Australia’s energy must be two-thirds renewable to meet 2030 climate target

Australia has pledged to cut its greenhouse gas emissions significantly by 2030. A five-fold increase in the share of renewables in its energy mix by then is the cheapest way to meet this goal, new research has found.

The most effective and cheapest way for Australia to fulfil the climate promise it made under the Paris Agreement is to ensure that at least 66 per cent of its energy comes from renewable sources by 2030, new research by The Australia Institute has found.

Titled ‘Meeting our Paris Commitment’ and released on Monday, the report by the Canberra-based think tank said that there are two ways that Australia can meet its Paris emissions target. Inked in December 2015, this is the world’s first deal signed by almost all countries on climate change and aims to cap global temperature rise at 2 degrees Celsius above 1990 levels. 

Australia, under the leadership of former Prime Minister Tony Abbott, pledged to reduce emissions by between 26 and 28 per cent below 2005 levels by 2030. 

To reach this target, Australia can take the “least-cost path” of scaling up renewable energy use significantly by 2030, or drag its feet and later adopt costly solutions to reduce emissions in sectors such as agriculture, transport, and building, noted the report, which is the first major research from the institute’s Climate & Energy Program.  

The report singled out the electricity sector for two reasons. First, it accounts for about 35 per cent of Australia’s greenhouse gas emissions, presenting a major opportunity for emissions.  

Second, renewable energy presents a readily available and cost-effective option to reduce electricity-related emissions, and there are no similarly affordable options for sectors such as agriculture, construction, and manufacturing, said the report. 

Because it is the proverbial “low hanging fruit” for Australia to cut its emissions in accordance with its Paris commitments, the electricity sector must reduce emissions by between 40 and 55 per cent compared to 2005 levels by 2030, the report recommended. To do so, it must scale up the share of renewables in its energy mix to between 66 and 75 per cent—it stands at 13.6 per cent today, according to government data.

Ben Oquist, director of research, The Australia Institute, said in a statement that “while there are emissions reductions that can be made in all sectors of the economy, electricity generation is an area where the technology to make major emissions cuts is cheaper, and is here now.”

“The government has been consistent in its commitments to Australia’s international emissions targets,” added Oquist. “It remains to be seen if we choose to meet those Paris commitments the easy way, or the hard way.” 

Status quo

Rod Campbell, the report’s author and director of research, The Australia Institute, said in the document that “fluctuations in climate policy over the past decade have created uncertainty, undermining the ability of investors to judge the economic viability of alternative energy investments.” 

The Australian government has various measures in place to reduce greenhouse gas emissions including minimum energy efficiency standards, renewable energy targets at a state level, and a ‘Large-scale Renewable Energy Target’, which provides incentives for the establishment and growth of wind, solar, and other renewable energy sources.

But “despite the existence of these policies, additional measures are likely to be required to meet the 2030 targets”, said Campbell. 

The government is also up against an “escalating crisis in the electricity sector”, characterised by skyrocketing prices—due to the high cost of natural gas, the closure of old coal plants, and a lack of investment in renewables—and a spate of blackouts in South Australia last summer.

While the ruling coalition government has blamed South Australia’s high rate of renewable energy use for these blackouts, subsequent inquiries have debunked this claim

To address the sector’s various challenges and find solutions to its emissions reduction challenges, the government commissioned an independent review of the electricity system last year. But it has failed to agree on the adoption of a key recommendation of the outcome document: a Clean Energy Target (CET).

Under the CET, any company that can produce electricity below a certain threshold of emissions intensity would be given an incentive to enter the market, regardless of whether it is wind, natural gas, or coal and carbon capture-powered. These companies would receive certificates for the electricity they produce, and electricity retailers would have to purchase these certificates to prove low-emissions electricity adoption. 

Though the CET is still under debate, The Australian Institute’s report aims to help set targets for the sector, said Campbell.

The government has been consistent in its commitments to Australia’s international emissions targets.  It remains to be seen if we choose to meet those Paris commitments the easy way, or the hard way.

Ben Oquist, director of research, The Australia Institute

Only one obstacle 

Kenneth Baldwin, director of the Australian National University’s Energy Change Institute, told Eco-Business that The Australian Institute’s report’s recommendations are “entirely feasible and reasonable”.  

At the moment, Australia is installing about 3 Gigawatts of wind and solar capacity annually, said Baldwin. “At this rate, we will probably get to 55 per cent renewables by 2030.”

To accelerate action further, there needs to be an alignment of climate policy with energy policy,” Balwdin said. The Clean Energy Target is one such measure, and “could give long term security to industry to industry, and unlock the logjam of investment we need to transform our electricity sector”, he added.

However, “what we really need is a price on carbon all the way across the economy—not just in the electricity sector—to derive emissions reductions in every sector”, Baldwin said. Australia briefly had a carbon tax, introduced by Labor Prime Minister Julia Gillard in 2011. But it only lasted from July 2012 to July 2014 before being repealed by the newly elected Liberal government, led by Tony Abbott.

The only constraint to achieving these measures is a lack of political will, specifically within the Coalition parties, Baldwin noted,

He added: “Everywhere else—whether it is the electricity sector, the industry more generally, in business and private enterprise, energy experts, or the wider community—everyone wants an alignment of climate and energy policy that will allow us to move forward.”

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