In facing up to his meeting with US President Barack Obama, Prime Minister Tony Abbott has been keen to suggest that his own climate change policy is comparable or even similar to Obama’s Clean Power Plan unveiled last week.
Abbott said while in ‘Canadia’, that ''I am encouraged that President Obama is taking what I would regard as direct action measure to reduce emissions, this is very similar to the action my government proposes in Australia.''
And when pressed by journalists about how he would respond to pressure from Obama to do more to reduce Australia’s carbon emissions, Abbott responded:
''We are proposing to spend some $2.5 billion on direct action climate change measures. If this was to translate to the United States that would be a $40 billion – a $40 billion program – over four years. Now, I think that would be a very, very substantial program should something like that be put into place here in the United States.''
Wow $40 billion, sounds like a big impressive number doesn’t it. But if we’re talking about context it might also help to know that replacing a standard fossil fuel power station comes at a price of around $500 million to $1 billion a pop and the US has 3444 fossil fuel power stations.
So really what might be more useful is to assess how Australia’s electricity emissions intensity under Abbott’s Direct Action policy will compare relative to US power emissions intensity under Obama’s Clean Power Plan.
Below is our chart of the week illustrating in the red bars the mandated emissions intensity targets (in kilograms of CO2 per megawatt-hour of electricity) the US EPA has set for 2030 for each state in the US. The black bars represent the emissions intensity of each Australian state’s electricity supply in 2030 under government projections with repeal of the carbon pricing scheme, but critically also assuming the Coalition Government doesn’t take an axe to the Renewable Energy Target.
In addition, the red vertical dashed line shows the average emissions intensity of overall US electricity supply and the black dashed line shows Australia’s. While Australia has some states that compare favourably to those in the US, they represent a small part of Australia’s electricity supply. Instead our supply is dominated by Victoria, Queensland and NSW, and their pollution intensity compares horribly. Victoria’s emissions are 25 per cent higher than the worst US state, and NSW and Queensland would be among the top five most polluting.
Carbon emissions intensity of US states (red) compared to Australian states (black) in 2030 under EPA Clean Power Plan vs Coalition’s Direct Action
Sources: US Environmental Protection Agency (2014) Clean Power Plan - Proposed State Goals; and ACIL Allen Consulting (2013) Electricity Sector Emissions – Modelling of the Australian Electricity Generation Sector, Report to the Department of Innovation, Industry, Climate Change, Science, Research and Tertiary Education
Just today Tony Abbott repeated his claim that his policy will do something similar to that planned under the Clean Power Plan telling Sky News: “What the US has done recently is actually very similar to what the Coalition is proposing to do. They want cleaner power stations, we want cleaner power stations.”
In reality Tony Abbott’s $2.5 billion Direct Action Emission Reduction Fund will do next to nothing to reduce the emissions intensity of Australia’s power supply.
How do we know this?
Well because the electricity supply industry said so.
Kieren O’Donoghue, General Manager of Policy at the Energy Supply Association of Australia (the industry representative group for electricity generators) told a Senate Committee:
“…we consider it unlikely that there will be significant participation from our sector in the Emissions Reduction Fund”.
The reason why stems from the fact that reducing emissions in the power sector involves upfront investments in discrete lumps of hundreds of millions to billions of dollars, which require a reliable income stream over at least 10 and generally 20 years to pay back that upfront investment.
The government’s Direct Action scheme is completely out of sync with such investments because $2.5 billion is a drop in the ocean (especially given it needs to acquire abatement beyond the electricity sector), and the government refuses to sign contracts to purchase abatement beyond the first five years on what is a 10 to 20-year investment.
The only policy that this driving down the carbon pollution intensity of Australia’s electricity supply is the Renewable Energy Target scheme. According to government projections with the carbon price repealed, the RET will be largely responsible for reducing the average CO2 pollution intensity of our electricity from 0.9 tonnes CO2 per megawatt-hour in 2010 to 0.75 tonnes in 2020. Once the RET target is reached in 2020, improvement essentially ceases only managing to decline to 0.74 tonnes in 2030.
If Abbott really thinks that he will be doing something similar to President Obama, then why has his office intervened to appoint three people to a four-person panel reviewing the RET scheme who either don’t think we should be worried about carbon pollution or have been openly negative about the scheme?