Don’t buy the carbon price hype

July 5, 2013
Yallourn coal-fired power plant.

Some environment NGOs have been quick to say that Australia’s carbon price has sharply cut carbon emissions in its first year. The claims not only contradict the evidence, but are positively deceptive: an exercise to cast a deeply flawed policy as a serious response to climate change.

The Australian Conservation Foundation (ACF) said on July 1 that the Labor/Greens carbon price scheme was working: “The carbon price, in its infancy, has led to a 30% increase in renewable energy in Australia, and an 8% drop in coal-fired electricity, and a 9% drop in electricity pollution overall.”

Similarly, campaign group 100% Renewable publicised an infographic on June 28 that said: “Australia’s electricity sector has transformed under a carbon price”. It attributed a 13.3% fall in brown coal-fired power use to the carbon price scheme.

The figures cited are correct: renewable energy use has indeed risen and coal use has fallen in the past 12 months. But the claim that the carbon price is responsible is pure misinformation.

Australia’s energy use in the past year fell by about 2.5% compared with the previous year, continuing a trend toward declining energy consumption that began in 2009.

Black coal use fell in NSW, but the biggest single reason was the closure of the energy-guzzling Kurri Kurri aluminium smelter, not the carbon price. Coal use fell in South Australia too, the biggest reason being the planned closure of a very old coal-fired plant in Port Augusta.

Brown coal use fell in Victoria, but a big factor here was the disastrous (and, ironically, climate change-induced) flooding of the huge Yallourn coal-fired power plant and nearby coalmine, which sharply cut its operations for many months.

The use of emissions-free hydro power rose in Tasmania, but this was due to a commercial decision to run down water storage capacity, which fell from 55% to 33% in the first six months this year.

None of these things point to a transformation of Australia’s energy sector. This is especially the case with brown coal — the most polluting fossil fuel of all. In fact, the carbon price grants huge subsidies to brown coal, keeping it in business longer.

In February, Environment Victoria said the state’s brown coal-fired power stations “will pocket billions of dollars in compensation payments” from the carbon price “while their businesses are relatively unaffected by the carbon price”.

The pleasing rise in renewable energy has most to do with the Renewable Energy Target, a federal government scheme that mandates that 20% of Australia’s energy be renewable by 2020. The carbon price cannot be credited for the result.

There is a push to hype the performance of the carbon price over the past year, but a strange reluctance to seriously discuss its future. From June 2015, Australia’s carbon price will join with Europe’s emissions trading scheme, which remains in a deep crisis.

Plagued with an oversupply of cheap carbon permits, Europe’s carbon price has collapsed. A tonne of carbon sells for less than 5 euros. The oversupply and the low price means Europe’s big polluters are saving millions of permits, intending to cash them in later instead of cutting emissions now.

A June 26 report from British NGO Sandbag said that instead of driving emissions down, Europe’s ETS was likely to drive them up, in effect “cancelling out the emissions reductions delivered by other policies”.

New Labor Prime Minister Kevin Rudd has flagged the idea of Australia joining Europe’s ETS next year rather than in 2015 as planned. If this happens it will simply bring the collapse of Australia’s carbon price a year closer. As has occurred in Europe, the low carbon price will act as a brake on zero-emissions technology and help entrench fossil fuel use.

The European parliament made a half-hearted attempt to deal with Europe’s carbon trading crisis in July. It voted to delay — or “backload” — the release of 900 million tonnes of carbon permits for three years.

Forty two civil society groups released a statement on July 1 that said trying to reform the ETS was futile and called on the European Parliament to end the scheme, “which thus far has been actively undermining climate objectives”. The groups said: “The EU ETS has been designed to prolong dependency on fossil fuels and expand and increase the role of financial markets in the daily lives of people ...

“We call for coherence in EU energy and climate policy decisions. We demand that European policy makers implement a swift and just transition to fossil fuel-free energy production which does not harm communities and ecosystems, and to define a participatory process to allow the public debate that is essential for such a transition and which the European Commission is still avoiding.”

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