Coal plants can expand without penalty: Reputex

THIRTY of Australia's 150 largest emitters will be required to reduce their emissions by Direct Action baselines, however the giant polluting coal-fired power plants at Loy Yang, Hazelwood, Bayswater and Yallourn in Victoria will be able to expand without penalty.

Haydn Black

That’s according to a new report by energy market analysts RepuTex, a piece of research that “has placed further scrutiny on the government’s climate policy credentials” ahead of today’s expected announcement of a carbon reduction target of at least 26% on 2005 levels.

Under the Emissions Reduction Fund’s ‘Safeguard Mechanism’, companies will have baselines from July 1 2016 to guarantee emissions reductions acquired through the $2.5 billion scheme are not negatively offset by increased emissions from other areas of the market.

However, analysis demonstrates that government baselines are likely to be largely ineffective and easily avoided, with only 30 companies being compelled to work more on their emissions practices.

RepuTex also foresees that companies will have baselines so high that they would be unable to exceed them, even with emissions growth.

Furthermore, out of the country’s 20 largest emitters, none of those facilities will have to account for their discharges despite forecasts showing that emissions will grow over the next decade.

“As currently proposed, the baseline methodology provides companies with a significant amount of headroom to grow their emissions before they exceed their baseline,” RepuTex executive director Hugh Grossman said.

“With baselines set so high, we project that emissions will actually grow under the safeguard scheme – by around 220% – so the policy will fail to curb emissions growth, let alone assist in reducing emissions to meet our new post-2020 emissions target,” he said.

One reason this is happening is that the baselines were drawn at the ‘high point’ of each facility’s emissions over the last five years.

As emissions have – on the whole – reduced in that time, it gives companies a lot of clean air to step up from their current operating levels without getting into trouble.

RepuTex also reports that new ways of assessing baselines on a sectoral basis will also lead to problems.

As it is, power generators now have this sectoral baseline that is calculated from historical emissions data. However, those entities classed as new or expanding will get concessions to emit more free of censure, including the new Western Australian and Queensland LNG projects and the Victorian power plants.

RepuTex forecasts these largest facilities will account for over 50% of all emissions covered by the safeguard mechanism by 2020, yet not be liable for emissions increases.

What is needed is a girding of the government’s environmental policy, says Grossman.

“Given the ineffectiveness of the scheme, it is untenable for the policy to stay in its current form, particularly with the steepest increase in Australia’s emissions projected to occur in the next four years.

“It is counter intuitive to let emissions grow while at the same time implementing a more ambitious post-2020 emissions target. This approach will simply impose a far greater cost at a later time.

“It is inevitable that tighter baselines, or a cap on emissions, will ultimately be set, particularly given the significant abatement task we are likely to face to meet our new emissions target.

“Should even minor adjustments be made to current policy, we anticipate the safeguard compliance market may abate emissions by up to 500 million tonnes through to 2025, covering around 100 companies.

“This would better manage emissions growth, particularly in the power and energy sectors, and would more effectively safeguard the abatement being purchased by the Emissions Reduction Fund, which will be wholly displaced under the proposed scheme,” Grossman explained.

Drafts for the Safeguard Mechanism were supposed to be finalised sometime this month, though there are rumours they could still be several weeks away.

As the Senate requires the government to have the rules in place by October 1, for operation from July 1 next year, there is a chance that, should any delay endure, this Senate deadline could be missed.

And this all against the backdrop of new post-2020 carbon pollution reduction target is considered by cabinet and the Coalition party room today.

The Climate Institute says nearly two thirds of Australians believe that the Abbott government should take climate change more seriously, CEO John Connor said.

“Despite a year which has seen renewable energy targets wound back, and attacks on wind power, support for both solar and wind in Australians’ preferred energy mix has grown,” Connor said.

“Most (84%, up two points) prefer solar amongst their top three energy sources, followed by wind (69%, up five points). Gas and nuclear both crashed 7 points to 21 and 13% respectively, with nuclear and coal now tied as least preferred.”

Around 67% of people say the government needs to regulate carbon pollution, and 76% see the Direct Action plan as a failure in the making. They say responsibility for pollution reduction should be placed on the polluters not taxpayer-backed Emissions Reduction Fund.

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