Needed: consistent policies for CO2 reduction

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.

Yet government policy encourages and supports expansion of coal production and increasing dependence on revenues derived from it. This stands in stark contrast to contradictory policy calling for application of a carbon tax, reduction in the use of fossil fuels and support of renewable technology to achieve reduce CO₂ emissions. Why are taxpayers being asked to support this dichotomy?

Australian governments and the international community know that to limit average global temperature to 2°C above the 1750 temperature by 2100 requires reducing CO₂ emissions by 2050 to almost zero. They know that this can only be achieved by producing energy from sources other than fossil fuels and that use of coal will, probably from 2020 onwards, decline. Yet federal and state governments fail to plan ahead for inevitable decline in revenue derived from coal mining. Why?

Federal and state governments assist and encourage expansion of the coal industry – and by implication increased global and domestic CO₂ emissions. At the same time they call for reduction of those emissions, noting that in this regard Australia is a laggard being left behind by the rest of the world.

Federal and state governments provide the coal mining industry with financial assistance in the form of excise-free diesel used in mining operations and below cost assistance from government departments. These concessions, provided to an industry that is already highly profitable, costs taxpayers in excess of $1 billion per annum. At the same time they provide financial assistance to the development and application of clean energy technology and pursue policies aimed at replacing electricity generated from coal and gas with renewables.

Federal and state Ministers continue to assure the coal industry and prospective investors in it that coal mining has a long and bright future in Australia. At the same time they acknowledge and espouse the imperative of replacing coal with renewable energy sources and work to achieve a target of producing 20 per cent of national energy consumption from renewables by 2020 and an even greater percent in the years leading up to 2050.

This 'bipolar' approach requires government explanation. How can it be cost efficient to place a price on carbon and subsidise the use of coal to generate electricity in NSW? How are CO₂ emissions reduced in a cost-effective manner by imposing a carbon tax on major emitters while at the same time paying the same emitters to expand their activities?

Taxpayers ultimately foot the bill. They have the right to expect consistency from the governments they elect – consistency of policy with practice and consistency of policy with the conclusions reached by the climate science those same governments claim to espouse and support.

Government policies should be formulated which are consistent with ensuring that temperature rises by less than 2°C by 2100. If government believes the science-based advice given to it, most recently by its own Climate Commission, it must ensure that its emissions do not rise beyond 2015 and fall thereafter. Otherwise the annual rate of reduction becomes increasingly difficult and costly to achieve.

Meanwhile, the electorate has a right to an explanation of:

• How is adoption of a five percent reduction in CO₂ by 2020 deemed adequate when science advises government of the need for a reduction target of 25 per cent?
• How are ministerial assurances that coal use will grow as an energy source consistent with reduction of Australian CO₂ emissions?
• How is provision of financial assistance for coal production and use consistent with placing a price on carbon or reduction of CO₂ emissions?
• How will development of CCS technology reduce CO₂ emissions, knowing its application is so expensive it makes production of electricity from renewable sources cheaper than using coal?
• How does excluding agriculture from a carbon tax help reduce CO₂ emissions, even though the sector contributes over 20 per cent of Australian emissions?
• How is assisting the motor industry to produce more fossil fuelled vehicles consistent with the government aim of reducing CO₂ emissions?
• How is CO₂ reduction achieved by increasing federal and state government dependence on revenue derived from expanding coal production and use, rather than aiming to reduce its use and dependence on its production?
• How the National Grid is being upgraded to ensure that electricity is transmitted in a more cost-efficient and effective manner to reduce loss and the effects this is likely to have on CO₂ emissions?

Taxpayers have an expectation that their money is spent efficiently, effectively and in as manner that achieves the outcomes stated by government, in this case a reduction of CO2 emissions. This can't be achieved with conflicting policies.