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Greenhouse emissions rise 5pc in two years

Greenhouse emissions rise 5pc in two years

Australia's greenhouse gas emissions have increased 5 per cent in the past two years, leaving a huge task for the proposed National Energy Guarantee to meet Paris climate commitments.

National greenhouse emissions were 554 million tonnes of carbon dioxide this year, up from 527 million tonnes in 2015, the last year for which the government reported.

The latest projections show emissions steady at 551 million tonnes in 2020, and rising 3.5 per cent over the following decade to 570 million tonnes in 2030, if new policies such as the National Energy Guarantee and tough vehicle emissions standards are not vigorously implemented.

The worst offenders are the farming sector, where emissions are projected to jump 14 per cent to 82 million tonnes between now and 2030 thanks to rising stock numbers, and transport, projected to be up 11 per cent to 112 million tonnes as the population and economy grow.

The cumulative emissions reduction task for the decade to 2030 has been reduced by about 120 million tonnes but still weighs in at a challenging 866 million tonnes to 934 million tonnes to meet the 26-28 per cent reduction on 2005 levels that the Turnbull government agreed at Paris.

A long-awaited Review of Climate Change Policies also reveals that the government will look at relaxing the only explicit cap on emissions of individual companies - the historical caps applied to the largest emitters under the Safeguard Mechanism of its Emissions Reduction Fund - by making it easier to bring baseline emissions up-to-date with current production.

Right trend

Despite the mixed progress, environment and energy minister Josh Frydenberg said the trend was in the right direction, with Australia on track to over achieve its 2020 emissions target of a 5 per cent reduction from 2000 levels by 294 million tonnes.

Mr Frydenberg said Australia continues to close the gap on the 2030 target, and review found that Australia had policies for each significant sector of the economy. He highlighted the Emissions Reduction Fund which has secured more than 191 million tonnes of abatement mostly in agriculture and land use, the Ministerial Forum on Vehicle Emissions and the National Energy Productivity Plan.

In the electricity sector, where emissions have edged up to 190 million tonnes in the two years since the Abbott government repealed Labor's carbon tax, the government is counting on the National Energy Guarantee (NEG), which is still being designed and is yet to win the approval of several states.

Underlining the scale of the challenge in electricity, the sector's emissions are only projected to fall slightly, to 175 million tonnes in 2020 and 173 million tonnes in 2030, without new policies such as the energy guarantee and further progress in reducing Australia's energy use per capita and unit of GDP.

Industry closures

Electricity demand has been weak thanks to the closure of some heavy industry - car assembly and aluminium smelters. Emissions are being held in check by the growth of wind and solar energy, the cost of which is falling fast, at the expense of coal power; the closure of the Hazelwood brown coal plant in Victoria at the end of March saw electricity sector emissions fall 1.6 per cent in the June quarter.


But the policy responsible for the surge in wind and solar energy - the Renewable Energy Target - peaks in 2020 meaning there will be less incentive for new wind and solar projects beyond 2020.

Emissions from direct combustion by industry are also projected to increase slightly, from 97 million tonnes to 105 million tonnes in 2020 and 103 million tonnes in 2030, while emissions from industrial processes are projected to fall 6 per cent to 32 million tonnes from 2020 to 2030.

The review confirms the government has decided "in principle" to allow polluting companies to buy foreign carbon credits after 2020 to manage liabilities under the NEG's emissions guarantee, and will "improve" the $2.55 billion ERF - put in place after the repeal of Labor's carbon tax - by making it more transparent.

The timing, and quantitative and qualitative criteria, for buying foreign carbon credits will be decided by 2020, in time for the NEG's commencement.

Financial Review

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