"Heroic" assumptions in new government Energetics report Statement

May 06, 2016 - 4:19pm

The government has today released a report by Energetics on how its 2030 emissions reduction target may be achieved using the existing policy framework (ERF and Safeguards Mechanism, and the yet-to-be developed National Energy Productivity Plan).

The top four takeaways are explained below:

  1. It assumes existing policies are turbo-charged.

  2. Policies would then need to be turbo-charged even more through the 2020s.

  3. Achieving the target using existing policies would require several activities that have an explicit/implicit carbon price of around $50-70/tonne.

  4. Electricity decarbonisation is critical but excluded.

"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," said The Climate Institute CEO John Connor. "None of these policies or funding is yet on offer, but we look forward to further details in the near future." 

"The report notes the importance of electricity decarbonisation and the current absence of government policies in this regard. The Climate institute also urges the government to adopt such policies and integrate them into a plan for an Australian economy with net zero emissions by 2050."

"We have noted the inadequacy of the target itself, which does not align with the globally agreed goal of limiting warming to less than 2°C and is consistent with global warming of 3-4°C," Connor said. 

The key aspects of this report are: 

1. It assumes existing policies are turbo-charged to reach the 2020 target through domestic emission reduction, but the government’s latest projections show 2020 emissions will be 577 million tonnes, or 5 per cent above current levels, even including the impact of the ERF and the Renewable Energy Target. Policies to be dialed up would include replacing brown coal-fired generation with gas, and restrictions on land clearing. 

2. Policies would then need to be turbo-charged even more through the 2020s. Energetics finds that the ERF and the Safeguards Mechanism need to deliver 500 million tonnes of abatement in the 2020s, suggesting either safeguards will be significantly stronger, or an ERF of at least $6 billion (based on the average price under previous auctions).

3. Achieving the target using existing policies would require several activities that have an effective carbon price around $50-70/tonne - such as upgrading coal and gas stations to improve their efficiency ($65/tonne in 2030). See blue lines on graph below.


4. Electricity decarbonisation is critical but excluded. Energetics notes: “This study largely excluded abatement opportunities that drive the decarbonisation of electricity as there are no existing policies to support this beyond the existing RET. We included the deployment of larger volumes of rooftop solar PV as we believe this to be cost effective to participants . Noting the current surplus of generation capacity in Australia, the importance of electricity decarbonisation as a means of achieving Australia’s abatement cannot be understated.”

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