not like a hormone or growth stimulant that they use implants under the animals skin for slow release. Those devices can last months/years I think. Even as a concentrate would still require vast quantities of input stock. It would require getting animals off extensive zone rangelands etc and onto improved pasture where they can be fed on a daily basis. Farm based partial reforestation as an offset for emissions and leave all the cleared woodlands extensive zone areas QLD and NT to recover. Like I said the land devoted to animal ag is 97% of land under production of some sort, and globally equivalent to the land mass of Africa. Reforest even half of that and we are starting to get somewhere.

            Suspect lab-meat will come to the (partial) rescue for cheaper cuts of meat. Its super pricy ATM (like computers were once) but will probably scale to be significantly cheaper (especially with a broad and accurately indexed carbon price!) than animal meat.

          • Ren Stimpy 3 years ago

            Lab meat! I can’t see something produced in a lab ever making for a tasty burger.

  3. ROBERT NEILL 3 years ago
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    • Joe 3 years ago

      Robert my man a lovely video. I don’t know about your claim ( down the page of comments below ) “No. 1 of greenhouse gas emissions by a long way” but what I do know the human race is like a plague upon the planet. The despoiling and destruction of the natural world upon which we depend for survival is insanity, from supposedly the most intelligent of all the species that inhabit planet Earth.

      • Alastair Leith 3 years ago

        I can tell you the no 1 claim is accurate. It all depends on how you do the accounting. This is why the NIR data using UNFCCC methodology comes up with only 14% for Ag sector, for a start it reassigns land clearing to another category, LULUCF, and then it uses forests to offset livestock emissions, which is ridiculous in my view. Why not hand forest sequestration to stationary energy or build environment to offset those emissions? Then it under accounts or ignores many short term GHGs, especially those like methane which have been rising much more rapidly than CO2 and are only accelerating as the world adopts SAD diets across the globe.

        My authority on this issue is the ZCA Land Use Report from Beyond Zero Emissions. I’ve pulled three graphs from it and posted below.

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