Target will transfer pressure to other sectors of the economy to reduce their emissions, research shows
August 29, 2017 — The clean energy target recommended by Australia’s chief scientist, Alan Finkel, won’t deliver Australia’s obligations under the Paris agreement and will only transfer pressure to other sectors of the economy to reduce their emissions, according to new analysis.
The new research comes as the Coalition’s difficult internal deliberations over the Finkel review are set to resume, with a report due from the Australian Energy Market Operator about the dispatchable power requirements of the electricity grid after the closure of two ageing coal-fired power stations.
And it comes as the prime minister will on Wednesday hold a second meeting with Australia’s major energy retailers in an attempt to make it easier for consumers to switch their power provider – a response to acute political pressure over rising electricity bills.
Discussions between the government and the companies in the lead up to Wednesday’s talks have centred on whether energy companies can offer monthly billing to try and prevent bill shock, and whether more can be done to communicate with hardship customers to ensure they aren’t locked in to inflated power contracts.
The new research on the clean energy target has been commissioned by the Australian Conservation Foundation.
While some government MPs oppose the central recommendation of the Finkel review – a 28% clean energy target – on the basis it is too ambitious, and will lock too much renewable energy into the system, the new modelling from the firm Reputex says the central problem is the emissions reduction trajectory is too weak.
The modelling says the Finkel trajectory would see Australia’s electricity emissions being phased out between 2095-2101 – a timeframe that is inconsistent with the Paris goal of limiting warming to two degrees, and of reaching carbon neutrality by mid-century.
It also points out that if the electricity sector does comparatively less of the heavy lifting on emissions reductions, the burden will fall more heavily on other sectors, with the largest reductions then falling on high emissions growth sectors, rather than the sectors with the largest share of total national emissions.
The Reputex report says that, under a uniform 28% reduction trajectory, the oil, gas and transport sectors would be accountable for reductions of 51m to 52m tonnes of carbon dioxide equivalent, or 31-32% of the national abatement task, despite making up between 17% and 18% of total emissions in the economy.
Electricity, by contrast, would deliver a 44m tonnes of CO2 equivalent reduction, contributing only 20% of the national abatement task, despite being the largest emitting sector.
The report says a 45% clean energy target would deliver zero emissions from electricity by 2045, which is similar to the Paris timetable.
It says a more ambitious target of 63% would phase out emissions by around 2035 and also assist in broader economic transformation, by offering other sectors, like transport and manufacturing, electrification with clean energy.
The modelling says a 45% clean energy target would place “downward pressure” on wholesale electricity prices by bringing new competition, in the form of clean energy into the market – although the work does not take into account the costs of new energy security obligations imposed on renewable generators under the Finkel model.
The ACF’s chief executive, Kelly O’Shanassy, says the Turnbull government needs to avoid locking Australia into a “weak and dirty target” for electricity and notes that whatever solution is landed for electricity “must be part of an overall strategy to tackle pollution from industry, transport and the land so that we reach a pollution-free future as swiftly as possible for the sake of our planet”.
The government is expected to use Wednesday’s meeting with the major electricity companies to insist that retailers write to all households currently on standing offers to advise them of better deals they can access.
In the discussions leading up to the Sydney meeting, the companies have told the government it is not easy to issue monthly bills to customers if their homes don’t have smart meters, and it is difficult to contact hardship customers if they are inclined to be disengaged.
During their last meeting with the government three weeks ago, the companies agreed to a change to the national energy market rules requiring them to inform customers when their discounted power deal ends, and to set out the dollar impact of doing nothing.
The companies also took the opportunity of their last meeting to send a signal to the government that they needed a prompt resolution on the clean energy target. The message the executives delivered to the top echelons of the government three weeks ago was that the country needed policy action that would lower or stabilise wholesale electricity prices, not just a focus on retail prices.