COMMENT to Govt on Clean Energy Legislative Package

22 August 2011

Carbon Price Legislation Branch

Carbon Strategy and Markets Division

Department of Climate Change and Energy Efficiency

GPO Box 854, CANBERRA ACT 2601

Comment on Draft Exposure of: Clean Energy Legislative Package

Dear Carbon Price Legislation Branch

Thank you for the opportunity to comment on the draft Clean Energy Package of legislation. My family and I are very concerned about the urgency of the climate change crisis and the need for urgent action to safeguard the future for our descendants. We include the following comment.

General:

Given that Australia:

a)      is the highest per capita emitter (developed nations)

b)    fossil fuel use has increased of the order of 50% since 1990 with no indication this will slow down

c)     latest scientific projections are nearer 4 to 6 degrees C by 2100

d)    latest scientific papers indicate methane release from tundra and arctic sea bed may be out of control within 20 years 

In our opinion therefore, the target for 2050 must be set at 80% to 95%. This target would be more in keeping with the need to avoid dangerous climate change.

The intention to reduce Australia’s emissions on paper by buying overseas permits and by allowing large offsets through storage of carbon in farm land will not satisfactorily reduce Australia’s position as an atmospheric polluter (worse even than the Tea Party driven USA).

The legislation must include measures to reduce the basic usage of fossil fuels rather than allow too many offsets. It will be only too obvious to the world if our fossil fuel use continues to increase regardless of the balancing of these increases by other measures. We must keep pace with the per capita reductions of other nations in real fossil emissions terms or become a pariah in the world.

The legislation must also allow for urgent increases in the target currently set of 5% by 2020. Such increased targets may not be currently politically palatable, but increased targets will be required as the impacts of climate change become more apparent (than they already are under recent extreme events such as the long drought and the widespread flooding). For example, the UK has recently announced targets of 50% reductions by 2027. It is only a matter of time till the rest of the world adopts similar targets.

The Government must also include measures that flag that if emissions reduce faster than expected with the current policy settings and caps, the targets will be tightened to provide the same financial downward pressure to emissions as is currently envisaged. This should be gauged on the currently expected impacts to jobs and families.

The legislation must include petrol for cars in the package. This could be offset against petrol excise so that there is still incentive for petrol producers to increase efficiency and reduce their production emissions, but provide no increase in the cost for consumers. In fact prices might fall as producers increase their anti-pollution measures.

The Government must be clear on the fact that the Australian Kyoto target can only be claimed to be achieved (to the extent that it is) because we included Land Use and Land Use Change in our national emissions figures. This allowed us to take advantage of a big reduction in land emissions from restrictions on land clearing and forestry introduced in the early 1990’s.

This fact acted as a smoke screen covering over the actual huge increase in Australia’s use of fossil fuels (45% since 1990). This historical mistake should not be propagated in the new arrangements as in the long term it is the total amount of fossil fuels we dig up and burn that drives the changing climate. Advantages obtained under LULUC are at best a delaying measure to give us more time to eliminate fossil fuel burning.

The Legislation must additionally set targets for the replacement of all coal fired electricity power stations with renewable. We recommend targets of 50% replacement of electricity generation with renewable energy by 2030 and 100% by 2040. In our opinion these are achievable targets, given the current rate of development in renewable energy and the options proven to be feasible by reports such as the Beyond Zero Emissions plan.

The advantage of setting such targets is that it will be clear to investors that major new coal, gas or oil electricity power stations are not economical. We cannot afford to have new plants of this type built as they will only have to be mothballed well before their end of life (generally 30 years) at great expense to the community.

In general terms, the legislation is supported. There must be no watering down of the current provisions. In fact we would support tightening of the targets or any other aspects of the legislation to achieve more rapid or more efficient emissions reductions.

Climate Change Authority

We fully support the reports of the CCA including a review of the reduction targets. This advice should be provided on the basis of the latest science (including but not limited to the IPCC Assessment Reports) and on the desires of the international community as stipulated under the UNFCCC process or other appropriate international negotiations. Current agreement sets a limit of 2 degrees of warming above pre-industrial levels which is roughly (a bit more than) 1 degree above the current global average temperature. This limit is likely to change (to a lesser value in our opinion) and there must be a mechanism for anticipating such a change.

We recommend that reports by the CCA also be provided (and made public) in 2012 and 2013 to cover the introduction of the fixed price scheme in 2012. Having the first report in 2014 provides no guidance prior to that time. Given the urgency of reductions being implemented, we urge this recommendation be adopted.

International Linking

As we noted above, the Package must not allow Australia’s burning of fossil fuels to continue to increase. If the purchase of 50% of permits from overseas allows our underlying rate of fossil fuel use to increase, the legislation must provide for a tightening of this percentage.

Part 3, clauses 23, 24 and 25

Emissions from legacy waste deposits must be dealt with under additional measures. It is a relatively simple installation to capture methane from land fill and burn it for electricity production. Such installations should be available to offset against current permit requirements as these are important sources of human GHG emissions into the atmosphere and they are easily controlled.

Fugitive emissions

Fugitive emissions from the mining of fossil fuels must be included. For example, it is becoming increasingly clear that escaping gas from coal seam gas mining is significant. As methane is a much stronger GHG than CO2 fugitive emissions must be included in the total emissions budget of the gas supplier. Similar emissions from the mining of coal should be included.

Fugitive emissions from decommissioned coal mines must also be dealt with. If it is not possible to find a responsible company which is able to cover these emissions, the Government must find methods to capture these emissions or provide economic incentives through provision of offset permits to encourage the private sector to capture these emissions.

Other Concerns

Our support for the legislation is dependent on its capacity to reduce greenhouse gas emissions in the short term, and to contribute to delivering science-based greenhouse pollution cuts in the medium and long-term. We provide the following comments.

In order to ensure the clean energy package’s capacity to reduce Australia’s fossil GHG emissions, this legislation must be augmented by the additional measures promised by the MPCCC, including the shut-down of 2000MW of coal power, the establishment of the Clean Energy Finance Corporation and the creation of a working group to implement recommendations on energy efficiency.

None of the $10 billion promised for the Clean Energy Finance Corporation for the first five years should be provided to gas power stations, super-critical coal or any other kind of fossil fuel technology.

The timeframe for the Australian Energy Market Operator to assess the technical needs for a switch to 100% Renewable Energy needs to be concluded by mid-2014.

Finally, this package does not provide for Australia to contribute some of the revenue from the emissions trading scheme to international climate finance. I look forward to Australia announcing how it intends to fulfill its commitment to provide its fair share of climate finance between 2012-2020 in the lead up to the Durban Conference of the Parties to the UNFCCC in December.

Objects and definitions of the Clean Energy Bill

Summary: We strongly support the 80% emissions reduction target, but ask that the objects of the Act and the definitions can be amended so as to ensure Australia can and will meet its international obligations.

The Objects of the Clean Energy Act (Part 1 s3) include giving effect to Australia’s obligations under the UNFCCC and the Kyoto Protocol, the new 2050 emissions reduction target and “support the development of an effective global response to climate change.” These are welcome, but they must include specific reference to Australia’s commitment to be part of a global agreement to limit global warming to less than 2 degrees.

All countries that are members of the UNFCCC have a responsibility to prevent dangerous human interference with the climate system, and in the Copenhagen Accord and the Cancun Agreements this has been recognized as a need to keep global warming to below 2 degrees above pre-industrial temperatures, and to consider strengthening that goal to 1.5 degrees.

In addition, section 12 of the Clean Energy Bill expressly prevents the Bill from impacting on the rights of foreign ships. It is important that this does NOT constrain Australia from imposing a levy on international marine bunker fuels.

Climate Change Authority and pollution caps

Summary: The Climate Change Authority will be the body that advises on the caps for the emissions reduction scheme and has a broad mandate to undertake reviews of various pieces of climate-related legislation, including the Clean Energy Act and the renewable energy target. The emergency cap for 2015 is an appropriate level (a 38Mt reduction for liable entities in aggregate) and should remain in place.

Section 12 of the Climate Change Authority Bill proposes a list of principles to which the Authority must have regard in performing its functions. These include environmental effectiveness, equity and the public interest, which are good, but it’s important that this list should also include the principles of ecologically sustainable development, which are enshrined in Australian law and policy.

Another consideration of the CCA must be the economic and social impacts of future generations of failing to act.

The NSW Protection of the Environment Administration Act specifies the following principles of ecologically sustainable development:

a)     the precautionary principle – if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation.

b)    inter-generational equity — the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations,

c)     conservation of biological diversity and ecological integrity,

d)    improved valuation, pricing and incentive mechanisms – environmental factors should be included in the valuation of assets and services, such as:

1)     polluter pays — those who generate pollution and waste should bear the cost of containment, avoidance or abatement,

2)     the users of goods and services should pay prices based on the full life cycle of costs of providing goods and services, including the use of natural resources and assets and the ultimate disposal of any waste,

3)     environmental goals, having been established, should be pursued in the most cost effective way…

These should be included as principles in the Clean Energy Act and the Climate Change Authority Act.

Provisions that ensure that the Climate Change Authority will be empowered to prepare an “indicative national emissions trajectory and national carbon budget” are strongly supported, but this work must be included in the list of matters to which the Authority must put its mind in preparing recommendations for caps for the emissions trading scheme (Clean Energy Bill s289.2) and which the Minister must consider when preparing Regulation to set caps (Clean Energy Bill s14.2c).

The provision for the emergency cap for 2015 which would reduce emissions from liable entities by 38 Mt from 2012 levels is strongly supported, as are provisions to prevent banking of units from the fixed price period (s122.7).

Section 123.1 of the Clean Energy Bill provides that “The regulations may make provision for, or in relation to, prohibiting the surrender of specified eligible international emissions units.” We strongly support synchronizing this legislation with the EU ETS, which prevents the importation of LULUCF credits, CERs from the destruction of HFCs and CERs from nuclear power.

The Climate Change Authority Bill will establish the Land Sector Carbon and Biodiversity Board. We support the allocation of funds to biodiversity protection, but there is a serious omission of any mention of biodiversity in the Board’s mandate.

The list of prescribed measures that the Board can advise on (Climate Change Authority Bill s62.1a) must include biodiversity conservation and ecological priorities. This section should reference Australia’s biodiversity adaptation plans and other biodiversity conservation planning at the national scale.

Assistance to coal generators

Summary: Coal generators will get free permits in 13/14, 14/15 and 15/16 only if they pass the power system reliability test, have submitted a Clean Energy Investment Plan, are provided with certification from the energy market regulator and are not under contract to close. The total number of free permits will be capped.

If a generator wants to close, it must get approval to do so from the energy market regulator – and show that supply is not threatened, and there is replacement capacity in the system from any technology. However, if the regulator is not satisfied, then the operator must build the replacement themselves, and this needs to be the same “the maximum continuous electrical generation capacity in megawatts” as the one being replaced. The emissions intensity of this replacement generation must not exceed 0.8 tonnes per MWh. Why not allow solar thermal to be the replacement?

Sections 177-180 of the Clean Energy Bill require coal fired generators to prepare Clean Energy Investment. Why is there no reference to the plans being consistent with reducing the emission intensity of the electricity sector to levels consistent with the long-term objects of the Act. Also, the regulation that will specify the content and purpose of these plans is to be prepared by the Resources and Energy Minister.

The free permits are proposed to be on emissions as generated, not “as sent out” basis. This arrangement would discourage efficiency by effectively providing more assistance to the least efficient operators.

Jobs and Competiveness Program (EITEs assistance)

Summary: Assistance to emissions-intensive trade-exposed industries serves multiple purposes but one of them is to ensure the environmental effectiveness of Australia’s climate legislation by preventing carbon leakage. This objective is not reflected in the objects of Part 7 of the Clean Energy Bill. The Productivity Commission’s review work relies heavily on the objects of Part 7, so it is crucial that they reflect this environmental goal.

The objects Part 7 do not include preventing carbon leakage. Section 143 (2) (b) should be amended to ensure that the objects of the Jobs and Competitiveness Program is to prevent carbon leakage – i.e. relocation of activity to a place where the same or greater greenhouse gas emissions would be produced.

There will be three review periods for the Productivity Commission before 2020, and we strongly support this approach, providing the objects of Part 7 include preventing carbon leakage, and providing the PC consults with the Climate Change Authority on a broader range of questions, including carbon leakage. Section of 156 (7) of the Clean Energy Bill only requires the PC to consult with the CCA on two aspects of their review.

We are very supportive of the Government’s efforts to legislate a price on pollution before the end of the year.

  • Our support for the legislation is dependent on its capacity to reduce greenhouse gas emissions in the short term, and to contribute to delivering science-based greenhouse pollution cuts in the medium and long-term.
  • For that reason, we believe that this legislation must be augmented by the additional measures promised by the MPCCC, including the shut-down of 2000MW of coal power, the establishment of the Clean Energy Finance Corporation and the creation of a working group to implement recommendations on energy efficiency.
  • We also support a review of the national transmission grid and implementation of measures to prepare it by constructing new connections and preparing for solar power stations in inland regions such as Kalgoorlie, Longreach and Bourke.
  • We note that this package does not provide for Australia to contribute some of the revenue from the emissions trading scheme to international climate finance. We look forward to Australia announcing how it intends to fulfill its commitment to provide its fair share of climate finance between 2012-2020 in the lead up to the Durban Conference of the Parties to the UNFCCC in December.

We are particularly keen to ensure that the following parts of the Exposure Draft legislation are maintained or improved:

  • The timelines, content and heads of consideration for reviews to be conducted by the Climate Change Authority, with the addition of the principles of ecologically sustainable development, and consideration of Australia’s carbon budget when setting caps.
  • The emergency cap that will ensure an emissions cut of 38Mt in the first year of the emissions trading scheme, should Regulation for caps not be put in place in time.
  • Reviews by the Productivity Commission of the Jobs and Competitiveness Program must have environmental effectiveness as a chief consideration, and the objects of the Jobs and Competitiveness Program must make clear that its chief purpose is to avoid carbon leakage.

We are concerned about the delay in legislating the Clean Energy Finance Corporation, and will be monitoring the process to establish that body and its mandate in the coming months. In particular:

  • None of the $10 billion promised for the Clean Energy Finance Corporation for the first five years should be provided to gas power stations, super-critical coal or any other kind of fossil fuel technology.
  • The timeframe for the Australian Energy Market Operator to assess the technical needs for a switch to 100% Renewable Energy needs to be concluded by the end of 2012.
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