Call for higher emissions reduction target for electricity sector

The Australia Institute has released a discussion paper arguing that the government should target the electricity sector for higher emissions reductions targets as it is a sector that has commercially available, mature technologies that can reduce emissions at relatively low cost.

It has proposed that “the government should target emissions reductions in electricity generation of 48 per cent by 2030”.

The paper suggested that by setting the emissions reduction target higher for the electricity sector, other sectors for which it is relatively difficult and expensive to curtail emission without reducing production could be set lower targets while still making it possible for Australia to meet it's commitments under the Paris Agreement.

The paper sets out a number of reasons why the electricity sector is best placed to make large scale emissions at low cost:

  • There are currently commercially available technologies in electricity generation that can substantially reduce emissions (renewable generation);

  • Renewable generation is competitive with new built fossil fuel generation and the cost of renewables continues to fall;

  • The electricity generation sector is highly concentrated and so policies to reduce emissions will be simpler to administer as they will only need to be implemented by a small number of players; and

  • A substantial reduction in electricity generation emissions has the potential to make emissions reduction in other sectors (like stationary energy and transport) less costly.

The paper warned that if emissions are cut in equal proportion for each sector “then sectors like agriculture and stationary energy are going to require expensive punitive policies in order to reach the target. In agriculture methane from animals is the main source of emissions.

“The only effective way currently available to reduce those emissions is to have fewer animals. This would probably take the form of a tax on meat in order to reduce the quantity demanded.”

“A large part of stationary energy emissions is the manufacturing sector. While some of their heating processes can be substituted from fossil fuels to electricity, others cannot. It is likely that this sector will also require a tax in order to reduce production. This will have a negative effect on manufacturing employment.

“It is important to remember that the more electricity generation does to reduce emissions the less other sectors in the economy will have to do.”

The paper, Choice cuts: The advantages of cutting emissions in the electricity sector, is available here.

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