Transcript I’ll add a nice graphic later

KEY INSIGHTS TO
HELP ACHIEVE DEEP
CUTS IN
GREENHOUSE GAS
EMISSIONS, WHILST
CREATING JOBS AND
A STRONGER
ECONOMY
Alan Pears
Adjunct Professor RMIT University
Director Sustainable Solutions Pty Ltd
with the Natural Edge Project Secretariat
Slide about TNEP
TNEP team: Cheryl Paten, Charlie Hargroves,
Nick Palousis and Mike Smith
“Are Greenhouse-friendly Energy Strategies Lifestylefriendly?” A Pears in Greenhouse and Energy CSIRO 1990
• “The impacts of well managed greenhouse-friendly
energy strategies are likely to enhance, rather than
detract from lifestyle quality….”
• “Successful greenhouse response will involve
consideration of equity issues, and management of
transitional impacts on the workforce and in the market
place. Institutional action is required to complement and
support individual response. This will involve shaping
new industrial directions, restructuring financial and
taxation signals, reallocating financial and physical
resources to strategic activities, and empowering
individuals to act.”
• My views haven’t changed…..
Since then, some successes
• Appliance energy efficiency:
– labels since late 1980s, standards from late 1990s
• Residential building envelope improvement:
– Victorian insulation regulations 1991, 5 Star
regulations 2005; ACT 4 star mid 1990s; national
regulations (3-4 star) 2003, 5 star 2006
• Commercial buildings:
– Demonstration high performance buildings
– Proposed national building regulations 2006
• Industry:
– Energy Efficiency Best Practice (Commonwealth)
– EPA Victoria Greenhouse Program
Impact of Energy Labelling and Minimum Performance Standards
Source: Aust
Greenhouse
Office
Annual heating and cooling energy requirement for
Melbourne houses (FirstRate) – ‘Netherlands’house meets
their regulations but is evaluated in Melbourne climate.
Netherlands Mandated
85% saving
6+ star
5 star (2005)
65% saving
4 star (2004)
Average 1991 regs 2.2 star
Average stock (1 star)
0
100
200
300
400
Megajoules/ square metre/ year
500
Annual office building energy consumption,
Melbourne (kWh/square metre)
300
250
70% saving
200
150
100
50
0
Heating
Cooling
Good new design
Lighting
60L Green bldg design
Equipment
60L actual
TOTAL
Average Melb
Some worrying areas
•
•
•
•
•
•
Overall energy growth trends
Residential sector energy
Commercial sector energy
Some industry sectors
Transport sector
Energy market reform: incentives to sell more
energy+ loss of support for DSM
Australia’s Energy-related Greenhouse Gas Emissions
(Kyoto accounting) (Source: www.ageis.greenhouse.gov.au)
NOTE: * Stationary energy includes fugitive emissions
350 Mt CO2e p.a.
300
Stationary
energy*
250
200
150
100
Transport
energy
50
0
1990
1992
1994
1996
1998
2000
2002
Approx Trends in Greenhouse Gas Emissions from Aust
Commercial Sector Energy Use (ABARE energy data multiplied
by greenhouse coefficients from Wilkenfeld).
Div. H,P,Q Accomodation,
cultural and personal
45
40
Div. N,O Education, health
and community services
35
30
Div. M Government
administration and defence
25
20
15
Div. K,L Finance,
insurance, property and
busines
Div. J Communication
10
5
0
19
73
-7
19 4
76
-7
19 7
79
-8
19 0
82
-8
19 3
85
-8
19 6
88
-8
19 9
91
-9
19 2
94
-9
19 5
97
-9
8
Million tonnes of CO2 equiv per annum
50
Div.F,G Wholesale and
Retail Trade
37 Water, sewerage and
drainage
Trends in CO2 Emissions from Australian Industry
(manufacturing plus mining)
29 Other manufacturi ng
140
28 Machinery and
equi pm ent
27 Metal products
120
100
80
60
40
20
1997-98
1995-96
1993-94
1991-92
1989-90
1987-88
1985-86
1983-84
1981-82
1979-80
1977-78
1975-76
0
1973-74
Million tonnes CO2e per annum
160
26 Non-metal li c mineral
products
25 Petroleum, coal and
chemi cal
23-24 W ood, paper and
pri nting
22 Texti le, clothi ng,
footwear and l eather
21 Food, bever ages,
tobacco
Div. B Mini ng
Trends in new vehicle fuel consumption (BTRE 2002)
Litres/100 km
Cars
Total Passenger vehicles
11
10.5
10
9.5
9
8.5
8
7.5
7
6.5
6
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
To summarise:
• We know how to cost-effectively make large
cuts in greenhouse emissions in every sector,
and we have some practical successes
• In several major areas, significant initiatives are
finally being introduced
• Progress is being slowed by a combination of
powerful vested interest groups, narrow
economic theorists and nervous politicians
• So why is action so difficult?
My interpretation of the situation
• People embrace change if they believe it will offer them
benefits, but resist it if they fear adverse impacts
• Some industries concluded by 1990 that greenhouse
action would hurt them
• They (helped by some misinterpretation of economic
modelling results and ill-informed media) convinced
most businesses that all business and the economy will
be hurt by greenhouse response
• Economic policy people in government have generally
accepted and promoted this view
• And the community is confused and disempowered
So future response is tied to beliefs about
the relative costs and benefits of action
• Beliefs that response will hurt the economy
are based on economic modelling and
reinforced by preconceptions that helping the
environment must hurt the economy
• There is increasing concern that the costs and
impacts of failing to act could be large – but
Australian economic modelling studies have
not included the cost of failing to respond
• We need to resolve this tension
Economic modelling
• Widespread misinterpretation of results
• Most studies had limited scope:
– Cost of failure to respond set to zero
– Limited energy efficiency potential and expensive renewables
– Blanket carbon price applied – no sector-specific transition
strategies
– No targeted ‘recycling’ of revenue
•
•
•
•
Inclusion of non-CO2 gases cuts response cost
More trading cuts costs
Smart policy cuts costs
Including lower cost energy efficiency options cuts costs
Example of ‘Worst case’ greenhouse response economic
impact from early modelling: a cumulative 2% reduction
in GDP over 12 years – many still believe it is 2% each
year. More recent studies tend to show lower costs.
2% difference in GDP
after 12 years - reach
same GDP level a few
months later
160
Growth in GDP
140
120
100
80
Base case GDP
60
40
Greenhouse
scenario GDP
20
0
2000 2002 2004 2006 2008 2010 2012
Year
Why is the economic impact of massive
carbon prices so small?
• Energy a fairly small cost to the economy
• Revenue from carbon price flows back through economy
via tax reductions, government investment
• ‘winners’ gain increased demand for their products and
services
• ‘losers’ are high greenhouse intensity industries and
suppliers of high greenhouse impact product (assuming
no adjustment support and high C price) – but they’re
15% or less of Australia’s economy
Estimated change in Aust sectoral output at 2010 relative to
BAU with large carbon tax for stabilisation of CO2 at 1990
level (ABARE 1997) by 2010
Note zero net impact
on services sector - 2/3
of economy
-60
Coal
Oil
Gas
Other mins
Petroleum
Chem, plastics
Non met mins
Iron and steel
Nonferrous metals
Fabric metals
Electricity
Agric
Proc agric
Capital goods
Manuf
Services
-40
-20
0
20
Percentage change as a percentage of each sector's BAU output
Estimated change in Aust sectoral output at 2010 relative to
BAU with large carbon tax for stabilisation of CO2 at 1990
level (ABARE 1997) by 2010
note zero impact on
services sector - 2/3
of economy
Coal
Oil
Gas
Other mins
Petroleum
Chem, plastics
Non met mins
Iron and steel
Nonferrous metals
Fabric metals
Electricity
Agric
Proc agric
Capital goods
Manuf
Services
-1
-0.5
0
0.5
1
Percentage change in total GDP due to impacts on each sector
1.5
Impact of various greenhouse response policies, 2011-12 (Allen
Consulting, 2000) Note most of economy impact <+/-1%
% change from base case by 2011-12
-60
-40
-20
0
20
40
60
80
Gas fired elect
Forestry
Black coal elect
Alumin
Brown coal elect
Oil
Black coal
Agriculture
Electricity supply
Natural gas
Dom ET
Dom ET energy only, grandfathering
Policy package
100
Greenhouse gas emissions and Value Added by
Business Council of Aust members (Grady 2003)
Value Added ($m)
Al Coa
um l
in
Ir
on ium
&
S
Tr tee
an l
sp
or
t
ca
t
un
i
Co
m
m
Emissions (kt)
io
Fi n s
na
Ed nce
Pu uca
ti o
lp
n
&
Pa
pe
r
Fo
od Re
ta
&
Te il
Co xt
ns iles
t
O ruc
th
t
er ion
M
i
Ch nin
em g
ica
Ce ls
Ag men
ric t
ul
Pe tur
e
tr
ol
eu
m
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
To conclude:
• Costs of greenhouse response have been
overstated while benefits have been ignored or
understated, particularly in 1990s economic
modelling
• Smart response policy and creative programs can
reduce costs and impacts, and create benefits
• Much stronger and more comprehensive action
is needed – but it can deliver
• We know what to do, but we need political will,
resources and an informed community
(www.naturaledgeproject.net)
THE END