In a development that has undermined any effort the conservative Liberal-National government has made to cut national emissions the carbon intensity of Australia’s main electricity grid has surged since the end of the carbon price.
According to the latest Cedex report, compiled by energy consultants Pitt and Sherry, on an annualised basis, emissions from the National Electricity Market serving eastern Australia have risen by 3.9 million tonnes since June.
The report also said the sector’s emissions intensity had risen 11 per cent.
Pitt and Sherry reports the share of black and brown coal in the generation mix rose to an 18-month high of 74.5 per cent by the end of 2014 even as gas-fired power reached a record 13.3 per cent of the market.
Dr Hugh Saddler, principal consultant with Pitt & Sherry, said “It is really coal displacing hydro, particularly brown coal,” adding, “It will go up further.”
Coal’s share is likely to continue to increase because higher-priced gas will be diverted to export markets as big LNG projects get under way in Queensland.
Poor rainfall has cut storage levels for Hydro Tasmania to under 32 per cent, the lowest in at least five years, making it less likely hydro will make an early recovery.
Drier than average conditions have also prevailed over Snowy Hydro’s catchment area.
Fairfax Media reports the electricity sector accounts for about one-third of Australia’s total emissions.
Any rise in this industry will make it harder for the government to meet the bipartisan-backed target of cutting greenhouse gas emissions by 5 per cent on 2000 levels by 2020.
Since the Liberal-National government scrapped the former Labor government’s carbon price laws in July, the government’s main climate change policy has been its Direct Action plan.
The scheme hinges on a $2.55 billion fund to pay polluters to cut emissions, a task that may get more expensive if power sector pollution jumps.
The increase in emissions from the power sector also comes despite demand continuing to wilt.
The demise of some large power users, particularly aluminium smelters, and the spread of roof-top solar has cut demand in the NEM to its lowest in 11 years, Pitt and Sherry estimates.
At the end of last year, hydro’s share of the NEM had dropped to 7.4 per cent from 9.6 per cent a year earlier.
The government’s effort to cut the Renewable Energy Target, so far blocked in the Senate, has all but frozen investment in new wind farms.
That sector supplied 4.8 per cent of the NEM at the end of 2014, up from 4.4 per cent in December 2013.
“If they want to can the RET, it just means that there’s going to be more and more coal,” Dr Saddler said.
