201109

Constance: There is no debate

MEMBER for Bega Andrew Constance has said he was misrepresented regarding an upcoming information session on carbon tax.

“I wish to make clear that at no point did I ever agree to debate Matthew Nott on climate change, climate science or carbon tax,” Mr Constance said.

“There will be no debate, nor the need for former Archbishop of the Canberra Goulburn Archdiocese George Browning to be a ‘moderator’ at the upcoming information session being arranged by Matthew Nott.”

“While I am happy to attend an information session and explain State Government concerns regarding the carbon tax and the need to compensate state taxpayers, it is really a fruitless exercise until the Federal Government releases all treasury modelling on the impact of the tax.”

“I am calling on Dr Nott to ensure Labor’s Mike Kelly comes along to provide the treasury modelling and data that justifies his statement that a carbon tax will create 2000 jobs here in the South East.”

“Until such time as Labor and the Greens recognise biomass generation as a legitimate renewable with a closed carbon cycle, as governments and Greens do in Europe, then I believe the whole debate becomes fundamentally flawed,” Mr Constance said.

A Big Task

Australia has a target to reduce greenhouse emissions by 5% by 2020. That target is bipartisan and represents a big challenge.

Australia has one of the most carbon- intensive economies in the world, and in the absence of new policy initiatives emissions are projected to increase by a further 15% by 2020. That?s only nine years away. To reduce the electricity sector?s emissions by 5% by 2020 we need to cut emissions by 60 million tonnes a year.

The current renewable energy target (20% by 2020) will deliver around a third of that, or about 20 million tonnes a year. Assuming around 70% of that comes from wind, we have got to build around 6,000 megawatts of wind in the next nine years. That?s about six times as much as exists in Australia today, so that?s not going to be any small challenge.

The rest of the current Mandatory Renewable Energy Target (MRET) would have to come from a mixture of solar, wave, biomass, hydroelectric and geothermal generation. It is going to be a big job.

That still leaves 40 million tones of year of CO2 abatement we have to find.

There has been a lot of commentary on the potential for gas as a transition fuel. A modern combined cycle natural gas plant produces less than half the emissions that you get out of a coal-fired power station per megawatt hour and it?s about a quarter of what you get out of brown coal power stations in the Latrobe Valley. So every megawatt hour that you can generate by using gas that displaces a megawatt of brown coal saves you a tonne of CO2.

There?s been some talk about the future of Australia?s worst coal fired power station Hazelwood. If you were to displace Hazelwood by gas generation, you would save around 12 million tonnes a year of CO2. To do that you would need to build 1,600 megawatts of gas combined cycle, and that means that you?ve got to spend about $5 billion to save that 12 million tonnes a year.

Closing Hazelwood with more gas power and achieving the 20% by 2020 MRET would bring us to about halfway of the abatement challenge that we?ve got.

If we could shut down Australia?s three biggest and most polluting coal fired power stations Hazelwood, Yallourn and a power station in South Australia called Northern, we?d probably go pretty close to achieving the 2020 abatement target for the electricity sector. That of course assumes we don?t build any new coal fired power stations.

Achieving a 5% reduction in emissions within the next 9 years is a huge transformation, and yet it is only a start. Unfortunately, our population continues to grow which makes the task even harder. A 5% reduction in emissions in Australia is only going to come about if the market is brought in to play, and the only way that will happen is via a carbon price signal.

(Some of these figures are taken from a talk by Andrew Stock, Director of Executive Projects at Origin Energy, to the Grattan Institute on 25/4/11)
Matthew Nott

Will a tax affect climate change?

The high sugar content of soft drinks contributes to childhood obesity. The chemicals in cigarettes lead to lung cancer. The sulphur dioxide emitted from coal fired power stations causes acid rain, and the carbon dioxide released from burning fossil fuels causes climate change.

Solutions to these problems require behaviour change, and those changes can be facilitated by a price signal.

Some states in North America have been able to introduce a soda tax, and in those states the consumption of soft drink has gone down.

Putting a tax on cigarettes has been shown to reduce the incidence of smoking amongst young people.

In 1990, under the administration of George H. W. Bush, amendments to the Clean Air Act established an emission trading scheme to control acid rain. That price signal resulted in a 54% decline in sulphur dioxide levels between 1990 and 2007.

Putting a price on commodities that have detrimental consequences can alter behaviour.

Is it possible to demonstrate that a price signal on CO2 can alter behaviour?

Denmark enacted a carbon tax in 1992. Denmark?s per capita carbon dioxide emissions were nearly 15% lower in 2005 than in 1990. That?s impressive considering Denmark?s per capita emissions were low to start with.

There are many countries setting a price on carbon. India last year introduced a tax on coal as an initial measure aimed at cutting emissions. Almost 100 countries have set emission reduction targets, and most of them plan to reduce emissions via a price on carbon, either with a tax, or an emission trading scheme. There are examples of carbon pricing that have been successful, and there are examples that have not gone well.

The first emission trading scheme was the European ETS started in 2005. There were many problems with the European system, and still are. Problems are being sorted out, but Europe has been a big learning curve.

Despite the difficulties, the European Union and all Member States but one are on track to meet their Kyoto Protocol commitments to limit and reduce greenhouse gas emissions. The EU has set a target for a 20 percent reduction in greenhouse-gas discharges by 2020 compared with 1990 levels, and it wants to limit them by as much as 95 percent by 2050. The bloc?s emissions trading program is a cornerstone of its climate initiative.

Fossil fuels are artificially cheap because the environmental cost of atmospheric CO2 is not factored in. A price on carbon will adjust the market and alter behaviour.
A tax will affect climate change. In fact a price on carbon is probably the only thing that will.
Matthew Nott