Despite the GFC slashing CO2 emissions, Australia is on course to miss the bipartisan target of a 5% reduction in CO2 emissions by 2020, despite several one-off factors that helped keep emissions down last year.

The National Greenhouse Gas Inventory data released yesterday for the December 2010 quarter showed that emissions increased last year by 0.5% to 543 million tonnes, still below pre-GFC levels. The emissions produced by the significant pick-up in economic activity from the GFC-induced fall in 2009 was partly offset by a drop in electricity demand due to lower temperatures, the flooding of Queensland coal mines that reduced fugitive emissions and greater use of hydro-electric power due to greater rainfall.

Those factors are temporary, meaning emissions are set to increase significantly more this year.

But even in the unlikely event that emissions growth is constrained to the muted 2010 level, it would still mean national emissions of over 570 million tonnes per annum in 2020, well above the target of about 530 million tonnes.

And by the way, based on even the highest population growth projections, that 2020 target will still make Australia one of the world’s most carbon-intensive economy, producing more than 20 tonnes of CO2 per person – ahead of the likes of the United States, Canada – even Saudia Arabia.

The new data also illustrates the problem of delay resulting from the inability of the major parties to develop an effective carbon reduction strategy. We’re already above the 2020 emissions target. Even if a carbon pricing scheme that actually worked was introduced starting in 2012, the task of cutting annual emissions back to 530 million tonnes would need to be achieved over just eight years.

A significant and prolonged economic slowdown might be the only means of meeting Australia’s target — the GFC only cut Australia’s emissions for five quarters, before they returned to growth mid-way through last year. Decoupling Australian economic growth from CO2 emissions is unlikely to be accomplished by 2020.

The data also shows that Queensland is by far the most carbon-intensive economy on a population basis, with nearly 35 tonnes of CO2 per person in 2009 (the most recent figures at a state level). WA is next with just under 31 tonnes per person; the industry breakdown of the data suggests that it’s agriculture that makes Queenslanders kings of carbon, whereas, even in a mining slump induced by the GFC, it’s the resources sector that makes Western Australia’s per capita emissions so high. Tasmanians had the lightest carbon footprint due to a hydroelectricity system benefiting from extra rainfall, with just 16 tonnes per person.

NSW is, understandably, the state with the highest emissions — 154 million tonnes in 2009 (remember, that’s during the GFC), or just under 161 million tonnes if Land Use, Land Use Change and Forestry emissions are counted. The NSW figures allow us to get a sense of how the Coalition’s “Direct Action” climate change policy would work. Coalition climate spokesman Greg Hunt has repeatedly held up the NSW government’s Greenhouse Gas Reduction Scheme as the model for the Coalition’s own policy — indeed, he described it a month ago as “the very model that we are using as the basis for our approach”, and uses prices from the scheme as evidence that “direct action” can be cheaper than a carbon price.

The scheme only applies to the NSW electricity sector, and was introduced in 2003. And handily, the industry breakdown of the latest inventory data allows us to see how effective it has been. In 2009, emissions from the NSW electricity sector actually fell from 2008 levels … by 100,oo tonnes, or a tenth of one per cent. That is, the GFC-induced economy slowdown didn’t actually reduce NSW electricity emissions by any significant amount. Despite the GFC, in 2009, electricity emissions were 3% higher than in 2007.

This matches with a report by the Howard government’s Department of the Environment, which found that between 2000 and 2005, two years after the start of the GGRS, the emissions intensity of electricity in NSW had risen, and risen at a faster rate than 1995-2000, whereas in Victoria and South Australia, electricity had become less carbon-intensive. The reason is simple — the NSW Greenhouse Gas Reduction Scheme does nothing except reward electricity generators for efficiency measures they would have undertaken anyway.

That’s why the cost per tonne of abated CO2 under the scheme is so low, because it’s not driving any real change. And it’s the “very model” of the Coalition’s Direct Inaction plan.

Peter Fray

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