Greenhouse gas cuts will cost $40b: report. 31/01/2007. ABC News Online

Greenhouse gas cuts will cost $40b: report.


The Energy Supply Association of Australia will today release a report showing a cut in greenhouse gas emissions by 30 per cent in the next 25 years would see power become twice as expensive.
The peak body for Australia's energy generators has modelled a series of possible futures and found a 30 per cent reduction in emissions by 2030 will add up to $40 billion in electricity generation construction costs.
The study also says there are limits to the generation capacity of wind and solar power.
But the Australian Business Council for Sustainable Energy says the findings do not weaken the case for investment in renewable energies.
Australia has some of the cheapest energy in the world and vast reserves, with estimates showing a 600-year supply of brown coal at current rates of use.
But the energy sector produces about half of the nation's greenhouse gases and most of that is tied up in electricity generation.
Brad Page, chief executive of the Energy Supply Association of Australia, knows they have to change the way they do business.
"Getting solid climate change policy going forward is very important," he said.
"We've got big investment needs, demand growth for electricity over the next 25 years [will be] about 67 per cent on what we use today.
"To meet that, we are going to need to invest somewhere between $35-$75 billion in generation capacity - big numbers and they change dramatically depending on what you've got to do on greenhouse emissions."
Possible futures
Mr Page's members have $100 billion tied-up in electricity assets. In order to plan for future investment, in an environment dominated by concern about climate change, the association has modelled a series of possible futures - from no change to current practices all the way through to deep emission cuts.
It would cost $35 billion to build the generation required to meet demand in 2030 using current, dirty technologies.
Using alternatives to make a cut of 30 per cent on 2000 emission levels pushes the price up to $75 billion.
"We found that what you need to do is have the widest range of technologies available to choose from if you want to do it in a least-cost manner," Mr Page said.
"For example, least-cost will actually come about by having nuclear and advance carbon-capture and storage technology available. Each time you remove one of these options you actually find that the cost of meeting these deep emissions cuts goes up, and in some case, very significantly."
Rewables 'expensive'
Also, Mr Page says some of the oft-cited solutions for reducing emissions, namely wind or solar energy, are the most expensive and they have other limitations.
"Wind remains a relatively expensive technology - it still comes in around $90 a megawatt-hour. And I might, for example, compare that to most of the carbon-capture and storage technologies or geothermal - [it's] about a third less at the most, than what wind is," he said.
"Wind is also an intermittent source, it's not a base-load source - it works for about 30 per cent of the time.
"Solar similarly, whilst we see over the next 25 years massive improvements in the technology and dramatic reductions in the cost, even the best of the solar technology is likely to still be around the $100 a megawatt-hour."
Mr Page says his industry accepts that a price on carbon is inevitable but there also have to be some incentives for industry to invest in new technology.
"I have no doubt that as we mature this debate and we fully understand what it is going to take to get to a low emission future, [there is] one element - and I stress one element, will be to have a price on carbon to provide the right sorts of incentives for people to take up new low emission technologies," he said.
"And also for consumers to understand the impacts of their consumption behaviours."
Renewable energy
But according to the Australian Business Council for Sustainable Energy, the findings by the Energy Supply Association does not weaken the case for investment in renewable energies.
The council's executive director Ric Brazzale says we have to keep in mind our emissions have been growing significantly over the past few years, and are responsible for not meeting Kyoto targets.
"So the key thing we need to do is start to reduce greenhouse gas emissions now," he said.
"We just can't rely on hypothetical and possible technologies that might be available in the future, we need to start taking action now.
"And that's why we need to look at existing proven technologies - like wind, energy efficiency, bioenergy, as well as gas-fired generation."
Wind, gas options
He says the argument that wind is an expensive option should not compare with the cost of greenhouse gas emissions.
"Wind is much more expensive than coal-fired power generation at the moment, but coal-fired power generation doesn't have to bare the costs of greenhouse gas emissions," he said.
"So if we ended up implementing some sort of carbon trading scheme, as most commentators are saying that we will need to have, you'll find that technologies like wind and gas, will be much more competitive - they'll be the technologies of choice of that will be rolled out because they are available today.
"Sustainable energy are the technologies that we've go available today to make significant inroads into our greenhouse gas emissions. Technologies like nuclear and clean coal, they're much further out, they're not effectively available today in Australian.
"They may be available in the future - but may not be available at anywhere near as cost-competitive as some people are claiming and certainly there not going to be available in the sort of time frame that we'll need to start to dramatically reduce out greenhouse gas emissions."
And Mr Brazzale disputes the association's findings that we do not have the infrastructure for sustainables.
"We have the demonstrated industry capacity to be able to deliver significant amounts of wind and renewable energy technologies, all we need a market-based policy mechanisms that will start to bring on these technologies we're advocating for," he said.
"Bring on an emissions trading scheme and let the market decide which technologies are most cost-effective, rather than have some consultants come up with hypothetical numbers for some potential technologies in the future."
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