Energy policy of Australia
Encyclopedia
Energy policy of Australia describes the energy policy
in the politics of Australia
. Energy in Australia
describes energy
and electricity
production, consumption and export/import in Australia
. Electricity sector in Australia is the main article of electricity in Australia.
The energy policy of Australia is subject to the regulatory and fiscal influence of all three levels of Government in Australia, although only the State and Federal levels determine policy for primary industries such as coal.
Federal energy policies continue to support the coal mining
and natural gas industries through subsidies for fossil fuel use and production
as the exports by those industries contribute significantly to the earnings of foreign exchange and government revenues. Australia is one of the most coal-dependent countries in the world. Coal and natural gas, along with oil-based products, are currently the primary sources of Australian energy usage, despite the fact that the coal industry produces approximately 38% of Australia's total greenhouse gas emissions. Federal policy is beginning to change with the publication of the Garnaut report
and Carbon Pollution Reduction Scheme
White Paper, the announcement of an Emissions Trading Scheme to commence in 2010, and the announcement of a national mandatory renewable energy target of 20% of electricity supply in Australia by 2020.
State energy policies such as Mandatory Renewable Energy Targets ensure that renewable energy contributes a greater percentage of the country's energy supply.
Due to Australia's reliance on coal and gas for energy, in 2000 the country was the highest emitter of greenhouse gases per capita in the developed world
, irrespective of whether or not emissions from land clearing were included. It is also one of the countries most at risk from climate change
according to the Stern report.
Renewable energy commercialisation in Australia is an area of relatively minor activity compared to the fossil fuels industry. Australia's renewable energy
industries are diverse, covering numerous energy sources and scales of operation, and currently contribute about 8–10% of Australia's total energy supply. The major area where renewable energy is growing is in electricity generation
following the introduction of government Mandatory Renewable Energy Targets
. The two most populous states, New South Wales and Victoria have renewable energy targets of 20% and 25% respectively by 2020.
.
Rapid economic growth led to large and expanding construction programs of coal-fired power stations (black coal in New South Wales, brown coal in Victoria) and by the 1980s complex policy questions had emerged involving the massive requirements for investment, land and water.
Between 1981 and 1983 a cascade of blackouts and disruptions was triggered in both states, resulting from generator design failures in New South Wales, industrial disputes in Victoria, and drought in the storages of the Snowy system (which provided essential peak power to the State systems). Wide political controversy arose from this and from proposals to the New South Wales Government from the Electricity Commission of New South Wales
for urgent approval to build large new stations at Mardi and Olney on the Central Coast, and at other sites later.
The Commission of Enquiry into Electricity Generation Planning in New South Wales was established, reporting in mid 1985. This was the first independent enquiry directed from outside the industry into the Australian electricity system. It found, among other matters, that existing power stations were very inefficient, that plans for four new stations, worth then about $12 billion, should be abandoned, and that if the sector were restructured there should be sufficient capacity for normal purposes until the early years of the 21st century. This forecast was achieved. The Commission also recommended enhanced operational coordination of the adjoining State systems and the interconnection in eastern Australia of regional power markets.
The New South Wales Enquiry marked the beginning of the end of the centralised power utility monopolies and established the direction of a new trajectory in Australian energy policy, towards decentralisation, interconnection of States and the use of markets for coordination. Similar enquiries were subsequently established in Victoria (by the Parliament) and elsewhere, and during the 1990s the industry was comprehensively restructured in southeastern Australia and subsequently corporatised.
Following the report by the Industry Commission on the sector moves towards a national market developed. Impetus towards system wide competition was encouraged by the Hilmer recommendations. The establishment of the National Electricity Market
in 1997 was the first major accomplishment of the new Federal/State cooperative arrangements under the Council of Australian Governments. The governance provisions included a National Electricity Code, a central market manager, the National Electricity Market Management Company, NEMMCO
, and a regulator, National Electricity Code Administrator (NECA).
Following several years experience with the new system and a number of controversies an energy market
reform process was conducted by the Ministerial Council on Energy.
As a result, beginning in 2004, a broader national arrangement, including electricity and gas and other forms of energy, was established including a national regulator, the Australian Energy Regulator
, (AER), and with the national markets and transmission operations and planning processes managed by the Australian Energy Market Commission
, (AEM), and the Australian Energy Market Operator
, (AEMO).
), natural gas (13.5%), liquid/gas fossil fuel-switching plants (5.4%), oil products (2.9%), wind power (0.4%), biomass (0.2%) and solar (0.1%).
Hydroelectricity accounts for 6.5–7% of Australian electricity generation. The Snowy Mountains
Scheme is a massive water diversion, storage and hydro-electric
scheme, which takes water from the eastern slopes of the Australian Alps
(part of the Great Dividing Range
) in eastern Victoria
and southern New South Wales
through pipes, tunnels and aqueducts into a series of dams, for use in hydro-electric power generation and irrigation in the Murrumbidgee
and Murray
valleys. The scheme created two major artificial lakes, Lake Eucumbene
and Lake Jindabyne
as well as a number of smaller lakes and ponds.
. A Carbon Market Economics report projects over 10 GW of new wind power capacity by 2016 is possible if renewable energy targets are met.
, in addition to its role in producing electricity through photovoltaics.
Less than 1 per cent of Australian electricity currently comes from solar power generation. This is mainly due to the higher cost per kW than other power sources because of the cost of solar panel
s. Innovative applications of photovoltaic technology being developed in Australia include concentrating systems to focus the solar energy on to a smaller area of higher efficiency cells and the use of building integrated photovoltaics
, where the PV cells perform architectural or structural functions as well as power generation, thereby offsetting some of the cost.
A major 154 MW photovoltaic (PV) Solar power station in Victoria
is planned, which will be the biggest and most efficient solar photovoltaic power station in the world. The power station will cost $420 million and have the capability to concentrate the sun by 500 times onto the solar cell
s for ultra high power output. The Victorian power station will generate clean daytime electricity directly from the sun to meet the annual needs of over 45,000 homes with zero greenhouse gas emissions.
could be important for supplying electricity to most of the country's major capital cities. A wave farm
near Fremantle in Western Australia operates through a number of submerged buoys, creating energy as they move with passing waves. The Australian government has provided more than $US600,000 in research funding for the technology developed by Carnegie, a Perth company.
was a proposed nuclear power reactor in the Jervis Bay Territory
on the south coast of New South Wales. It would have been Australia's first nuclear power plant
, and was the only proposal to have received serious consideration as of 2005. Some environmental studies and site works were completed, and two rounds of tenders were called and evaluated, but the Australian government decided not to proceed with the project.
Queensland introduced legislation to ban nuclear power development on 20 February 2007. Tasmania has also banned nuclear power development. Both laws were enacted in response to a pro-nuclear position, by John Howard
in 2006, and the release of the Switkowski
report into nuclear power.
An independent panel of Australian scientists and nuclear experts have been critical of the findings of the Switkowski nuclear inquiry. They found that the Switkowski report relies on some flawed assumptions which reveal a bias towards nuclear power on economic, technological, health and environmental grounds.
John Howard went to the November 2007 election with a pro-nuclear power platform but his government was soundly defeated by Labor, which is opposed to nuclear power for Australia.
, Stanwell
and Delta Electricity
pay 1.36 cents/kWh. By comparison, coal-dominated utilities in the United States paid 1.37–2.44 cents/kWh.
The coal power stations receive subsidies which are calculated to be between $450 million and $1.1 billion in 2005–06. Currently, the subsidies received by several electricity generation companies prioritising in coal-fired generation appear to match or exceed the profits made by those companies in 2005–06. In other words, government subsidies appear to be directly creating profits for coal-fired generators.
The impact of removing certain electricity sector subsidies will increase the cost of electricity by about $0.05/kW or 3.9%. This would decrease demand for electricity by 1.4% and also reduce GHG Emission by about 2.7 Mt CO2-e.
The $400 million Greenhouse Gas Abatement Program (GGAP) has already invested in 15 projects totaling $145 million to diminish 27 million tonnes of GHG during 2008–2012.
In 2005–06, 141TWh of electricity was harvested, with a total of $284 million for concession subsidies. All of these subsidies:
These subsidies that encourage coal firing are distorting the energy market. The removal of this subsidy would cause coal power stations to lose profitability. They would be forced to raise their electricity prices to regain profits in order to compete with other energy methods.
to contribute electricity for 450 years.
The 2008 Federal Budget allocated $50M through the Renewable Energy Fund to assist with 'proof-of-concept' projects in known geothermal areas.
Any realistic attempt to harvest geothermal energy from deep hot dry rocks failed. In 2010, the Queensland Government's Parliamentary Committee on Renewables found out from leading representatives of the Australian geothermal industry, that no electricity will be generated before 2021 by the so called deep hot rocks technology (HANSARD).
plants use crops and other vegetative byproducts to produce power similar to the way coal-fired power plants work. Another product of Biomass is extracting ethanol from sugarmill byproducts. The GGAP subsidies for Biomass include ethanol extraction with funds of $7.4M and petrol/ethanol fuel with funds of $8.8 million. The total $16.2M subsidy is considered as a renewable energy source subsidy.
vehicles. It is produced from vegetable or animal fats and is the only other type of fuel that can run in current unmodified vehicle engines. The advantages of using biodiesels are summarised below:
Subsidies given to ethanol oils totaled $15 million in 2003–2004, $44 million in 2004–2005, $76 million in 2005–2006 and $99 million in 2006–2007. The costs for establishing these subsidies are $1 million in 2005–2006 and $41 million in 2006–2007.
However, with the introduction of the Fuel Tax Bill, grants and subsidies for using Biodiesel have been cut leaving the public to continue using diesel instead. The grants will be cut by up to 50% by 2010–2014. Previously the grants given to users of ethanol-based biofuels were $0.38 per litre, which will be reduced to $0.19 in 2010–2014.
of A$23 ($23.78) a tonne on the top 500 polluters from July 2012.
Australia is the fourth-largest coal producing country in the world. Newcastle
is the largest coal export port in the world. In 2005, Australia mined 301 million tonnes of hard coal
and 71 million tonnes of brown coal
. Coal is mined in every state of Australia. It provides about 85% of Australia's electricity production and is Australia's largest export commodity. 75% of the coal mined in Australia is exported, mostly to eastern Asia. In 2005, Australia was the largest coal exporter in the world with 231 million tonnes of hard coal. Australian black coal exports are expected by some to increase by 2.6% per year to reach 438 million tonnes by 2029–30, but the possible introduction of emissions trading
schemes in customer countries as provided for under the Kyoto protocol
may affect these expectations in the medium term.
Coal mining in Australia has become more controversial because of the strong link between the effects of global warming on Australia
and burning coal, including exported coal, and climate change
, global warming
and sea level rise. Coal mining in Australia will as a result have direct impacts on agriculture in Australia
, health and natural environment
including the Great Barrier Reef
.
The IPCC
AR4 Working Group III Report "Mitigation of Climate Change" states that under Scenario A (stabilisation at 450ppm) Annex 1 countries (including Australia) will need to reduce greenhouse gas emissions by 25% to 40% by 2020 and 80% to 95% by 2050. Many environmental groups around the world, including those represented in Australia, are taking direct action for the dramatic reduction in the use of coal as carbon capture and storage
is not expected to be ready before 2020 if ever commercially viable.
reduce petrol prices by $0.38/L. This is very significant, given current petrol prices in Australia of around $1.20/L. The acceptable petrol prices hence result in Australia's petroleum consumption at 28.9 GL every year.
Removal of this subsidy will make petrol prices rise to around $1.60/L and thus could make certain alternative fuel
s competitive with petroleum on cost. The 32% price increase associated with subsidy removal would be expected to correspond to an 18% reduction in petrol demand and a Greenhouse Gases emission reduction of 12.5 Mt CO2-e. The Petroleum Resource Rent Tax keeps oil prices low and encourages investment in the 'finite' supplies of oil, at the same time considering alternatives.
is highly recommended. If the subsidies for diesel were bounded with the renewable subsides, remote communities could adapt hybrid electric
generation systems. The Energy Grants Credit Scheme (EGCS), an off-road component is a rebate program for diesel and diesel-like fuels.
in 1992. The system allows consumers to compare the energy efficiency between similar appliances.
(COAG), the Ministerial Council on Energy (MCE), the Ministerial Council on Mineral and Petroleum Resources (MCMPR), the Commonwealth Department of Resources; Energy and Tourism (DRET), the Department of Environment and Heritage (DEH), the Australian Greenhouse Office (AGO), the Department of Transport and Regional Services, the Australian Competition and Consumer Commission (ACCC), the Australian Energy Market Commission
, the Australian Energy Regulator
and the Australian Energy Market Operator
.
Securing Australia's Energy Future, a number of initiatives were announced to achieve the Australian Government’s
energy objectives. These include:
Key Points
Criticisms
Energy Regulator (AER), were created.
Subsidies by sector
Total subsidies that support production and consumption of different fuels
Geoscience Australia
, the Department of Industry, Tourism and Resources & State Government energy departments are involved in the direct support of mining and fossil fuel exploitation. These agencies only provide subsidies if there is a benefit to a particular group. As forecast, the main groups concerned are from the coal industry. Thus, by providing subsidies to the coal-fired power industry, there will be an increase in fossil fuel production, lower coal costs and inevitably an increase in greenhouse gases (GHG).
Geoscience Australia (GA) provided a $107 million subsidy for energy in 2005–06. The 2006–07 budget involved 66 projects of which 11 are allocated to petroleum research and others related to mineral and mining industry. On a much smaller scale, the subsidy allocated to saving climate change was 'storage of GHG' with a subsidy of $0.6 million.
The Department of Industry, Tourism and Resources (DITR), similarly to GA, provided a A$30 million energy technology fund in 1994–95. This increased to a government-funded $1,314 million subsidy which divides into 52 branches.
95% of Australia's electricity originates from fossil fuels, which make the power industry quite profitable. The DITR supports fossil fuel research with 95% of its total budget, leaving less than 5% for renewable energy technology.
are at less than 50%, refining oil will be harder and cost more money. However, Australia has an alternative – natural gas reserves, which are abundant throughout the states.
Due to the current fossil fuel (including oil) subsidies making oil refinement cheaper, natural gas extraction is ignored.
through the Queensland Department of Energy and is most noted for its contribution to coal mining in Australia
.
A major priority of South Australia’s Strategic Plan is to reduce greenhouse gas emissions in South Australia to achieve the Kyoto target as a first step towards reducing emissions by 60% (to 40% of 1990 levels) by 2050.
Measures announced in South Australia include:
In 2009 Premier Mike Rann announced plans to increase the State's renewable energy production target to 33% by 2020. (Letter from Energy Minister Michael O'Brien 29/4/11)
In 2006 Victoria became the first state to have a renewable energy target of 10% by 2016. In 2010 the target was increased to 25% by 2020.
has a concession rebate and a life support discount. The Northern Territory
has similar programs.
into the atmosphere.
Currently has funded six projects to help reduce GHG emissions, which are summarised below
82% of subsidies is concentrated in the Australian Government's 'Clean Coal Technology', with the remaining 18% of funds allocated to the renewable energy 'Project Solar Systems Australia' $75 million.
The LETDF is a new subsidy scheme aimed at fossil fuel energy production started in 2007.
In November 2008 an Australian Senate committee chaired by Labor Senator Anne McEwen recommended further scrutiny of a renewable energy feed-in tariff before it is rolled out nationally. The committee has recommended that such a scheme be put to the Council of Australian Governments. Some states already have a tariff to encourage investment in renewable energy, and the Greens have introduced a bill for a national scheme.
Energy policy
Energy policy is the manner in which a given entity has decided to address issues of energy development including energy production, distribution and consumption...
in the politics of Australia
Politics of Australia
The Politics of Australia take place within the framework of a parliamentary democracy, with electoral procedures appropriate to a two-party system. Australia is governed as a federation and as a constitutional monarchy, with an adversarial legislature based upon the Westminster system...
. Energy in Australia
Energy in Australia
Energy in Australia describes energy and electricity production, consumption and export in Australia. Energy policy of Australia describes the politics of Australia related to energy....
describes energy
World energy resources and consumption
]World energy consumption in 2010: over 5% growthEnergy markets have combined crisis recovery and strong industry dynamism. Energy consumption in the G20 soared by more than 5% in 2010, after the slight decrease of 2009. This strong increase is the result of two converging trends...
and electricity
Electricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
production, consumption and export/import in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
. Electricity sector in Australia is the main article of electricity in Australia.
The energy policy of Australia is subject to the regulatory and fiscal influence of all three levels of Government in Australia, although only the State and Federal levels determine policy for primary industries such as coal.
Federal energy policies continue to support the coal mining
Coal mining in Australia
Coal in Australia is mined primarily in Queensland, New South Wales and Victoria. It is used to generate electricity and 75% of the coal mined in Australia is exported, mostly to eastern Asia. In 2000/01, 258.5 million tonnes of coal was mined, and 193.6 million tonnes exported. Coal also provides...
and natural gas industries through subsidies for fossil fuel use and production
Energy and transport subsidies in Australia
The environmental impact of transport in Australia is considerable. Australia subsidizes fossil fuel energy, keeping prices artificially low and raising greenhouse gas emissions due to the increased use of fossil fuels as a result of the subsidies...
as the exports by those industries contribute significantly to the earnings of foreign exchange and government revenues. Australia is one of the most coal-dependent countries in the world. Coal and natural gas, along with oil-based products, are currently the primary sources of Australian energy usage, despite the fact that the coal industry produces approximately 38% of Australia's total greenhouse gas emissions. Federal policy is beginning to change with the publication of the Garnaut report
Garnaut Climate Change Review
The Garnaut Climate Change Review was a study by Professor Ross Garnaut, commissioned by then Opposition Leader, Kevin Rudd and by the Australian State and Territory Governments on 30 April 2007...
and Carbon Pollution Reduction Scheme
Carbon Pollution Reduction Scheme
The Carbon Pollution Reduction Scheme was a proposed cap-and-trade system of emissions trading for anthropogenic greenhouse gases, due to be introduced in Australia in 2010 by the Rudd government, as part of its climate change policy. It marked a major change in the energy policy of Australia...
White Paper, the announcement of an Emissions Trading Scheme to commence in 2010, and the announcement of a national mandatory renewable energy target of 20% of electricity supply in Australia by 2020.
State energy policies such as Mandatory Renewable Energy Targets ensure that renewable energy contributes a greater percentage of the country's energy supply.
Due to Australia's reliance on coal and gas for energy, in 2000 the country was the highest emitter of greenhouse gases per capita in the developed world
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
, irrespective of whether or not emissions from land clearing were included. It is also one of the countries most at risk from climate change
Climate change
Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average...
according to the Stern report.
Renewable energy commercialisation in Australia is an area of relatively minor activity compared to the fossil fuels industry. Australia's renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
industries are diverse, covering numerous energy sources and scales of operation, and currently contribute about 8–10% of Australia's total energy supply. The major area where renewable energy is growing is in electricity generation
Electricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
following the introduction of government Mandatory Renewable Energy Targets
Mandatory renewable energy targets
A mandatory renewable energy target is a government legislated requirement on electricity retailers to source specific proportions of total electricity sales from renewable energy sources according to a fixed timeframe. The additional cost is distributed across most customers by increases in other...
. The two most populous states, New South Wales and Victoria have renewable energy targets of 20% and 25% respectively by 2020.
History and governance
After World War II, New South Wales and Victoria started integrating the formerly small and self-contained local and regional power grids into large state-wide systems run centrally by public statutory authorities. Similar developments occurred in other states. Both of the industrially large states cooperated with the Commonwealth in the development and interconnection of the Snowy Mountains SchemeSnowy Mountains Scheme
The Snowy Mountains scheme is a hydroelectricity and irrigation complex in south-east Australia. It consists of sixteen major dams; seven power stations; a pumping station; and 225 kilometres of tunnels, pipelines and aqueducts and was constructed between 1949 and 1974. The Chief engineer was Sir...
.
Rapid economic growth led to large and expanding construction programs of coal-fired power stations (black coal in New South Wales, brown coal in Victoria) and by the 1980s complex policy questions had emerged involving the massive requirements for investment, land and water.
Between 1981 and 1983 a cascade of blackouts and disruptions was triggered in both states, resulting from generator design failures in New South Wales, industrial disputes in Victoria, and drought in the storages of the Snowy system (which provided essential peak power to the State systems). Wide political controversy arose from this and from proposals to the New South Wales Government from the Electricity Commission of New South Wales
Electricity Commission of New South Wales
The Electricity Commission of New South Wales, sometimes called Elcom, was a statutory body responsible for the generation of electricity and its bulk transmission throughout New South Wales, Australia...
for urgent approval to build large new stations at Mardi and Olney on the Central Coast, and at other sites later.
The Commission of Enquiry into Electricity Generation Planning in New South Wales was established, reporting in mid 1985. This was the first independent enquiry directed from outside the industry into the Australian electricity system. It found, among other matters, that existing power stations were very inefficient, that plans for four new stations, worth then about $12 billion, should be abandoned, and that if the sector were restructured there should be sufficient capacity for normal purposes until the early years of the 21st century. This forecast was achieved. The Commission also recommended enhanced operational coordination of the adjoining State systems and the interconnection in eastern Australia of regional power markets.
The New South Wales Enquiry marked the beginning of the end of the centralised power utility monopolies and established the direction of a new trajectory in Australian energy policy, towards decentralisation, interconnection of States and the use of markets for coordination. Similar enquiries were subsequently established in Victoria (by the Parliament) and elsewhere, and during the 1990s the industry was comprehensively restructured in southeastern Australia and subsequently corporatised.
Following the report by the Industry Commission on the sector moves towards a national market developed. Impetus towards system wide competition was encouraged by the Hilmer recommendations. The establishment of the National Electricity Market
National Electricity Market
The National Electricity Market is the name of the Australian wholesale electricity market and the associated synchronous electricity transmission grid....
in 1997 was the first major accomplishment of the new Federal/State cooperative arrangements under the Council of Australian Governments. The governance provisions included a National Electricity Code, a central market manager, the National Electricity Market Management Company, NEMMCO
NEMMCO
The National Electricity Market Management Company Limited was the Wholesale Market and Power System Operator for the Australian National Electricity Market...
, and a regulator, National Electricity Code Administrator (NECA).
Following several years experience with the new system and a number of controversies an energy market
Energy market
Energy markets are those commodities markets that deal specifically with the trade and supply of energy. Energy market may refer to an electricity market, but can also refer to other sources of energy...
reform process was conducted by the Ministerial Council on Energy.
As a result, beginning in 2004, a broader national arrangement, including electricity and gas and other forms of energy, was established including a national regulator, the Australian Energy Regulator
Australian Energy Regulator
The Australian Energy Regulator is the regulator of the wholesale electricity and gas markets in Australia. It is part of the Australian Competition and Consumer Commission and enforces the rules established by the Australian Energy Market Commission....
, (AER), and with the national markets and transmission operations and planning processes managed by the Australian Energy Market Commission
Australian Energy Market Commission
The Australian Energy Market Commission was set up by the Council of Australian Governments through the Ministerial Council on Energy in 2005. The AEMC has two roles in relation to national energy markets - as rule maker and as a provider of advice to Ministers on how best to develop energy...
, (AEM), and the Australian Energy Market Operator
Australian Energy Market Operator
The Australian Energy Market Operator delivers an array of gas and electricity market, operational, development and planning functions. It manages the National Electricity Market and the Victorian gas transmission network. AEMO also facilitates electricity and gas full retail contestability,...
, (AEMO).
Coal fired power
The main source of Australia's electricity generation is coal. In 2003, coal-fired power plants generated 77.2% of the country’s total electricity production, followed by natural gas (13.8%), hydropower (7.0%), oil (1.0%), biomass (0.6%) and solar and wind combined (0.3%). Coal-fired plants also constitute a majority of generating capacity. The total generating capacity was approximately 44,771 MW in 2002. Depending on the price of coal at the power station, the long run marginal cost of coal based electricity at the power stations in eastern Australia is between 3 and 5 cents per kWh, which is between $30 and $50 per MWh. In Victoria brown coal stations produce electricity for less than $30 per MWh. In 2003, coal fired plants produced 58.4% of the total capacity, followed by hydropower (19.1%, of which 17% is pumped storagePumped-storage hydroelectricity
Pumped-storage hydroelectricity is a type of hydroelectric power generation used by some power plants for load balancing. The method stores energy in the form of water, pumped from a lower elevation reservoir to a higher elevation. Low-cost off-peak electric power is used to run the pumps...
), natural gas (13.5%), liquid/gas fossil fuel-switching plants (5.4%), oil products (2.9%), wind power (0.4%), biomass (0.2%) and solar (0.1%).
Hydro electric power
Snowy Mountains
The Snowy Mountains, known informally as "The Snowies", are the highest Australian mountain range and contain the Australian mainland's highest mountain, Mount Kosciuszko, which reaches 2,228 metres AHD, approximately 7310 feet....
Scheme is a massive water diversion, storage and hydro-electric
Hydroelectricity
Hydroelectricity is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy...
scheme, which takes water from the eastern slopes of the Australian Alps
Australian Alps
The Australian Alps are the highest mountain ranges of mainland Australia. They are located in southeastern Australia and straddle the Australian Capital Territory, south-eastern New South Wales and eastern Victoria...
(part of the Great Dividing Range
Great Dividing Range
The Great Dividing Range, or the Eastern Highlands, is Australia's most substantial mountain range and the third longest in the world. The range stretches more than 3,500 km from Dauan Island off the northeastern tip of Queensland, running the entire length of the eastern coastline through...
) in eastern Victoria
Victoria (Australia)
Victoria is the second most populous state in Australia. Geographically the smallest mainland state, Victoria is bordered by New South Wales, South Australia, and Tasmania on Boundary Islet to the north, west and south respectively....
and southern New South Wales
New South Wales
New South Wales is a state of :Australia, located in the east of the country. It is bordered by Queensland, Victoria and South Australia to the north, south and west respectively. To the east, the state is bordered by the Tasman Sea, which forms part of the Pacific Ocean. New South Wales...
through pipes, tunnels and aqueducts into a series of dams, for use in hydro-electric power generation and irrigation in the Murrumbidgee
Murrumbidgee River
The Murrumbidgee River is a major river in the state of New South Wales, Australia, and the Australian Capital Territory . A major tributary of the Murray River, the Murrumbidgee flows in a west-northwesterly direction from the foot of Peppercorn Hill in the Fiery Range of the Snowy Mountains,...
and Murray
Murray River
The Murray River is Australia's longest river. At in length, the Murray rises in the Australian Alps, draining the western side of Australia's highest mountains and, for most of its length, meanders across Australia's inland plains, forming the border between New South Wales and Victoria as it...
valleys. The scheme created two major artificial lakes, Lake Eucumbene
Lake Eucumbene
Lake Eucumbene is a man-made lake on the Eucumbene River in the Snowy Mountains of Southern New South Wales in Australia. The lake was created by the damming of the river as part of the Snowy Mountains Scheme. The dam was built between 1956 and 1958....
and Lake Jindabyne
Lake Jindabyne
Lake Jindabyne is a man-made lake on the Snowy River on the eastern slopes of the Snowy Mountains in Southern New South Wales. The lake was created by the damming of the River as part of the Snowy Mountains Scheme.-Flow of water:...
as well as a number of smaller lakes and ponds.
Wind power
As at September 2010 wind power generation was 4,985 GWh for the previous year, representing 2% of total electricity generation and 23% of renewable electricity generation. About half of the installed capacity of 1880 MW is in South AustraliaWind power in South Australia
Wind power in South Australia is a significant energy source for the state and South Australia is well suited to wind farms due to its proximity to the Roaring forties....
. A Carbon Market Economics report projects over 10 GW of new wind power capacity by 2016 is possible if renewable energy targets are met.
Solar power
Solar energy is used as a "fuel" for heating waterSolar hot water in Australia
Solar hot water is heated using natural energy from the sun. Solar energy heats up large panels called thermal collectors. The energy is transferred through a fluid to a reservoir tank for storage and subsequent use...
, in addition to its role in producing electricity through photovoltaics.
Less than 1 per cent of Australian electricity currently comes from solar power generation. This is mainly due to the higher cost per kW than other power sources because of the cost of solar panel
Photovoltaic module
A solar panel is a packaged, connected assembly of solar cells, also known as photovoltaic cells...
s. Innovative applications of photovoltaic technology being developed in Australia include concentrating systems to focus the solar energy on to a smaller area of higher efficiency cells and the use of building integrated photovoltaics
Building integrated photovoltaics
Building-integrated photovoltaics are photovoltaic materials that are used to replace conventional building materials in parts of the building envelope such as the roof, skylights, or facades...
, where the PV cells perform architectural or structural functions as well as power generation, thereby offsetting some of the cost.
A major 154 MW photovoltaic (PV) Solar power station in Victoria
Solar power station in Victoria
The Mildura Solar Concentrator Power Station is a proposed photovoltaic heliostat solar concentrator power station is to be built at Carwarp, near Mildura, Victoria, Australia.The provisional timeline for the project is:...
is planned, which will be the biggest and most efficient solar photovoltaic power station in the world. The power station will cost $420 million and have the capability to concentrate the sun by 500 times onto the solar cell
Solar cell
A solar cell is a solid state electrical device that converts the energy of light directly into electricity by the photovoltaic effect....
s for ultra high power output. The Victorian power station will generate clean daytime electricity directly from the sun to meet the annual needs of over 45,000 homes with zero greenhouse gas emissions.
Wave power
The Australian government says new technology harnessing wave energyWave power
Wave power is the transport of energy by ocean surface waves, and the capture of that energy to do useful work — for example, electricity generation, water desalination, or the pumping of water...
could be important for supplying electricity to most of the country's major capital cities. A wave farm
Wave farm
A wave farm or wave power farm is a collection of machines in the same location and used for the generation of wave power electricity.-Portugal:...
near Fremantle in Western Australia operates through a number of submerged buoys, creating energy as they move with passing waves. The Australian government has provided more than $US600,000 in research funding for the technology developed by Carnegie, a Perth company.
Nuclear power
Jervis Bay Nuclear Power PlantJervis Bay Nuclear Power Plant
Jervis Bay Nuclear Power Plant was a proposed nuclear power reactor in the Jervis Bay Territory on the south coast of New South Wales. It would have been Australia's first nuclear power plant, and was the only proposal to have received serious consideration...
was a proposed nuclear power reactor in the Jervis Bay Territory
Jervis Bay Territory
The Jervis Bay Territory is a territory of the Commonwealth of Australia. It was surrendered by the state of New South Wales to the Commonwealth Government in 1915 so that the Federal capital at Canberra would have "access to the sea"....
on the south coast of New South Wales. It would have been Australia's first nuclear power plant
Nuclear power plant
A nuclear power plant is a thermal power station in which the heat source is one or more nuclear reactors. As in a conventional thermal power station the heat is used to generate steam which drives a steam turbine connected to a generator which produces electricity.Nuclear power plants are usually...
, and was the only proposal to have received serious consideration as of 2005. Some environmental studies and site works were completed, and two rounds of tenders were called and evaluated, but the Australian government decided not to proceed with the project.
Queensland introduced legislation to ban nuclear power development on 20 February 2007. Tasmania has also banned nuclear power development. Both laws were enacted in response to a pro-nuclear position, by John Howard
John Howard
John Winston Howard AC, SSI, was the 25th Prime Minister of Australia, from 11 March 1996 to 3 December 2007. He was the second-longest serving Australian Prime Minister after Sir Robert Menzies....
in 2006, and the release of the Switkowski
Ziggy Switkowski
Dr Zygmunt "Ziggy" Edward Switkowski is a Polish Australian businessman and nuclear physicist.He is most known as the former Chief Executive Officer of Australia's largest telecommunications company Telstra, and for overseeing major aspects of the implementation and planning of its full...
report into nuclear power.
An independent panel of Australian scientists and nuclear experts have been critical of the findings of the Switkowski nuclear inquiry. They found that the Switkowski report relies on some flawed assumptions which reveal a bias towards nuclear power on economic, technological, health and environmental grounds.
John Howard went to the November 2007 election with a pro-nuclear power platform but his government was soundly defeated by Labor, which is opposed to nuclear power for Australia.
Costs
Coal fired power stations produce electricity between 3 and 5 cents per kWh, which is between $30 and $50 per MWh. In Victoria brown coal stations produce electricity for less than $30 per MWh. Coal subsidies from the government are the second largest associated with fuel subsidies. Due to domestic production, coal fired power stations pay much less for fuel than the international market price. Major Australian power plants owners such as Macquarie Generation, CS EnergyCS Energy
CS Energy is an Australia based electricity generating company owned by the Government of Queensland with it's head office located in Fortitude Valley, Brisbane...
, Stanwell
Stanwell Corporation
Stanwell Corporation is an electricity generation company in Australia. It is fully owned by the Queensland Government, and has a portfolio of generating sites using thermal coal, wind, and hydroelectric power in Queensland....
and Delta Electricity
Delta Electricity
Delta Electricity is an electricity generation company in Australia. It is fully owned by the Government of New South Wales, and has a portfolio of generating sites mainly using thermal coal power.-Power stations:...
pay 1.36 cents/kWh. By comparison, coal-dominated utilities in the United States paid 1.37–2.44 cents/kWh.
The coal power stations receive subsidies which are calculated to be between $450 million and $1.1 billion in 2005–06. Currently, the subsidies received by several electricity generation companies prioritising in coal-fired generation appear to match or exceed the profits made by those companies in 2005–06. In other words, government subsidies appear to be directly creating profits for coal-fired generators.
The impact of removing certain electricity sector subsidies will increase the cost of electricity by about $0.05/kW or 3.9%. This would decrease demand for electricity by 1.4% and also reduce GHG Emission by about 2.7 Mt CO2-e.
The $400 million Greenhouse Gas Abatement Program (GGAP) has already invested in 15 projects totaling $145 million to diminish 27 million tonnes of GHG during 2008–2012.
- $5 million to coal-fired power stations for improving thermal efficiencyThermal efficiencyIn thermodynamics, the thermal efficiency is a dimensionless performance measure of a device that uses thermal energy, such as an internal combustion engine, a boiler, a furnace, or a refrigerator for example.-Overview:...
- $15.5 million for pre-drying brown coal
- $58.8 million fossil fuel subsidy for methane capture
Depreciation
The major Australian coal-fired power stations (Delta Electricity, CS Energy, Stanwell) have a 0.23 cents per kWh depreciation charge for their plants. On average, the cost of buying a plant is about $220/kW compared to the international market of $1300/kW. As these power plants age over time, their asset values decline and thus form a subsidy of $189/kW. This in turn equates to a power generation subsidy of 0.2 cents/kWh.In 2005–06, 141TWh of electricity was harvested, with a total of $284 million for concession subsidies. All of these subsidies:
- lower the cost of coal firing
- encourage increased coal firing and depletion of fossil fuel sources
- produce higher levels of GHG emissions
These subsidies that encourage coal firing are distorting the energy market. The removal of this subsidy would cause coal power stations to lose profitability. They would be forced to raise their electricity prices to regain profits in order to compete with other energy methods.
Geothermal
There are vast deep-seated granite systems, mainly in Central Australia, that have high temperatures at depth and these are being drilled by 19 companies across Australia in 141 areas. They are spending A$654M on exploration programmes. South Australia has been described as "Australia's hot rock haven" and this emissions-free and renewable energy form could provide an estimated 6.8% of Australia's base load power needs by 2030. According to an estimate by the Centre for International Economics, Australia has enough geothermal energyGeothermal power
Geothermal energy is thermal energy generated and stored in the Earth. Thermal energy is the energy that determines the temperature of matter. Earth's geothermal energy originates from the original formation of the planet and from radioactive decay of minerals...
to contribute electricity for 450 years.
The 2008 Federal Budget allocated $50M through the Renewable Energy Fund to assist with 'proof-of-concept' projects in known geothermal areas.
Any realistic attempt to harvest geothermal energy from deep hot dry rocks failed. In 2010, the Queensland Government's Parliamentary Committee on Renewables found out from leading representatives of the Australian geothermal industry, that no electricity will be generated before 2021 by the so called deep hot rocks technology (HANSARD).
Biomass
Biomass powerBiofuel
Biofuel is a type of fuel whose energy is derived from biological carbon fixation. Biofuels include fuels derived from biomass conversion, as well as solid biomass, liquid fuels and various biogases...
plants use crops and other vegetative byproducts to produce power similar to the way coal-fired power plants work. Another product of Biomass is extracting ethanol from sugarmill byproducts. The GGAP subsidies for Biomass include ethanol extraction with funds of $7.4M and petrol/ethanol fuel with funds of $8.8 million. The total $16.2M subsidy is considered as a renewable energy source subsidy.
Biodiesel
Biodiesel is an alternative to fossil fuel diesels that can be used in cars and other internal combustion engineInternal combustion engine
The internal combustion engine is an engine in which the combustion of a fuel occurs with an oxidizer in a combustion chamber. In an internal combustion engine, the expansion of the high-temperature and high -pressure gases produced by combustion apply direct force to some component of the engine...
vehicles. It is produced from vegetable or animal fats and is the only other type of fuel that can run in current unmodified vehicle engines. The advantages of using biodiesels are summarised below:
- can be mixed with normal fuels (B20 is the common biofuel mixture consisting of 20% biodiesel and 80% petrol)
- produces 80% less CO2 and 100% less sulphur dioxideSulfur dioxideSulfur dioxide is the chemical compound with the formula . It is released by volcanoes and in various industrial processes. Since coal and petroleum often contain sulfur compounds, their combustion generates sulfur dioxide unless the sulfur compounds are removed before burning the fuel...
- reduces cancer risks by 90%
- biodiesels are 11% oxygen and contain no sulphur
- provides 30% more lubricity for car engines
Subsidies given to ethanol oils totaled $15 million in 2003–2004, $44 million in 2004–2005, $76 million in 2005–2006 and $99 million in 2006–2007. The costs for establishing these subsidies are $1 million in 2005–2006 and $41 million in 2006–2007.
However, with the introduction of the Fuel Tax Bill, grants and subsidies for using Biodiesel have been cut leaving the public to continue using diesel instead. The grants will be cut by up to 50% by 2010–2014. Previously the grants given to users of ethanol-based biofuels were $0.38 per litre, which will be reduced to $0.19 in 2010–2014.
Fossil fuels
In 2003, Australian total primary energy supply (TPES) was 112.6 million tonnes of oil equivalent (Mtoe) and total final consumption (TFC) of energy was 72.3 Mtoe.Coal
Australia will have fixed carbon taxCarbon tax
A carbon tax is an environmental tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel and is released as carbon dioxide when they are burnt. In contrast, non-combustion energy sources—wind, sunlight, hydropower, and nuclear—do not...
of A$23 ($23.78) a tonne on the top 500 polluters from July 2012.
Australia is the fourth-largest coal producing country in the world. Newcastle
Newcastle, New South Wales
The Newcastle metropolitan area is the second most populated area in the Australian state of New South Wales and includes most of the Newcastle and Lake Macquarie Local Government Areas...
is the largest coal export port in the world. In 2005, Australia mined 301 million tonnes of hard coal
Anthracite coal
Anthracite is a hard, compact variety of mineral coal that has a high luster...
and 71 million tonnes of brown coal
Lignite
Lignite, often referred to as brown coal, or Rosebud coal by Northern Pacific Railroad,is a soft brown fuel with characteristics that put it somewhere between coal and peat...
. Coal is mined in every state of Australia. It provides about 85% of Australia's electricity production and is Australia's largest export commodity. 75% of the coal mined in Australia is exported, mostly to eastern Asia. In 2005, Australia was the largest coal exporter in the world with 231 million tonnes of hard coal. Australian black coal exports are expected by some to increase by 2.6% per year to reach 438 million tonnes by 2029–30, but the possible introduction of emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
schemes in customer countries as provided for under the Kyoto protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
may affect these expectations in the medium term.
Coal mining in Australia has become more controversial because of the strong link between the effects of global warming on Australia
Effects of global warming on Australia
Predictions measuring the effects of global warming on Australia assert that climate change will negatively impact the continent's environment, economy, and communities...
and burning coal, including exported coal, and climate change
Climate change
Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average...
, global warming
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
and sea level rise. Coal mining in Australia will as a result have direct impacts on agriculture in Australia
Agriculture in Australia
Australia is a major agricultural producer and exporter. Agriculture and its closely related sectors earn $155 billion-a-year for a 12% share of GDP. Australian farmers and graziers own 135,996 farms, covering 61% of Australia’s landmass. There is a mix of irrigation and dry-land farming...
, health and natural environment
Natural environment
The natural environment encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species....
including the Great Barrier Reef
Great Barrier Reef
The Great Barrier Reef is the world'slargest reef system composed of over 2,900 individual reefs and 900 islands stretching for over 2,600 kilometres over an area of approximately...
.
The IPCC
Intergovernmental Panel on Climate Change
The Intergovernmental Panel on Climate Change is a scientific intergovernmental body which provides comprehensive assessments of current scientific, technical and socio-economic information worldwide about the risk of climate change caused by human activity, its potential environmental and...
AR4 Working Group III Report "Mitigation of Climate Change" states that under Scenario A (stabilisation at 450ppm) Annex 1 countries (including Australia) will need to reduce greenhouse gas emissions by 25% to 40% by 2020 and 80% to 95% by 2050. Many environmental groups around the world, including those represented in Australia, are taking direct action for the dramatic reduction in the use of coal as carbon capture and storage
Carbon capture and storage
Carbon capture and storage , alternatively referred to as carbon capture and sequestration, is a technology to prevent large quantities of from being released into the atmosphere from the use of fossil fuel in power generation and other industries. It is often regarded as a means of mitigating...
is not expected to be ready before 2020 if ever commercially viable.
Petrol
In the transport sector, fuel subsidiesEnergy subsidies
Energy subsidies are measures that keep prices for consumers below market levels or for producers above market levels, or reduce costs for consumers and producers...
reduce petrol prices by $0.38/L. This is very significant, given current petrol prices in Australia of around $1.20/L. The acceptable petrol prices hence result in Australia's petroleum consumption at 28.9 GL every year.
Removal of this subsidy will make petrol prices rise to around $1.60/L and thus could make certain alternative fuel
Alternative fuel
Alternative fuels, known as non-conventional or advanced fuels, are any materials or substances that can be used as fuels, other than conventional fuels...
s competitive with petroleum on cost. The 32% price increase associated with subsidy removal would be expected to correspond to an 18% reduction in petrol demand and a Greenhouse Gases emission reduction of 12.5 Mt CO2-e. The Petroleum Resource Rent Tax keeps oil prices low and encourages investment in the 'finite' supplies of oil, at the same time considering alternatives.
Diesel
The subsidies for Oil-Diesel fuel rebate program are worth about $2 billion, which are much more than the grants devoted to renewable energy. Whilst renewable energy is out of scope at this stage, an alternative diesel–renewable hybrid systemHybrid system
A hybrid system is a dynamic system that exhibits both continuous and discrete dynamic behavior – a system that can both flow and jump...
is highly recommended. If the subsidies for diesel were bounded with the renewable subsides, remote communities could adapt hybrid electric
Hybrid vehicle
A hybrid vehicle is a vehicle that uses two or more distinct power sources to move the vehicle. The term most commonly refers to hybrid electric vehicles , which combine an internal combustion engine and one or more electric motors.-Power:...
generation systems. The Energy Grants Credit Scheme (EGCS), an off-road component is a rebate program for diesel and diesel-like fuels.
Petroleum subsidies
Companies involved in the extraction of the fossil fuel petroleum are given special deductions as follows:- deduction of expenditures
- deduction of expenditures on capital and current environmental protectionEnvironmental movementThe environmental movement, a term that includes the conservation and green politics, is a diverse scientific, social, and political movement for addressing environmental issues....
on pollution control and waste management - deduction of mine rehabilitation costs.
Federal Government
Australia introduced a national energy rating labelEnergy rating label
In Australia and New Zealand an energy rating label is a type of energy input labeling used on various appliances. It allows consumers to compare the energy efficiency between similar products....
in 1992. The system allows consumers to compare the energy efficiency between similar appliances.
Institutions
The responsible governmental agencies for energy policy are the Council of Australian GovernmentsCouncil of Australian Governments
The Council of Australian Governments is an organisation consisting of the federal government, the governments of the six states and two mainland territories and the Australian Local Government Association. It was established in May 1992 after agreement by the then Prime Minister, Premiers and...
(COAG), the Ministerial Council on Energy (MCE), the Ministerial Council on Mineral and Petroleum Resources (MCMPR), the Commonwealth Department of Resources; Energy and Tourism (DRET), the Department of Environment and Heritage (DEH), the Australian Greenhouse Office (AGO), the Department of Transport and Regional Services, the Australian Competition and Consumer Commission (ACCC), the Australian Energy Market Commission
Australian Energy Market Commission
The Australian Energy Market Commission was set up by the Council of Australian Governments through the Ministerial Council on Energy in 2005. The AEMC has two roles in relation to national energy markets - as rule maker and as a provider of advice to Ministers on how best to develop energy...
, the Australian Energy Regulator
Australian Energy Regulator
The Australian Energy Regulator is the regulator of the wholesale electricity and gas markets in Australia. It is part of the Australian Competition and Consumer Commission and enforces the rules established by the Australian Energy Market Commission....
and the Australian Energy Market Operator
Australian Energy Market Operator
The Australian Energy Market Operator delivers an array of gas and electricity market, operational, development and planning functions. It manages the National Electricity Market and the Victorian gas transmission network. AEMO also facilitates electricity and gas full retail contestability,...
.
Energy strategy
In the 2004 White PaperWhite paper
A white paper is an authoritative report or guide that helps solve a problem. White papers are used to educate readers and help people make decisions, and are often requested and used in politics, policy, business, and technical fields. In commercial use, the term has also come to refer to...
Securing Australia's Energy Future, a number of initiatives were announced to achieve the Australian Government’s
Government of Australia
The Commonwealth of Australia is a federal constitutional monarchy under a parliamentary democracy. The Commonwealth of Australia was formed in 1901 as a result of an agreement among six self-governing British colonies, which became the six states...
energy objectives. These include:
- a complete overhaul of the fuel excise system to remove A$1.5 billion in excise liability from businesses and households in the period to 2012–13
- the establishment of a A$500 million fund to leverage more than A$1 billion in private investment to develop and demonstrate low-emission technologies
- a strong emphasis on the urgency and importance of continued energy market reform
- the provision of A$75 million for Solar CitiesSolar Cities in AustraliaSolar Cities is an innovative demonstration programme designed to promote solar power, smart meters, energy conservation and new approaches to electricity pricing to provide a sustainable energy future in urban locations throughout Australia...
trials in urban areas to demonstrate a new energy scenario, bringing together the benefits of solar energySolar powerSolar energy, radiant light and heat from the sun, has been harnessed by humans since ancient times using a range of ever-evolving technologies. Solar radiation, along with secondary solar-powered resources such as wind and wave power, hydroelectricity and biomass, account for most of the available...
, energy efficiency and vibrant energy marketEnergy marketEnergy markets are those commodities markets that deal specifically with the trade and supply of energy. Energy market may refer to an electricity market, but can also refer to other sources of energy...
s - the provision of A$134 million to remove impediments to the commercial development of renewable technologies
- incentives for petroleum explorationOil explorationHydrocarbon exploration is the search by petroleum geologists and geophysicists for hydrocarbon deposits beneath the Earth's surface, such as oil and natural gas...
in frontier offshore areas as announced in the 2004–05 budget - new requirements for business to manage their emissions wisely
- a requirement that larger energy users undertake, and report publicly on, regular assessments to identify energy efficiency opportunities.
Green paper on Carbon Pollution Reduction Scheme
This Green Paper was released on 16 July 2008 by Senator the Honourable Penny Wong at the National Press Club in Canberra, ACT, Australia.Key Points
- Payments to carers, pensioners and seniors will be increased to counter rising costs.
- Low-income earners to receive extra payments through the tax system. Family assistance payments would also be reviewed through the Budget.
- The aim is to create an incentive for businesses to decrease emissions.
- 2010 start-up date only an "intention".
- Includes about 75 per cent of Australia's emissions
- About 1,000 businesses that emit more than 25,000 tonnes of carbon a year will be required to buy permits and monitor and report their emissions.
- Electricity generation, transport, emissions released from oil and gas production, industrial processes and waste will all be included in the scheme from the start.
- Agriculture will not be included any earlier than 2015, with a final decision to be made in 2013.
- Deforestation is not included but forestry can be included on a voluntary basis and receive permits for sequestration, or the burial of carbon.
- Large greenhouse gasGreenhouse gasA greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
emitters like the aluminium and cement industries to get some free permits. - Petrol will be included but there will initially be 100% offset of cost increases by reduction in the fuel excise.
- The fuel price will be adjusted periodically over the next three years after which the system will be reviewed.
- Once a cap is set, carbon permits per tonne will be auctioned with a price set by the market., with
- Businesses will know within a five-year timeframe what the carbon emission cap would be, and can trade permits.
- Coal-fired energy generators will receive limited but as yet undefined direct assistance at the beginning of the scheme.
- Climate Change Action Fund to be set up to support capital investment and improve energy efficiency for businesses.
Criticisms
- On a net basis this is a tax on the top 40% of income earners which will then be used largely to subsidise the coal industry in attempts to develop carbon capture and storage in AustraliaCarbon capture and storage in AustraliaCarbon capture and storage is an approach to mitigate global warming by capturing carbon dioxide from large point sources such as fossil fuel power plants and storing it instead of releasing it into the atmosphere...
, so called clean coalClean coalHistorically used to refer to technologies for reducing emissions of ash, sulfur, and heavy metals from coal combustion; the term is now commonly used to refer to carbon capture and storage technology...
. - Deforestation is not included in the scheme where there will be reforestation in spite of the significant timing differences, uncertainty of reforestation and effect of leaving old growth forests vulnerable.
- It is unclear what level of carbon price will be sufficient to reduce demand for coal fired power and increase demand for low emissions electricity like windWind power in AustraliaWind power in Australia is a proven and reliable technology that can be and is readily deployed. As of October 2010, there were 52 wind farms in Australia, most of which had turbines of from 1.5 to 3 megawatts...
or solarSolar power in AustraliaAustralia has an estimated 300 MW of installed photovoltaic power , contributing an estimated 0.1 to 0.2% of total electricity production despite the hot and sunny climate that would make it ideal for utilisation...
. - No commitment to maintain Mandatory Renewable Energy TargetMandatory renewable energy targetsA mandatory renewable energy target is a government legislated requirement on electricity retailers to source specific proportions of total electricity sales from renewable energy sources according to a fixed timeframe. The additional cost is distributed across most customers by increases in other...
. - The scheme fails to address climate change caused by burning of coal exported from Australia.
Energy market reform
On 11 December 2003, the Ministerial Council on Energy released a document entitled “Reform of Energy Markets”. The overall purpose of this initiative was the creation of national electricity and natural gas markets rather than state-based provision of both. As a result, two federal level institutions, the Australian Energy Market Commission (AEMC) and the AustralianEnergy Regulator (AER), were created.
Subsidies
The Australian Government provides financial support for the production and implementation of all forms of energy development. These include direct payment and tax reductions. In 2001, Australia's subsidies for the fossil fuel related market alone exceeded $6.5 billion. Between 2005 and 2006, Australia's subsidies for the Energy Market ranged from $9.3 to $10.1 billion. The subsidies for fossil fuels account for 96%. 4% of the available funds for renewable and transport technologies.Subsidies by sector
- Transport 74% at A$7.2 billion
- Electricity 18% at A$1.7 billion
- Other stationary 8% at A$806 million
Total subsidies that support production and consumption of different fuels
- Oil 76% at A$7.4 billion
- Coal 17% at A$1.7 billion
- Gas 4% at A$377 million
- Renewables 3% at $326 million
Public agency subsidies
Geoscience Australia
Geoscience Australia
Geoscience Australia is an agency of the Australian federal government. It carries out geoscientific research.On a user pays basis it produces geospatial products such as topographic maps and satellite imagery.-History:...
, the Department of Industry, Tourism and Resources & State Government energy departments are involved in the direct support of mining and fossil fuel exploitation. These agencies only provide subsidies if there is a benefit to a particular group. As forecast, the main groups concerned are from the coal industry. Thus, by providing subsidies to the coal-fired power industry, there will be an increase in fossil fuel production, lower coal costs and inevitably an increase in greenhouse gases (GHG).
Geoscience Australia (GA) provided a $107 million subsidy for energy in 2005–06. The 2006–07 budget involved 66 projects of which 11 are allocated to petroleum research and others related to mineral and mining industry. On a much smaller scale, the subsidy allocated to saving climate change was 'storage of GHG' with a subsidy of $0.6 million.
The Department of Industry, Tourism and Resources (DITR), similarly to GA, provided a A$30 million energy technology fund in 1994–95. This increased to a government-funded $1,314 million subsidy which divides into 52 branches.
95% of Australia's electricity originates from fossil fuels, which make the power industry quite profitable. The DITR supports fossil fuel research with 95% of its total budget, leaving less than 5% for renewable energy technology.
Transport subsidy
Currently, 82% of all Australians live in towns and cities with a population of 25,000 or more, and by 2011 almost 62% will be living in the five major state capitals. According to the 'Peak Oil Phenomenon', when Oil reservesOil reserves
The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...
are at less than 50%, refining oil will be harder and cost more money. However, Australia has an alternative – natural gas reserves, which are abundant throughout the states.
Due to the current fossil fuel (including oil) subsidies making oil refinement cheaper, natural gas extraction is ignored.
- In 2005–06, the road construction costs was A$4.7 billion more than the revenue received by road users. This makes the Road User Deficit the largest subsidy in the transport sectors.
- Largest government revenue in transport is A$0.38/L fuel
- Old Scheme – Energy Grants Credit Scheme – reduced fuel revenue by A$3.5 billion, with the addition of different fuels like LPG and natural gas which reduced fuel revenue by $710 million
- New Scheme – Fuel Tax Credit Scheme – allows a wide range of fuels and activities to be eligible for rebates and therefore the 'Road User Deficit' subsidy will increase.
Queensland
Queensland's energy policy is based on the year 2000 document called Queensland Energy Policy: A Cleaner Energy Strategy. The Queensland Government assists energy developmentEnergy development
Energy development is the effort to provide sufficient primary energy sources and secondary energy forms for supply, cost, impact on air pollution and water pollution, mitigation of climate change with renewable energy....
through the Queensland Department of Energy and is most noted for its contribution to coal mining in Australia
Coal mining in Australia
Coal in Australia is mined primarily in Queensland, New South Wales and Victoria. It is used to generate electricity and 75% of the coal mined in Australia is exported, mostly to eastern Asia. In 2000/01, 258.5 million tonnes of coal was mined, and 193.6 million tonnes exported. Coal also provides...
.
South Australia
The South Australian Government has developed an Energy policy based on sustainability objective as well as on South Australia's Strategic Plan.A major priority of South Australia’s Strategic Plan is to reduce greenhouse gas emissions in South Australia to achieve the Kyoto target as a first step towards reducing emissions by 60% (to 40% of 1990 levels) by 2050.
Measures announced in South Australia include:
- stabilisation of greenhouse pollution by 2020
- legislated cuts of 60% in greenhouse pollution by 2050
- legislated renewable energy target of 15% by 2014
In 2009 Premier Mike Rann announced plans to increase the State's renewable energy production target to 33% by 2020. (Letter from Energy Minister Michael O'Brien 29/4/11)
- solar feed-in tariffFeed-in TariffA feed-in tariff is a policy mechanism designed to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology...
- ban on electric hot water systems.
Victoria
New South Wales
New South Wales has a renewable energy target of 20% by 2020. New South Wales had the world's most generous feed in tariff for solar power from 2010 - 2011 at A$0.60/kwh.Western Australia
In some remote areas of WA, the use of fossil fuels is expensive thus making renewable energy supplies commercially competitive. Western Australia offers renewable energy subsidies including; solar heaters, Photovoltaic rebate program for installations at households, schools, factories and renewable Remote Power Generation Program of >$500,000 rebates for large off-grid systems.Australian Capital Territory
The ACT Government’s , an integrated policy framework for managing the social, economic and environment challenges faced by the Territory in relation to energy production and use, was released on 28 September 2011. The policy is a continued commitment to maintain affordable and reliable electricity and gas supply to Canberra. The policy also establishes the key objective of achieving a more sustainable energy supply as the Territory moves to carbon neutrality by 2060.Other states
TasmaniaTasmania
Tasmania is an Australian island and state. It is south of the continent, separated by Bass Strait. The state includes the island of Tasmania—the 26th largest island in the world—and the surrounding islands. The state has a population of 507,626 , of whom almost half reside in the greater Hobart...
has a concession rebate and a life support discount. The Northern Territory
Northern Territory
The Northern Territory is a federal territory of Australia, occupying much of the centre of the mainland continent, as well as the central northern regions...
has similar programs.
Mandatory renewable energy targets
An Expanded Renewable Energy Target was passed by the Australian Parliament on 20 August 2009, to ensure that renewable energy obtains a 20% share of electricity supply in Australia by 2020. To ensure this the Federal Government has committed that the MRET will increase from 9,500 gigawatt-hours to 45,000 gigawatt-hours by 2020.The scheme lasts until 2030.Greenhouse gas emissions reduction targets
Coal is the most carbon-intensive energy source releasing the highest levels of carbon dioxideCarbon dioxide
Carbon dioxide is a naturally occurring chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom...
into the atmosphere.
- South Australia, legislated cuts of 60% in greenhouse pollution by 2050 and stabilisation by 2020 were announced.
- Victoria announced legislated cuts in greenhouse pollution of 60% by 2050 based on 2000 levels.
- New South Wales announced legislated cuts in greenhouse pollution of 60% by 2050 and a stabilisation target by 2025.
Low Emissions Technology Demonstration Fund (LETDF)
- $500 million – competitive grants
- $1 billion – private sector funds
Currently has funded six projects to help reduce GHG emissions, which are summarised below
| Project | Details | Funding [Mio. $] |
|---|---|---|
| Chevron Chevron Corporation Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,... – CO2 injection program |
natural gas extraction, carbon capture and underground storage | 60 |
| CS Energy CS Energy CS Energy is an Australia based electricity generating company owned by the Government of Queensland with it's head office located in Fortitude Valley, Brisbane... – Callide A Oxy-fuel Demonstration Project |
black coal power with carbon capture and underground storage | 50 |
| Fairview Power – Project Zero Carbon from Coal Seams | gas power station with seam injection of CO2 | 75 |
| Solar Systems Australia – Large Scale Solar Concentrator | concentrated sunlight solar power | 75 |
| International Power International Power International Power PLC is an international electricity generator formed in 2000 by the demerger of National Power. It is headquartered at Senator House, 85 Queen Victoria Street in the City of London... -Hazelwood 2030 A Clean Coal Future |
drying of brown coal, carbon capture and underground storage | 50 |
| HRL Limited -Loy Yang IDGCC project | combined drying coal systems | 100 |
| Total | 410 |
82% of subsidies is concentrated in the Australian Government's 'Clean Coal Technology', with the remaining 18% of funds allocated to the renewable energy 'Project Solar Systems Australia' $75 million.
The LETDF is a new subsidy scheme aimed at fossil fuel energy production started in 2007.
Feed-in tariffs
Each state and territory has a different position on feed-in tariffs. In summary, as at 26 May 2008, no state or territory has a general, operating feed-in tariff which creates a positive financial return for investing in roof top solar photo-voltaic power. Such a scheme has resulted in Germany being one of the largest producers of solar photo-voltaic power in the world. South Australia, Queensland and Victoria are expected to have such schemes operating by the end of 2008. The other states and territories have not announced any intention to legislate for an incentive scheme. Under a limited federal Solar Cities program, Alice Springs has such a scheme.In November 2008 an Australian Senate committee chaired by Labor Senator Anne McEwen recommended further scrutiny of a renewable energy feed-in tariff before it is rolled out nationally. The committee has recommended that such a scheme be put to the Council of Australian Governments. Some states already have a tariff to encourage investment in renewable energy, and the Greens have introduced a bill for a national scheme.
Public opinion
The Australian results from the 1st Annual World Environment Review, published on 5 June 2007 revealed that:- 86.4% are concerned about climate change.
- 88.5% think their Government should do more to tackle global warming.
- 79.9% think that Australia is too dependent on fossil fuels.
- 80.2% think that Australia is too reliant on foreign oil.
- 89.2% think that a minimum 25% of electricity should be generated from renewable energy sources.
- 25.3% think that the Government should do more to expand nuclear power.
- 61.3% are concerned about nuclear power.
- 80.3% are concerned about carbon dioxide emissions from developing countriesDeveloping countryA developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
. - 68.6% think it appropriate for developed countries to demand restrictions on carbon dioxide emissions from developing countries.
See also
- Asia-Pacific Emissions Trading ForumAsia-Pacific Emissions Trading ForumThe Asia-Pacific Emissions Trading Forum is an information service and business network dealing with domestic and international developments in emissions trading policy in the Asia-Pacific region. The AETF was originally called the Australasian Emissions Trading Forum, and was founded in 1998...
- Carbon capture and storage in AustraliaCarbon capture and storage in AustraliaCarbon capture and storage is an approach to mitigate global warming by capturing carbon dioxide from large point sources such as fossil fuel power plants and storing it instead of releasing it into the atmosphere...
- Effects of global warming on AustraliaEffects of global warming on AustraliaPredictions measuring the effects of global warming on Australia assert that climate change will negatively impact the continent's environment, economy, and communities...
- Energy policyEnergy policyEnergy policy is the manner in which a given entity has decided to address issues of energy development including energy production, distribution and consumption...
- Renewable energy in AustraliaRenewable energy in AustraliaRenewable energy in Australia represents 5.2% of total energy consumption, but only 1.7% of total production, the difference being the result of significant non-renewable energy exports. In the five years to 2009 renewable energy consumption grew by 3.5%, faster than other energy sources. Of all...
- Solar hot water in AustraliaSolar hot water in AustraliaSolar hot water is heated using natural energy from the sun. Solar energy heats up large panels called thermal collectors. The energy is transferred through a fluid to a reservoir tank for storage and subsequent use...
Further reading
- Australian Conservation Foundation (2007). A Bright Future: 25% Renewable Energy for Australia by 2020 27 pages.
- Australian Government (2007). Australian Government Renewable Energy Policies and Programs 2 pages.
- Diesendorf, Mark (2007). Paths to a Low Carbon Future 33 pages.
- ICLEI Oceania (2007). Biodiesel in Australia: Benefits, Issues and Opportunities for Local Government Uptake 95 pages.
- New South Wales Government (2006). NSW Renewable Energy Target: Explanatory Paper 17 pages.
- Office of the Renewable Energy Regulator (2006). Mandatory Renewable Energy Target Overview 5 pages.
- Renewable Energy Generators Australia (2006). Renewable Energy – A Contribution to Australia’s Environmental and Economic Sustainability 116 pages.
- The Natural Edge Project, Griffith University, ANU, CSIRO and NFEE (2008). Transformed: Sustainable Energy Solutions for Climate Change Mitigation 600+ pages.
- Greenpeace Australia PacificGreenpeace Australia PacificGreenpeace Australia Pacific is the regional office of the global environmental organization Greenpeace. Greenpeace Australia Pacific one of Australia's largest environmental organisations.-Origins and Formation:...
Energy [R]evolution Scenario: Australia, 2008 http://www.greenpeace.org/australia/resources/reports/climate-change/energy-revolution-scenario-full) 47 pages. - Beyond Zero EmissionsBeyond Zero EmissionsBeyond Zero Emissions is an Australian-based, not-for-profit climate change solutions think-tank founded by Matthew Wright and Adrian Whitehead. The group coordinates research and education into the need to reduce human-caused greenhouse gas emissions to 'zero and below' by implementing structural...
Zero Carbon Australia 2020, 2010 http://beyondzeroemissions.org/zero-carbon-australia-2020
External links
- Energy Policies of IEA Countries – Australia (2005) OECD/IEAInternational Energy AgencyThe International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis...
. ISBN 92-64-10933-1 - Energy Economics and Management Group, University of Queensland
- Advanced Analysis on energy institutions, policies and local energy companies in Australia including updated statistics, Enerdata Publications.