Regulator tips “big reduction” in emissions in 2022, as renewables push out more coal

The announcement of more than 1GW of new large-scale renewable energy capacity in the third quarter of 2021 has set the scene for “a big reduction of emissions” going into 2022, as solar and wind continue to push coal out of the generation picture.

The Clean Energy Regulator’s latest Quarterly Carbon Market Report (QCMR) confirmed that a record 32% of electricity generated in the National Electricity Market came from renewable sources, taking the average renewable contribution across 2021 to 30% of all NEM generation.

A total of 603MW of new large–scale renewable energy capacity was given formal approval to generate renewable energy certificates in the third quarter of 2021, the CER said, bringing the total for 2021 to 1.2GW, a sharp decrease from the 2.7GW approved over the same period last year.

But it pointed to the “very strong result” for final investment decisions in large-scale solar and wind projects coming into the final quarter of the year, with 1.11 gigawatts of new capacity announced, in contrast to reports of a slowdown in investor activity in the sector.

“This is an important lead indicator that we can expect to see many new large-scale renewable energy power stations being constructed around the country,” said CER chair, David Parker.

And Parker added that “all the lead indicators” were strong for a big reduction of emissions going into 2022, too.

“By one estimate is that the Renewable Energy Target and Emissions Reduction Fund (ERF) will reduce Australia’s emissions by 57 million tonnes.

“However, a less conservative approach suggests Australia’s emissions will decline by as much as 75 million tonnes in 2021 given the thermal generation that will be displaced by the additional renewable energy,” he said.

Certainly, the rollout of renewable energy – and in particular the nearly 3GW rooftop solar already installed by households and businesses this year – have done the heavy lifting in terms of emissions reduction for Australia.

But apart from solar and wind squeezing out coal and gas, little has been achieved in the reduction of emissions, with the recent fall in national emissions over the past 12 months described by the Climate Council as “sluggish” and falling short of what was needed for Australia to deliver on international climate goals.

Parker noted that one of the milestones achieved in the quarter had been the registration of the 1000th ERF project, with 54 new projects added in the quarter bringing the total to 145 for the year – led by an increase in soil carbon project registrations.

Not everyone is convinced of the merit of all of the projects registered through the Morrison government’s ERF, however.

A joint report from the Australian Conservation Foundation and The Australia Institute in September suggested that up to one-fifth of carbon offset units issued under the ERF may have no basis in emissions reductions.

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