Key Greenhouse Response Strategy in Energy and Transport for Australia: A Discussion Paper

With the 6th Conference of the Parties to the Framework Convention on Climate Change scheduled for mid-November and with the recent announcement that Australia’s 1998 greenhouse gas (GHG) emissions reached 17% above the 1990 level, it is time to examine options for making serious reductions in Australia's emissions. This paper proposes a broad strategy and some key specific actions for federal, state and local governments to reduce substantially GHG emissions from the Australian energy and transport sectors.

Further work is required to estimate the magnitude of the greenhouse gas reductions; the economic, social and other environmental benefits; and the economic costs of the actions proposed in this paper.

Targets for reduction of greenhouse gas emissions

The proposed short-term and medium-term targets are:

1. stabilisation of GHG emission at 108% of 1990 levels by 2010; and
2. reduction to 50% by 2030.

Modelling by the Intergovernmental Panel on Climate Change suggests that, to stabilise atmospheric concentrations of GHG, emissions by the rich countries may have to be reduced to 10-20% of 1990 levels by some time in the second half of the 21^st century. Based on continuing improvements to existing technologies, such a long-term target is technically feasible, although it appears to be very expensive at present. However, by the time the 50% target is achieved, the technologies required for a 10-20% target may be already cost-effective.

Strategy

The aim is to implement institutions, practices and technologies that will enable short-term and long-term GHG reductions to be achieved simultaneously. This contrasts with the apparent policy of the federal government to place the main emphasis on short-term measures with limited long-term potential for reducing GHG emissions.

The overall strategy for achieving the 2010 and 2030 targets is quite simple to state, although some measures will be politically difficult to implement. In general, the economic savings achieved by substantial increases in the efficiency of energy use and the removal of subsidies to inefficient energy use will be used to fund the transition to an energy supply system based on a mix of renewable energy and natural gas sources for electricity and heating/cooling. New institutions will be required to ensure that the economic savings are actually used to fund the cost of the transition.

It should be emphasised that the targets cannot be achieved by individual actions alone. There is little point in exhorting people who live in areas where there is inadequate public transport and long distances to travel to forego using cars; or exhorting people who live in poorly insulated rental accommodation to do without electric radiators and convectors. Since market failure is endemic for environmentally sound practices in the energy sector, the community must insist that governments assist the transition by removing the barriers and providing appropriate infrastructure, laws, institutions, planning processes, pricing signals, funding and education/information.

Actions proposed for achieving targets

The following proposed actions contain both short-term and long-term measures. The numbering is for ease of reference and does not reflect priority.

1. All spheres of government

1.1 Require mandatory annual reporting of their own GHG emissions by all government departments, agencies and state-owned corporations at all levels of government.

1.2 Introduce in-house carbon levies to fund emission reduction within their own operations, and encourage or require adoption of such internal levies by participants in greenhouse challenge and other government programs.

1.3 Foster education, information and training about sustainable energy and transport in schools, universities, vocational education and training institutes, and the community at large.

2. Federal Government

2.1 Implement national mandatory energy and greenhouse labelling, and national mandatory minimum energy and greenhouse performance standards for a wide range of appliances and equipment, including all new motor vehicles, that become increasingly stringent every 5 years.

2.2 Continue to develop national model codes for buildings, and make codes for energy efficiency increasingly stringent every 5 years, publishing schedules for improvement 5 years ahead.

2.3 Increase the "2% target" for renewable electricity in 2010 to 5%: i.e. increase the percentage of electricity provided by renewable energy in 2010 by an amount equivalent to 5% of projected total electricity demand in 2010. Including existing renewables (mostly large-scale hydro-electricity), this means that a total of about 15% of Australian electricity generated in 2010 would come from renewables.

2.4 Set a similar target for solar heat: i.e. increase the percentage of heat provided by solar energy in 2010 by an amount equivalent to 5% of projected total heat use in 2010.

2.5 Set an average fuel consumption target for the category of motor vehicles comprising all new cars, four-wheel-drives and light commercial vehicles in 2010 of 6 litres per 100 km.

2.6 Set increasingly stringent targets for electricity generation, heat use and fuel consumption of motor vehicles for 2020 and 2030 that enable the 2030 GHG emission target to be met.

2.7 Increase the Australian Greenhouse Office’s funding for the Cities for Climate Protection (CCP) program for local governments from the present level of $13M over 5 years to 10 times that level for the next 5 years and maintain that level to 2020 at least.

2.8 Encourage the states to remove cross-subsidies for electricity and fuel prices in rural areas and replace them by location allowances (these could still be funded by a levy on the price of electricity in urban areas).

2.9 Add to the Greenhouse Gas Abatement Program funding for public transport planning by state governments, infrastructure for cycling and walking, and local transport planning by local governments.

2.10 End the existing bias towards funding the construction of major roads by adopting legislation similar to the USA’s Transportation Equity Act (TEA), which requires roads to compete with rail, and includes environmental impacts in the assessments of funding proposals, which are done by cities & local regions.

2.11 Work with the states to implement a national system of mass and distance charges for heavy trucks travelling in Australia’s populous zone, i.e. the J-shaped curve from Townsville to Adelaide, east of the Newell Hwy and South of the Sturt Hwy.

2.12 As a matter of urgency, remove tax benefits for the purchase and use of company cars and government cars, and increase the rate of import duty on 4-wheel drives to parity with that of ordinary passenger cars. Phase out oil exploration incentives. Allow only a fixed flat-rate income tax deduction for personal vehicle use, set at the marginal cost per km of use of a fuel-efficient car, not the total cost per km. Likewise, permit business to claim only fuel costs based on 8 litres/100 km, or some similar benchmark, ratcheting down over time.

2.13 To raise additional funds for the implementation of programs by all levels of government to reduce GHG emissions, implement either a low carbon tax or a system of tradeable emission permits with charges for the permits increasing gradually until it comes to reflect the best estimates of the environmental, health and social costs of using fossil fuels.

2.14 To assist the process of achieving the targets and to ensure that improvements continue throughout the 21^st century, increase funding for R & D on efficient energy use and renewable-energy technologies, and on the organisational and institutional changes required for their dissemination.

3. State Governments

3.1 Ensure that new investments in major transport links, suburbs, power stations, shopping centres, and employment centres are planned to minimise GHG emissions. In particular, there should be no new coal-fired power stations or urban freeways, and no cheap parking places for motor vehicles in urban centres or sub-centres.

3.2 Remove all subsidies from electricity and fuel prices in rural areas, and replace with remote-area location allowances.

3.3 Remove incentives for selling excessive electricity from electricity retailers in all States.

3.4 Mandate energy ratings for all homes and require that these ratings be published in all advertisements for the sale and rental of the homes, as is already done in the Australian Capital Territory

3.5 Based on national model codes developed by the Commonwealth (see Action 2.2), legislate for mandatory energy performance standards for all homes, with new and renovated homes to meet standards forthwith and existing homes to achieve specified standards increasing in 5-year steps.

3.6 Mandate that electric hot water services in mainland Australia be sold packaged with a lifetime Green Power purchasing requirement. The purchase package would have to include the installation of a meter in cases where it is not already connected.

3.7 Renegotiate contracts with aluminium smelters to remove de facto subsidies for electricity and infrastructure. Use part of the savings to facilitate the creation of new jobs in any region in which a smelter is subsequently closed down.

3.8 Reform the pricing of access to and use of electricity transmission and distribution grids, in order to stop overcharging small generators of electricity that connect to grids.

3.9 Remove road agencies’ planning powers and guaranteed funding, and strengthen powers and funding of Departments of Transport and/or Urban Planning.

3.10 Using the funding from the proposed federal TEA-type legislation (see Action 2.10), improve infrastructure, service frequency and service quality of urban rail, both heavy and light.

3.11 Increase taxes on car parking (from zero in some states) in city centres & sub-centres that are well served by public transport, and hypothecate the revenue to local governments for the purpose of providing facilities for cyclists and pedestrians.

3.12 Create and enforce an extensive network of transit lanes in cities.

3.13 Work with the Commonwealth to implement a national system of mass and distance charges for heavy trucks, as in New Zealand, for Australia’s populous zone only (see Action 2.12).

3.14 Develop and implement integrated ticketing and fares for public transport within cities, so that passengers are charged according to distance travelled (except in the central regions of cities where a flat fare is appropriate) and are not charged extra for transfers between modes or between publicly and privately operated services.

3.15 Set up statutory Public Transport Advisory Committees in every local government area with membership comprising representatives from State and Local Government, public transport providers, and members of the public. (see Actions 2.7, 4.3 and 4.4).

3.16 From part of the economic savings achieved by other measures, create a substantial fund for cycleways and bicycle parking at key local destinations including railway stations, schools, and shopping centres.

3.17 Create incentives for ownership and use of low-speed electric motor-assisted vehicles, such as scooters and buggies, with power outputs of motors up to 250 watts.

4. Local Governments

The role of local government could be substantial, since it is responsible for approving building plans, construction of minor roads and parking areas, and the choice of locations of many of the main local travel destinations.

4.1 Implement energy ratings and energy efficiency standards for all new and renovated buildings, and eventually all buildings, as mandated by the States (see Actions 3.4 & 3.5).

4.2 Require a solar or natural gas hot water system to be installed in every proposal for a new or substantially renovated residential building, as currently required by Leichhardt Council in Sydney.

4.3 With the additional federal funding from Cities for Climate Protection (proposed above) and State funding from financial savings (proposed above), develop integrated local transport/land use planning and implementation, including:

• local traffic demand management;
• bicycle paths and bicycle parking;
• pedestrian access and public places to sit outdoors;
• locations and prices of car parking areas;
• orientation of new streets and housing blocks;
• locations of new public buildings, shopping centres and commercial/employment centres;
• incentive programs for local businesses to monitor, benchmark and reduce GHG emissions;
• facilitation of community processes and negotiations with private bus companies that nominally serve the locality.

4.4 If the additional CCP funding (Actions 2.7 & 4.3) is insufficient, enact specific environmental levies on rates.

Conclusion

Based on decades of experience in the fields of sustainable energy and urban transport, I believe that in the long run the above key actions can achieve the 50% GHG reduction target. Research is in progress at the Institute to estimate the economic costs and benefits of the key actions. Since some of the actions only involve regulation, institutional change and changes to price structures, they will cost little in economic terms to implement. Indeed, it appears that most of the proposed actions could be funded from other proposed actions, without the implementation of a carbon tax or equivalent. However, the tax will be needed in the long run to ensure that all actions are implemented while creating new jobs and maintaining social equity.

Local government would of course have to receive a share of these cost savings to implement its GHG reduction programs. In addition, it could enact specific environmental levies on rates. All spheres of government, businesses and households will achieve direct financial savings by implementing energy management programs for their own operations.