Energy scenarios for Australia under carbon pricing and implications for the Hunter

Paul Graham

Carbon Futures Theme Leader

Exploring the Future Energy Role of the Hunter Region

15 June 2011

Energy Transformed Flagship

Presentation outline

• Carbon price range

• Changing perspectives on the impact of carbon pricing on coal demand

• Australia’s power sector

• Transport fuel opportunities

Carbon price profiles

Source: Adapted from Commonwealth of Australia (2008)

0

50

100

150

200

250

2010 2015 2020 2025 2030 2035 2040 2045 2050

CP-Low CP-High

A$2005/tCO2-e

Modelling found Australian coal production will grow with and without a carbon price – How?

0

50

100

150

200

250

2010 2015 2020 2025 2030 2035 2040 2045 2050

Prod

ucti

on in

dex

2010

=100

Reference case

CP-Low

CP-High

Answer 1: Developing country demand to hold up

Answer 2: CCS becomes large part of electricity generation mix

Source: Adapted from Commonwealth of Australia (2008)

Next 10-20 years – coal demand may be supported by developing country demand

0

20

40

60

80

100

120

0

20

40

60

80

100

120

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Rest of world Developed coalition Reference 550ppm pathway

Gt CO2-e Gt CO2-e

Contraction & convergence towards common emission per capita target

Allows for developed countries to continue to increase emissions in the medium term

Source: Garnaut Review (2008),Commonwealth of Australia (2008), CSIRO analysis

One of many possible abatement sharing arrangements

International electricity generation – CP-Low

0

1000

2000

3000

4000

5000

6000

2006 2010 2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

Ele

ctri

city

gen

erat

ed (G

WY

r)

Ocean current/tidal

Wave

Hydro

Conventional geothermal

Hot fractured rocks

Wind

Large scale PV

Rooftop PV

Solar thermal

Biomass

Nuclear

Gas open cycle

Gas with CCS

Gas combined cycle

Black coal with CCS

Black coal combined cycle

Black coal, pf

Brown coal with CCS

Brown coal combined cycle

Brown coal, pf

Source: CSIRO projection

Levelised Cost of Energy – CP-Low

0

20

40

60

80

100

120

140

160

180

2015 2030 2015 2030 2015 2030 2015 2030 2015 2030

$28/tCO2-e $52/tCO2-e $28/tCO2-e $52/tCO2-e $28/tCO2-e $52/tCO2-e $28/tCO2-e $52/tCO2-e $28/tCO2-e $52/tCO2-e

LCO

E ($

/MW

h)

Fuel

O&M

Capital

CO2 costs

CO2 storage

Black coal pf

Black coal with CCS

Combined cycle gas turbine Wind

Solar

Source: CSIRO

Australian electricity generation CP-Low

0

50

100

150

200

250

300

350

400

450

500

2010 2015 2020 2025 2030 2035 2040 2045 2050

TW

h

Hydro

Wave

Hot f ractured rocks

Wind

Roof top PV

Solar

Biomass

DG

Gas peak

Gas CCS

Gas combined cycle

Black coal CCS

Black coal pf

Brown coal CCS

Brown coal pf

Source: CSIRO projection

Australian electricity generation – CP-High

0

50

100

150

200

250

300

350

400

450

500

2010 2015 2020 2025 2030 2035 2040 2045 2050

TW

h

Hydro

Hot f ractured rocks

Wind

Roof top PV

Solar

Biomass

DG

Gas peak

Gas CCS

Gas combined cycle

Black coal CCS

Black coal pf

Brown coal CCS

Brown coal pf

Source: CSIRO projection

Transport

• Hunter• Small to mid-sized cities

• Low density

• High passenger vehicle use

• Significant rail freight

• GHG and energy saving opportunities in this region will need to suit the car and rail freight

Transport fuel consumption CP-Low

0

500

1000

1500

2000

2500

2010 2015 2020 2025 2030 2035 2040 2045 2050

PJ

Electricity

Natural gas

LPG

Biodiesel

Diesel - GTL

Diesel - CTL

Diesel

Ethanol

Petrol

Bio-derived-Jet

Fossil-Jet

Biofuels, electricity & LNG likely to expand

Point where electric vehicles are broadly emission saving

Source: Assume 0.18kWh/km times retail electricity emissions intensity, ALPF & Green Vehicle Guide

Light vehicle fleet average ~215 gCO2e/km

0

25

50

75

100

125

150

175

200

2010 2015 2020 2025 2030 2035 2040 2045 2050

0

25

50

75

100

125

150

175

200

Reference CPRS -5 CPRS -15 Garnaut -10 Garnaut -25

gCO2e/km gCO2e/km

Toyota Yaris / Ford Festiva (petrol)

Ford Festiva (diesel)

Household consuming renewable electricity

Key messages

• In facing a potentially carbon constrained world coal trade may still continue to expand• Developing country demand may continue if they successfully argue to allow their emissions to rise for a period

• If successful, coal with CCS will allow coal to deliver low emission base load power

• Other local opportunities• Renewable technologies and research• Vehicle electrification, HFR, biofuels, roof-top solar

Thank you

Paul GrahamCarbon Futures Theme Leader

Phone: +61 2 49606061Email: paul.graham@csiro.au

Contact UsPhone: +61 3 9545 2176Email: Enquiries@csiro.au Web: www.csiro.au