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Australia energy mixcost of living not skrocketed by Carbon taxCHP plant CO2 reductionTaxing Carbon pollution is already paying the dividends according to the National Energy Market of Australia. Such a tax will encourage fossil fuel fired power plants to review   the way they generate power and emit the Carbon into the atmosphere. For example, black and brown coal power plants can switch over to gasification technology from their existing combustion technology  which can cut their Carbon emissions. Coal fired power plants can switch over to gas-fired power plants and cut their emissions by almost 50%. By employing CHP (combined heat and power) the gas-fired power plants can cut their Carbon emission as much as 75%. Taxing Carbon will encourage efficiency and reduce pollution. Australian Carbon tax is a good example which has clearly shown the way to cut Carbon pollution and to encourage renewable energy. The following is an excerpt from Climate Institute of Australia:

“Emissions from electricity are falling:

Annual carbon emissions from the National Electricity Market fell by over 12 million tonnes (CO2-e) between June 2012 and May 2013. They fell by only around 1.5 million tonnes over the previous twelve-month period. Carbon pollution per megawatt-hour has also fallen: from 0.86 to 0.81 tonnes per unit of output, or a little over 5 per cent.

According to the National Energy Market (NEM) data released in June this year, Australia’s electricity supply is becoming cleaner: electricity from renewable sources has risen by nearly 23 per cent and natural gas power by more than 5 per cent since the previous twelve months to May 2012. At the same time, the use of brown coal has fallen by about 12 per cent and black coal by more than 4 per cent. Generation by Australia’s seven biggest coal-fired power stations has fallen by over 13 per cent. Structural changes driven by the high Australian dollar, rising electricity prices, introduction of energy efficiency measures, increased home installations of solar photovoltaic (PV), and the Renewable Energy Target are key drivers of this change. However, early indications are that the carbon price is playing a supporting role by make renewable energy even more competitive compared to fossil-fuel generation. As the price becomes more embedded in longer-term investment decisions the role of the carbon price will increase.

Electricity price-rises—perception and reality:

For businesses and consumers alike, electricity prices have risen sharply for several years—more than 40 per cent in the last few years. On average, more than half of this rise is the result of network upgrades, including the replacement of aging infrastructure. Despite the recent increases, however, when adjusted for inflation, electricity prices are about the same as they were a generation ago.

Yet, according to the Australian Industry Group, there is still a false perception amongst many in business that the carbon price is the biggest contributor to rising prices.

The biggest of [the] …pressures [on prices] is the rising cost of electricity networks, the poles and wires that deliver power. The high-profile of the carbon tax appears to have led to some over-estimation by businesses of the specific impact of the carbon tax on energy prices…

For residential retail customers, the carbon price accounted for around 9 per cent of power bills in 2012–13, or between about $2 and $4 extra per week, depending upon the state or territory. It should be noted that the carbon price is unlikely to materially increase bills any further in the next few years, although prices will continue to rise for reasons that have nothing to do with the price on pollution.

An upshot of recent price rises—and scare-campaigning by some in politics and industry—may be the spread of a more energy-efficient ethos: in 2012, approximately 90 per cent of Australians did something to minimize their power bills, according to the Australian Bureau of Statistics. Such changes in consumer and business behavior are likely to help cushion the impact of any future price-rises.

The cost of living has not skyrocketed:

 Before 1 July, 2013, the Australian Treasury predicted that the carbon laws would add 0.7 per cent to the Consumer Price Index, while CSIRO and global consulting firm AECOM conservatively predicted inflation at 0.6 per cent, given 100 per cent cost pass-through. This was part of a study for The Climate Institute, Choice, and the Australian Council of Social Service (ACOSS). The impact of the carbon price on particular prices is barely discernible. Indeed, the ABS has said it is unable to discern any impact against normal variability in consumer prices. One estimate, by Westpac Economics, suggests the reality is that the carbon price has added just 0.4 per cent to the Consumer Price Index.

For the vast majority of Australian households, the increase their cost of living has been very small and this will be covered by the assistance package associated with the scheme. According to independent analysis, for a low-income family of four, for instance, assistance is, on average, around $31 per week; for a single pensioner, it’s a little over $19 and for a middle-income family of four, it’s about $13. Federal assistance was projected to leave the large majority of households better off.

 Looking forward

The hyperbole that characterized the twelve months to 1 July 2013 has largely given way to reality. The carbon laws have not undermined Australia’s economic performance nor have they raised the cost of living substantially.

What is more, the package of carbon laws is contributing to emissions from electricity falling, the energy mix shifting in favor of renewable and cleaner fuels, and energy use is becoming more efficient. Low-carbon investment is flowing—the carbon price at work using money raised by the price on pollution, over six years, $946 million is committed to maintain stocks of carbon in bush land, and to enhance the resilience of natural systems to climate change. In the first round of the Biodiversity Fund, around $270 million has been allocated to more than 300 landscape rehabilitation and restoration projects around the country.  Hundreds of firms are investing in energy efficiency, cleaner manufacturing, and innovative renewable energy projects, such as geothermal and solar-thermal. Many have received grants drawn from monies raised by the carbon price. Federal clean technology funding programs total $1,200 million over the next few years. Already, companies with household names like Arnott’s, Bundaberg Sugar, Bega Cheese, CSR, and Coca-Cola, together with many others, have received public grants leveraging considerably more private investment.

Meanwhile, the Carbon Farming Initiative is seeing the big end of town investing new money in regional and rural communities. Between them, BP Australia, CS Energy, CSR, and Energy Australia have purchased more than 322,000 Australian carbon Credit Units, representing more than $7 million in low-carbon projects, such as sustainable forestry, cleaner livestock production, better landfill operations, and savannah management. Overall, Australian Carbon Units and ACCUs purchased by fossil-fuel power stations were worth $39 million in June 2013.”

President Obama has recently outlined his policy on climate change and Carbon pollution reduction measures.US and the rest of the world can learn lessons from Australian experience on how low Carbon economy can be achieved without compromising an economic and industrial growth. In fact low Carbon economy can create millions of jobs and a sustainable future. The same polluting Carbon can become a source of cheap Hydrogen by innovative gasification technology. Innovation is the key to achieve a sustainable energy mix between renewable and fossil fuels.

 

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