Posted by John, August 28th, 2011 - under Uncategorised.

Tags: Carbon tax, Climate change, Coal, Coal Seam Gas, Gas

There’s a dirty little secret I want to let you in on. Labor’s carbon tax isn’t a step towards a fully renewable energy economy. It is a step away.

The carbon tax will lock in gas-fired power stations as ‘cleaner’ energy than coal at the expense of a move to a 100% renewable energy economy.

Don’t believe me? Here are the predictions from the Government’s Clean Energy Future Plan. It says (at page 71) that gas-fired power currently accounts for only 16 percent of the Australia’s electricity.

Under the carbon tax and associated emissions trading scheme Treasury predicts (at both pages xii and 24 ) that ‘total renewable generation (including hydro) will comprise around 40 per cent of electricity generation in 2050. Gas-fired electricity [will] increase by over 200 per cent by 2050.’

In other words 60 percent of Australia’s energy will come from fossil fuels in 2050, with most of that coming from gas, a fossil fuel which releases carbon dioxide and, in the case of coal seam gas, methane into the atmosphere.

The coal addicts in Treasury go so far as to say that ‘if we can combine coal-fired generation with new technologies such as carbon capture and storage, then our reserves of coal can continue to underpin cleaner electricity generation.’

The Government clearly has a transition in mind, not to the renewables that the Greens and others want, but to gas. This is the key point about the carbon tax. As the Minister for Resources and Energy, Martin Ferguson said recently:

During the period of transition, however, gas will play an important role as a cleaner transition fuel – from both a peaking and baseload perspective.

The price of permits – $23 a tonne, with prospects for some gradual but still minor rises over the coming years – does not make wind power cost effective, let alone solar power.

According to the Greens that would require a tax of at least $40 a tonne and $100 a tonne respectively. Here’s how Christine Milne put it last year:

I certainly recognise that you are going to need a price at $40 or more to shift from coal to gas and then a higher price still from gas to the renewables.

The Greens are arguing for a combination of measures … because even at $40, it is not a high enough price to bring on renewable energy at large scale.

Beyond Zero Emissions (BZE) estimates even larger costs. BZE says the cost effective figures are more like $70 a tonne for wind power and $200 a tonne for solar thermal. In fact BZE used to argue for the focus to be not on pricing mechanisms but on action, with a tax of about $10 a tonne as complementary to large scale investment in solar thermal for example. In the same report BZE said:

A low carbon price of $10-20/tonne is somewhat useful, as it will still create a disincentive to build new coal-fired power stations, and will ensure that coal is more likely to be displaced by renewable than gas. However, a carbon price which is greater than $25/tonne will ensure a mass rollout of gas-fired power stations, while renewables are left out in the cold.

As BZE argued as recently as June this year:

We believe that seeing a “price on carbon” as central to a low-emissions future, whether in the form of a carbon tax or trading scheme, is both inadequate to the task at hand and a dangerous distraction from effective climate action.

Furthermore, while many people who want serious climate action have understandably thrown their weight behind the current carbon tax proposal being formulated in Canberra because at least “something” is being done, we believe this represents a political dead end for the climate movement which will constrain the possibilities for demanding more serious action in the future.

They estimated the cost of moving to a totally renewable energy economy by 2020 as about $370 billion over ten years – a big cost but in perspective and annualised about three percent of Australia’s current GDP, and one that could be easily paid for by taxing big business and cutting defence spending.

Why the urgency to move to a totally energy renewable society? According to Patrick Hearps from the Melbourne Energy Institute at the University of Melbourne:

Analysis from the Potsdam Institute found a high-per-capita emitting country like Australia needs to reduce emissions to zero by 2020 to give us a 67% chance of staying below two degrees of warming. This target is also more likely to be revised down than up.

The Government and business have in mind a transition period to renewables, given the certainty required for investment in electricity generation, of 40 to 60 years. Gas will perform that role. That’s why Treasury predict a massive increase in gas fired power generation to 2050.

Much of that gas will come, the Government and business believe, from coal seam gas (CSG). It may well be that the certainty the carbon tax is offering to mining companies and power generators is encouraging the explosion of CSG exploration across the country.

The Government has taken the Greens for a massive ride (or more cynically the Greens have acquiesced in a massive con job on the Australian people.)

The carbon tax is about promoting fossil fuel use. It does nothing to move Australia to a 100% renewable future, a necessity if we are to really address climate change in any meaningful way by 2020.

In the next article on this, I will look at whether it is technically possible to move to a renewable energy economy by 2020, using Beyond Zero Emissions’ ground breaking paper Zero Carbon Australia Stationary Energy Plan. The impediment to doing that is capitalism.