Blueprint for Emissions Reduction: Major Industrial Policy Changes Needed for Australia to Reach Net Zero | Greenhouse gas emissions

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Greenhouse gas emissions from Australian industrial sites have increased 24% since 2005, and must be addressed now if the country is to have a chance of reaching net zero by 2050, according to a new report.

The Melbourne-based think tank Grattan Institute has released a plan to cut emissions from major industries, citing government projections that, without action, they are expected to stay around current levels until 2030.

It recommends policy changes such as improving Australia’s failing ‘safeguard mechanism’, creating an ‘industrial transformation future fund’ similar in design to the national green bank and expansion of state energy saving programs.

The report found that an economy-wide carbon price backed by technological development support would be the most effective way to reduce emissions, but found this “politically out of reach” and focused on policies which, according to the institute, could be introduced within the framework of the Coalition or the Labor Party. .

It was released as the Morrison government invited industry to comment on the design of a promised new ‘back-up credit facility’ that it says will help large energy-using companies adopt new ones. technologies to reduce costs and emissions.

Emissions Reduction Minister Angus Taylor said the new mechanism – which was signaled last year following a government climate policy review led by the former chairman of the Business Council of Australia, Grant King – would award carbon credits to industry for “transformative reduction projects”.

If successful, he could respond to criticism of how the safeguard mechanism works, which was introduced under Tony Abbott to limit industrial emissions, but which in practice has allowed companies to repeatedly increase pollution. without penalty. Critics have expressed concern that large emitters will receive government aid for little public benefit if they are not well designed.

The government allocated $ 279.9 million in the May budget for the new mechanism.

The industrial sector, not counting electricity production, is responsible for 31% of Australian emissions. This proportion has increased as annual industrial emissions increased from 130 million tonnes in 2005 to 162 million tonnes in 2019.

This increase is mainly attributable to an expansion in gas and coal exports. Government projections released in December suggest that industrial emissions are still expected to be at 2019 levels by 2030. Scientists, political leaders and diplomats have said global emissions must be halved by then for the world to be on track to achieve the goals. objectives of the Paris agreement.

Tony Wood, director of energy and climate change policy at the Grattan Institute, said every decision the industry makes will impact emissions for decades. Governments had to “send the right signals,” he said.

“Current policies exert little or no downward pressure on emissions, nor do they encourage the development of new industrial capacity with low or zero emissions,” he said in the report.

“From now on, any decision to renew, renovate or build an industrial asset potentially blocks emissions for decades to come. Making these good decisions will be essential to achieve net zero. “

The Grattan report divided industrial emissions into three main groups: fugitive emissions that escape during the extraction of fossil fuels, emissions from the combustion of coal, gas and petroleum products, and emissions released during the extraction of fossil fuels. of chemical reactions in manufacturing plants.

While Australia has thousands of industrial facilities, the overwhelming majority of current industrial emissions come from 194 large facilities covered by the Safeguard Mechanism.

Prime Minister Scott Morrison and Minister of Emissions Angus Taylor during a visit to Ampol’s Lytton refinery in Brisbane in May. Photograph: Darren England / AAP

The report recommended transforming the safeguard. He said companies should be set emission limits – called benchmarks – that reflect their current pollution, not inflated estimates of what it might be, and benchmarks should be lowered over time. time in accordance with emissions targets.

He said there should be no exemptions and any new installation should be given benchmarks that are significantly lower than the current industry average. Companies should be rewarded financially for their emissions below their baseline, but only if the baseline was difficult to achieve based on current production, he said.

Taylor said in a statement on Sunday that the King Review recommended the government establish a system in which companies could receive carbon credits for emission reductions below their baseline, and he would now begin consulting industry on how best to implement it and “maximize co-investment”.

The Grattan report also recommended the creation of a Transformation Futures Fund to provide loans for the replacement of industrial assets with low-emission alternatives. The fund could be similar to the Clean Energy Finance Corporation, but would not be required to generate a return on loans and would use both government and private sector money.

For small and medium-sized industrial facilities, he suggested expanding and coordinating existing state energy efficiency programs and encouraging the use of instantaneous asset write-off to replace old polluting technologies with newer and cleaner versions. Wood said reaching net zero would require an “unprecedented rate of asset replacement and renewal, from now on.”

The Grattan report said there was a significant economic opportunity for Australia’s industry if the country acted to expand the export of essential minerals in low-emission technology. If the country maintained its current share of the world market, exports of copper, nickel, lithium, graphite and cobalt would bring in by 2050 double the income generated today from coal exports.

The Grattan Institute report is one of five the organization is releasing ahead of the Cop26 climate summit in Glasgow in November. A transport emissions report released in July recommended phasing out sales of new gasoline and diesel cars by 2035 if Australia was to have a chance of reaching net zero by 2050. He said that this could be achieved by gradually tightening a new emission limit for light vehicles. , and suggesting removing the stamp duty on electric cars would reduce their price by 6.5%.

Like industrial emissions, transportation emissions have increased significantly since 2005, the baseline year against which the Morrison government pledged to reduce emissions.


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