The politics of the Coalition’s climate policy announcement has already been covered by Mark, but the policy also contains some pretty dodgy accounting, as I argued in my piece yesterday for New Matilda.
Today I thought I’d take some time to unpick those rubbery carbon reduction figures.
Let’s take a closer look at page 22 of the Coalition policy document, which contains a table outlining the emissions reductions a Coalition government would buy from polluters, which I’ve reproduced below:
Coalition carbon emissions reduction figures. Source: "Rewarding a Greener Australia", p.22
As you can see, the bulk of the emissions reductions are slated to come from so-called “biochar” technologies in the agricultural sector, which, as I reported for New Matilda last year, are highly speculative and relatively untested at any large-scale level.
The other interesting thing this table tells us is what the shadow price for carbon abatement under the Coalition plan is likely to be. While the price the Coalition is planning to pay polluters is not spelt out in the document, it is possible to use these figures to calculate an overall average carbon price, which I’ve done in the table below:
| Reduction measure | Minimum indicative CO2 reduction to be delivered through fund to 2020, million tonnes | Average price for carbon, $/tonne | Minimum payment to polluters, $m | |
| Soil carbons | 85 | 9 | 765 | |
| Electricity generators & industry | 10 | 30 | 300 | |
| Forestry measures | 15 | 15 | 225 | |
| Waste coal mine gas | 4 | 15 | 60 | |
| Transport | 3 | 40 | 120 | |
| Green buildings / energy efficiency | 20 | 12.5 | 250 | |
| Landfills / Recycling / Compost | 6 | 12.5 | 75 | |
| Total | 143 | 12.55 | 1795 |
As I pointed out yesterday, the Coalition’s own figures suggest that not only will the actual funds disbursed by ERF be less than the $2.55 billion budgeted, they will also result in a shadow carbon price of only $12.50 a tonne – far less than the $23 a tonne that the Treasury’s CPRS modelling says is consistent with a 5% national carbon reduction target.
There are plenty of smart people on this blog so I welcome comments if you think I’ve stuffed up the methodology. But I think we can agree that the price signal is weak, and that therefore so will the incentive for decarbonisation.
Thanks for that Ben, that is useful. Isn’t the difference due to the CPRS excluding soil carbon and forestry? The lower price doesn’t necessarily produce a weak signal then. It depends on whether you think these areas should be included.
The other thing to note is that the govt’s CPRS modelling relies heavily on carbon capture and storage coming along in the mid 2030s the save the day. This is basically a guess, and the costs of their scheme would be much higher without it.
Even if you take the Coalition figures at face value, where will the post-2020 abatement come from? There won’t be enough of a price signal from the Coalition policy to trigger investment in more expensive and longer-term abatement options like nuclear, CCS, and large-scale solar and wind.
There’s $100 million a year of an additional $1000 subsidy for installing solar panels or electric hot water. I’m not sure, but I assume that’s counted in the $250 million for green buildings.
I wonder if they’re counting the cost exclusively in terms of the additional government subsidy, rather than the extra cash that state governments, electricity consumers, and the purchasers of solar panels toss in.
I can’t find a convenient figure of the true cost of abatement using solar panels, but I think it’s well over $200 a tonne.
Thats right Matt – the CPRS modelling is full of questionable assumptions – the key one being that clean coal will be invented in 2030. I might add, the only cuts we get out of it rely on that too.
The best you can say for the current CPRS is that emissions wont rise under it.
But on Tones’, cehck Lenore Taylor today: “After nine years, the Abbott plan would have cost taxpayers $10bn; the Rudd plan, in direct terms, just $2.5bn.”
http://www.theaustralian.com.au/news/opinion/initiative-is-about-votes-not-carbon/story-e6frg6zo-1225826098662
So, who has the ‘great big new tax’?
From the article:
Um, no. They cite:
The Wentworth Group report talks about quite different technologies to biochar. I suggest you take a look at each section and check each author’s affilations to get a sense of their commitments.
Oh, and on questionable assumptions, Lefty E, one of the scarier ones is that governance issues with REDD will magically have been solved by 2015.
Macquarie Bank’s analysts, in a research note today, describe the ERF plan as “an incomplete alternative”:
Did somebody say “slush fund”?
Dk, I acknowledge that there is a difference between biochar and soil carbon management, but I still don’t think they’re necessarily scalable, proven ways to abate carbon. The Wentworth report, for instance, relies on its estimate of increasing soil carbon through land management by 2% a year on an unpublished paper (footnote 24), while the CSIRO, for its part, is also fairly cautious about soil carbon technologies.
On the related issue of biochar, if you chase down the academic literature further, for instance that of Evelyn Krull or Johannes Lehman, they both admit that scaling up biochar to regional or continental scales is currently impractical.
>
I hope soil carbon can come to the rescue, but I think it’s fair to say that we’re a long way away from being in a position to abate 85 million tonnes of carbon by 2020.
Yeah and MacBank aren’t conflicted.
You say Ben that:
However, the treasury figure assumes that “putting a price on carbon” is the only driver being used to drive down emissions.
For example, the figure in your table quotes $40/tonne CO2 for transport. (Which may or may not be true. The impact of increased fuel costs on transport emissions is weak and not very predictable.) By contrast, if we used regulation instead of price increases to limit the average price of new cars to 5 litres/100km there would be no cost (price of fuel remains unchanged) and savings resulting from the move to smaller, cheaper cars in addition to savings in the annual fuel bill as a result of lower fuel consumptions.
Not sure about some of the other stuff but thinking outside the “we must put a price on carbon” mindset may provide other opportunities for reducing the cosat of driving down emissions.
Perhaps the government/opposition could start by setting up competitive contracts for the reduction of net emissions. Some very competitive ideas could come out of the woodwork.
I did a similar calculation over at the blogocrats, and I thought that the coalition prices carbon at aroung $7 per tonne (based on a reduction of 140 million tonnes per year at their estimated $1 billion cost – a back of beer coaster calculation). Either way, they are vastly underpricing carbon based on Treasury figures.
The coalition fund-a-mental plan is not looking good.
I see Labor has already picked up on the
slush fund idea
Well, if Lenore Taylor’s figures are correct, Abbotts’ plan taxes the public purse $7.5b MORE than Rudd’s CPRS does over the first 9 years.
And yes – Bernard Keane is right, watch for a coalition dog-whistling on high immigration levels (i.e. the levels they boosted enormously when last in power)
It’ll be desperate and ugly stuff. And great viewing: I for one love to see born-to-rules frustrated, making absolute asses of themselves, tripping up and then LOSING
Abbott’s plan has missed an important point re the proposal to use increases in soil carbon as the major method of carbon reduction. Quite simply there is not way to measure soil carbon across large areas. Yes, we can sample and use lab analysis for soil carbon and density or we can use in-situ neutron activation but that is very costly for broad areas. In addition, whilst increasing soil carbon is good agricultural practice, there is still little research on the permanence of added soil carbon. If the soil carbon is not “permanent”, adding carbon to soils is at best a delaying tactic, not a solution. So what else does Tony offer ? Urban forests? So are we all to grow trees in our backyards? But wont that shade the solar cells?
BTW when did we (Aust) decide to really do nothing on AGW by setting a National target of 5% for 2020. No comment that much higher targets are needed for something real to happen. Can the Abbott scheme be scaled to 50% reduction? Atleast an ETS could be de-hobbled and acheive this. But as I told my kids, its sorry but we leaving you are seriously damaged planet. Enjoy!
That’s the real issue isn’t it? But since Abbott knows that Rudd isn’t going to say “the great thing about the CPRS is that we can ramp it up after the election” he’s relatively isolated from that line of attack, at least from the government.
I need a fact check on the conflicting targets. My understanding is that:
1. Labor is committed to a 5% reduction below the 2000 level which is roughly equivalent to a 25% reduction from the current level.
2. The coalition is committed to a 5% reduction based on the 1990 figure. It is clear from what they are proposing to do that this could not be a 5% reduction below the 1990 figure so it appears to mean a reduction of 5% of the 1990 figure which is a bit less than 3% of the current figure. (Otherwise they are talking about a reduction of over 40% of current emissions!!!)
Anyone got a better understanding?
This 12.5$ figure is not the same as the ~$20/carbon that is commonly cited in modelling. This figure is the price needed on carbon needed to induce a given reduction (5%?) in demand for carbon in the models- given a state of technology and given elasticity of carbon inputs.
The 12.5$ on the other hand seems to be the cost of reducing emissions in terms of total investments needed to implement technologies that will reduce a tonne of emissions. The development and implementation of these technologies are held as given in the modelling.
The price in the modelling may well reduce to $12.50 or lower if the substitution possibilities for carbon are expanded through say investment in biochar etc.
Ben, help me out here. I am confused as to how the libs’ policies create a shadow price on carbon in the first place?! What is the link between the credits offered for below BAU emissions and the investments in the technologies highlighted above? Is there one at all? This feels like a doggie breakie.
If a yank may add to this conversation;
Soil Carbon is the final arbiter, common currency, accountant & Judge of sustainability. A broad group of Ag interest in the US have put forward a Soil Carbon STANDARD, soon to be approved by USDA.
I wish our Republicans would seize the moral high ground of stewardship as Abbot has.
Soon I will live in a nation that measures it’s progress not by the yields of their fields, but by the carbon content of the soil.
Carbon to the Soil, the only ubiquitous and economic place to put it.
Cheers,
Erich
Erich J. Knight
Chairman; Markets and Business Opportunities Review Committee
US BiocharConference, at Iowa State University, June 27-30
http://www.ucs.iastate.edu/mnet/biochar/home.html
EcoTechnologies Group Technical Adviser
http://www.ecotechnologies.com/index.html
Shenandoah Gardens (Owner)
1047 Dave Barry Rd.
McGaheysville, VA. 22840
540 289 9750
Co-Administrator, Biochar Data base & Discussion list TP-REPP
The difference between the two schemes as I see it, one attempts to prevent the carbon being formed, the other attempts to bury what is being created. Just like the action you can take with a hole in the roof. You can leave the hole there and concentrate on catching and disposing of the water. Alternately you can mend the hole. In the long run, fixing the problem is the most efficient thing to do. Maybe more expensive but not ongoing.
It would be nice to think Erich J Knight’s mention of the USDA proposing a ‘soil carbon standard’ would have some international standing, if ever soil is to get a post-Kyoto recognition as an acceptable sequestration for carbon.