Treasury modelling concludes that we would have to invest more than $700bn in overseas abatement permits to reduce carbon emissions to 80 per cent below 2000 levels by 2050. This is money invested in foreign projects to reduce greenhouse gas emissions.
Electricity generation presently contributes about one-third of Australia's total greenhouse gas emissions and the electrification of transport and industry is likely to increase in the coming decades. Stationary energy is the sector targeted by Treasury for the biggest cuts and its core policy model has these emissions down to less than half by 2050.
The Treasury model envisages more renewable energy and gas plants. It retains some coal plants, with and without carbon capture and storage. By 2050 it has about 40 per cent of our electricity coming from renewable energy and the balance from fossil fuels.
Notably, neither CCS nor some of the renewable energy technologies proposed in the modelling report (for example, deep geothermal drilling) has been proven on a commercial scale in Australia, so significant technical risk remains.
Renewable energy plants produce no greenhouse gas emissions in operation. But, presently, only about 10 per cent of Australian electricity comes from renewables (mainly hydro and biofuels); the rest comes from fossil fuels.
Gas and coal plants produce greenhouse gas emissions even with carbon capture. As modelled, fossil fuel generation retained to 2050 means that decarbonisation of the sector cannot reach its target. That's why the Treasury model calls for the purchase of overseas abatement permits.
Greens leader Bob Brown wants us to believe that these gas and coal plants are not required and we could shift to 100 per cent renewable energy, even well before 2050.
The consulting experts used by Treasury for its modelling seem to disagree.
Presumably they give more weight to the need for a reliable, continuous and cost-effective electricity supply in a growing economy such as Australia.
If the model included fewer fossil fuel and more zero-emissions plants, while maintaining a reliable network, we could save some of that $700bn spent on overseas permits. Nuclear power can do just that.
Resources and Energy Minister Martin Ferguson clearly recognised this when he stated that Australia would have to consider a nuclear-powered future by the end of the decade if advances in renewable energy failed to provide options for cost-effective base load power.
Of course, we are not privy to the consultant briefings from Treasury but it seems likely that they were asked to exclude nuclear power even though it produces no greenhouse gas emissions in operation and can readily replace coal plants. One wonders how the generator mix would have changed had those briefings been different.
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