Analysis of Australia’s Emissions Projections - 14 Feb 2011

The Department of Climate Change and Energy Efficiency recently launched a report, Australia’s Emissions Projections, that takes a detailed account of more than 30 policies and measures to assess the contribution of existing policies to reducing Australia’s carbon pollution. It predicts that without further action, emissions will continue to rise.

nghenvironmental analysed the report and commented on its content.

According to them, the flattening of the emissions curve in recent times is almost entirely due to the reduction in deforestation, a Howard-era policy to ensure Australia met its Kyoto targets. There was continued rises in mining, energy and transport emissions, which were almost offset by the reduction in deforestation. As these offsets have now been realised, continued growth in emissions from energy and transport/fugitive emissions (ie mining, oil and gas) will start to become noticeable over the next few years.

The good news is that the Renewable Energy Target (RET) looks like it will start making an impact, with a forecast substantial reduction in growth of emissions from energy production (2000-2012 growth = 57%, 2010-2020 growth only 6%). This demonstrates the enormous impact this policy has had and will have on greenhouse gas reductions, and the opportunity for further emissions reductions through higher RETs.

The bad news is that fugitive emissions (mostly from the mining and oil/gas sectors) will rise by nearly 50%, and in gross terms will account for the largest rise in emissions second only to direct combustion (eg transport). It is disappointing to see this high growth expected from direct combustion, given the technologies available to reduce transport emissions and the policy settings in other jurisdictions (Europe, California). More can be done here to put pressure on the transport sector to produce cleaner modes of transport, and more can be done to improve and encourage public transport in our major cities.

Interestingly, there is expected to be an increase in emissions from deforestation and forestry, although the figures presented by the government’s paper does not indicate the contributions from each of these sectors, although one can speculate that it would be from forestry, which is experiencing some growth at the moment.

Finally, to achieve a 5% emissions reduction by 2020 (which Australia has committed to unconditionally), will require an enormous effort and will cause substantial structural change in several sectors, especially energy but also mining and oil/gas. The evidence says that both Direct Action (ie the Coalition's policy) and market forces (be it trading scheme or a carbon price/tax) will achieve 5%, the differences being in who pays for it.

To achieve a 15% reduction by 2020 (which Australia has committed to doing if there is a global agreement on climate change) represents a huge challenge and our ability to achieve this is by no means certain, especially given the political polarisation of views between the two parties. The cost of doing this through Direct Action would be enormous, in the vicinity of $25billion we have heard, over just 9 years. If the Coalition continue to fight this issue after a global agreement has been reached, than we stand little chance of reaching this target. To achieve it requires bipartisan support.

To achieve 25% is in the current political climate practically impossible. The cost through Direct Action was estimated at $50billion. Even through market forces, the political pressure would be enormous as prices would rise dramatically and margins on exports would reduce.

An interesting point in the report is that if there is a global agreement on climate change, the demand for Australia coal, oil and gas would reduce and this in itself would reduce our emissions. This was not calculated in the projections though.

Erwin Budde

Director nghenvironmental

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