Climate Change and Australia
Additional Report by Senator Bob Brown, Australian Greens
The evidence before the Committee leaves no doubt that human action is
changing the climate of the Australia and the Earth. This has momentous
implications.
Finding 1
The scientific consensus of the second report of the Intergovernmental
Panel on Climate Change was that the balance of evidence suggests a discernible
human influence on global climate. Recent work has strengthened the evidence
that –
- There has been sustained global warming over the last century
- Current concentrations of CO2 in the atmosphere are higher than
at any time in the last 15 million years
- Human activity accounts for the substantial fraction of the global
temperature increase in the 20th century.
Finding 2
I accept forecasts that over the next century global temperatures
will rise by between 1-5 degrees C and note that –
- Sea level will rise by about 0.5 m during the next century, and
continue to rise for 500 to 800 years longer even if atmospheric concentrations
of greenhouse gases are stabilised. The main contributor to the rise
is ocean water expanding as it warms; the warming already experienced
will continue to work its way to the ocean's depths over a period of
centuries causing the water to expand and sea levels to rise.
- Australia is the most vulnerable OECD country to the impacts of
climate change because of its aridity, already high temperatures and
long coastline.
- The potential for more frequent and severe El Nino events and possible
disturbance to the Walker Circulation in the atmosphere over the western
Pacific are key concerns for Australia
- Australia's ecosystems are vulnerable because of their evolutionary
isolation
- Higher than normal sea temperatures in 1998 resulted in mass bleaching
and death of coral and that modelling indicates such events could become
commonplace within 20 years and annual and catastrophic within 50 years.
The Convention on Climate Change, which Australia has signed, calls for
greenhouse gas concentrations in the atmosphere to be stabilised at a
level that `would prevent dangerous anthropogenic interference with the
climate system'.
Finding 3
The evidence suggests that stabilising CO2 levels in the atmosphere
at 550 ppm (compared with pre-industrial levels of 280 ppm and the current
concentration of 360 ppm) may be sufficient to avoid dangerous climate
change and that this would require developed countries to reduce emissions
by about 90%, to 10% of 1990 levels.
Recommendation 1
That Australia plan to reduce its greenhouse gas emissions by 90%,
compared with 1990 levels, by 2050, as its contribution to stabilising
CO2 levels in the atmosphere at twice pre-industrial levels.
While recognising that Australia's Kyoto target will have minimal impact
on climate change, its ratification is nevertheless an important signal
of concern and acceptance of responsibility.
I agree with Professor Ian Lowe –
“The argument that Australia should not adopt greenhouse targets
until developing countries do is simply morally indefensible. It is
a bit like diners in a five star restaurant saying that soup kitchens
should be closed down to avoid waste of food. I think it is entirely
unreasonable for a country that uses six kilowatts of energy per person
continuously to be saying that countries that use between one per cent
and 10 per cent of that amount of energy should set limits on their
energy use before we do.” [1]
Recommendation 2
Ratify the Kyoto Protocol without delay.
Australia's Failure
By 1998, the most recent year for which figures are available, Australia's
greenhouse gas emissions were already 118% of 1990 levels, 10% over our
Kyoto target of 108% of 1990 emissions by 2010.
The government's big policy decisions are promoting increased greenhouse
gas emissions while the strategies to reduce emissions are small, fragmented
and, with the exception of the anaemic and compromised 2% for renewables
program, voluntary.
Thus --
- Electricity reform and the introduction of the national electricity
market have favoured existing brown coal generators (the worst greenhouse
gas polluters) over all other energy sources, including gas, energy
efficiency and renewables. In addition the price of grid electricity
has fallen by 30%. Result – greenhouse gas emissions increased
by 18.4% between 1990 and 1997 and a further 9% between 1997 and 1998.
[2]
- Land transport consistently and massively favours road over rail,
exacerbated by the GST package which reduced diesel taxes for heavy
transport by 25c per litre, and petrol for business use by 10%, at an
annual cost of around $3 billion. The price of public transport increased
and the competitiveness of rail freight relative to road declined. Even
before these changes road transport emissions had increased by 18% between
1990 and 1998.
- The Federal Government has failed to stop runaway clearing of native
vegetation in Queensland and Tasmania. The current rate is over 400
000 hectares per annum.
- Carbon-rich old growth forests are open for logging, and deemed a
renewable energy source if burnt for electricity, under the new Renewables
Energy (Electricity) Act 2000. The government does not measure greenhouse
gas emissions from logging native forests.
- Implementation of the National Greenhouse Strategy, weak as it is,
is well behind schedule, to the point where the Government noted in
answer to questions on notice that –
Finding 4
The Australian Government will fail to meet its Kyoto target.
A report on progress in implementing the National Greenhouse Strategy
is supposed to be tabled in the `second half of 2000'. Meanwhile, appendix
2 reproduces the Government's answers to questions on notice relating
to the lack of progress on implementing the Strategy.
Recommendation 3
That the Government implement the National Greenhouse Strategy on
time and in full.
While commissioning and funding ABARE to assess the economic impact of
reducing greenhouse gas emissions, the government has made no effort to
count the environmental, economic and social cost if global warming continues
unabated.
Recommendation 4
That the Government commission a comprehensive accounting (financial
where relevant) of the environmental, economic and social impacts of climate
change. It should focus on Australia and the Asia Pacific region, and
include an assessment of the risks of sudden catastrophic change to key
weather systems and the costs of remedial plans for such an emergency.
Environmental Technology, Industry and Jobs
Ostrich or ET?
A striking feature of the Committee's hearings was the evidence of a
lively, energetic and creative environmental technology sector is flourishing
despite the structural impediments and lack of government support.
Greenhouse-polluting industries portrayed action to reduce greenhouse
gas emissions as resulting in unmitigated economic gloom –
“I do not think the Australian community fully appreciates that
the adjustment process that we are talking about is massive in its dimensions
if, in fact, we are to contemplate some of the options now being canvassed.
The cost will come back on the community, either by way of jobs or by
way of costs, which will translate ultimately into jobs and into the
investment environment.” [4]
They also disputed that carbon dioxide was a pollutant –
“The issue really is that, if the industry is overpolluting for
its product, there is a responsibility for that industry to manage that
process. I do not regard CO2 as a pollutant. CO2 is a natural part of
the lifecycle; it is not a polluting gas.” [5]
By contrast, the Committee heard from many companies and organisations
of the great opportunities in the inevitable transition to a more sustainable
future –
“We consider there are tremendous opportunities for the renewable
energy sector in Australia. The New South Wales government estimated
that the renewable energy sector was worth $5 billion in New South Wales
for 1999. It was the largest growth sector in that state and current
trends indicate that the trend will continue.” [6]
“….Australia is now sitting on a goldmine of energy efficiency
opportunities, with the potential for energy savings in NSW alone estimated
by SEDA to be at least $900 million annually.” [7]
In fact, as the Sustainable Energy Industry Association pointed out,
by reinterpreting ABARE's modelling, 85% of the national economy is
either unaffected (substantially the services sector) or beneficially
affected by reducing greenhouse gas emissions. The 15% that is negatively
affected includes some of Australia's largest companies, especially mining,
mineral processing and coal, who have been disproportionately effective
in moulding public perceptions.
Local government has a key role in reducing emissions and in many cases
has been more energetic and creative than federal or state governments.
They influence up to 50% of emissions. For example, street lighting alone
accounts for 40% of greenhouse gas emissions in some cities, and the energy
cost is $156 million a year. Quality can be improved and energy consumption
at least halved by using efficient lighting and controlling the lighting
time more accurately. [8]
Finding 5
Key impediments to energy efficiency and renewable energy include
–
- The fossil fuel industry does not pay for its pollution.
- The National Electricity Market is heavily biased. It favours existing
brown coal generators, subsidises long distance electricity transmission,
and hinders grid access for small scale renewable electricity generators.
- We lack legislated, uniform, high energy efficiency standards for
electricity generation, appliances, buildings and transport.
- Consumers lack information about their contribution to greenhouse
gas emissions.
Carbon taxes have dropped off the big parties' political agenda because
of the introduction of the GST. A carbon tax is nevertheless the simplest,
most direct and efficient way to force greenhouse polluters to pay the
cost of their pollution, promote environmental technology industries,
and signal to the community that we are serious about tackling climate
change. The tax already exists in several western European countries,
can be introduced at a modest level to begin with, and can be complemented
by emissions trading. A carbon tax of $30-$40 per tonne would reverse
the 30% drop in electricity prices that industry gained between 1993 and
1997 [9] and give it to the environment instead.
[10]
Recommendation 5
That the Government –
- Boost environmental technology industries and ensure that greenhouse
polluters pay by introducing a carbon tax of $30 -- $40 per tonne from
2002.
- Establish a national analogue of the NSW Sustainable Energy Development
Authority to promote and invest in energy efficiency and renewables,
funded from the carbon tax.
- Legislate to require electricity retailers to disclose greenhouse
gas emissions on consumer's bills.
- Fund a national program make street lighting energy and cost efficient.
- Abolish tied road funding and replace it with a Transport Fund,
that can allocate money to works and strategies after an open consultative
process.
- Implement the Sun Fund, through which farmers and others using
diesel generators can swap part of all of their entitlement to the diesel
fuel rebate for an equivalent amount to invest in renewable energy.
Dedicated funding for sustainable energy research was abolished in 1996,
and funding through federally funded Cooperative Research Centres favours
fossil fuels by a factor of at least 4:1.
Recommendation 6
Reinstate the National Energy Research and Development Corporation
with a budget of at least $30 million pa to fund research into sustainable
energy and energy efficiency.
Age Matters
“…an increasing number of process studies indicate that terrestrial
forest ecosystems do not reach an equilibrium of assimilation and respiration
and act as net carbon sinks until high ages… These arguments indicate
that replacing unmanaged old-growth forest by young Kyoto stands…will
lead to massive carbon losses to the atmosphere mainly by replacing
a large pool with a minute pool of regrowth and by reducing the flux
into a permanent pool of soil organic matter.” [11]
Australia is cheating the environment and the international community
by manipulating the accounting rules for carbon in living systems (plants
and soil in particular).
- Australia alone of the developed countries is allowed to count the
emissions from clearing native vegetation in its 1990 baseline. Despite
the Government's inaction to date, it is inconceivable that clearing
in 2008—12 will be anywhere near 1990 levels, if only because it
is so cheap to stop. Australia thus has a `bubble' of 20% of 1990 emissions
that can be filled by increased fossil fuel emissions.
- Australia is arguing to exclude CO2 emissions from logging old growth
native forests and clearing native forests for plantations from the
Kyoto Protocol (see appendix 1). For example --
“Deforestation is defined as direct human induced forest conversion
which is frequently accompanied by burning. This does not include
harvesting or other practices which occur as part of ongoing commercial
forestry.” [12]
“The estimates of the impact of logging will not distinguish
between old growth and modified native systems, as it is forest parameters
other than age which are the most useful predictors of carbon storage.
More reliable predictors rely on models based on bole volume, basal
area or basal area and height.” [13]
“As the National Plantation Inventory does not currently collect
information relating to previous land use, it is not possible to say
whether, or how much of the plantations established were on sites
that previously contained natural vegetation….all states except
Tasmania agreed that no further native forest would be cleared for
plantation establishment.” [14] The
most recent estimates put the current rate of clearing for plantations
in Tasmania on public and private land at 20 000 hectares per annum.
- Australia is actively working to undermine even the limited effectiveness
of the Kyoto Protocol by including additional `sink' activities such
as revegetation but ignoring activities that lead to greenhouse gas
emissions, e.g. destroying wetlands.
- The Renewable Energy (Electricity) Bill 2000 encourages wood
from cleared native vegetation and logged native forests, including
old growth, to be burned for electricity and counted as renewable.
Recommendation 7
Reduce greenhouse gas emissions immediately by –
- Implementing national clearing controls, to intervene in Queensland
and Tasmania.
- Protecting remaining old growth forests.
Recommendation 8
Negotiate at the Sixth Conference of Parties (COP6) (November 2000)
for international accounting rules that –
- Are consistent with the goals of the Convention on Biological Diversity,
the Ramsar Convention on Wetlands, the Regional Seas Convention, and
the UN Convention to Combat Desertification;
- Allow carbon credits to be created only when the carbon stock on
any given parcel of land is greater than it was in 1990;
- Include logging of native forests and clearing of native forests
for plantations within the definition of `deforestation';
- Are `symmetrical' with respect to the inclusion of new activities
– that is additional sinks can only be counted if additional sources
are included too.
Recommendation 9
Negotiate at COP6 for the contribution of sinks to be capped under
any international emissions trading system.
Basslink
“…if we were given that amount of money to spend [the $500
million cost of Basslink] you could do a lot for renewables, for demand
management and for setting up a more sustainable energy system in Australia…”
[15]
“…a negative is that…you are going to allow the existing
coal-fired base load plants to operate even more in a base load mode
and possibly prolong their life or to operate with higher load factors
and probably thereby shut out other new greenhouse friendly technologies,
particularly gas-fired cogeneration which also likes to operate in a
base load mode.” [16]
“The cost of Basslink is very substantial and, while I know that
there are plans regarding having large wind farms in Tasmania, effectively
they would be facing a cost penalty of something like $1,000 a kilowatt,
roughly, compared to putting those same wind farms in, say, southern
Victoria or other parts of the mainland…We do not know the actual
cost—that is a commercial matter—but it would be of that order.
So, while there is some potential there, it is not clear to me how it
could be capitalised on, how you would achieve it.” [17]
“If we are going to deal with greenhouse seriously, we have to
be looking at managing demand and not managing supply. Basslink is part
of the whole old approach that we have had towards electricity where
we are constantly looking at supply options but we never focus on demand.”
[18]
I agree.
Recommendation 10
That Basslink should not proceed.
Climate Change Implementation Bill
The only way to give certainty for industry and the community to plan
ahead is through legislating to implement the Convention on Climate Change.
Voluntary measures are not working, and a carbon tax and/or emissions
trading alone will not do the job. Neither will a greenhouse trigger under
the Environment Protection and Biodiversity Conservation Act, because
it will only affect new proposals.
Legislation is needed to set the targets for reducing greenhouse gas
emissions, provide mechanisms for consultation with industry and the community,
and establish an independent statutory authority to manage the process
and report on progress.
Recommendation 11
That the Government introduce legislation to implement the Climate
Change Convention, based on the Climate Change Implementation Bill.
APPENDIX 1 – Australian Greens Additional Report
Australia's preferred definitions exclude native forest logging from
greenhouse scrutiny
The Australian Government is protecting the native forest based timber
industry by arguing to exclude its greenhouse gas emissions from scrutiny
under the Kyoto Protocol. It also displays a consistent bias in over-estimating
the greenhouse benefits of plantations and under-estimating those of native
forests (see box).
The Kyoto Protocol requires changes in carbon stocks and emissions resulting
from `deforestation', `reforestation' and `afforestation' to be accounted
for. The Australian Government submission on Land Use, Land Use Change
and Forestry [19] proposes to define these
terms as follows:
Afforestation, reforestation – planting a hectare or more of trees
on an area that has not been tree-covered for a minimum of five years
beforehand.
Deforestation – removing trees so that the land is no longer `forested';
but specifically excluding `harvesting or other practices which occur
as part of ongoing commercial forestry'.
In other words, old growth forests and woodlands can be logged and replaced
with pulp or fuelwood plantations without accounting for the loss of carbon.
The woolly definitions that enable such a perverse interpretation pervade
the analysis of `forests' and `forestry' in relation to climate change.
`Forest' includes everything from a 10 year old pulp or fuelwood plantation
to a 500 year old forest. A change of use from forested to non-forested
land or vice versa is taken to be the critical element in triggering an
assessment of carbon storage and emissions, while the impact of the equally
significant change of use from conservation to agro-industrial management
is ignored.
To sort out the confusion requires –
- Different categories of `forest' to be defined, ranging from old-growth
to tree farms
- `Deforestation' to be broken down into its component activities, including
logging, clearing for plantations or other crops, burning etc, with
the carbon conservation impact of each activity individually accounted
for
- Tree farming to be treated in the same way as any other form of agriculture
for carbon accounting purposes
Appendix 2 – Australian Greens Additional Report
Australian Greenhouse Office
Answers to Questions on Notice dated 28 June 2000
Government answers to questions show a consistent bias
over-estimating the greenhouse benefits of plantations and underestimating
those of native forests.
“In many instances a plantation forest, because of
improved condition due to soil aeration and fertiliser application will
be more productive (carrying more biomass at maturity) than a native
forest in a mature condition.” [20]
“The amount of carbon stored in old growth forests
is highly variable, being closely related to forest type. Current estimates
are in the range of 39-490 t biomass per hectare. A typical value for
plantations is around 244 t biomass per hectare.” [21]
“The amount of carbon stored in regrowth forests
combined with that stored in forest products has the capacity to exceed
storage in mature forest. However, it takes 500 years before this effect
is fully offset by stored products…..(emphasis added)” [22]
Questions on Notice from Senator Bob Brown
1. Provide a report showing how each of the following actions in the
National Greenhouse Strategy has been completed.
NB: The National Greenhouse Strategy has been developed by the
Commonwealth and all State and Territory governments, with some measures
not relevant or applicable to all jurisdictions. The following responses
address actions taken by the Commonwealth to implement NGS measures. A
report on progress in implementing the NGS, including action by States
and Territories, will be tabled in the Commonwealth Parliament in the
second half of 2000.
3.3 Environmental impact assessment (to be reviewed and amended
as appropriate by the end of 1998/99)
Measure 3.3 of the National Greenhouse Strategy reads as follows:
“Governments will ensure that significant potential greenhouse
gas emissions emitted from proposed projects are adequately addressed
through their environmental impact assessment processes. This will include
recognition of greenhouse as an environmental factor for this purpose.
Responsibilities - to be pursued by all jurisdictions.
Indicative timeframe - EIA processes to be reviewed and amended as
appropriate by end 1998/99.”
Answer:
Under the Environment Protection (Impact of Proposals) Act 1974,
now repealed, greenhouse gas emissions were considered as an environmental
factor and addressed through environmental impact assessment processes
conducted under that Act.
The Environment Protection and Biodiversity Conservation Act 1999,
which commenced on 16 July 2000, introduces a new scheme based on
actions affecting six matters of national environmental significance and
actions affecting Commonwealth land or taken by Commonwealth agencies.
In the case of actions in a Commonwealth marine area and actions affecting
Commonwealth land or taken by a Commonwealth agency, where the matter
protected is the environment, greenhouse gas emissions will be addressed,
where relevant, through environmental impact assessment processes.
In addition, a consultation process is under way on the possible addition
of a greenhouse trigger under the Act in relation to new projects that
would be major emitters of greenhouse gases. Under the proposed model,
the trigger would apply to actions likely to result in greenhouse gas
emissions over 0.5 million tonnes of carbon dioxide equivalent in any
12 month period. This proposed threshold is equivalent to approximately
10% of the average annual increase in Australia's total greenhouse emissions
and can therefore be considered to be of national environmental significance.
Preface to the Responses for NGS Measures 4.1 A (iv) - (vii)
Under the National Greenhouse Strategy, specific Measures were to be
pursued in cooperation with State and Territory governments, industry
and others in order to expand energy market reforms and promote the
delivery of greenhouse abatement consistent with the competition reform
principles underpinning energy market reform. Specific Measures to be
undertaken included:
- ensuring that technical and safety requirements for small scale electricity
generation were consistent, appropriate and equitable;
- ensuring that there are no regulatory impediments to the provision
of stand-alone power systems based on renewable resources where it is
economic to do so;
- identifying and addressing any structural, legislative or regulatory
barriers to cogeneration, consistent with the principle of neutrality
of treatment of energy sources; and
- identifying and addressing any structural, legislative or regulatory
barriers to renewable energy and energy efficiency, consistent with
efficient operation of the market.
The timeframe given for implementing these measures was June 2000.
It should be noted, however, that the reporting schedule contained in
the National Greenhouse Strategy was indicative only and not intended
to bind Government consideration or action to address these matters.
Competition reform in the electricity sector has delivered structural
reform of publicly owned utilities, creation of competitive generation
and retail markets, a competitive wholesale spot market for electricity,
an efficient financial contract market, third-party access and regulation
of network services. Similarly, competition reform in natural gas has
delivered structural reform of publicly owned pipeline and retail businesses,
open access to transmission and distribution services and establishment
arrangements which, over time, should lead to greater competition in
the upstream sector. Together, these reforms have already delivered
considerable benefits.
Electricity and gas markets have entered a period of transition towards
a more fully integrated and competitive national market. The nature
of the Measures which are the subject of your question are such that
activity is not completed but ongoing as jurisdictions and various organisations
work through the reform process. However, significant progress is being
made and activities which have either been completed, are in progress
or are planned, are reported below.
Responses relating to specific Measures follow:
4.1 A(iv) Consistent, appropriate and equitable technical and safety
requirements for grid connection of small scale electricity generation
(by June 2000)
One of the objectives of the National Electricity Code (the Code) is
to provide open access to the interconnected transmission and distribution
network.
The Code requires generators intending to participate in the National
Electricity Market (NEM) to abide by a set of uniform technical requirements,
as well as any requirements specified in the connection agreement with
their network provider. The technical requirements dictated in the Code
for a connection agreement are extremely stringent and were put in place
to ensure the security of the national power system.
National Electricity Code Administrator (NECA) is progressing its Review
of Technical Standards which is expected to be completed by the end of
this year. The principal objective of this Review is to examine whether
the existing standards in the Code are too stringent and especially therefore
whether they represent a barrier to entry to the market, in particular
for cogeneration and emerging technologies.
Non-technical requirements applying to generators, including safety,
are primarily a matter for jurisdictional regulation by the States and
may vary from jurisdiction to jurisdiction. With regard to this, on 23
May 2000, the Energy Market Group, which reports to the Council of Australian
Governments, established a working group to investigate the potential
benefits of harmonising certain regulatory arrangements across jurisdictions
in order to promote consistency and improve efficiency. Opportunities
for greater harmonisation include safety regulation and licensing conditions.
4.1 A(v) Ensure no regulatory impediments to stand-alone power systems
based on renewable resources (by June 2000)
Stand-alone power systems, including those based on renewable resources,
are usually located in remote locations at the extremities of transmission
networks. Stand-alone power systems that are not grid-connected are not
subject to the Code although they are subject to jurisdictional regulation.
To date, however, we are not aware of any direct regulatory impediments
to the use of stand-alone power systems.
One potential impediment to the implementation of stand-alone power systems,
however, is the incentive that current regulatory arrangements may create
for network service providers to augment transmission systems when the
implementation of demand-side or local generation alternatives would have
been more economic. Under the Code, inter-regional network augmentations
need the approval of the National Electricity Market Management Company
(NEMMCO) which must consider any practical and economically efficient
alternatives to augmentation when deciding whether network augmentation
is justified.
In addition, NECA has proposed strengthening the Code to ensure greater
consideration of demand-side and local generation alternatives to new
network investment, and meaningful consultation with affected customers.
The next step will be to publish draft Code changes as the basis for consultation
with stakeholders. This process is expected to be completed by the end
of 2000.
The high capital costs of establishing stand-alone power systems can
act as a significant barrier to entry, particularly for renewable energy
systems. To address this concern, the Government introduced the Renewable
Remote Power Generation Program (RRPGP) to actively encourage the uptake
of stand-alone power systems based on renewable sources.
The RRPGP provides a rebate for the installation of renewable remote
power supplies in situations where renewable energy will reduce or replace
diesel for off-grid electricity generation, or for new off-grid installations
where it can be demonstrated that the energy source would otherwise be
diesel.
The program is funded from excise paid on diesel used to generate electricity
by publicly owned generators and will potentially provide support for
up to 50% of the capital cost of a renewable energy installation. The
program commenced on 1 July 2000.
4.1 A(vi) Address structural, legislative or regulatory barriers to
cogeneration (by June 2000)
Under the National Greenhouse Strategy, structural, legislative or regulatory
barriers to cogeneration were to be identified and addressed consistent
with the principle of neutrality of treatment of energy sources.
Structural, legislative and regulatory barriers to cogeneration and renewable
generators have been documented in two recent reports: the Allen Consulting
Group report commissioned by the Department of Industry Science and Resources,
Energy Market Reform and Greenhouse Gas Emission Reductions
(March 1999), (Allen Report), and in the Renewable Energy Action Agenda
(June 2000). Principal among these issues is the impact of Transmission
Use of Service (TUOS) charges on the competitiveness of cogenerators.
TUOS charges have two components: a variable component relating to actual
use of the transmission system and a fixed component to facilitate recovery
of sunk costs associated with existing transmission investments.
Under the present arrangements, TUOS charges are paid entirely by end
customers. Remotely located generators do not face any charges for transporting
electricity to market. These arrangements create a significant competitive
disadvantage for generators located within a distribution network, such
as cogenerators. Their customers pay these TUOS charges even when they
do not use the transmission network. NECA estimates that TUOS represents
around 8 per cent to 10 per cent of delivered electricity charges.
This anomaly was recognised by NECA in its Transmission and Distribution
Pricing Review report (July 1999). The Report's recommendations include
Code changes to require distributors to pass on savings to cogenerators
resulting from the reduced use of the transmission system by their customers
(ie the variable component). This change has the potential to reduce the
effective TUOS charge by around 50%, to between 4 per cent and 5 per cent
of delivered electricity charges. The Australian Competition and Consumer
Commission is expected to release its final determination on NECA's proposed
Code changes in August 2000.
In addition, NECA is currently progressing the Review of the
Scope for Integrating the Energy Market and Network Services (the
RIEMNS Review). This Review includes an evaluation of current regional
boundaries and methods for calculating transmission loss factors, with
a view to improving locational pricing signals within the National Electricity
Market.
Improved locational pricing signals will favour generators that are located
closer to load, compared to existing, remotely located generators, who
will be required to pay for increasing transmission losses as electricity
is transmitted across a greater number of regional boundaries. Greater
use of locational pricing would help to create new competitive opportunities
for embedded generators, including renewable and cogenerators.
Further reform in this area has the potential to offset the impact of
the fixed component of the TUOS charge, which would eliminate any material
disadvantage to cogenerators resulting from the TUOS charging regime.
The recommendations of this Review are likely to be implemented over the
next three years, inclusive of the one year notification period required
under the Code for alteration of regional boundaries, subject to the ACCC's
response to the review.
Reforms in the gas transportation sector in particular have produced
positive outcomes such as reduced gas haulage prices and enhanced security
of supply, benefiting downstream industry.
Ongoing reforms in the gas market to reduce impediments and remove barriers
to competition along all stages of the gas supply chain recommended in
the Allen Report are being pursued through the recently established Gas
Policy Forum. This Forum, established by the Commonwealth, includes jurisdictions,
national regulatory bodies, and the gas and electricity industry. As such
it will be well placed to provide high level oversight of, and advice
to, Governments on the progress of the Commonwealth, States and Territories
in implementing existing gas sector reforms, priorities for future gas
policy development in relation to `free and fair trade in natural gas,
and policies as they may relate to the growth of the gas market, including
convergence and greenhouse issues. The Forum will also facilitate a broad
review of the gas access Code following completion of the first round
of access arrangements.
Implementation by jurisdictions of acreage management recommendations
from the Upstream Issues Working Group report and full retail contestability
over the next two years (large industrial gas customers are already fully
contestable) should contribute to greater penetration of natural gas in
the nation's energy mix to achieve efficient cogeneration and improved
greenhouse outcomes.
4.1 A(vii) Address structural, legislative or regulatory barriers
to renewable energy and energy efficiency (by June 2000)
Under the National Greenhouse Strategy, structural, legislative or regulatory
barriers to renewable energy and energy efficiency were to be identified
and addressed in a manner consistent with the efficient operation of the
market.
The greatest impediment to increased market penetration of renewable
energy remains its cost. On the 20 June 2000, the Minister for Industry,
Science and Resources launched the Renewable Energy Action Agenda.
The Action Agenda establishes a policy framework to promote growth in
a commercially viable and internationally competitive Australian renewable
energy industry.
In addition to promoting the growth of renewable energy, the Government
is also introducing efficiency standards for new and existing electricity
generation facilities. The final report prepared by the Efficiency Standards
Working Group was released in February 2000 and outlines measures aimed
to encourage movement toward best practice in the efficiency of fossil-fuelled
electricity generation, while recognising issues such as cost effectiveness
and regional diversity. The Minister for Environment and Heritage, Senator
the Hon Robert Hill, officially launched the Measure on 29 June 2000 and
the standards formally took effect on 1 July 2000.
Concerns have been raised that certain aspects of the current market
arrangements, such as network pricing arrangements, operate to restrict
the entry of renewable projects. These structural, legislative and institutional
barriers were identified in the Allen's Report (March 1999) and highlighted
in the Renewable Energy Action Agenda (June 2000). In particular,
vesting contracts and TUOS charges were identified as significant impediments
to renewables and energy efficiency.
Vesting contracts were introduced to ensure a smooth and orderly transition
to a fully competitive wholesale electricity market and were always intended
to be temporary in nature. Vesting contracts will expire from January
2001.
TUOS charges are being addressed through NECA's Transmission and Distribution
Pricing Review and the RIEMNS review. The Transmission and Distribution
Pricing Review's recommendations have the potential to halve the effective
TUOS for embedded generation customers to between four and five percent
of the total delivered electricity charge. In addition, further reform
resulting from the outcomes of the RIEMNS Review has the potential to
offset the remainder of the TUOS charge, thereby eliminating any material
disadvantage to renewable generators resulting from the TUOS charging
regime.
NECA is also undertaking an initiative to facilitate and encourage a
more pro-active demand-side management response within the NEM. The initiative
is examining, amongst other things, the impediments in current market
arrangements to the development of a vigorous and competitive demand-side
response, and ways in which the market framework could facilitate customers
gaining the full value of their demand-side response. Specifically, the
initiative will include examination of: the regulatory framework; commercial
incentives; technical coordination; market information and communication;
and transaction costs.
As a first step, NECA has conducted a survey of retailers and end-use
customers to assess the current extent of demand-side participation and
prevailing market attitudes towards it. The survey findings will provide
a basis for shaping further processes to overcome any potential structural
or code-based barriers to greater demand-side participation. Improved
demand side management may create new opportunities for renewable generators
to participate within the NEM.
4.1 B(i) Monitor operation of the market...to assess its impact on
greenhouse gas emissions (first assessment and report to be completed
by July 2000)
The ANZMEC analysis of trends in energy supply and use in the national
energy market ["Energy Trends" publication (incorporating measure
4.1 B(i) of the NGS)] is currently being conducted. The original goal
was to have the first draft of the report completed by the end of July
2000, in time for the August 2000 ANZMEC Ministerial meeting. However,
delays in provision of some essential data to assess the trends in energy
production and use, and to produce the required indicators, are still
to be obtained before the final assessment can be presented. It is expected
that the report will be delivered to ANZMEC Ministers late in November
2000.
4.2 (i) Efficiency standards for different fossil fuel classes to
be applied to new electricity projects, significant refurbishments and
existing generation (standards for new power stations to be in place from
2000)
Efficiency standards for new, refurbished and existing power stations
using fossil fuels are in place in 2000. The framework, developed by a
technical working group comprising representatives from all Commonwealth,
State and Territory governments as well as industry and energy users,
was released in October 1999 for public comment. Detailed technical guidelines
for the measure were released in January 2000. Workshops were held with
the majority of generators affected by the standards during April and
May 2000. "Generator Efficiency Standards" took effect from
1 July 2000.
4.6 (iv) Collate data on the renewable energy services industry (to
be collated by December 1999)
The Renewable Energy Internet Site (http://renewable.greenhouse.gov.au)
was launched in October 1999. It contains among other things a map of
significant renewable energy installations in Australia and a database
of industry members. The database enables members of the public to find
players in the Australian renewable energy industry. It has over 500 entries
including business, government, universities, research institutes and
non-profit organisations. The database can be searched by product or organisation,
and all searches can be done for the entire database or a single state
of Australia. Organisations wishing to be included in the database can
advise their details online.
The Australian Greenhouse Office is currently adding to this information
by participating with the Sustainable Energy Industry Association, the
Department of Industry, Science and Resources and relevant State agencies
in conducting a sustainable energy industry national survey. Questionnaires
have been sent to 2000 organisations understood to be involved in renewable
energy and energy efficiency.
5.1 Examine economic policy instruments relating to transport to ensure
they are consistent with fiscal, economic and environmental policy, including
greenhouse objectives (to be completed in 1999/00)
The Bureau of Transport Economics is undertaking this task at the request
of the Australian Transport Council comprising Commonwealth, State and
Territory transport ministers. A final report is expected to be considered
by transport ministers when they meet in November 2000.
5.4 Integrated transport investment framework (project proposals to
be framed this way from January 2000)
No Commonwealth actions to date in the context of the NGS. However, the
Commonwealth along with other jurisdictions has been examining this issue
as part of the work program of the National Taskforce on Best Practice
Land-use and Transport Planning established under Measure 5.3 of the NGS.
It is expected that a report will be provided to the ATC in November reporting
on this issue.
5.7 Improving public transport services (plans to be initiated by
1999/2000 for urban centres with populations of 200 000 and above)
Measure not applicable to the Commonwealth. This measure is being pursued
by the States and Territories.
5.8 New public transport modes and technologies (forum to be established
by July 1999)
The Commonwealth Department of Transport and Regional Services has undertaken
consultations with States and Territory agencies and interested academic
and community groups. The aim of these consultations has been to further
define the objectives and methodology of the project. A report on the
forum will be provided to the Australian Transport Council at its meeting
of November 2000.
5.9 Support for walking and cycling (1999/2000)
Parts (ii) and (iv)
The National Bicycle Strategy has been revised and updated. The Commonwealth
is assisting in the delivery of this measure in the context of the work
program being implemented by the Australian Bike Council.
5.14 Study of opportunities to reduce freight transport emissions
(studies to be completed by July 2000)
The study of opportunities to reduce freight transport emissions is being
addressed by the Australian Transport Council (ATC) though two processes.
The potential role of Intelligent Transport Systems for reducing freight
emissions is being progressed as part of a larger joint consultancy with
Environment Australia and the Australian Greenhouse Office into the role
ITS can play in addressing air quality and greenhouse emissions. This
project is due to report in October 2000.
Separately, ATC has tasked the Marine and Ports Working Group and Rail
Working Group (comprising Commonwealth, State and Territory officials)
to review opportunities for reducing greenhouse emissions from freight
transport, including the potential for modal shift. Consultants will shortly
be commissioned to undertake industry case studies to identify options
to reduce freight transport emissions and to deliver the analytical tools
to assess the relative greenhouse benefits of possible options. ATC will
consider interim results from this project in November with the final
outputs to be considered in the first quarter of 2001.
Footnotes
[1] Professor Ian Lowe, Hansard, 26 May 2000
[2] Hugh Saddler, Greenhouse Gas Emissions
from Australia 1990-97: Key Trends. April 2000
[3] Answers to questions on notice from Senator
Bob Brown dated 28 June 2000
[4] Mr Buckingham, Business Council of Australia,
Hansard, 21 March 2000
[5] Dr Rawlings, Australian Coal Council, Hansard,
26 May 2000
[6] Mr Chia, Stanwell Corporation, Hansard,
26 May 2000
[7] Ms Cathy Zoi, Energy Technology Investments,
submission no. 208
[8] SEDA, Energy Efficiency Victoria, Energy
and Cost Savings Opportunities in Street Lighting, August 1999
[9] Prof. Hugh Outhred, ???
[10] SEIA's proposal for a `reverse' carbon
tax deserves consideration.
[11] Schulze, Ernst-Detlef, Wirth, Christian,
Helmann, Martin (2000) Managing forests after Kyoto. Science 289,
2058
[12] Australian Submission to UNFCCC on Land
Use, Land Use Change and Forestry, 1 August 2000
[13] Answers to questions on notice from Senator
Brown, 28 June 2000
[14] Answers to questions on notice from Senator
Brown, 16 March 2000
[15] Dr Muriel Watt, p.422, 23/3/2000
[16] Dr Hugh Saddler, p.422, 23/3 2000
[17] Prof. Outhred, p.505, 17/4/2000
[18] Ester Abram, p.504, 20/3/2000
[19] Australian Submission to UNFCC on Land
Use, Land use change and Forestry – 1 August 2000
[20] Answers to questions on notice from Senator
Brown, 9 March 2000
[21] Answers to question on notice from Senator
Brown, 22 June 2000
[22] Australian Greenhouse Office, Greenhouse
Sinks and the Kyoto Protocol: An Issues paper, 2000
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