Minerals Council provides clarity on renewable energy costs

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Trying to navigate climate change policy, emissions reduction targets and renewable energy schemes can at times seem like swimming though treacle.

Politicians and bureaucrats love targets because they can get the kudos for making a “visionary” announcement, safe in the knowledge that they probably won’t be in office when the policies to realise these targets are implemented. For instance, President Obama can announce a 32 per cent reduction in CO2 emissions in the US by 2030, fully aware that he is constitutionally barred from the presidency beyond 2016.

This week Prime Minister Tony Abbott announced that Australia will take an emissions reduction target of 26-28 per cent of 2005 emissions by 2030 to the UN’s November Climate Change conference in Paris, though the details are still hazy. The prime minister’s own website claims that it will be achieved through a new “National Energy Productivity Plan” and “National Climate Resilience and Adaptation Strategy” – meaning the details will be worked out later.

While Labor doesn’t appear to have committed to a formal target of its own, the shadow environment minister ominously noted that “countries to which we often compare ourselves… all have targets in an equivalent timeframe into the 40 per cent range.”

Of course, Labor last month pledged a 50 per cent Renewable Energy Target by 2030 as well as a new Emissions Trading Scheme – though it claims all is well because this is not a carbon tax. Malcolm Turnbull correctly pointed out that if an emissions trading scheme is a tax, then the renewable energy target is also a tax.

Unsurprisingly, none of these targets are good enough for the climate change campaigners, such as the Climate Institute (who implies support for a 65 per cent cut) and the Climate Change Authority (who wants a 40-60 per cent cut). What is interesting to note is how these campaigners believe on the one hand that Australian reduction target does not go far enough, while either ignoring or downplaying the inconvenient truth of China’s goal to increase its emissions to 150 per cent of 2005 levels, with talk of plans to reduce “emissions intensity”.

However in the midst of a week of double-speak and obfuscation, the Minerals Council of Australia has come to the rescue with new research on current renewable energy subsidies in Australia.

Electricity production subsidies

The report found that Australia’s renewable energy sector in the year 2013-14 alone received subsidies to the value of:

  • $2.8 billion, including over $2 billion for solar technology and $388 million for wind; or
  • $412 per megawatt hour for solar power and $42 per megawatt hour for wind power.

In contrast, coal-fired power received a subsidy of less than $1 and gas less than 1 cent per megawatt-hour, with the actual “coal subsidies” generally for research into coal alternatives, not actual subsidies to make coal suitable to use for electricity.

Given that coal and gas are responsible for over 80 per cent of Australia’s electricity these figures are extraordinary. It also illustrates how, contrary to popular opinion, the fossil fuels that actually provide most of our electricity on a proper commercial basis, and do so effectively and efficiently.

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