Is it responsible for reduced CO2 emissions in the electricity sector?
Guest essay by Phil Hutchings
The Australian carbon tax of A$23/t of CO2 became effective one year ago on 1 July 2012. And with an automatic increase after the first 12 months, it is now set at $24.15/t.
Last week, the Australian Government’s Department of Climate Change published a 16 page paper titled “How Australia’s carbon price is working One Year On”.[1]
I decided to take a look at what has been happening.
The ‘One Year On’ report focuses on the electricity sector. That’s not surprising perhaps as Australia’s electricity generation industry produces approximately 35% of our greenhouse gas emissions. And that’s because 75% of Australia’s electricity comes from coal fired generation. Of that, two-thirds is from black coal and one-third from brown coal.
Victoria’s four big brown coal-fired power stations (Hazelwood, Loy Yang A, Loy Yang B and Yallourn) are the lowest cost power generators in Australia but they are also the least efficient. That means they emit the highest amount of CO2 for each unit of electricity produced.
The black coal fired stations are located mainly in NSW and Queensland.
It is these coal operators who are targeted in Australia’s carbon tax as they comprise a small number of large CO2 emitters. The less-efficient brown coal fired power stations in Victoria emit approximately 1.3 tonnes of CO2 per MWh of energy produced. The black coal fired power stations are more efficient and emit 0.8 to 0.9 t CO2/MWh.
On page 3 of the ‘One Year On’ report, a fascinating chart takes centre-stage.
This shows Australia’s emission intensity (amount of CO2 per MWh of electricity generated) before and after the introduction of the carbon tax. It covers the National Electricity Market (the NEM), comprising the interconnected electricity system over the populous eastern two-thirds of Australia.
At face value, it’s a stunningly successful picture for the carbon tax policy – a sudden drop in the amount of CO2 produced for each MWh generated.
Australia’s emissions intensity dropped significantly after the carbon tax
(Source: How Australia’s carbon price is working One Year On)
According to the One Year On report says, the amount of ‘carbon pollution’ for each MWh dropped from an average of 0.92 tonnes before the carbon tax to 0.87 tonnes afterwards. As the report says:
“As a result, electricity generation is switching away from high-polluting fuels like brown coal and towards lower-polluting fuels like natural gas and renewable energy sources. In fact, renewable energy output increased by almost 30 per cent and the output from the seven most highly-polluting coal generators was down 14 per cent from the same period in 2011-12.”
Knowing the long development periods in the electricity industry and its nature of very slow changes, this seemed to be an amazing outcome.
The report goes on to give more detail of electricity generation by fuel type:
Australia’s electricity moved away from coal stations after the carbon tax
(Source: How Australia’s carbon price is working One Year On)
There are all sorts of things about this chart that surprised me. Like for example:
Ø Did the carbon tax really stimulate a 28.5% jump in Australia’s renewable energy production in the NEM?
Ø What was behind the 13% drop in electricity generation from brown coal?
Ø Perhaps most disconcertingly, what caused Australia’s electricity consumption to drop by 3% year-on-year?
(I found this chart was inconsistent with NEM electricity generation reported in Australia’s National Greenhouse Accounts. The One Year On report is showing NEM electricity demand to be almost 10% less than the figures shown in the Greenhouse Accounts.)
The One Year On report itself goes on to say:
A year after the carbon price started, the evidence shows these Clean Energy Future policies are:
· reducing carbon pollution;
· driving investment in clean and renewable energy; and
· transforming Australia’s economy to be more competitive as the world tackles climate change.
Pretty compelling, huh?
Intrigued, I thought I’d dig a little deeper. Real data is hard to come by, and I had to check a number of sources. Perhaps not surprisingly, there are inconsistencies in the data.
Wholesale electricity prices – before and after the carbon tax
Let’s have a look at what happened to wholesale electricity prices after the carbon tax. The body which operates Australian electricity market, the Australian Energy Market Operator (AEMO) publishes some data on NEM electricity prices which we can use as guide.
These generators bid into the National Electricity Market (NEM) to supply electricity in 30 minute blocks during the day. In theory, the lowest bid price for any power station should correspond to the short-run marginal cost of operating it. The imposition of the $23/t carbon tax in theory sees the costs of the brown coal generators rise by around $30/MWh and by approximately $21/MWh for the black coal generators.
That increase in cost should be reflected in realised NEM wholesale prices, and indeed, this was the case. True volume weighted price data is not available, but if we use NSW price data as a proxy, the step change in wholesale prices from July 2012 is clear.
NEM electricity prices increased significantly after the carbon tax
(Source: AEMO)
So in this sense, the carbon tax is working correctly – sending a signal to electricity generators of much higher prices. That rise in electricity price will benefit any generator that doesn’t have to pay a commensurate carbon tax – such as any renewable generator like wind, hydro or solar.
But – did this rise in electricity price due to the carbon tax really trigger a sudden shift to lower carbon emissions in the electricity sector?
To answer that question, I had to look a little deeper…..
Australia’s electricity consumption has been declining since 2010
Interestingly, a good source of more information is Australia’s National Greenhouse Accounts, which are published every six months.
The Greenhouse Accounts include historical NEM demand data. This data shows that there has been a marked reduction in Australia’s electricity consumption over the past three years.
Annual consumption in the NEM has declined by approximately 9 TWh/yr or 4.5% since 2010 – from 206 TWh/yr to 197 TWh/yr.
Electricity demand in the NEM has been declining since 2010
(Source: December 2012 issue of Australian National Greenhouse Accounts)
Some of this falling demand is undoubtedly due to much higher retail electricity prices over recent years. Retail prices have risen nationally by 70% to 80% over the past five years.
Other factors have been residential solar PV installations and energy efficiency savings by businesses and residences.
Residential solar PV has grown dramatically due to State incentives
Solar PV in Australia has seen boom times in the past three years.
The boom in solar PV in Australia since 2009
(Source: 2012 Clean Energy Council Report))
The Clean Energy Council says that of the total Australian solar PV capacity of 2,300 MW at the end of 2012, approximately 95% of that was installed in the past three years.
http://www.cleanenergycouncil.org.au/cec/resourcecentre/reports/cleanenergyaustralia
This very high rate of installation growth was driven some overly generous State Government schemes. State Governments quickly realised the very high true cost of these incentives. Faced with the large impact on state budgets, Governments responded by dropping or heavily reducing the incentives in 2012 and 2013. In Queensland for example, the tariff for solar PV electricity exported to the grid was 44 ¢/kWh, guaranteed until 2028. That was abandoned in July 2012 and replaced with an 8 ¢/kWh rate, fixed just until 2014.
Right across Australia, the State Government incentives for solar PV have been slashed.
That led to a late rush on installations of solar PV with calendar 2012 being the biggest year yet for PV installation.
In 2012, the CEC estimates that these solar PV units generated 2.4 TWh in 2012. Allowing for the 13% of these units that are in Western Australia and Northern Territory (i.e. outside the NEM), that means that the residential solar PV are contributing approximately 2 TWh in the NEM.
That residential solar PV is shown as a reduction in demand rather than as NEM generation supply.
So of that 9 TWh reduction in electricity demand in the NEM over the past three years, around 2 TWh is attributable to the more than 900,000 solar PV systems installed on Australian houses.
Wind generation in also increasing
Wind generation has also grown, but from a low base. Total Australian installed wind capacity was 2,600 MW at the end of 2012. A further 1200 MW is under development.
Total wind generation in the NEM in 2012 was approximately 6 TWh according to the CEC. That represents 3% of NEM supply.
AEMO however, in its report, says ‘wind generation supplies less than 2%’ in the NEM.
Australia’s hydro generation
The core of Australia’s renewable generation is in fact hydro power. Hydro power makes up about one-eighth of the generation in the NEM. This principally comes from two big players – Snowy Hydro and Hydro Tasmania. And the amount of hydro generation principally depends on water inflows.
Hydro Tasmania is by far the largest renewable generator in Australia. It has produced 7 to 9 GWh/yr over recent years. In the 2011/12 year (i.e. the year prior to the carbon tax introduction), Hydro Tasmania produced approximately 45% of the renewable generation that AEMO reported in the NEM.
Snowy Hydro has approximately half of the hydro capacity of Hydro Tasmania and produces 3 to 5 GWh/yr. This includes output from its 620 MW of gas fired capacity, as Snowy does not publish its generation by fuel source (hydro or gas). Like all hydro generators, its output depends on rain and snowfall. And as a guide to the variability of Snowy’s catchment, the amount of water it has released has varied from 1,324 GL/yr to 2,311 GL/yr over the past four years.
There’s been little additional hydro generation developed in Australia for several decades. But with ample lake storage, the hydro operators can decide when to generate – at least within the limits of dam capacity.
Gas fired generation has been stable
There was been additional investment in gas turbine peaking and shoulder plants in the years before 2010. But since then, gas fired generation has been reasonably stable at approximately 22 TWh/yr.
So – What are the coal fired generators doing?
Against that background of declining electricity demand, and slowly increasing supply from solar PV and wind generation, the traditional coal fired generators are responding with reduced supply.
And the ongoing rate of decline of coal fired generation in the NEM is striking.
Coal fired electricity generation has been shrinking for four years
(Source: December 2012 issue of Australian National Greenhouse Accounts)
Both the black coal and brown coal generators have been reducing output. For the black coal generators, it has been a consistent downtrend over the past four years. And the brown coal generators have been reducing over the past two years.
All of this has been happening well before the carbon tax came in on July 1 2012.
Australian Energy Market Operator published its own analysis of the carbon tax effects
As it turns out, AEMO had published its own analysis of the impact of the carbon tax in November 2012 – seven months ago.
AEMO’s analysis “Carbon Price – Market Review”[2] covers the first four months of the life of the carbon tax. http://www.aemo.com.au/Reports-and-Documents/Reports/Carbon-Price-Market-Review
This report actually provides a lot more data, and lets the informed reader see what is really going on – at least in those first four months.
There was an interesting observation from AEMO in relation to an incident that led to a shutdown of one of the brown coal fired generators.
Soon before the start (on 6 June 2012) of the carbon tax, the big Yallourn brown coal station in Victoria was affected by flooding and was shut until October 2012.
That event alone had a significant effect on CO2 emissions, lowering them across the NEM generation sector. AEMO refers to this as the carbon dioxide intensity index (CDEII) – amount of CO2 emitted per MWh generated.
The CDEII varies frequently during the day or week depending on which generating plants are supplying power. If more wind and hydro is supplying energy, the CDEII falls. Conversely, a shift towards coal fired generation will lift the CDEII.
Looking back at 2012, AEMO says the big structural change in CDEII actually occurred as a result of the Yallourn flooding. As a brown coal fired station, it has one of the highest CO2 emissions of all of Australia’s sources of electricity. And its closure due to flooding on 6 June 2012 led to a noticeable reduction in CDEII.
AEMO highlighted this in the chart below.
CO2 emissions fell after temporary closure of a brown coal plant
(Source: Carbon Price- Market Review Australian Energy Market Operator 8 November 2012)
In effect, AEMO is saying that (at least in the first four months of the carbon tax), the reduction in CO2 emissions was due more to the shutdown of an inefficient brown coal fired power station by flooding than by market effect of the carbon tax!
CO2 emissions from the electricity sector have been falling for four years
The Greenhouse Accounts publication show the reduction in CO2 emissions from Australia’s electricity sector has been occurring since 2008/09.
It is a clear trend, shown in the chart below from December 2012 issue of the Greenhouse Accounts.
CO2 emissions from electricity have trended down for the past four years
(Source: December 2012 issue of Australian National Greenhouse Accounts)
So – What conclusions can we draw?
The cut in CO2 emissions from Australia’s electricity sector has been a four year trend.
Yes, the sector is responding to Government incentives with wind and solar PV installations.
However, the fall in electricity sector emissions intensity in 2012 was due to a combination of events and not necessarily due to the carbon tax:
a) Australia’s electricity demand was falling anyway due to higher retail prices.
b) There was a massive burst of residential solar PV installations in 2011 and 2012 which further decreased electricity demand.
c) Wind generation is steadily increasing.
d) Hydro generation remains stable.
e) Faced with the falling demand, the coal fired generators have been reducing output.
f) A once-off flood event temporarily closed one of Australia’s four brown coal fired stations in June 2012.
Did the carbon tax have an immediate effect on 1 July last year? On the face of it, it seems longer term policy factors were more at play in delivering this result than the carbon tax itself.
[1] “How Australia’s carbon price is working One Year On”. Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education
[2] Carbon Price- Market Review Australian Energy Market Operator 8 November 2012
Ford, Alcoa, IBM, HP, ANZ, CBA, NAB, WestPac, oil refining, various other “industries” going offshore! Turn off the lights please, last person to leave Aus!
Slightly off topic but…
It should be pointed out that there is also a growing area of development for geothermal power in australia.
There is a lot of hot rock close to the surface in much of the centre of the continent.
As a matter of fact, having a shower in some places requires cooling the water coming out of the ground enough to stop it burning you.
Potentially the energy available is enormous. And far more reliable than wind or solar.
Yep. If the DCC said the sky was blue it might be a good idea to check outside …
Up here in the north we have had a nasty outbreak of grid-connected PV, which is now being curtailed. Mercifully, no wind (subsidy) farms yet. Even the nutters realise they wouldn’t survive the cyclones.
Today I will be attending a discussion on “Developing Northern Australia”, and will be looking out for initiatives that might stand a chance. Maybe here on the east side, some hydro power from the Burdekin system?
My personal response to this issue has been to construct a wood-burning brazier, as we still have plenty of timber left over from the last big blow two years ago, and are already having problems with the CO2 assisted regrowth.
We have to be wary of the local mind police of course, but they can’t do much if we are using it to cook food 🙂
The biggest fraud of wind/solar is the idea that these are “zero emission” power generators. study after study has shown the extent to which solar/wind are responsible for all sorts of emissions
during the manufacturing phase. Add to that the fact that they are unreliable, and any fool knows that introducing unreliable power onto the grid nearly always results in appreciable emissions in order to accommodate same. Most analyses from biased sources such as govt agencies and renewable enthusiasts are plainly simpleminded and fraudulent.
Thanks, Phil.
This item got my attention:
“Some of this falling demand is undoubtedly due to much higher retail electricity prices over recent years. Retail prices have risen nationally by 70% to 80% over the past five years.”
Why? To pay for the green energy? More on this would be welcomed.
That’s a big hit to average families and to businesses that use lots of power.
Patrick @ 7:49 indicates and exodus of “names” from OZ. More on this, also, would be of interest. Making things in other countries and then importing the goods doesn’t do much to reduce global carbon dioxide emissions.
The purpose of these things is to save the World. The Australian Government’s Department of Climate Change can report on any number of markers – that you show are not as claimed, anyway – but what do they say the global temperature has been lowered by?
How much is this going to cool the planet in 2050?
Just kidding, cause I know there is no answer to that question. Basing a policy decision on a pyramid of erroneous assumptions is not going to benefit society. The only definite benefit of a carbon tax is going to those that collect the tax.
Martin Clark says:
July 2, 2013 at 8:21 am
“. . . having problems with the CO2 assisted regrowth.”
This effect is global. And relentless!
From personal experience (North Carolina) there is a limit to reduction of electricity use without major lifestyle changes/ initial $$$ outlay. This limits changes to those with excess $$$ to spend and with a rotten economy world wide, people are not as willing to take a chance of spending $$$ on something that pays back over decades. I doubt if you are going to see much more of a reduction in electric usage going into the future unless Australia does what Obama wants to do – shut down all coal plants (80% of our electric generating capacity).
We no longer heat with central heating in winter and instead use space heaters in the occupied room and keep the house pretty much at between 40F (4C) to 55F (13C). We only use A/C when it is over 90F (32C) and set the thermostat at 88F (31C) The only other changes we can make is to install Geothermal and that would cost somewhere between $11,000 and $30,000 with a cost of financing of between $140 to $160 a month for ~ 20 years to save 40% to 60% on my heating/cooling bill of ~ $150/month. Only if I can do most of the installation myself does it make sense and of course bureaucrats ALWAYS frown on amateurs doing anything.
(Have Backhoe Will Dig)
Gail said “We no longer heat with central heating in winter and instead use space heaters in the occupied room and keep the house pretty much at between 40F (4C) to 55F (13C).”
Whoa, that is a big mistake. Keeping your house cold to keep heating bills down will allow mold to grow within/behind your walls, making your house unsellable. The money you save now will be lost when you are forced to remove the walls to clean out the mold. Just a warning from someone who learned this lesson the hard way.
also slightly off topic in response……
Had to laugh at Felflames comment – “a lot of hot rock close to the surface…” Only if you consider 5km or so close to the surface. Confusing hot artesian water with hot rocks capable of generating significant power is a common mistake.
The sad fact is that after 20 years+ of investigation and over $100 million in grants and more in shareholders funds, there is no basis for the establishment of a commercial development anywhere in sight. And without the government handouts, most (all?) of the company hopefuls would have collapsed long ago.
Makes me wonder what continent Felflames is talking about?
We know that reducing CO2 does no good and adds no value to the economy. We also know that increasing the costs of energy makes everyone poorer and drives away industry and employment.
So where is the value in all this? Everyone loses except perhaps a few corrupt officials and farmers of government subsidy.
Nice work, thanks for crunching the numbers.
The figures that are missing is the millions of dollars of taxpayer money, and the millions of dollars of consumers money, that have been flushed down the toilet in the form of subsidies for solar and wind, and compulsory renewable quotas that have been placed on the industry. These have briefly slowed down electricity demand, although at the cost of prices almost doubling. So, everyone is significantly poorer, the planet gives not a jot, and greenies are still complaining that it is not enough.
I understand that the US is faced with proposals for a ‘carbon tax’ – over and above the massive ones you (and we) already pay on things like petrol for our cars. In Australia, it was just a chance to grab more tax revenue and redistribute it to favoured constituents.
Please don’t fall for it.
This is good but it does not look at the issue the way I would. A few key questions arise. Where did the coal go? Did coal exports rise? What was the cost of the solar and wind installations? Are the subsidy costs sustainable and is there back filling of the budget with tax increases to perform the slight of hand? Is Australia digging deeper to pay for its policy adventures? Did some large industrial users of electricity exit the economy or exit the grid?
Felflames says:
July 2, 2013 at 8:10 am
“There is a lot of hot rock close to the surface in much of the centre of the continent.
As a matter of fact, having a shower in some places requires cooling the water coming out of the ground enough to stop it burning you.
Potentially the energy available is enormous. And far more reliable than wind or solar.”
There are two possibilities, one, your hot rock is a volcano, in that case you have a winner, see Iceland.
The other, it’s just rock. In which case your gand geothermal scheme will just cool it down efficiently. And as the thermal conductivity of rock is very low, you will get a steep decline in output pretty fast. It’s a good scheme to rip off stupid investors but not more.
Resourceguy says:
July 2, 2013 at 10:28 am
“Are the subsidy costs sustainable ”
Here we go again. They really think that way. They have the words “sustainable” and “subsidy” as synonyms in their brains.
Hey, we could start more loss-making enterprises, that way we could solve all problems even faster!
At this link, there is another report regarding emissions. The noted flood is in Victoria. This pdf report at this link clearly shows little change across provinces pre-post except for Victorai, with a notable decrease – matching the shut-down coal plant story…
http://www.cleanenergyfuture.gov.au/wp-content/uploads/2013/02/Emissions-In-The-National-Electricity-Market-Factsheet.pdf
Question: Do the CO2 figures include CO2 emitted when a fossil fuel plant is on “spinning reserve”, e.g. backing up wind turbines, or is the CO2 only measured/calculated when actually selling electricity to the market?
All of this has been happening well before the carbon tax came in on July 1 2012.
Yea, but.a carbon tax was anticipated and debated for the past decade.
If it wasn’t for the snow storm in Copenhagen COP15, the carbon tax might have been enacted a year or two sooner.
A very nicely constructed and logically set out paper, thank you for your efforts
Patrick said;
“Ford, Alcoa, IBM, HP, ANZ, CBA, NAB, WestPac, oil refining, various other “industries” going offshore! Turn off the lights please, last person to leave Aus!”
It would be interesting to know what contribution the demise of some Aussie heavy manufacturing has had on the need for electricity and consequently emissions. In the US it seems to me that their decline in co2 emissions closely follows the wholesale exporting of their industries to places like China over the last 20 years. As a result China’s emissions goes up as the emissions parcel is handed around.
Presumably some of this industry will return because of cheap energy from fracking but emissions will be mitigated by the use of relatively clean fracked US gas instead of rather dirty Chinese energy.
tonyb
Your Figures 1, 4, 7, and 8 all have Y-Axis scales that do not start at zero, but are zoomed in to show the greatest visual differences. This is all true, but a better perspective may be to show this plots with a Y-axis that starts at zero. It may then be hard to see the changes — but that’s the real point.
Note that Figure 3, the change in Energy Costs DOES start at zero. It is easy to notice the difference in electrical costs, while the difference in tCO2/MWHr is much harder to see at full scale.
Finally, What has been the change in temperature? Don’t forget the error bars.
Decline in electricity usage is likely directly related to the decline in Australian manufacturing which is in turn related to the relentless escalation of the value of the Australian dollar….
(the Oz dollar has taken a substantial dive very recently…. will be interesting to see how that goes) .
They added a $25/MWHr tax to what had been a $30/MWHr price? Holy cow. Even assuming that the IPCC’s known-to-be-wrong models of Co2 driven warming were right the benefits of and drastic reductions in world CO2 are immeasurably small. The marginal benefits per ton of reduction cannot be a penny, even given all of the alarmists insane assumptions. Yet the Australian people let themselves get saddled with a doubling of energy prices for this insignificant cause. Yikes.
@felflames –
Geothermal, in most locations, is extremely dirty – the steam carries all kinds of toxic and corrosive substances: sulfides, chromates, arsenic, selenium, mercury, thallium and lead to name a few. These pollutants shorten equipment life and are extremely expensive to remove from the effluent. It is no panacea, except perhaps on volcanic islands where the heavy metal and other pollution may be less than, say, at the Geysers in California.
@arthur4563 –
More fossil fuel must be burned to accommodate wind and solar power, than would be if there were no wind or solar. This is because the rapid-response fossil generation that is requited to keep the grid energized and deliver power use 2 to 3 times as much fuel as the more efficient baseload units, which cannot respond quickly enough when the wind stops or clouds cover the sun. For that portion of the rated output of wind and solar installations which is unrealized, this extra fuel consumption can amount to 20 percent or more, over what would be burned if there were no wind or power. Also, the vast swaths of land and the extremely expensive new transmission lines that are needed to accommodate wind and solar are never factored in by those who say wind and solar are “free” – they’re anything but. In California, even though electric rates are double what they would be without the renewables mandate, taxpayer subsidies still pay at least half the cot of operating wind and solar installations.
DirkH says: July 2, 2013 at 10:33 am
>>Felflames says: July 2, 2013 at 8:10 am
“There is a lot of hot rock close to the surface in much of the centre of the continent.
As a matter of fact, having a shower in some places requires cooling the water coming out of the ground enough to stop it burning you.
Potentially the energy available is enormous. And far more reliable than wind or solar.”
>[ … ] it’s just rock. In which case your gand geothermal scheme will just cool it down efficiently. And as the thermal conductivity of rock is very low, you will get a steep decline in output pretty fast. It’s a good scheme to rip off stupid investors but not more.
…
You hit the nail right on the head first go, Dirk. Geodynamics – http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/flannerys_little_earner
and
Taxpayer Money Down The Drain: A Looming ‘Geodynamics’ Scandal?
http://www.stopgillardscarbontax.com/2011/09/taxpayer-money-down-the-drain-a-looming-geodynamics-scandal.html
Australia already has the 4th highest Electricity bills in the entire world. Look it up. So if high price lowers usage (which it does not because people *need* electricity, it is not a *want*) then Australia should already have low usage per head compared to the rest of the world. But they do not.
All the carbon tax does is put extra strain on the resources of the working families who are already struggling with the ridiculous cost compared to the rest of the world of just about everything a family needs to buy in order to survive.
What they should do is extract all of that coal and start to export finished products from the mineral resources. Instead they are paying the 4th highest energy bills and sending the minerals abroad at a discount to be processed elsewhere – but that processing requires energy! It is just that someone else gets the jobs and profits, then Australians import the finished product.
It is a sad, sad, sad state of affairs. The cause? Guilt politics. Grow up Australians, your government is committing slow democide against you softly and you don’t even know it.
Very good analysis. Thanks.
Although as pointed out above, the real scandal is the high cost of electricity and gas in Australia. We are among the lowest cost producers of coal and, to a lesser extent, gas. So, how do we end up with very high retail costs for electricity and gas? I realize there are multiple reasons for this state of affairs, but I have yet to see a good analysis of why.
Perhaps tonyb who has done many good analyses of Australian electricity at Jo Nova’s blog and elsewhere could attempt an answer.
It should be obvious to anybody, that there is no way on earth emissions intensity could drop so dramatically within the month of a new tax.
This lying chart makes anybody reading the document believe the entire thing must surely be a lie.
It makes me sick to my stomach to even consider reading this document with the view of verifying its claims. I’m glad somebody can do these things which I could not bear to.
You forget to mention that the Carbon Tax has also cost the government two Prime Ministers.
The first (Kevin Rudd) was booted as he got unpopular because he decided to drop his emissions trading scheme, after saying that climate change was the “greatest moral challenge of our generation”. The second (Julia Gillard) was dumped just the other day because she got unpopular, among other things, for introducing a carbon tax after saying “There will be no carbon tax under a government I lead”. The government has now decided to bring back the first PM (Kevin Rudd) and they are now talking about moving to a floating price system (linked to the European carbon trading market), which would likely see the price drop from $25/t down to less than $10/t. The opposition, who will likely win government at the election to be held around September, have promised to repeal the carbon tax.
Regardless of the validity of the CO2 hypothesis, energy security issues alone will drive renewables developments, but probably not in the direction green extremists think. For example, a biofuels company has just announced a new algae-based CO2-to-fuel facility at one of Australia’s coal-fired power stations:
http://algaetec.com.au/news-room/press-releases/
I will say, on the Northern Tablelands where wood burning is restricted (because of increasing prices and a smoke restrictions in Armidale) people do use gas rather than electricity to heat homes or to cook by, or oil heating. Solar is increasing because of the subsidies available, but a wind farm aimed for New England has been cancelled. But in temperate areas, solar is not enough to heat the house without an electricity back up. Electricity prices are due to fall next year (why I don’t know) but gas prices increase. Bush fires can also cause a carbon increase in the immediate atmosphere and people are becoming rather conscious of electricity consumption, mainly to cut down bills firstly, and couldn’t care a stuff about the carbon emissions as it hasn’t worked overseas. One would think only electricity was the devil, what about cars and trucks, or like in China, India, Indonesia their coal surface fires? Have they put them out yet? OK they think by cutting emissions they will change the climate, eh? What we want is cheaper energy not cleaner.
Alec Rawls: Yes, we doubled the wholesale price of power. The govt was pushed into this by their coalition with the Greens. The greens wanted it to be far higher.
Retail prices of power here are A$0.31 to A$0.37 (summer peak rates) per kW-hr, which is the 3rd highest in the world.
Manufacturing industry has been closing and moving to China for 10 years now. The amount of local manufacture of whitegoods, car tyres, electrical goods, etc has fallen through the floor. While the mining boom here has led to cash coming in nobody has cared very much – why have a manufacturing job when you can go to the mines, drive a truck and earn A$120K / year? (Average earnings are about A$75K / yr).
Now that mining is tanking and new projects are being cancelled, the penny is finally dropping that there needs to be something to employ people who are not going to the mines. Manufacturing has been so badly hollowed out that this is not likely to be the answer. Mind you the falling A$ (finally) will help make local industry more competitive.
I suspect the politicians answer, as well as the greens, will be that we can all sit in a circle cutting each others hair. Gosh I can see a modern economy working on those lines.
Thanks Phil, that is very good information, expertly collated and analysed. Our electricity bills are certainly getting quite uncomfortable! (And if you want to see read a rather cruel illustration of the big-brotherly way in which these changes are inflicted on the consumer/electorate by utilities/government, you only have to read Jennifer Hewett’s excellent editorial on Page 2 of today’s Australian Financial Review Weds 3rd July – pay-walled online unfortunately at: http://www.afr.com/).
There is another factor at play in this rising cost though, and that is the appalling design of modern suburban Australian housing. As someone who lives in one of the modern beachside northern suburbs north of Perth WA, I have been watching the residential construction boom and sprawl of the past 30 years and marvelling the mutation of the already incredibly energy-inefficient single-storey, red tiled, orange, brown or white brick box into the ludicrous two-storey, rendered, grey block, all-electric MacMansion.
Apart from the fact that endless, uniform property styles are hideously ugly, they have got to be the most energy-inefficient sort of box you could ever build in a climate that ranges from near freezing winter nights, to summers where a solid week of plus 40C daytime maximum is considered normal.
A hundred years ago houses were built to this efficiently cope with this sort of temperature range with minimal electrical power. The ideal home was a single storey house, built to face north towards the sun, with wide verandas extending out from the roof, which then shaded the front windows from the high sun in summer, but allowed the lower winter sun to come in under and warm the front of the house in winter. Ceilings were high in the rooms, with vents at the top of the walls to let rising hot air escape into the roof space. The roof was higher pitched and again well ventilated. There were ceiling fans for summer and wood fires in the rooms for winter, with doors on all rooms and heavy carpets and curtains to keep in the warmth. People dressed for the season, both indoors and out. Now I am not one for returning to Edwardian or Victorian living, but I would certainly appreciate a little of this basic common sense in the design of my current house.
We rent our current home, which is a family house full of all the usual clutter and activity of working adults and busy children, and it’s a lovely house complete with ocean views and all that, but I would never buy it in a million years! It is the most energy-inefficient box that I have ever come across. These are its faults:
1. It is a two storey building that faces east-west, presenting large glass windows (about 30% of the rear) to the morning and afternoon summer sun. My study at the front is intolerable without air conditioning after 8.00am on a summers day, and the lounge at the back would make a very good industrial greenhouse.
2. There are no verandas and little roof overhang to shade any of the walls or windows from the almost overhead summer sun.
3. The roof is lower than it should be for optimum cooling and has heavy dark tiles (though fortunately not the liquorice black ones of several of my neighbours). There is some pink fibrous insulation in between the joist in the roof space and on the underside of the roof, but it doesn’t seem to help much.
4. I don’t know what lies beneath the render on the external wall – probably some sort of quick-block, designed to keep construction costs and times down / building profits up, but the external walls let in the heat of summer and are freezing to the touch in winter. The huge areas of glass both front and back seem to be intentionally designed to ensure that the interior equilibrates to the temperature of the outside world.
5. The crowning glory is the internal layout: when you enter at the front door, the hallway opens out on the left into a grand entrance lounge that rises the full two storeys to the roof, big windows on two sides on both levels and a massive chandelier in the middle; around the upper floor of this room is a balcony railing beyond which is an open upstairs lounge that goes right to the back of the house, where it’s rear wall consists of a wall of huge glass windows looking out to the distant ocean; downstairs again to the right is a broad archway that opens onto a very large dining room, again with picture window all down one wall.
I shan’t go on. I mean, I don’t need to mentions the seven different types of light globes, including festoons of little halogen down-lights that go on and off of their own accord as their transformers overheat or cool, or the permanently on lights in children’s walk-in wardrobes, toilets, etc., or the noise factor of children in an open plan house built entirely of reflective surfaces.
But anyway, the whole place needs to be heated in winter and cooled in summer, and when I say the whole place I mean it. The main intake for the state-of-the-art reverse cycle heating and cooling system is in the ceiling of the upstairs lounge, and this also contains the sensor for the system. So, in summer, when it is a 40 degree day outside we must switch on the air-conditioning (and there are vents everywhere and an ineffective sector control). But no matter where you are in the house, all the cold air flows down over the upstairs balcony and across the downstairs floors to pond in the ‘sunken’ lounge at the back, where it is re-heated by the scorching afternoon sun coming through the greenhouse windows and the white California blinds, whilst the hot air rises up to the top of the uninhabitable upstairs lounge to ensure that the air-conditioning sensor never goes off and the system will run full-power, night and day if you let it. And in winter, the reverse: all the hot air ponds in he room upstairs to be rapidly cooled by the picture windows and the outside walls. Granted at least the sensor in the air intake keeps warm, and so it shuts itself off when the inhabitants downstairs are still freezing, but that is not the idea.
As you can imagine, run as it has been designed, the whole place uses a ludicrous amount of electricity to provide the basic home comforts of heating, cooing and lighting, and if not run as it has been so badly designed, the occupants freeze or swelter by turn.
Sounds awful, doesn’t it? And have I been singled out for this injustice? No, this is just one of thousands of these modern Australian houses in the sea of suburbia that has been making its way up and down our coast. We looked at dozens of similar ones before choosing this one. And whenever at dinner parties or barbecues I sheepishly raise the topic of our ludicrous energy consumption and ruinous electricity bills, there is always a chorus of similar cries: “That was nothing! Our bill was $4,000 for the summer half!!”
So there you go. Excuse my rant. But somebody somewhere has to tell someone that this is not the way to build a house in a sub-tropical, semi-arid environment. Apart from anything else, those gracious old verandas with iron lacework and ornate columns, and high ceilinged rooms with turning fans were a little more picturesque than the grey wall with square cut-out window and thundering air-conditioning unit.
PS: Anthony, is it possible to have a ‘Post Preview’ function with ability to edit one’s awful typing before posting, as some other websites do? My apologies for my dreadful typing above. With regards, LK.
[Reply: Sorry, WordPress doesn’t support a preview function. — mod.]
Resourceguy says:
July 2, 2013 at 10:28 am
On the coal use question, The present Australian Government is happy for Australian Coal to be shipped overseas, and that is where our best black coal is going at an ever increasing rate. The coal industry reports that over the past 10 years black coal exports have increased by more than 50 per cent, and the government is looking to increase that rate in the future. Our reserves of black coal are said to be good for 500 years at current rates of use but may be less if that export is boosted to accommodate the eager needs in our export markets..
Japan takes a reported 39.3 per cent (115.3 million tonnes) with China 42.4 million tonnes in 2009-2010, almost double the previous year, and the Republic of Korea 40.7 million tonnes, India 31.92 million tonnes and Taiwan 26.53 million tonnes among the top five buyers accounting for 88 per cent of the market and 28 further countries taking up the remaining 12 per cent if you believe the coal industries published figures.
They say that they expect the market to increase dramatically over the next decade in line with these countries projected need for coal for energy and manufacturing.
So that is it – an increasing coal sales sector underpinning our GDP and the government knows it!
Much of our coal based electricity power generation (well what was once our cheapest electricity power source for domestic and manufacturing use) is from the Brown coal Yallourn Power stations once owned by the Victorian State Government, but now in private investor hands. We have huge brown coal reserves, but because of our small percentage of population, Australians per head of population make us theoretically, among the high “polluters” contributing to the emission of CO2 and therefore our brown coal generation of electricity use is under pressure to be closed.
The main campaign to justify the closure and the higher prices that will follow, is aimed at “Black Carbon” and “Carbon Pollution” as uttered constantly by our outgoing Prime Minister Julia Gillard. This mantra is still being chanted by the green army with absolutely no credence being given to the excellent clean air quality practice of scrubbing any such particulate emission from Australian smokestacks for some 30 years or more.
It is this false impression that we emit dirty carbon particulate, that drives the agenda to bring in wind and solar based energy source under raised prices and subsidy, (but be careful not to let nuclear get an edge in the clean power generation debate) for our home market.
The net result is that Australians can’t burn our coal, because of a false scare, but any government will be happy to export our coal to other countries, even to those who don’t have our track record of ensuring particulates are removed from their industrial emissions.
the Australian Coal Industry site says as a footnote “looking to purchase coal”?
So the rest of us without PV are paying for the ones that have it of course. Yep – all that price and tax misery for zero gorebull cooling. Ask any of the pollies and greenies why not and their excuse is that the rest of the world isn’t following their master plan.
If they seriously want to reduce CO2 emissions, they should start by having their mouths stapled shut.
From my own perspective, my quarterly electricity bills, by chance, start from 1st of July, the start of the financial year in Australia and, conveniently, lines up with the start of the “proice ohn cahbon”, as Juliar Gillard would say. The quarter from 1st July 2012 (July – September) was ~6% more expensive than the previous quarter (April – June) with slightly less consumption. I am told by the uninformed and Govn’t alike that the price on carbon was not the cause. I beg to differ.
Phil,
Thank you for an absolutely fascinating piece. Well done.
I would like to have seen an overlay of the Australian electricity prices to provide context. I appreciate this is not simple, having tried to find suitable references myself to offer you, but the substantial increase in price tells its own tale. For me this is quite clearly a reason for the slow strangulation of the Australian economy. Roll on elections!
“Hydro Tasmania is by far the largest renewable generator in Australia. It has produced 7 to 9 GWh/yr over recent years”
Are those units correct?
I would have expected TWh/yr.
I work in the NEM, and it is a pretty reasonable summary. It does however understate (in fact doesn’t really mention) the decline in heavy industry which has contributed to the decline in overall electricity demand.
The carbon tax has been a contributing factor to this decline. To a very large extent “green” policies are anti-industry policies: to put it very simply, the biggest individual users of power are major production industries (with aluminium smelters at the top of the list). If you want to reduce emissions, you need to reduce industrial activity simply because using wind and solar won’t have much effect.
Unfriendly labour and environment laws, the empowering on trade unions (note that at present Yallourn is basically shut down due to a struggle with the Unions over operational control of the power station), and a high Australian dollar, are all reasons why production is moving overseas.
The carbon tax is an added factor: not only does it increase costs, it also increases business uncertainty – what future measures will the government introduce to combat CO2 emissions (or what will they hit us with next?)” If the production businesses inevitably involve creating emissions, they will always be a target. The government has made it clear it doesn’t want the emissions, and by default therefore it doesn’t want the businesses. Those businesses can reduce costs, and remove themselves from future punitive government moves, by closing down and shifting offshore.
Where it gets really complicated is that governments simultaneously want to keep those businesses for some very good economic reasons: they provide jobs and help underwrite economic activity. In Australia, Europe and the USA, this fundamental contradiction in government objectives is hitting crunch-time. In my view, this simple equation will end the global warming movement: as voters become disillusioned with the economic downside (starting with the increased cost of power), politicians will lose interest in global warming measures. Fortunately that process seems to be well and truly starting.
Lew,
Yes, you are correct That should be TWh/yr in the references to both Hydro Tasmania and Snowy Hydro. Good pickup!
Thanks,
Phil
Larry Kirk says (July 2, 2013 at 8:23 pm): “PS: Anthony, is it possible to have a ‘Post Preview’ function with ability to edit one’s awful typing before posting”
Use the “test” page of the blog; see masthead.
MBE,
Thanks for the response. I agree – it would be interesting to see which heavy industries have reduced production and lowered electricity production. I suspect it is happening, but I couldn’t identify any significant cut-backs. I’ll have a closer look.
I wasn’t aware that Yallourn is shut due to industrial action. That will be keeping CO2 emissions low in the NEM still, and allow the Government to continue its claim that the carbon tax is cleaning up the electricity sector.
The practice of exporting Australian energy while domestic prices rise drastically is reminiscent of the anthropogenic Ukranian famine of 1932-33, in which millions of Ukranians died of starvation while feeding Europe, surely one of the greatest injustices in human history.
From ibiblio:
“The policy of all-out collectivization instituted by Stalin in 1929 to finance industrialization had a disastrous effect on agricultural productivity. Nevertheless, in 1932 Stalin raised Ukraine’s grain procurement quotas by forty-four percent. This meant that there would not be enough grain to feed the peasants, since Soviet law required that no grain from a collective farm could be given to the members of the farm until the government’s quota was met. Stalin’s decision and the methods used to implement it condemned millions of peasants to death by starvation.”
Wake up, Oz! Arm-in-arm with American and British commoners, lets throw the self-righteous thieves out on their tax-fat backsides! Rouse the Ents! Scour the Shire!
Snowy Hydro and Hydro Tasmania are in the Govn’ts list of the top ~250 (Was 500) carbon polluters. I found out recently that Snowy Hydro has, as well as regular hydro-electric generation capacity, a pumped-storage hydro facility where as Hydro Tasmania is a 100% regular hydro-electric facility. Not sure how that equates to being a top “carbon polluter”.
“JPG (from Oz) says:
July 2, 2013 at 6:04 pm”
The real risk is that we could end up with a “hung” result similar to the 2010 election, where the ALP, Greens and Independents formed a minority lead Govn’t. This happened only because the Independents sold out their electorates, who would never vote ALP, LNP or Green, in favour of providing the ALP support. Two of those MP’s will not stand at the next election (They knew they would be sacked by their electorate, so they are, cowardly IMO, resigning), as well as a raft of ALP MP’s. Bob Brown, the former Greens leader, resigned from the party in April 2012.
Rudd (Erless) is very popular with voters, but unpopular with his party MP’s. He is planning to dump the Price on Carbon in favour on an ETS, linked to the EU system. The risk here is that he could win. The other risk is the EU masters want to limit supply of carbon credits to force the price up to over 40 Euros. This is a very real possibility with Obama talking about carbon pricing (Which sounds almost identical to the Australian implementation).
The intention to “rubber duck” the economies of the western world is very clear for all to see.
Don
I wish I could, at the risk of the usual strike back from the warm and green variety, I’ve already had parts of my personal property splashed in blood like colouring (apparently in the early years it was claimed that den**rs were killing not only the world but the future born ??) and you must understand that the greatest growth industry under authoritarians is always to grow government. Increased departments, increased regulation, increased social encouragement (you don’t have work then sign up and we will own you with welfare payments through Centerlink) and even provide forward payments, to buy a class of votes, the great something for nothing, but in reality reducing the poorest or less able to a “serf” class.
The growth in government departments, fudges the employment figures, but it does create an in-between class of so called “public servants” who demand all the benefits, like to drive government paid for and fuelled motor cars, and regulate other less fortunate than them, but all the time complaining that some “upper class” are responsible for the mess the country is in.
This frees them from any need to supply service to the serfs, or anyone else for that matter, it’s look after your own job (The old I look after No, 1 B**gger the rest syndrome) and as long as the government continues to supply money and inducements that will continue, as they consider they are intelligent, employed and superior beings (well some do) and if you believe in the C02 propaganda even better, as you are now serving a noble cause (while looking after No 1)
Both major sides of politics want to outdo the other in giving, as that is where the unthinking vote lies and remember we have COMPULSORY voting, so if you capture the unthinking, unquestioning vote, then you will most likely be elected.
That of course is supported by the huge employed in government bureaucracy and they don’t mind fudging figures or making up exotic taxes, or new ways to levy fees or spinning a line to justify keeping them employed, that is their job, their vocation and they will proudly declare that at official dinners and parties. They see elders as just a drain on the economy, social justice as a way to reap and justify/waste more taxes while looking sympathetic and concerned.
Its only when you happen upon a gathering of mainly farmers and retired persons, or those struggling to maintain small businesses, and there are lots of those that are closing doors all over Australia as they cannot employ, pay rents, forward taxes, business taxes, and paying exorbitant power and utility costs supporting Federal, State and local councils who all have to increase income to support their employed staff, so there you get a real sense of why small business can no longer employ or absorb aggregate losses.
The whole thing is too big, the average person is too occupied with their own survival and want to trust (someone) and at this stage anyone who speaks out is howled down by a compliant media and held up to ridicule, and most of us therefore feel powerless or to have any expectation that one political party will do better than the other – they need money to prop up employment, the economy and look after themselves.
All we have is a hope that good scientists all over the world will look at the science, reject the grant inducement system and speak out for the betterment of science. And maybe if they do convincingly put aside bad science, our own individual pleas will finally be heard and recognised by an awakening media and this is what keeps us going.
I know this sounds weak but we need Anthony’s readership to understand we are all in this together.
Ahh stuck in moderation.. must have used a wrong word..
There is very little media examination here in Australia regarding the increase in electricity prices, the leftist media never mention it unless they can claim it has some moral virtue and the rest will rage over the price increases to anger their readers but they do it without showing how it is ALL the result of government policy. No one was ever given the chance to vote on the issue because it was never an issue… it was all clothed in “green” talk about carbon and pollution, not as a tax issue, which it is, that is easily costing a typical family several thousand dollars a year over and above plain market costs.
And it’s not just about the carbon tax, that’s the least of the troubles if you can believe it. Even before the carbon tax, electricy prices had soared around 80% in the last few years. The various governments have been embarking on green idiocy projects and shoving the costs for all of it onto the carbon-based generators, who then pass along the costs to their customers as price rises. There is nothing in your quarterly bill to tell you that the 25% increase for the year is a government mandate to fund wind-towers and the like.
The generators don’t care, where else are their customers going to go? They are servants of government policy on this, both powerless to stop it and complicit in their silence. I can tell you now that if the Australian people were told 5 years ago that it was government policy to double their energy bills “for the planet” that government would have been reduced to ruins within 24 hours. Silence about the costs was how we got here. People just don’t understand what is being done to them, and how. But they don’t like it one bit.
The biggest user of electricity is industry so perhaps some big users have moved to China thus reducing power demand.
You cannot class hydro power as renewable (?) because the loony environmentalists don’t.
Larry Kirk
I agree 100% about the absurd design of new houses. What are they thinking? I can only assume that they are cheap to build relative to the selling price.
My 60 year old weatherboard shack faces perfectly north, with a verandah awning exactly right to let in winter sun and keep out summer sun. There are eaves about 15 inches (in old money) all the way round. Where I live, the temps vary from 40C to -7C, but the house is easy to heat and cool. It’s not rocket science.
Here in Australia, we are into the second year of the “fixed price on carbon”, which has just risen from AU$23/tonne to AU$24.15/tonne, or 5%. Just received my new power supply charges. Some, downward, changes to the standing charges such as “Payment Processing Fee” (Say what? I pay my bill. It’s a bank to bank transfer.), but usage charges up. For peak, it’s gone up by ~8.5%.
“johanna says:
July 3, 2013 at 3:53 am”
The brother of a friend of mine is an architect. He told me there is no design anymore, just a bunch of requirements and a computer program. The computer program spits out what needs to be built. I now fully believe this. Just across the street from where I live, there were two houses on their own blocks. Typically in Sydney that’s about 450m squared. So lets just round that up for convenience, 1000m squared. A new development has just been completed and up for sale/rent. I just happened to walk past one day and noticed the number of letter boxes. I counted 56. Yes, 56 dwellings, in 2 blocks of 28, where 2 houses existed before.
This is Sydney’s urban future!
Fools and their power supply are soon parted.
There is no man made global warming.
Even the biased IPCC and the UK Met office have both stated that any warming stopped 17 years ago.
CO2 is not a pollutant,it is essential for all life on earth, equal to oxygen.
Johanna,
That sounds exactly like my previous old weatherboard house, which was built in 1910. Mind you, the electricity consumption there was limited by the capacity of some of the old cloth-covered 1920’s wiring. You couldn’t run the kettle and the toaster at the same time without blowing a fuse. It didn’t need air conditioning though. Just the odd patch on the tin roof and the occasional termite treatment. It’s still occupied now.
Everyone of the Greens can not relate to the fact 75% of our air is Nitrogen. That’s why plants grow well when you put down nitrogen fertilizers. They have suddenly got obsessed with CO2, a gas that we can’t live without. Even Tony Windsor reckons that he had to retire because he doesn’t get enough oxygen. Their scam is falling apart, when people believe their lies are better informed.
A number of commenters have mentioned the increased costs, but seem not to be aware that the Carbo Tax package came with reduced taxes for low to middle income families, and for assistance to pensioners and welfare recipients. According to a review one year on by the Treasury and the Department of Families, Housing, Community Services and Indigenous Affairs, millions of Australians are actually better off under the scheme, even factoring in increased costs.
Aside from the 500 companies that emit enough to be taxed by the ton, businesses that fall under that bar have paid increased prices in electricity and other bills. However, consumer spending is up, and I haven’t yet seen data for this first financial year of the Carbon Tax to make a proper determination of the total impact per sector/demographic. Thus far, this much is true – the Australian economy remains relatively strong. There has been no economic apocalypse – yet.
Barry, if you think the carbon tax is not increasing prices, and we get compensation, just think, you don’t need an air conditioner, a heavy user of electricity, but what about the cold regions of Australia. We freeze rather than put on an electric fire in winter. I have a brick/tile 17 1/2 square home in Armidale on the Northern Tablelands. Luckily I live up high but the valley residents saw a minus 9 the other night. We’ve always had insulation in the roof before the pink bats debacle. The bird bath froze over and was frozen until 11 am. Rhubarb wilted. We were cold too, but used to it, and don a jumper and thermals. The old whippet I have has a sheepskin coat on in the house. What the NSW government gives me is eaten up by the GST. And I think I get $13 a fortnight on my pension. $7.00 dollars a week? Running an electric fire, costs at least $2 per hour, some subsidy! Thank God for the Salvos, and St.Vinnies, who are inundated with welfare claims for electricity or gas. I think Australians forget, that heat (summer temps) and water supplies are the general problem, and that one does not run electricity (unless you have an air conditioner) to keep cool. But older citizens anywhere feel the cold, and I know myself, I watch TV in my bedroom with an electric blanket on, rather than sit in front of a TV in my large lounge room. Even wood burning is banned here to a degree, even so wood is so expensive as well as oil heating.