Taylor’s emissions projections assume rapid and accelerated exit of coal power

Last week, Australia’s government released its annual projections of emissions. As I wrote here at RenewEconomy, the projected emissions of Australia released by energy and emissions reductions minister Angus Taylor have been revised downwards each year largely due to renewables, and partly due to the drought and the pandemic.

Australia is inching closer to its shamefully weak 2015-era Paris climate targes, but refuses to update them to more modern targets that reflect modern capabilities and potential ambition. The report itself ignores any potential strong, rapid action in the sectors of transport, buildings and industry; leaning on questionable gas extraction carbon capture instead.

Curiously enough, I found in that last piece that the 2020 report leaned less heavily on electricity sector reductions than previous reports. It was 77% of the change between 2018 and 2019, but only 50% of the change between 2019 and 2020. COVID19 did plenty of the heavy lifting, reducing forecasts emissions in transport significantly.

That created wiggle room for some very weird shenanigans in the forecasted vision of electricity. Gas somehow increased, wind power decreased, and solar only increased incrementally. Specifically, predicted generation for Rooftop PV in 2030 was upgraded by around 7,000 gigawatt hours. Generation for large-scale solar was upgraded by 1,000 gigawatt hours, and wind was downgraded by 8,400 gigawatt hours. But coal – that was something else. The projected power output from coal plummeted by its largest downgrade ever, over the forecast period and all the previous reports.

Um. What is going on? It’s really quite weird. And I’ve finally found a moment to place this vision of the next decade for Australia’s electricity system against a benchmark I hope RenewEconomy’s readers are now deeply familiar with – the Australian Energy Market Operator’s “Integrated system plan” (ISP). The most recent version was published this year, and outlines various scenarios for Australia’s National Electricity Market (NEM), ranging from high emissions to low emissions, high consumer energy to low, and various other variables.

In this big report, they also include a yearly estimate of the total emissions from the NEM – matching perfectly with the 2020 emissions projections. So what do they look like, when we compare them? How far has the Australian government travelled, from the least-ambitious to most-ambitious, in this year?

These results are quite astonishing. Between 2022 and 2030, the most recent government projections suggest cumulative emissions of 926 MTCO2-e. That’s lower than the 932 MTCO2-e in the best-case ‘step change’ scenario presented in the AEMO ISP.

The reason this is so astonishing is that AEMO’s most ambitious scenario actually incorporates an assumption of extreme contention within Australia’s political and energy circles: shutting down coal-fired power stations earlier than their scheduled retirement dates. Both the ‘fast change’ and ‘step change’ scenarios incorporate coal and gas generators leaving the market well before their retirement dates, “the accelerated exit of existing generators”, as per AEMO:

That scenario on the far left sees the NEM’s coal-fired capacity drop from 23 gigawatts today to 12 gigawatts in 2030, and a measly 1.2 gigawatts by 2042. The most recent emissions projections for Australia’s NEM are below all of these scenarios, up to 2030. Read that sentence again. The projections are below two scenarios that assume accelerated closure of coal-fired power stations.

There is no real clarity on whether the modelling for this government report assumes the closure of coal, or whether it simply assumes a reduced output for coal that stays open, but simply barely generates anything at all. But it seems unfeasible that the NEM’s emissions could end up well below every single ISP scenario without at least some early closure of coal-fired power stations, or at least, their ‘effective’ closure as they generate so little they become completely uneconomic.

The context here is valuable: the recent spat around the closure of the Liddell coal-fired power station in NSW was a long saga of the government trying to keep it open. And the potential early closure of coal-fired power in NSW as a result of the state government’s recent ‘Electricity Infrastructure Roadmap’. Though we can’t say with confidence that the modelling puts coal-fired power stations on the early closure chopping block, we can say with certainty that the assumptions it is working on are no friend to coal, and increasingly, no friend to renewables – to the benefit of gas.