How ready is business for a price on carbon? Part Two

By Paula Wallace

The mining industry’s claims around CPRS are alarming: threats to the economy of the NSW’s Hunter coal producing region, massive job cuts across the coal industry and surrounding communities nationally, unknown levels of threat to Australia’s $17 billion gold export business, and it goes on.
Speaking at the recent NSW Coal & Energy conference, Andrew Petersen, partner sustainability and climate change at Pricewaterhouse Coopers (PwC), told attendees, “Most of business in this country is alarmed and not necessarily alert. But the question is, what is it going to take in terms of that risk management approach that business in this country needs to change that to be alert rather than necessarily alarmed?”

To read the first part of this report click here

The mining industry is not alone in trying to assess the impact of emissions trading and the CPRS.
“This issues is a multi stakeholder issue, this issue is troubling all of us in some form or another…the question is how do we prepare an appropriate response and what does that preparation, that transition, look like. What does looking beyond Kyoto actually mean?” said Petersen.
He believes there will be a result arising from the much anticipated meeting of the United Nations Framework Convention on Climate Change on Copenhagen, in December.
“Why? There is huge fear in every civil policymaker and politician at this very moment in time that if they don’t have some kind of negotiated outcome to Copenhagen that the uprising in whatever form it may take could be quite substantial,” said Petersen.
“What does the deal look like?...that’s something that we’ll only know on the 19th December.”
Based on research put together by PwC over the last few years, which it will be presented at the Copenhagen talks, “business wants to see policy and policymakers find the right framework around these four key areas – energy efficiency; decarbonise the energy system; find some way not to incrementally change transport but transform it; and…deal with land management.”
That’s what business wants to see debated, according to Petersen. “They want to see the international government community bring forward new investment models. And again, I’ll make a prediction – the Government will intervene more and take on more risk in relation to the carbon issue.
“It is surprising to see the Government take on risk in relation to carbon capture and storage at Gorgon, but it is not surprising when you are talking about a new era in relation to the economy.”

Powering renewable energy needs
Also addressing the NSW Coal & Energy conference, held on September 28-29th, Andy Pittlik of ERM Power, said that questions need to be asked about how the Governments 20 per cent target of electricity generated by renewable sources by 2002, will be met.
“In regard to the RETS in NSW…we don’t think that wind will provide the deep cuts needed to carbon emissions at an affordable price, and we don’t believe that the other forms of renewable technologies will be able to make a significant contribution…in the time frame we’re talking about,” said Pittlik.
“We believe the only way….is through gas fired power generation. And to use gas to replace retiring generation.”
He used the Queensland experience as an example. In 2001, the Queensland Government introduced a mandatory requirement that 13 per cent of all power generation be made from natural gas. Since the first ERM-operated power station went into play shortly afterwards, there has been something like 2,600 Megawatts of gas-fired generation developed in Queensland to satisfy that initiative of the Government.
Not only has that had an impact on the CO2 emissions and the carbon footprint in Queensland which have reduced by more than 10 per cent in that time compared to New South Wales, and both States started off with a similar generation mix of largely coal-fired power stations, but it’s also led to the development of a gas industry in Queensland.
ERM operates several gas-fired energy plants and when its current projects are completed, it will be able to power about five per cent of Australia.
“Something like 6,000-9,000 Megawatts of wind will need to be developed to satisfy the (national) RET targets and that translates into something like one or two wind towers every day for the next ten years, and we don’t think that’s achievable,” said Pittlik
“Wind generation is not going to be cheap, there’s a lot of hidden costs associated with wind generation.
“The cost of connecting wind generation that’s remote from the grid is one, the fact that something like eight per cent of the wind capacity can be counted on as being available when you want it is another major issue,” said Pittlik.
Given these issues with capacity, Pittlik believes that wind-powered generation requires back up generation to be available.
“…gas fired wind turbines will be needed to come on quickly as the wind…generation levels change.
In terms of alternative Pittlik said, “Solar is not going to make a significant contribution, solar is a very expensive generation resource. We see it being mainly used in a distributed sense, on people’s roofs, at schools, at factories.
“Geothermal has also been tipped to provide part of the renewable energy story. In our view, that sort of technology is still some years away and won’t be ready I don’t think in time to make a significant contribution to the RETS targets.”

To read the first part of this report click here