August 24, 2010 / 9:34 AM / 9 years ago

Q+A-Why Australia needs a price on carbon

 By David Fogarty
 SINGAPORE, Aug 24 (Reuters) - Australia is the world's top
exporter of coal which generates more than 80 percent of its
power, transports most goods by road and cars clog its cities.
 But the country has been a laggard in passing a law
enshrining a cap on emissions and a market-based trading scheme
for carbon pollution.
 That could change. Analysts say a minority Labor government
will face increased pressure from independents and the Greens,
who won significant voter support in Aug 21 polls, to push
through tougher climate policies.
 Here are some questions and answers on tackling Australia's
greenhouse gas emissions:
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 For a related story, click on [ID:nSGE67N01T]
 For a graphic on Australia's carbon footprint: click on:  
 here
 For a graphic on fuel sources, click on:    
here 
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 WHY THE NEED TO ACT?
 Australia's economy, and particularly its power generation
sector, has been driven by access to nearly limitless supplies
of cheap brown and black coal, and gas. Coal, the most
polluting fossil fuel, still remains the cheapest source of
power.
 Australians also love their cars. In a nation of 22 million
people, there were 15.7 million vehicles registered in 2009, up
from 13.5 million in 2004, government figures show.
 Australia's net emissions grew 31.4 percent between 2008
and 1990, the base year for the U.N.'s Kyoto Protocol climate
pact.
 Over the same period, emissions from power generation rose
52.1 percent, while transport emissions grew 29.2 percent.
Overall, energy sector emissions, making up three-quarters of
the nation's greenhouse gas pollution, rose 44 percent.
 A growing population, expanding at roughly two percent a
year, and rising incomes, fuel greater demand for energy.
 The projected impact of climate change on Australia also
worries many. Rising sea levels, greater extremes of droughts
and floods, higher temperatures, more intense bushfires, water
shortages, and warmer and more acidic oceans in coming decades
all point to a tougher future.
 WHAT HAS THE GOVERNMENT DONE SO FAR?
 Not much. It has developed an emissions trading scheme but
twice failed to win political support and has since shelved it.
 The government has also set a target of cutting emissions
by 5 percent by 2020 from 2000 levels and by up to 25 percent
if there is a strong global climate agreement.
 Europe has a more ambitious target of cutting greenhouse
gas emissions 20 percent below 1990 levels by 2020 and by 30
percent if there is a strong global climate pact. Britain is
targeting a cut of 34 percent below 1990 levels by 2020.
 The Australian government has had better luck winning
parliamentary approval for a scheme that mandates a target of
20 percent renewable energy generation by 2020 and has also
laid out a A$4.5 billion initiative backing investment in clean
energy.
 IS A CARBON PRICE BEST?
 Yes. An emissions trading scheme that sets a clear
reduction target and lets the market set a price for each tonne
of carbon dioxide emitted is regarded as the best way to drive
greater energy efficiency and investment in cleaner energy.
 The renewable energy target (RET) laws just passed by
parliament, while boosting investment in wind farms and some
other renewables, won't bring major emissions cuts, analysts
say.
 Instead, the RET will promote additional generating
capacity to help meet projected annual growth in consumption of
about 3 percent.
 The RET is unlikely to displace coal-fired generation
sharply but is likely to encourage fast-start gas-fired
generation needed to meet baseload power demands when wind
power output dips.
 Generators say a CO2 price that effectively makes
coal-fired power more expensive is needed to drive a shift to
cleaner gas and new-generation renewables, such as geothermal.
 WHAT ARE THE RISKS IF THERE'S NO CARBON PRICE?   
Increasingly, investors are demanding certainty on CO2 pricing
to ensure financing for investment plans.
 Some companies and the government also say the longer the
delay, the higher the costs to the power generating sector,
other industries and households in meeting the minus-5 percent
target.
 (Editing by Clarence Fernandez)

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