Published by The Conversation. View original article. Australia has a problem with its power system that goes to the core of many issues we’re facing at the moment — increasing coal and gas prices, changing electricity usage, and climate change. … Continue reading Act now on Australia’s power system or pay more later
By Alan Pears AM, energy policy guru and Adjunct Professor, RMIT University.
We should not be debating a choice between direct action and carbon pricing: we need both, but with credible, well-designed mechanisms.
Why we need both
We need a carbon price based on certificate trading for several reasons.
It sends a signal to both emitters and investors that they need to cut emissions, starting today. The price rises if there is insufficient action, and declines if action is effective. And there is the potential to profit from trading. All of that makes emitters more likely to innovate and bring down the cost of reducing emissions.
The revenue from a carbon price provides funds to support additional cuts and help those affected by the price to adapt. Because a price brings in revenue, funds don’t have to be dragged from other government activities.
We need effective direct action because carbon pricing is a relatively crude and imperfect incentive. A carbon price can be undermined by non-financial barriers and market imperfections. Weak carbon caps lead to low carbon prices that do not reflect true long-term costs of climate change.
Businesses and households also tend to put more value on money they have now than money they have in the future. That means future carbon costs are not necessarily powerful motivators when compared with other factors.
In the electricity industry, profits increase with higher sales, so a carbon price will encourage action that reduces emissions per unit of electricity sold, such as renewable energy, but not actions that reduce sales. Energy companies won’t encourage energy efficiency, the most cost-effective abatement option, because it cuts their profits.
A carbon price does increase the prices consumers pay for fossil fuel sourced energy, but it is a small increase in a small part (1-5%) of most business and household costs. If we want consumers and businesses to improve their energy efficiency, or set up distributed energy generation such as solar panels, direct action can help.
Direct action can be applied to activities that cannot be included in a carbon trading scheme. We have already seen this approach under the Carbon Farming Initiative, which encourages sequestration by rewarding those who act. Continue reading “Direct action vs carbon pricing: we can have it all”
The Intergovernmental Panel on Climate Change’s Fifth Assessment Report paints an authoritative picture of the dire consequences if we fail to rapidly curb our greenhouse gas emissions.
Solving this will require many different actions in parallel: to curb energy demand, reduce the greenhouse intensity of electricity production, shift transport to renewable electricity and renewable fuels, move heavy industry away from fossil fuel, curb land clearing, and reduce the greenhouse intensity of agriculture.
Mechanisms to achieve this include research and development (R&D) funding, sector targets, carbon pricing, liberal capital investment funding and authoritative information. Australia presently has these mechanisms, although the new government plans to abolish the latter three. Continue reading “Lomborg’s criticism of current renewables is years out of date”
Coal-fired electricity may have little or no economic future in Australia, a new analysis has found. While the new government seems determined to turn its back on renewable energy, our study shows that even without a carbon price, and even with the assumption that carbon capture and storage will eventually become commercially available, coal may not be able to compete with renewable electricity.
Carbon capture and storage captures CO2 emitted by fossil-fuelled power stations, compressing and transporting it by pipeline, and burying it in repositories deep underground. We modelled a range of fossil fuel scenarios with CCS, and then compared their economics with that of our previously published 100% renewable electricity scenario based on commercially available wind, solar and biomass technologies. Continue reading “Even under a conservative government, coal-fired electricity has no future”
Today marks the first anniversary of the national carbon price which is driving a shift from fossil fuels to renewable energy in Australia. Yet In Victoria, ‘brown’ tape is preventing more renewable energy projects getting built–costing jobs, investment and income for regional areas.
Ted Baillieu’s anti-wind farm laws–which still stand–create a minefield of ‘brown’ tape that unfairly target renewables. A right of veto allow just one individual to block a wind farm proposal. Arbitrarily-established ‘no-go’ zones for wind energy ban wind farms in large swathes of the state. In Victoria, there’s more regulation for wind farms than coal mines and power plants.