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John Passant

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The carbon tax’s dirty little secret – gas-fired power

There’s a dirty little secret I want to let you in on. Labor’s carbon tax isn’t a step towards a fully renewable energy economy. It is a step away.

The carbon tax will lock in gas-fired power stations as ‘cleaner’ energy than coal at the expense of a move to a 100% renewable energy economy.

Don’t believe me? Here are the predictions from the Government’s Clean Energy Future Plan. It says (at page 71) that gas-fired power currently accounts for only 16 percent of the Australia’s electricity. 

Under the carbon tax and associated emissions trading scheme Treasury predicts (at both pages xii and 24 ) that ‘total renewable generation (including hydro) will comprise around 40 per cent of electricity generation in 2050. Gas-fired electricity [will] increase by over 200 per cent by 2050.’

In other words 60 percent of Australia’s energy will come from fossil fuels in 2050, with most of that coming from gas, a fossil fuel which releases carbon dioxide and, in the case of coal seam gas, methane into the atmosphere.

The coal addicts in Treasury go so far as to say that ‘if we can combine coal-fired generation with new technologies such as carbon capture and storage, then our reserves of coal can continue to underpin cleaner electricity generation.’

The Government clearly has a transition in mind, not to the renewables that the Greens and others want, but to gas. This is the key point about the carbon tax. As the Minister for Resources and Energy, Martin Ferguson said recently:

During the period of transition, however, gas will play an important role as a cleaner transition fuel – from both a peaking and baseload perspective.

The price of permits – $23 a tonne, with prospects for some gradual but still minor rises over the coming years – does not make wind power cost effective, let alone solar power.

According to the Greens that would require a tax of at least $40 a tonne and $100 a tonne respectively. Here’s how Christine Milne put it last year:

I certainly recognise that you are going to need a price at $40 or more to shift from coal to gas and then a higher price still from gas to the renewables. 

The Greens are arguing for a combination of measures … because even at $40, it is not a high enough price to bring on renewable energy at large scale.

Beyond Zero Emissions (BZE) estimates even larger costs. BZE says the cost effective figures are more like $70 a tonne for wind power and $200 a tonne for solar thermal. In fact BZE used to argue for the focus to be not on pricing mechanisms but on action, with a tax of about $10 a tonne as complementary to large scale investment in solar thermal for example. In the same report BZE said:

A low carbon price of $10-20/tonne is somewhat useful, as it will still create a disincentive to build new coal-fired power stations, and will ensure that coal is more likely to be displaced by renewable than gas. However, a carbon price which is greater than $25/tonne will ensure a mass rollout of gas-fired power stations, while renewables are left out in the cold.

As BZE argued as recently as June this year:

We believe that seeing a “price on carbon” as central to a low-emissions future, whether in the form of a carbon tax or trading scheme, is both inadequate to the task at hand and a dangerous distraction from effective climate action.

Furthermore, while many people who want serious climate action have understandably thrown their weight behind the current carbon tax proposal being formulated in Canberra because at least “something” is being done, we believe this represents a political dead end for the climate movement which will constrain the possibilities for demanding more serious action in the future.

They estimated the cost of moving to a totally renewable energy economy by 2020 as about $370 billion over ten years – a big cost but in perspective and annualised about three percent of Australia’s current GDP, and one that could be easily paid for by taxing big business and cutting defence spending.

Why the urgency to move to a totally energy renewable society? According to Patrick Hearps from the Melbourne Energy Institute at the University of Melbourne:

Analysis from the Potsdam Institute found a high-per-capita emitting country like Australia needs to reduce emissions to zero by 2020 to give us a 67% chance of staying below two degrees of warming. This target is also more likely to be revised down than up.

The Government and business have in mind a transition period to renewables, given the certainty required for investment in electricity generation, of 40 to 60 years. Gas will perform that role. That’s why Treasury predict a massive increase in gas fired power generation to 2050.

Much of that gas will come, the Government and business believe, from coal seam gas (CSG). It may well be that the certainty the carbon tax is offering to mining companies and power generators is encouraging the explosion of CSG exploration across the country.

The Government has taken the Greens for a massive ride (or more cynically the Greens have acquiesced in a massive con job on the Australian people.)

The carbon tax is about promoting fossil fuel use. It does nothing to move Australia to a 100% renewable future, a necessity if we are to really address climate change in any meaningful way by 2020.

In the next article on this, I will look at whether it is technically possible to move to a renewable energy economy by 2020, using Beyond Zero Emissions’ ground breaking paper Zero Carbon Australia Stationary Energy Plan. The impediment to doing that is capitalism.



Comment from Tony
Time August 28, 2011 at 11:58 pm

John, on first reading, I think you’ve nailed it. Good piece.

The unusual money circuit for levying and redistributing the revenue certainly suggested this method would not drive a rapid switch to renewables. The impression I got was always that the consumer would suffer the burden, the government would present as compensating for most of it, and through a card trick, pull any further needed funds from consolidated revenue for any miserly “real action” (seeing other services cut) and little else would change due to the long asset life of existing infrastructure.

Not everyone understands the detail of this circuit, but it’s obvious people’s gut feeling is there’s something wrong with the concept. It gives the impression of being the financial equivalent of a perpetual motion machine.

Comment from John
Time August 29, 2011 at 9:52 am

Interesting points on the impact of a carbon price on the uptake of renewable energy sources. I don’t agree with the crux of the argument against the carbon tax but if there is an impact to impede investment in long-term objectives of renewables that’s worth raising.

I think it misses the point though that carbon pricing is a method of reducing overall carbon emissions in line with government set targets (e.g. 20 by 2020, or whatever it is). It is frankly irrelevant the method by which this is acheived, as long as there are no holes in the accounting… what’s more important is how cheaply we can do this, how strict the targets are, and how well we can contribute to global leadership on emissions reductions. Massive investment in renewables fails against these criteria, and attempts to meet targets that aren’t in line with government policy.

And don’t forget that electricity generation is only one part of GHG emissions, and that increased energy efficiency is one of the key potential drivers of reduced GHG emissions. Spending hugely on short-term renewable power generation targets would leave no cash and negative political capital to address these avenues. (In fact, government spending to date on renewable energy has proven not to be cost effective, and that’s tinkering at the edges aiming to only pick the more cost effective options…)

But I should also add, go the Swans.

Comment from Bill Koutalianos
Time August 29, 2011 at 10:56 am

So the government’s misguided clean energy future plan to reduce emissions of harmless CO2, will lead to more problematic coal seam gas frakking. Given the prospect of promoting plant growth with more atmospheric CO2, we’d apparently prefer to poison our land and water instead. To compliment this suspension of logic, our illogical government and media sponsored love affair with wind and solar then drives up our national debt to leave us vulnerable to the whims of foreign financial institutions. So to recap, they want to keep us hungry, powerless and poor.
Productivity Commission figures show the cost of electricity generation in Australia last year per megawatt hour as $79 for coal, $97 for gas, $1502 for wind and $4004 for solar. The renewables love affair is destined to become a nightmare.
When science becomes hijacked by politics and ordinary citizens can’t do their math; bankruptcy, financial austerity measures and the loss of self-governance must surely follow. Modeled predictions of dramatic warming over the last decade were dramatically wrong. Climate science is now more disputed than ever, yet some continue to ignore these alarm bells, preferring to focus on the methods by which to threaten our freedoms and future prosperity. Perhaps they are guided by a misguided belief that their own hidden agendas will benefit. Little fish should be wary of big fish.

Comment from John
Time August 29, 2011 at 11:09 am

Thanks John. I think there are a couple of points I can make in response to your comments. The first is that, according to Bob Brown, the jury is out on whether gas is a cleaner fuel. Second the targets the Government has set are abysmal and will reduce the projected warming from 4 degrees to 3.5 degrees by 2050 if adopted globally. A switch to renewables is needed now, and that is certainly the position the Greens take, or rather took. But seeing this as a halfway house to renewables, as the Greens seem to ague to justify their support for the Carbon Tax is wrong.

Comment from Martin Nicholson
Time August 29, 2011 at 11:32 am

John, if you intend to further consider the Zero Carbon Australia Stationary Energy Plan, I strongly recommend you read a critique of this plan at

I was the lead author on that critique and we found the plant capacity and total cost was substantially under-estimated.

Comment from John Bennetts
Time August 29, 2011 at 11:50 am

What Martin said.

The BZE plan is a huge sidetrack away from reality.

Do away with all domestic air travel within Australia with a couple of decades? Pull the other leg.

Replace domestic air travel with non-existent fast trains? Another leg pull.

Decrease military spending by 50% or so? Sure, we all believe that this will happen, don’t we?

Reduce personal and industrial electricity consumption on a per-capita basis, whilst not lowering productivity and living standards? Sez who?

Construct megatonnes of aluminium and steel and concrete wind and solar structures and transcontinental transmission lines at the same time as closing down these three industries? That’s another reality bypass.

That’s before we find the necassary dollars to do all of this damage.

There is another, much safer and far cheaper and reliable way, but let’s not mention nuclear energy, which will eventually have to be part of any successful CO2 reduction strategy.

Comment from donkeygod
Time August 29, 2011 at 12:18 pm

It took centuries for humankind to move from the energy stored in wood, to horses, to water, to coal. Renewable energy sounds like a good next step. But …

Technology isn’t a cooperative beast. Sure the ‘science’ behind solar thermal is solid. So is the science for terraforming Mars, but the engineering most assuredly is NOT settled. This rush to dismiss engineers’ deep and troubling questions/reservations as some sort of variant on ‘denialism’ is likely to prove costly in the extreme.

Zero Carbon Australia is a lovely idea, but utopian. Progress isn’t made by university professors and activists alone: we need to move incrementally towards a number of clean energy targets, learning as we go. You DON’T accelerate progress by mandating it, or banning alternatives that don’t appear utopian enough early in the piece. From the tone of the article, anybody’d think planning ahead 50 years was a walk in the park, all up-side, no down-side. It’s not. Credible activists will be open to alternatives, accept that practical engineering outcomes are reached though baby-steps rather than grand imaginative leaps.

The best way to control emissions is probably to control population; if human numbers can be stablilised and eventually reduced to a few billions, the problem’s largely solved. If achieving THAT goal takes a temporary surge in CO2 emissions, so be it. By all means let’s innovate. But let’s do it the way it’s always been done: step by flexible, practical, realistic step.

Comment from John
Time August 29, 2011 at 12:40 pm

Thanks Martin.

Comment from John
Time August 29, 2011 at 12:48 pm

This ‘where is the money coming from’ argument ignores the reality there has been a massive transfer of wealth from labour to capital over the last 4 decades. Tax the rich and big business. Impose price controls on them. Nationalise them under workers’ control if they go on a capital strike.

I think BZE’s solar thermal plan is worth looking at. I am not actually about making workers pay for the environmental crisis of capitalism, which BZE appears to be. I am for making the bosses pay. In my view it is their system, and their non-solutions we must challenge if we are to successfully address climate change.

Nuclear energy? It has such a good name after Fukushima that Germany is closing down its plants. Nuclear energy is hopefully history, except maybe in regimes who don’t have to worry about troublesome things like elections.

Comment from MarianK
Time August 29, 2011 at 7:52 pm

Must watch DVD – at most DVD rental outlets at present (Also Oscar nominated):

Gasland –

This energy source has contaminated large parts of rural US. Although it’s been around here for a while in small doses, climate change imperatives and potential huge profits have promoted it to top energy agenda status – especially in Queensland.

This disaster waiting to happen MUST be stopped!

Comment from Rhys
Time August 29, 2011 at 8:06 pm

Anybody who has been paying more than a fleeting bit of attention to the carbon pollution reduction debate over the last decade knows that using more gas will be a big part of the energy mix equation. How this constitutes a dirty little secret is beyond me.

Comment from John
Time August 29, 2011 at 8:16 pm

Thanks Rhys. I have all these environmentalist friends and acquaintances who deny this reality or think foolishly that this is not a gas-fired power lock in process going on, but rather a first step to renewables. They are shocked when I tell them that the Treasury predictions are 60 percent fossil fuel by 2050 and only 40% from renewable sources.

Comment from Mark Duffett
Time August 29, 2011 at 11:58 pm

‘after Fukushima’ indeed. John, you’ve been taken in by the running dogs of capitalism in the media. See

Comment from Rhys
Time August 30, 2011 at 12:13 pm

Correct John, and fundamentally so long as whatever energy mix we end up achieves the emissions reductions we are after, who cares whether or not it uses gas?

Comment from John
Time August 30, 2011 at 2:16 pm

One answer Rhys might be because only a switch to renewables can prevent catastrophic warming.