Australia’s energy emissions rise after carbon price chop

Published 02:24 on March 5, 2015  /  Last updated at 15:36 on May 11, 2016  / Stian Reklev /  Asia Pacific, Australia

Carbon emissions from Australia’s energy sector grew by 1.6% in the second half of 2014 despite a drop in electricity consumption as black coal returned to the energy mix, according to a new report.

Carbon emissions from Australia’s energy sector grew 1.6% in the second half of 2014 despite a drop in electricity consumption as black coal returned to the energy mix, according to a report on Thursday.

Emissions from the energy sector in the 12 months to Dec. 2014 were 4.6 million tonnes of CO2e higher than in the 12 months to June 2014, according to CEDEX, a carbon emissions index published by consultancy Pitt & Sherry.

Electricity generation accounted for 3.9 million tonnes of the increase despite a drop in electricity demand, reflecting a growing use of coal, said the latest CEDEX, published this week.

The changes in the energy mix came after the government abolished the country’s carbon pricing mechanism, making the use of coal more profitable.

The carbon price had caused a steady drop in emissions from electricity generation over the two years ahead of June 2014, although its effect may be overstated as hydropower operators ramped up generation temporarily, in anticipation that the CO2 price would be repealed.

“We might speculate that a longer lived carbon price would have delivered slower, but more lasting changes, as it effectively brought brown coal back to the pack in cost of generation terms,” said CEDEX.

The report said the key factor for future electricity emissions in Australia is the fate of the Large Renewable Energy Target:

If this is retained in its present form, with a 2020 target of 41 TWh and electricity demand grows slowly, as forecast by AEMO in its most recent and updated National Electricity Forecasting Report, mandated extra renewable generation will displace mainly coal fired generation (and probably the less efficient black coal plants). Assuming, for the sake of illustration, that indeed only black coal generation is displaced, and that demand is as forecast by AEMO, then the reduction in emissions between 2014 and 2020 will be roughly 25 Mt CO2‐e, equal to about 4.5 % of current total national emissions. Any reduction in the LRET will obviously dilute the effect.

Investments in Australia’s renewable energy industry have stalled after the government announced it would reduce the target to 26 terrawatt hours in 2020, instead of the current 41 TWh.

The Age newspaper on Wednesday said a compromise deal on the policy between the government and the opposition Labor party might be imminent, after months of failed negotiations.

By Stian Reklev – stian@carbon-pulse.com