A carbon price would not force any big change in the largest source of greenhouse gases - the electricity generation sector - until after 2020, expert modelling shows.
Until 2020 most change in electricity generation would be due to the existing 20 per cent renewable energy target, with the carbon price slicing a further 11 per cent from power sector emissions through a small shift away from brown coal-fired power and reduced consumer demand.
But the modelling, done for the federal Treasury by MMA and ROAM Consulting and released yesterday, did not include the government’s announced policy to pay for the early retirement of one or two brown-coal generators, which could lead to much bigger emissions cuts in the sector.
And it does show significant cuts to electricity emissions between 2020 and 2050, as the carbon price rises and clean coal, gas and geothermal power become the dominant sources of Australia’s power.
By 2050, electricity generation accounts for almost half of total emissions reductions.
Both modellers found that some regions producing coal-fired power, particularly the Latrobe Valley and Gippsland in Victoria, would not shrink economically as power production changed, because they were well positioned to shift to the new sources of generation.
NSW, hardest hit by the carbon price with job losses and reduced economic output according to separate modelling conducted for the state government, is shown in the federal government modelling to steadily increase its generation capacity.
According to the ROAM results, the state’s generation capacity would double by 2050, with wind, new coal generation with carbon capture and storage, and gas-fired power gradually taking over from the black-coal plants.
Regarding Latrobe Valley and Gippsland, the MMA analysis said, ”the level of generation with brown coal falls with a carbon pricing regime. However … [the] region has close proximity to a major natural gas resource and parts of eastern Victoria have access to good wind, biomass and potentially geothermal resources.
”This leads to increased investment in generation exploiting these resources, particularly natural gas resources. The exploitation of these resources under carbon pricing means that the overall level of electricity generation may not fall.”
And ROAM Consulting predicted electricity generation in the Latrobe Valley might increase, as old brown-coal plants close but gas, renewable and new carbon capture and storage plants are built.
Just like the Treasury modelling it informed, both MMA and ROAM base their calculations on a $20 carbon price, not the $23 price the multi-party climate change committee eventually agreed upon.
Another model by the CSIRO, of what would happen to road transport emissions, modelled a very different policy to the one eventually announced.
According to the government procurement system AusTender, MMA was paid $32,907 for its work and ROAM $145,200.
Both models showed a higher carbon price would have driven a much faster transformation of the electricity sector.
The Coalition has attacked the assumptions used in the Treasury modelling, which found household electricity prices would rise 10 per cent owing to the carbon price, and has called for it to be scrapped and redone.
However, the Climate Change Minister, Greg Combet, maintained it was ”detailed and rigorous”.
