Rising Power Prices – What’s the Story?
27 Jul 2017
The simple fact is, Australia’s electricity prices have risen because the price of power we buy on our customers’ behalf has increased substantially.
3 August 2015
Christmas is coming and so is the crucial United Nations Framework Convention on Climate Change (UNFCCC) meeting in Paris this December to agree on a new framework for reducing global greenhouse gas emissions. So with about five months to go, let’s look at what the world is up to as it counts down to Paris.
The UN’s ultimate goal is to limit global warming to two degrees Celsius above pre-industrial average temperature levels if the world is to have a 50 per cent chance of avoiding the worst impacts of climate change. To do this, it is suggested that the concentration of greenhouse gases in the atmosphere be limited to about 450 parts per million carbon dioxide equivalent (ppm CO2-e). For context, the concentration of carbon dioxide in the atmosphere before the industrial revolution was about 280 ppm CO2-e and the current concentration of carbon in the atmosphere already exceeds 400 ppm CO2-e.
When we last talked about climate change after the G20 summit in late 2014, the “big three” emitters-the US, China and the EU-had already made significant pledges, which is a step in the right direction. Since then, some other nations, including Canada, Japan and Mexico, have also announced pledges.
|Nation||Target (2025 or 2030)||% world emissions (2013)|
|China||2030: peak emissions by 2030 (or earlier)||29|
|US||2025: 26-28% below 2005 levels||15|
|EU||2030: 40% below 1990 levels||11|
|Russia||2030: 25-30% below 1990 levels||5|
|Japan||2030: 26% below 2013 levels||4|
|Canada||2030: 30% below 2005 levels||1.4|
|Mexico||2030: 25% reduction against expected levels, peak emission by 2026||1.3|
|Australia||To be confirmed||1.1|
The Australian Government is considering its own pledge ahead of the Paris conference and has a public consultation process in progress, with targets expected to be announced in August.
Origin’s recent submission to this consultation process highlighted our position:
“Origin recognises that climate change is a global challenge and unequivocally supports measures to progressively reduce carbon emissions. We support Australia making an equitable contribution to this global effort, that the level of this effort be comparable to our most relevant trading partners and that it take account of the nature of the Australian economy.”
We made three key points:
1. Use measures of "comparative effort". We recommend the use of appropriate metrics, such as carbon dioxide equivalent (CO2-e) per unit of gross domestic product (GDP), as a key measure when comparing the relative “effort” of national emissions reduction targets.
2. Use the United States' 2025 target as a guide. Applying this concept of comparative effort based on a reduction of emissions intensity to the announced US target, we have estimated an approximate equivalent range for Australia as an indicative guide. This is about a 15–20 percent reduction on 2005 levels by 2025; or about a 20-25 percent reduction on 2030 levels.
3. Reference Australia’s national circumstances. Consideration of an appropriate range of targets should also include reference to Australia’s national circumstances, including the significance of its energy and resources sector and its contribution to reducing global emissions through the export of low emissions fuels such as natural gas to countries hungry for energy (such as China).
Once Australia announces its target the debate will shift to the practical ways to reduce emissions. To achieve this, Origin continues its support for a well-designed market mechanism of some form for the electricity generation sector. We believe this could be complemented by:
It is important to view the UNFCCC Paris conference not as an end in itself, but rather as another stepping stone on the way to progressively reducing carbon emissions and limiting climate change.
While it’s not clear exactly what the outcome of the Paris conference will be, coordinated international action will produce a better outcome than disparate national policy. The sum of the pledges announced in Paris may not place the world on a pathway to the stated two degree goal just yet. But there’s hope that, over time, with advances in technology and innovation across the globe, there will be an appropriate level of climate change action.