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Needed: consistent policies for CO2 reduction

By Mike Pope - posted Wednesday, 6 July 2011

Australia has committed itself to reducing carbon emissions by a minimum of five per cent below 2000 levels by 2020. Before that year it will be evident that greater reductions will have to be made, not only by Australia but by all major emitters, if average global temperature increase is to be limited to less than 2°C. A larger temperature increase is likely to result in irreversible melting of the Greenland and West Antarctic ice sheets causing dangerous sea level rise, an increase in severe climate events and climate change reducing food production.

Government response has been to indicate preparedness to reduce emissions by up to 20 per cent, depending on what other emitters do. Australia could achieve this higher target with introduction of an ETS in 2015. Similar CO2 reductions are certain to be necessary by the larger regional emitters, particularly Japan, Korea, China and India to have a global effect.

Those countries are substantial importers of Australian coal. If they make necessary reduction of their emissions and they have indicated they will make some reduction, it can be expected that over the next 10-20 years, they will use cleaner energy sources and reduce their demand for imported coal. Alternatively they will continue coal use but employ carbon capture and sequestration (CCS) technology. However, CCS will only be used if it produces electricity which is cheaper than that generated by other means.


CCS technology

The problem with CCS technology is that it is very expensive to use because it places a high demand on the energy generated by power stations using it. Energy is needed to capture and isolate CO2, more energy is needed to compress and liquefy it. Energy is needed to transport liquefied CO2 to the location where it is to be stored and additional energy is needed to pump it underground. These energy demands make CCS so expensive to use, as discovered by ZeroGen in Queensland in 2010, that its use is deemed unaffordable until the price of carbon reaches a price of $70-$75 per tonne.

When carbon is around $60-$65 per tonne, the cost of energy produced from wind and geothermal sources becomes competitive with that produced by burning coal. Solar electricity remains uncompetitive but its production cost is falling as technological advances are made. When CCS technology becomes affordable, energy produced from renewable sources becomes relatively cheaper. Further, energy produced from geothermal sources is base load power, which can be rapidly added to or taken off feed into the National Grid to meet varying demand.

Prudent investors knowing that coal fired power stations can't rely on affordable CCS technology to guarantee a 40-year competitive lifespan will become increasingly reluctant to invest. Instead they will invest in power stations fired by less-polluting gas or non-polluting geothermal. While existing coal fired power stations may have a future life of 10-15 years, new ones will not. It is unlikely that nuclear power stations will be approved in Australia until radioactive waste can be safely disposed of without the need for millennia storage.

Government policies

It is against this background of likely medium term decline in domestic use of coal and, over the next 25 years, falling demand from overseas that prudent investment in coal production will be made. However, the international price for Australian coal is so high that returns on short-medium term investment provide very lucrative returns. For this reason and questionable assurances from the Australian government that coal mining has a bright future, coal mining continues to expand, particularly in NSW and QLD, increasing state government dependence on revenue derived from coal production.


However, climate scientists continue to warn us that 'business as usual' is no longer an option. If we pursue 'business as usual', average global temperatures are likely to exceed 3°C by 2100. Consequently tipping points will be passed with respect to slow feedbacks such as melting of polar ice caps, ocean acidification and release of methane in the Arctic.

Combined, the effect of these developments will be sufficient to cause catastrophic climate change threatening mass extinction of flora and fauna - including our species. These warnings are not to be taken lightly and, as evidence of their reality increases, international pressure and penalties will reduce demand for and use of fossil fuels.

Australia is the highest per capita emitter of CO2 in the world. It is also the worlds' largest exporter of coal – and of CO2. Its coal industry is therefore the most vulnerable to global calls, already being heard, for reduction in production and use of coal.

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About the Author

Mike Pope trained as an economist (Cambridge and UPNG) worked as a business planner (1966-2006), prepared and maintained business plan for the Olympic Coordinating Authority 1997-2000. He is now semi-retired with an interest in ways of ameliorating and dealing with climate change.

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