A government-commissioned report released Friday said Australia could meet its 2030 GHG emission targets without putting in place new policies, although the analysis relied on the ERF and Safeguard Mechanism creating a traded market with prices up to A$80 ($58.91) per tonne of CO2e.
Australia’s current suite of climate policies, including the not-yet-finalised National Energy Productivity Plan, can cut GHG emissions by a total 960 million tonnes of CO2e by 2030, enough for the nation to meet its 26-28% below 2005 reduction target, the report by consultancy Energetics said.
“Australia can reach its 2030 abatement target under the current policy framework. Large emitters must be effectively engaged and programs pursued without delay,” the report said.
Energetics said the Emissions Reductions Fund (ERF), under which Australia has so far bought 143 million tonnes of cuts, and the accompanying Safeguard Mechanism would drive over half of the potential reductions.
“Energetics believes that there will be a significant intersection between the role of the ERF and the Safeguard Mechanism between 2021 and 2030,” it said, adding that the latter would spark a prominent secondary market in Australian Carbon Credit Unit (ACCU) trading.
“While Energetics has not modelled the projected ACCU price required to ensure uptake of the total required abatement, it is important to note that the future ACCU price range will be influenced by both direct ERF funding provided by the Federal Government and the secondary market price of ACCUs available to project proponents.”
The report’s annex showed the analysts expected the ERF to get access to a large amount of emission cuts in the land sector at around A$20-25 per tonne, but that cuts in other sectors amounting to around 10 million tonnes for the year 2030 alone would cost over A$80 per tonne.
While Environment Minister Greg Hunt has indicated that the Safeguard Mechanism may bring about some ACCU trading, the government has long stressed that it should not impose any penalties or costs on participants.
Meanwhile, the ERF is about to run out of funds to buy emission cuts.
Critics were quick to point out the apparent disconnect between the statement that current government policies would meet the 2030 target and the current state of those policies.
Tristan Edis of consultancy Green Energy Markets said on Twitter that the study assumed such a transformation of the current regime that it amounted to a new set of policies.
“This report commissioned by the government highlights the need for much tighter regulation through measures such as the government’s ‘Safeguard Mechanism’, significantly more funding for the Emissions Reduction Fund and/or direct or indirect carbon pricing of around $70 tonne for certain activities. None of these policies or funding is yet on offer but we look forward to further details in the near future,” added John Connor, CEO of think-tank the Climate Institute.
Meanwhile, the study did not include any abatement opportunities for the electricity generation sector because “there are no existing policies to support this” beyond the renewable energy target.
The government on Friday rejected a proposal by a Senate committee that would legislate environmental objectives for the national electricity market in order to reduce Australia’s reliance on coal and bring the nation’s electricity generation in line with Australia’s targets under the Paris Agreement.
The government rejected the proposal because the electricity market’s current objectives – efficiency and reliance – are “good enough”, reported Renew Economy.
By Stian Reklev – stian@carbon-pulse.com
Not yet signed up to CP Daily? Subscribe to our free newsletter here
