Alan Pears - slides - price on carbon forum Aug 2011

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Alan Pears - slides - price on carbon forum Aug 2011

  1. 1. How will we be affected by Carbon Pricing? What can we do? ‘Contraction and Convergence’ model for globally equitable greenhouse gas emissions: Per capita emissions allowances for 450 ppm(From Garnaut Supplementary Draft Report (Sept 2008)). Note 2012 EU and Aust emissions level assume Kyoto compliance, others BAU emissions levels) Alan Pears AM RMIT University Sustainable Solutions Pty Ltd
  2. 2. Carbon Pricing Myths Busted• No forms to fill out, ‘tax returns’, GST-like BAS etc: only 500 large organisations must comply• No need to calculate carbon footprints• No ‘carbon police’ except for the big 500, who have lots of similar compliance issues• Pass-through costs we’ll see are mostly small and: – Most people compensated – Scope for most to take action to avoid costs• House prices won’t rise by $6,000 – maybe $700• Food prices won’t skyrocket due to C price
  3. 3. AEMC estimates of residential electricity price increases to 2013 and contributions to them (AEMC 2011 p.iv)Impact of retailer and network charges bigger than C price.....
  4. 4. Treasury estimates of economic impacts of different abatement scenarios: small differences in costs between -5% and -25% scenarios for CPRS! (Australia’s Low Pollution Future, Treasury 2008) Ignores benefits of reduced climate change and other benefits not able to be modelled (see Garnaut)
  5. 5. Why is the economic impact of massive carbon prices so small?• Energy a fairly small cost in the economy• Revenue from carbon price flows back through economy via tax reductions, government services – C price is a signal, not a cost to society• Shifts to lower greenhouse impact fuels and cost- effective energy efficiency improvement cut costs, create net jobs• ‘winners’ gain more demand for products, services• ‘losers’ are high greenhouse intensity industries and suppliers of high greenhouse impact product (assumes no adjustment support and high C price) – but they’re less than 10% of economy – and they can change• Active policy can increase benefits, cut costs
  6. 6. Range of future costs of emission permits for 450 and 550 ppm scenarios showing impact of accelerating technological change –average of 9 models (IPCC WG3 Contribution to 4th Assessment Report, Cross-sectoral chapter, Barker et al (2007) Innovation cuts carbon price Arrows show effects of accelerated technological change (ETC= Endogenous Technological Change!)
  7. 7. Impact of CO2 prices on household price of various energy types – indicative only, excluding taxes and profit margins. Note: pricesassumed 20c/kWh for electricity & cogen; Green Power 26c/kWh, gas 1.3 c/MJ, Diesel $1.50/L, Petrol $1.40/L 0 $10/tonne CO2 $30/t $50/t300250200150100 50 0 Victorian Cogeneration Green Power Natural gas Diesel Petrol (c/L) electricity ($/MWh) ($/MWh) ($/GJ) (cents/Litre) ($/MWh)
  8. 8. ‘Pass-through’ impacts of emission price• Examples of impacts on prices of material and service inputs (NIEIR, 2007) for $25/t CO2 if suppliers do not cut emissions, ignoring free permit allocations and including transport fuel: – Sheet metal products +3.7% – Household appliances +2.1% – Bakery products +1% – Fruit and vegetables +1.3% – Clothing 1.8% – Health services 0.3% – Average 1.6% (Treasury estimate is 0.7% cost of living impact)• Impact varies with greenhouse intensity – eg best bricks cost increase is 1/3 of worst, etc• Choose low emission suppliers
  9. 9. Installed PV capacity Australia (APVA 2011) – 2011 expected to be at least as big as 2010 (+275 MW to end May) In Melbourne 1 kW PV avoids approx 1.5 tonnes CO2 pa 600 500 Megawatts Capacity 400 300 200 100 0 1990 1995 2000 2005 2010
  10. 10. Household energy efficiency savings for an efficient ‘average’ household per annum: using less energy offsets higher price/unit when C price is added (from Energy and Equity)– saving electricity at 23c/kWh = saving $175/tonne CO2 avoided(Vic) to $230/tonne (Aust average) CO2 at CO2 at 2000 $30/tonne $50/tonne 1800 1600 (b) Carbon cost Annual cost ($) 1400 (a) 1200 (c) Cost of energy efficiency 1000 measures 800 Energy Cost 600 400 200 0 EE hhold BAU EE hhold BAU hhold hhold
  11. 11. Energy labelling and new technologies (eg LED backlighting) have slashed TV power consumption Operating Power (watts vs screen size) March 2011 400 Large traditional (CRT) TVs used 350 99 watts (68cm), 114W (76cm) and 127W (80cm). These would 300 also require a set top box (using around 13 watts) 250watts 200 150 76 cm traditional TV + set- top box=127 watts 100 50 0 0 20 40 60 80 100 120 140 160 180 200 Screen size (centimetres diagonal)
  12. 12. Useful to prepare a time-line of major opportunities to act to cut energy use/ghgs and drive action – for example: 1.2 Year 2 - Year 4 - No buy Year 1 - changes efficient 1 low cost fridge savings Year 5 - energy- Tonnes CO2 per year 0.8 efficient home renovation Year 3 - change 0.6 to fuel-efficient car 0.4 0.2 0 0 1 2 3 4 5 YEAR
  13. 13. Example of a personal zero emission strategy for householdenergy-related emissions – some or all of remaining emissions can be offset each year 25 Baseline Year 2 - Year 4 - No buy Year 1 - changes efficient low cost fridge 20 savings Year 5 - energy- Tonnes CO2 per year Year 3 - change efficient home to fuel-efficient renovation 15 car GHGs ignoring Green Power, offsets 10 Offsets Effect of Green GHGS energy including 5 Green Power, offset reductions 0 0 1 2 3 4 5 YEAR
  14. 14. www.epa.vic.gov.au
  15. 15. Advertisement from Ode magazinespecial Copenhagen COP 15 Issue THE END

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