What's the cost of CO2 emissions abatement with wind turbines?

I was invited to testify to the 'Senate Select Committee on wind turbines' in Canberra on 19 May 2015. Here I explain the main messages I wanted to get across in my testimony.

The cost of CO2 emissions abatement with wind turbines is much higher than current estimates (such as in the Warburton RET Review).

The cost of CO2 abatement with wind power in Australia in 2020, under the RET as currently legislated, is likely to be (refer to costs in Table 1):

• 2 to 5 times the carbon price which was rejected by voters at the 2013 election
• 4 to 8 times the Direct Action average price at the first auction
• 6 to 12 times the current EU ETS price
• 100 to 200 times the international carbon price futures to 2020

The Warburton RET Review estimated the cost of abatement under the LRET at $32-$72/tonne CO2 in 2020 (Section 5.6 – Cost of abatement' – from estimates by ACIL-Allen, Frontier Economics and Deloitte).

But the actual cost is likely to be much higher because the estimates apparently do not take the CO2 abatement effectiveness into account.

Wheatley estimated wind energy in the NEM was just 78% effective at abating emissions in 2014, and would be about 70% effective if wind power's share was double.

Under the current RET legislation, wind energy would have to supply about 15% of electricity in 2020. At 15% share, wind is likely to be about 60% effective.

At 60% effective, the CO2 abatement cost would be $53-$120 per tonne CO2

The most important recommendation from my Submission, No. 259, is:

The CO2 abatement cost estimates in the RET Review should be re-estimated taking CO2 abatement effectiveness into account.