Tuesday, July 15, 2008

How to reduce emissions?

Adam Morton 
The Age, July 16, 2008 - 12:02AM


FOR Professor Jeffrey Sachs the timing was perfect; for Kevin Rudd and Penny Wong, it was somewhat less so. The economic adviser to UN Secretary-General Ban Ki-moon breezed into Canberra's Australian National University this week to announce that emissions trading - the Rudd Government's biggest weapon in the fight against dangerous climate change - was, in effect, a dud. It was, he said, messy, complicated and bound to be unpopular.

"It's such a mess administratively. It covers only a fraction of what needs to be covered. It's hard to implement, it's hard to monitor, it's not transparent, it's highly manipulative - which is why the banks love it," he said.

It was strong stuff from such a respected thinker and decidely unhelpful PR for the Government as it faces what is likely to be its biggest challenge. Of course, it came too late in the piece to change anything (and almost certainly wouldn't have anyway).

The Government is committed to emissions trading; its climate change adviser Ross Garnaut is a strong advocate and even the Opposition supports the general idea, if not the conditions under which it should be brought in.

Today we get the detail - the design of the Government's preferred model of emissions trading, renamed this week under what seems a truth in- advertising approach, as a carbon pollution reduction scheme.

This change in branding to an easy-to-grasp slogan makes sense, and is a sign the Government recognises what a difficult sell it has on its hands.

The scheme is a political nightmare: while some will be compensated, Wong has to persuade a majority of people that it is in the interest of future generations that they pay more for energy, with higher costs flowing through to other goods and services.

Under the model proposed by Garnaut, but which is likely to be only partly accepted by the Government, emissions would be capped, divided into permits and auctioned at a market-set price.

Through this, it says the country can do its bit to save the world from a dangerous lurch in climatic conditions caused by skyrocketing greenhouse gas emissions.

But what is the scope of the problem it has to deal with? If Australia is going to cut its carbon footprint to a point where every person in the world is responsible for the same, manageable level, it is almost unfathomable. Andrew Macintosh, associate director of ANU's climate law and policy centre, estimates it would require it an emissions cut of more than 90% by 2050.

Why? The draft report by the Garnaut Climate Change Review released 12 days ago sets it out in basic terms. Australia's per capita emissions are the highest among wealthy nations. Only five heavy polluting developing nations are dirtier: Bahrain, Bolivia, Brunei, Kuwait and Qatar.

Australia's per head average is roughly twice that of OECD citizens, and more than four times that across the world.

Most of the blame falls at the feet of what is called the stationary energy sector - mostly electricity generation, but also taking in fuel used in manufacturing, and metals and plastic production. Together, these make up about half Australia's emissions. And that proportion is growing - predicted to soar by 50% between 1990 and 2012.

The major reason is, of course, the country's extraordinarily cheap and extraordinarily large supplies of coal - both the dirtier brown version in Victoria and marginally cleaner black further north. It means Australia emits more greenhouse gas in producing the same amount of energy than nearly all other countries.

There is a second reason that fl ows from this. Because Australia was largely insulated from the global oil shocks of the 1970s, due to having a limited domestic oil supply and an abundance of cheap coal, it did not face the energy security issues that threatened Japan and Europe from that time on.

According to conventional wisdom then and into the 1980s, with such a cheap and plentiful supply of energy, there was no need to cut its use or become more efficient.

Climate Institute policy director Erwin Jackson says while European countries live in fear of gas-rich Ukraine turning off its pipes, Australia was never forced to worry about where its power would come from. "There has been a lot more policy focus on energy effi ciency there - it is part of the reason fuel taxation in Europe is two to three times higher than in Australia."

Macintosh says the reliable supply of cheap electricity as much of the world was hit by the 1970s oil shocks made Australia incredibly attractive to companies that need a lot of energy and spew out a correspondingly large amount of greenhouse gas.

This is the reason Australia has a fl ourishing aluminium sector. It boomed from the 1980s as smelters shut down in Japan and Europe and took their business south.

Hugh Sadler, managing director of consultants Energy Strategies, estimates the aluminium industry uses nearly 20% of Australia's electricity supply. Iron and steel, liquid natural gas and cement are others that suck up power and emit accordingly.

Macintosh says Australia is "way down there with China" in its ineffi - cient use of energy, largely due to the industries that were drawn here in greater numbers three decades ago.

"It comes back to basic economics - if electricity was more expensive we would use it more effi ciently," he says. "Europeans use it more effi ciently because electricity there is more expensive. Conversely, the cheap price means our practices have developed in ways that don't use electricity well."

While improvements have been made over the past 15 years - the aluminium sector, for example, has dramatically cut its emission of concentrated perfl uorocarbons- Macintosh says the approach of heavy industry has principally been to lobby Government to hold off action to address climate change.

"From industry's point of view, it makes sense that they pay so much to lobbyists to go to Canberra to try to delay action - they don't have many other options, because a lot of these sectors don't have a lot they can do," Macintosh says.

"What does cement do for example? It's not only that cement requires a lot of electricty, but that the very process requires a lot of carbon dioxide emissions. Aluminium smelters can be made effi cient, but it can't get around the fact that it takes a lot of electricity to produce its product."

Energy aside, the other major contributor to Australia's inflated emissions profile is land-clearing.

While it has been reduced since the globally stratospheric levels of 1990, Macintosh says "we're still talking quite large amounts" - in the order of 50 million tonnes a year, a little less than 10% of Australia's annual emissions.

"And the return on that is tiny," Macintosh says. "It's a very emissions intense, low-return activity."

Solutions to land-clearing emissions have been fl oated, and advances in satellite monitoring and laws in NSW and Queensland have restricted how much is allowed.

If attention is switched from where emissions are generated - at a coal-fired power plant or during land-clearing - to the industries they ultimately benefit, the broad category of agriculture, forestry and fishing is responsible for 23%. Sadler says this is predominantly land clearing for grazing and methane released by Australia's substantial cattle stocks.

Manufacturing is another 23%, with aluminium the biggest chunk, followed by iron and steel. Mining accounts for 11%. Nearly 20% comes from the residential sector - homes and households.

Sadler says this is a similar story - partly due to cheap energy prices, Australia lags behind world's best practice of sixstar homes common in Europe and North America.

Australia is slowly moving forward - Victoria leads the way with a five-star minimum on new homes and major renovations - but is still behind despite more efficient homes costing little more to build.

Housing is only a fraction of the problem, of course, and land-clearing - as big as a part of Australia's emissions that it is - will not be addressed immediately by emissions trading. Australia's biggest problem is, and will continue to be, its energy supply.

Coal produces about a third of its greenhouse gas, and is relied on for 80% of its electricity. It is estimated Victoria has at least a 500-year supply still in the ground So-called clean coal technology is still at its development stage, and at least a decade off according to the most optimistic observers.

The cleaner brown coal plant announced for the Latrobe Valley a fortnight ago, which will use a drying and gassifi cation process, is widely seen as only an interim step.

For an emissions trading sceptic such as Sachs, everything else will be window-dressing unless there is a direct, head-on conversation about how Australia will cut emissions and still have an energy supply.

"There hasn't been enough discussion in my view about what Australia's energy system ought to look like in 10 or 20 or 30 years."

He says the main focus must be spending more on developing carbon capture and storage.

"That's even more important than the kind of tax or trading system - if Australia can manage that, it can manage a relatively low-cost transition to a low-emission economy."

Adam Morton is environment reporter.

No comments: