Labor's greenhouse aspirations.

Author:Birrell, Bob
Position:Report
 
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The Labor government aspires to reduce greenhouse gas emissions by 60 per cent on year 2000 levels. Is this a realistic commitment? The issue is explored in the context of likely population growth in Australia from 21 million to 31.6 million by 2050. The population factor is ignored by the Garnaut Climate Change Review. Yet this article calculates that the energy required to provide for the material needs of the additional population will (in the absence of intervention) lead to a huge increase in greenhouse gas emissions. In consequence, in order to achieve the 60 per cent reduction target, the price level for permits under the emission trading scheme proposed by Garnaut will have to be very high. It is doubtful whether these prices will be politically acceptable.

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The Rudd Labor Government's initiatives in signing the Kyoto Convention and its statement of a target aspiration to reduce Australia's greenhouse gas emissions by 60 per cent on year 2000 levels by the year 2050 have been widely and justifiably welcomed. The aspiration would require annual national greenhouse gas emissions to be reduced from the estimated level of 491 million tonnes of [CO.sub.2](e) (1) in 2000 (2) to 196 million tonnes in 2050. The Government has set up a Climate Change Review led by economist, Ross Garnaut, which is to recommend an appropriate emissions trading scheme to address greenhouse gas emission levels. It has also indicated that it will establish an interim Mandatory Renewable Energy Target (MRET) to ensure that the equivalent of at least 20 per cent of Australia's electricity supply is generated from renewable sources by 2020 (3). The federal government expects that, by this time, a 'cap and trade' carbon emissions market will be the primary policy instrument to deal with emissions reduction.

How serious is this greenhouse reduction commitment? This question flows from a consideration of the Rudd government's other commitments. These include firstly, continued Australian economic growth so as to maintain the confidence of business and enhance the living standards of working families, and secondly, the pursuit of a very high migration program. The priority given to these objectives is not as explicit as it was when the former Coalition government established a Task Group on Emissions Trading in 2006. The terms of reference stated that:

Australia enjoys major competitive advantages though the possession of large reserves of fossil fuels and uranium. In assessing Australia's further contribution to reducing greenhouse gas emissions, these advantages must be preserved. (4). Nevertheless, Treasurer Wayne Swan stated on 7 July 2008 that when the government sets its emission targets under the proposed emissions trading scheme;' we will strive to maximise Australia's economic prosperity--providing enough scope for existing business to adapt to a low-emissions economy, while still combating dangerous climate change and fostering new, world-leading low-emissions industries' (5)

On the face of it, the Rudd government's economic growth commitments are incompatible with a sharp reduction in greenhouse gas emissions. In the scenarios explored below, we adopt the Productivity Commission's assumption that per capit economic growth in Australia will grow by around 1.8 per cent per annum. If so, per capita income (in real terms) will increase by 104 per cent between 2004 and 2050. Increased wealth is closely associated with increased consumption of energy-intensive goods and services. As a result, if the past record is any guide, as Australians' real income increases they will buy more consumables, including bigger houses, undertake more international travel, procure more cars and drive them further.

The 60 per cent reduction in greenhouse emissions also has to be achieved with a much larger population--at least if Australia's current levels of fertility and immigration continue. There are 21 million persons living in Australia today. In 2006-07, net overseas migration reached the record post-WW2 level of 177,000. This followed the former Coalition government's decisions to ramp up the immigration intake. The Rudd government has built on this foundation. In the May 2008 Budget, it announced a further 37,500 increase in the permanent migration program. This implies a net migration intake in the immediate future of at least 180,000 per year. If this level is maintained until the year 2050 and Australia's total fertility rate stabilises at 1.7, Australia's population will reach 31.6 million in 2050.

A fifty per cent increase in population, all living--on average--at double current income levels, implies a massive increase in economic throughput and thus in energy use. Should Australia's heavy dependence on coal for electricity production continue, this also implies a huge increase in greenhouse emissions. In 2003, coal accounted for 42.6 per cent of Australia's total primary energy supply (TPES), the second highest level in the OECD after the Czech Republic. This is the main reason why per capita [CO.sub.2](e) emissions are higher in Australia than any of the other major developed countries listed in Table 2 below.

Table 2: Estimates of [CO.sub.2] (e) emissions per capita, national [CO.sub.2] (e) emissions change and factors contributing to [CO.sub.2] emissions growth, selected countries, 1990 to 2002 Country GIIG emissions [CO.sub.2] 1990 to per capita (e) change 2002 2000 tonnes Mt [CO.sub.2] Per cent [CO.sub.2] (e) (e) China 3.9 1247 49 United States 24.5 863 18 India 1.9 457 70 Sth Korea 11.1 246 97 Iran 7.5 178 93 Indonesia 2.4 164 97 Saudi Arabia 16.4 148 91 Brazil 5 125 57 Spain 9.4 98 44 Japan 10.4 96 9 Canada 22.1 87 20 Australia 25.6 73 28 United Kingdom 11.1 -36 -6 Germany 12.3 -127 -13 Russian Federation 13.2 (1) -453 -23 EU-25 10.5 -70 -2 Country Per cent contributions to [CO.sub.2] changes GDP Population Energy Fuel per intensity mix capita (Equ/GDP) [CO.sub.2] (e) China 122 15 -96 8 United States 23 16 -20 -1 India 55 28 -31 19 Sth Korea 84 15 12 -15 Iran 44 26 24 -1 Indonesia 44 25 2 26 Saudi Arabia -7 46 52 0 Brazil 17 21 7 13 Spain 31 6 7 -1 Japan 12 3 0 -7 Canada 24 13 -18 0 Australia 31 16 -19 -1 United Kingdom 24 3 -20 -13 Germany 15 4 -21 -10 Russian Federation -5 -3 -12 -3 EU-25 21 3 -14 -12 Source: World Resources Institute, Navigating the numbers: greenhouse data and international climate policy, 2005, p. 15 and p. 22 Note: (1) Russia only The simple arithmetic of the task is as follows. If Australia were to achieve the 196 million tonne target for [CO.sub.2](e) by 2050, per capita [CO.sub.2](e) emissions would have to fall from the current level of 24 tonnes per person per annum to 9.4 tonnes. However, if Australia's population reaches 31.6 million by 2050, annual percapita emissions would have to fall to just 6.2 tonnes per person.

A HISTORY OF PROMISES

Before exploring the options for achieving such cuts, it is worth contemplating the record of government promises concerning greenhouse gas reductions in Australia. Most of the state Labor governments have been promising cuts for years. Yet, in all cases, despite a patchwork of measures designed to reduce emissions, greenhouse gas emission levels have expanded since the promises were made.

Prior to the 2006 Victorian election, the then Victorian Premier, Steve Bracks, committed the Victorian Government to legislate to achieve a 60 per cent reduction in greenhouse gas emissions, compared with 2000 levels, by 2050. (6) In 2007, Bracks moved a motion in the Victorian parliament calling for the implementation of a national emissions trading scheme with 'firm emissions caps' and a commitment to 'absolute emissions reductions', of 60 percent by 2050 compared with 2000 levels. (7)

Nevertheless, in June 2008, the Victorian Government announced it had signed off on a new 400 MW generating plant which will utilise brown coal from the Latrobe Valley (and which will receive $ 175 million in government subsidies). The plant is intended to incorporate new technology which according to the Victorian Energy Minister, Mr Bachelor, would lead to a 30 per cent reduction in emissions relative to conventional brown coal power stations. (8) Conventional brown coal stations result in 1220 kg [CO.sub.2] per megawatt hour [CO.sub.2]/MWh) compared with 861 kg CO/ MWh from black coal power stations. (9) Therefore, even if the proposed plant does achieve the desired 30 per cent reduction in emissions it will still produce [CO.sub.2]/MWh at the level of black coal stations.

We highlight this Victorian case because it is such a clear indicator of the symbolic nature of political commitments to low greenhouse emission targets. The Victorian Government may be genuine in wanting reductions, but only if they do not prejudice other goals. One of these is a continuing commitment to high population growth. If the current demographic parameters hold, Melbourne will grow by 1.6 million over the next thirty years. This is an outlook celebrated by the current premier, Mr Brumby. (10) But population growth of this order inevitably will require a major augmentation of electricity generation capacity, of which the recently announced 400 MW plant will be the first instalment. This situation will only...

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