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How will we be affected by Carbon Pricing? What can we do?
‘Contraction and Convergence’ model for globally equitable greenhouse gas emissions: Per capita emissions allowances for 450 ppm
(From Garnaut Supplementary Draft Report (Sept 2008)). Note 2012 EU and Aust emissions level assume Kyoto compliance, others BAU emissions levels)
Alan Pears AM RMIT University Sustainable Solutions Pty Ltd
Carbon Pricing Myths Busted • No forms to fill out, ‘tax returns’, GST-like BAS etc:
only 500 large organisations must comply
• No need to calculate carbon footprints
• No ‘carbon police’ except for the big 500, who have lots of similar compliance issues
• Pass-through costs we’ll see are mostly small and:
– Most people compensated
– Scope for most to take action to avoid costs
• House prices won’t rise by $6,000 – maybe $700
• Food prices won’t skyrocket due to C price
AEMC estimates of residential electricity price increases to 2013 and contributions to them (AEMC 2011 p.iv)
Impact of retailer and network charges bigger than C price.....
Treasury estimates of economic impacts of different abatement scenarios: small differences in costs between -5% and -25% scenarios for CPRS! (Australia’s Low Pollution Future, Treasury 2008)
Ignores benefits of reduced climate change and other benefits not able to be modelled (see Garnaut)
Why is the economic impact of massive carbon prices so small?
• Energy a fairly small cost in the economy
• Revenue from carbon price flows back through economy via tax reductions, government services – C price is a signal, not a cost to society
• Shifts to lower greenhouse impact fuels and cost-effective energy efficiency improvement cut costs, create net jobs
• ‘winners’ gain more demand for products, services
• ‘losers’ are high greenhouse intensity industries and suppliers of high greenhouse impact product (assumes no adjustment support and high C price) – but they’re less than 10% of economy – and they can change
• Active policy can increase benefits, cut costs
Range of future costs of emission permits for 450 and 550 ppm scenarios showing impact of accelerating technological change –
average of 9 models (IPCC WG3 Contribution to 4th Assessment Report, Cross-sectoral
chapter, Barker et al (2007)
Arrows show effects of accelerated technological change (ETC= Endogenous Technological Change!)
Innovation cuts carbon price
Impact of CO2 prices on household price of various energy types – indicative only, excluding taxes and profit margins. Note: prices
assumed 20c/kWh for electricity & cogen; Green Power 26c/kWh, gas 1.3 c/MJ, Diesel $1.50/L, Petrol $1.40/L
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50
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Victorian
electricity
($/MWh)
Cogeneration
($/MWh)
Green Power
($/MWh)
Natural gas
($/GJ)
Diesel
(cents/Litre)
Petrol (c/L)
0 $10/tonne CO2 $30/t $50/t
‘Pass-through’ impacts of emission price
• Examples of impacts on prices of material and service inputs (NIEIR, 2007) for $25/t CO2 if suppliers do not cut emissions, ignoring free permit allocations and including transport fuel: – Sheet metal products +3.7%
– Household appliances +2.1%
– Bakery products +1%
– Fruit and vegetables +1.3%
– Clothing 1.8%
– Health services 0.3%
– Average 1.6% (Treasury estimate is 0.7% cost of living impact)
• Impact varies with greenhouse intensity – eg best bricks cost increase is 1/3 of worst, etc
• Choose low emission suppliers
Installed PV capacity Australia (APVA 2011) – 2011 expected to be at least as big as 2010 (+275 MW to end May)
In Melbourne 1 kW PV avoids approx 1.5 tonnes CO2 pa
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600
1990 1995 2000 2005 2010
Me
gaw
atts
Cap
acit
y
Household energy efficiency savings for an efficient ‘average’ household per annum: using less energy offsets higher price/unit
when C price is added (from Energy and Equity) – saving electricity at 23c/kWh = saving $175/tonne CO2 avoided(Vic)
to $230/tonne (Aust average)
0
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600
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1000
1200
1400
1600
1800
2000
EE h'hold BAU
h'hold
EE h'hold BAU
h'hold
An
nu
al
co
st
($) Carbon cost
Cost of energy efficiency
measures
Energy Cost
CO2 at
$30/tonne
CO2 at
$50/tonne
(a)
(b)
(c)
Energy labelling and new technologies (eg LED backlighting) have slashed TV power consumption
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400
0 20 40 60 80 100 120 140 160 180 200
wa
tts
Screen size (centimetres diagonal)
Operating Power (watts vs screen size) March 2011
Large traditional (CRT) TVs used
99 watts (68cm), 114W (76cm)
and 127W (80cm). These would
also require a set top box (using
around 13 watts)
76 cm traditional TV + set-
top box=127 watts
Useful to prepare a time-line of major opportunities to act to cut energy use/ghgs and drive action – for example:
0
0.2
0.4
0.6
0.8
1
1.2
0 1 2 3 4 5
YEAR
To
nn
es
CO
2 p
er
ye
ar
Year 2 -
No
changesYear 1 -
low cost
savings
Year 3 - change
to fuel-efficient
car
Year 4 -
buy
efficient
fridge
Year 5 - energy-
efficient home
renovation
Example of a personal zero emission strategy for household energy-related emissions – some or all of remaining emissions can
be offset each year
0
5
10
15
20
25
0 1 2 3 4 5
YEAR
To
nn
es
CO
2 p
er
ye
ar
GHGs ignoringGreen Power,offsets
GHGSincludingGreen Power,offsetreductions
Baseline Year 2 -
No
changesYear 1 -
low cost
savings
Year 3 - change
to fuel-efficient
car
Year 4 -
buy
efficient
fridge
Year 5 - energy-
efficient home
renovation
Effect of Green
energy
Offsets
www.epa.vic.gov.au
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special Copenhagen COP 15 Issue
THE END