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The environment and energy superportfolio can deliver real action – here’s how

By Anna Skarbek | July 21st, 2016

When Victorian Premier Daniel Andrews reshuffled his cabinet in May, most of the headlines were about Wade Noonan’s return after suffering mental health issues, and Lisa Neville who became the state’s first female police minister.

But from an environmental perspective there was another significant change. Energy and resources, long regarded as twin portfolios, were split. Instead, the energy brief was partnered with climate change and environment under a single minister, Lily D’Ambrosio.

On Monday, Prime Minister Malcolm Turnbull followed suit, creating a new super-portfolio of environment and energy, with Josh Frydenberg as the minister.

Linking policy development and decision-making for the energy and climate change portfolios makes sense. As a result of the historic Paris Agreement struck last year, the world – including Australia – is committed to achieving net zero emissions by 2050.

This calls for a major transformation, shifting the world’s energy away from fossil fuels and towards renewable sources like solar and wind, newer technologies such as wave and geothermal energy, and innovations like battery storage and energy demand management.

In that sense, energy and climate (and therefore the environment) go hand in hand. Decisions about energy sources have direct implications for our ability to deal with climate change. Conversely, decisions taken to reduce emissions will invariably impact on the energy portfolio. The two sectors have been crying out for better integration.

Many of the technologies needed to decarbonise our electricity system are already available. But we need to move faster. Our research at ClimateWorks Australia shows we will need at least 50% renewable electricity by 2030 if we are to decarbonise the electricity sector in time to avoid the worst effects of climate change.

This means we need policies that will push harder to help large-scale clean energy technologies reach the necessary level of commercialisation and integration.

Within these broad portfolios, there are particular policy areas that also need to be linked more closely with one another. In particular, renewable energy policy needs to be combined with measures to promote energy efficiency.

There is a natural synergy between renewable energy and energy efficiency, yet the two have never been systematically linked at either a national or state level. The better our energy efficiency performance, the less investment we need in new renewable energy sources to replace carbon-intensive ones. This in turn helps to lower the overall network costs and can protect households against rising power bills.

While unit prices of electricity are expected to rise as we modernise and decarbonise the energy system, household bills need not. If governments promote energy efficiency at the same time, households can reduce their energy use to offset the rising energy costs, keeping bills flat or even reducing them.

The lack of joined-up thinking between these two areas has led to missed opportunities. Some 1.5 million Australian homes have solar panels, thanks in part to the federal incentive scheme. Meanwhile, there are separate state-based incentive schemes for household energy efficiency. Why have these two never been linked? If solar panel installers could also provide household energy efficiency audits, householders could kill two birds with one stone and further reduce their demands on the electricity grid.

Household battery storage technology provides the next key opportunity to link installation incentives with renewable energy and energy efficiency. But this opportunity will again be missed if policies are not better integrated within the portfolio.

The National Energy Productivity Plan is a new policy with 34 measures aimed at improving energy efficiency. Frydenberg led this process when he chaired the COAG Energy Council last year. He has retained these responsibilities within his expanded portfolio, giving him a golden opportunity to take a truly integrated approach.

In the meantime, D’Ambrosio has taken the opportunity to review Victoria’s upcoming action plans on renewable energy and energy efficiency, to take advantage of the opportunity in her joint portfolio to ensure energy and climate policies have the close integration they need.

Of course, integrating the energy and climate portfolios is not the whole solution. Cabinet support will still be needed to introduce integrated policies in other areas that are critical to hitting Australia’s emissions reduction targets. Examples include: putting specific regulations on emissions-intensive industries; creating market enablers for low-carbon technologies; ratcheting up green standards for buildings, vehicles and infrastructure; and ensuring planning approval systems are designed to take account of these targets.

The real work will need to happen in the federal government’s 2017 review of policies to achieve Australia’s Paris emissions target of 26-28% below 2005 levels by 2030. A recent Pricewaterhouse Coopers report found that “Australia will need to nearly double its historic rate of decarbonisation, to 4.4% annually”, if it is to meet even the lower end of this goal.

Ministers often talk about taking a “whole-of-government approach” to major issues. Yet plenty of silos still need breaking down if we are to achieve meaningful action on climate change.

The moves in both Canberra and Spring Street to bring environment, climate and energy under a single umbrella are a positive step towards better policy and real action. But, as ever, there is still plenty of hard work ahead.

Anna Skarbek is CEO of ClimateWorks. 

This article was originally published at The Conversation


Invest now to achieve 50 per cent renewable energy target

By Anna Skarbek | July 30th, 2015

Some people claim that 50 per cent renewables by 2030 is ambitious, but it is entirely feasible and would not break the bank. It is also the minimum needed on the path to keeping emissions below the levels that would exceed the 2  degrees warming limit agreed to by the United Nations. The Business Council of Australia with others recently acknowledged that it means Australia, alongside most countries, must reduce emissions to net zero. By 2030 we need to be well on the way. Thanks to technology advancements, it can be done.

CSIRO modelling for our Deep Decarbonisation Pathways study show renewable energy shares of between 50 per cent and 70 per cent at 2030, on the way to a zero-carbon electricity system by mid-century. This would come mostly from a dramatic expansion of solar cells, both on rooftops and in large solar power stations, alongside an increase in wind power, especially in the short term. Solar thermal power stations, including with storage, would also come into the system. Alternative trajectories include significant shares for nuclear power or carbon capture and storage, but renewables are the mainstay in all scenarios.

This modelling takes into account the intermittent nature of renewable energy supply, and even assumes rising power demand on account of switching from direct use of oil and gas to electricity, to allow for very deep cuts in Australia’s carbon emissions. Energy storage, new ways of managing energy demand and smarter power grids can make it happen.

Many businesses are already nearly there. IKEA has announced it will use 100 per cent renewable energy for all its global operations by 2020. Apple already uses 100 per cent renewable energy for all its US operations, and all its retail stores in Australia, Britain, Germany, Spain and Italy. In Australia, King Island has had an imperative to move faster than the mainland and is now on average 65 per cent renewable energy powered. At the country level, Germany is the best comparison, with a renewables target of at least 50 per cent by 2030, and much more difficult preconditions for achieving it than Australia.

Renewable power is expected to be the cheapest source of power in coming decades, if emissions are limited in line with a 2-dregree warming goal. Of course, it is impossible to know the exact future costs of renewable technologies. But we do know three things, all of them good news.

The first is that the costs of new energy technologies continue to come down. The cost reductions have been much faster than anticipated, in particular for solar cells. The costs of large-scale solar power plants today are already only about half what modelling for the Australian Treasury from four years ago suggested the costs would be in 2030. For example, the ACT is having solar power stations built at fixed-price contracts that are much cheaper than thought possible just a few years ago. Costs for energy storage are likewise coming down.

Even without further drastic cost reductions, the overall capital costs for 50 per cent renewables will be small compared to past major infrastructure investments. And Australia’s fleet of coal power stations is aging. Most of the plants that would be replaced by solar, wind and other renewables will be past or near the end of their design lives by 2030. It’s industrial renewal.

The third point is the tremendous potential for greater energy efficiency in Australia’s housing stock and appliances. Household energy savings counterbalance power cost increases. Even under ambitious decarbonisation scenarios, the share of household incomes spent on electricity would fall.

And yet, by itself a 50 per cent renewables target would fail the cost-effectiveness test to reduce Australia’s carbon emissions, because it misses the opportunities in energy efficiency at all levels, and also in fuel switching: there are emissions savings to be had from switching from highly polluting brown coal to black coal and to gas as well as to renewables.

A portfolio of actions is needed. Our recent analysis shows that doing cost-effective energy efficiency in buildings, industry and transport would keep Australia’s emissions from growing. Switching to renewable energy in the electricity sector and using this low-emissions electricity to replace fossil fuels in cars, buildings and some industries would help reduce emissions to 25 per cent below 2005 levels. Carbon forestry and agricultural improvements can bring emissions down to about45 per cent below 2005 levels. Switching to biofuels and gas, and reducing industrial non-energy emissions can bring Australia’s emissions down to 50 per cent below 2005 levels by 2030.

The economically sensible policy instrument to achieve all of these goals is to put a price on carbon. This could be in the form of an emissions trading scheme, or probably less effectively by turning the government’s Direct Action policy into a baseline-and-credit scheme. Putting a price on carbon will also help with a renewables goal. Governments can also use direct regulation, which can work well for energy efficiency.

Policies that are “long, loud and legal” – stable, clear, firm signals for investors – will keep costs down and they are what business is calling for. We are a long way from that in the highly politicised climate change debate.

Getting to a low-carbon economy will be about investment but also about innovation and managing the social transition that is inherent in any significant economic shift – and Australia has successfully managed a few. It means being clear that building a resilient future means investing now, and building a societal consensus around this. Will Australia’s politics be up to the challenge?

This article was originally published at The Age.

Sectors: Government