Hazelwood power station outside Morwell in Victoria.
Photo: Luis Enrique Ascui
THE carbon tax has helped to drive a sharp fall in the emissions intensity of Australia’s power generation as coal-fired stations are closed, moth-balled or sell less electricity.
As Victoria’s Yallourn brown-coal-fired power station became the latest to announce a production cut, experts said falling demand for electricity, more renewables such as wind farms and solar, and the carbon price were all pushing Australia’s coal-fired stations out of the market, making generation cleaner.
Electricity sold into the east coast market in the three months since the tax was introduced created on average 7.6 per cent less carbon dioxide for each megawatt hour of power, an analysis of figures compiled by the Australian Energy Market Operator shows.
Compared with the same three months last year, the decline in emissions was about 6.3 per cent, after seasonal differences are ironed out.
Climate Change Minister Greg Combet talked up the role of the $23-a-tonne carbon price in the shift.
”It is significant that the emissions intensity of the electricity generation system has fallen in the first quarter of the carbon price,” he said.
”It is also significant that … about 3000 megawatts of high-polluting electricity generation has closed or phased down.
”The carbon price is a key driver of these changes, although it is not the only factor at work.”
Coalition resources spokesman Ian MacFarlane said the cost of the shift in power generation was being paid by workers.
”The carbon tax might be causing people to cut back on usage, and it is certainly slowing manufacturing, combined with the renewables energy target [RET] that means coal is being taken offline,” he said.
But energy analyst Hugh Saddler said that, at its current level, the carbon price was ”more important as a statement of intent”.
The major reasons that black and brown coal generation was being ”pushed out of the market” were falling demand and the RET, he said.
The chief executive of the Energy Supply Association, Matthew Warren, also said the decrease had more to do with lower demand.
”As demand has softened, renewables have kept their market share because that is mandated through the RET, so brown and black coal generation has acted as the shock absorber,” he said.
The decline in emissions intensity was sharpest in South Australia (16.1 per cent) and Victoria (8.7 per cent). In NSW it was 4.3 per cent. The dip began in June, shortly before the introduction of carbon pricing, as the market began to factor in the change.
The rapid decline in coal-fired generation has led to industry calls for changes to the RET to slow the deployment of renewables, but the Greens said that ”when even coal companies are complaining that solar and wind power are outcompeting them, you know that things have changed forever in our country”.
There has been a spate of recent closures and mothballings of coal-fired plants.
In Queensland, Tarong and Swanbank B have closed capacity; in NSW, the closure of Munmorah has been confirmed; and in Victoria, Energybrix is no longer producing power for the grid and Yallourn yesterday announced the closure of one unit. In South Australia, the Playford B station has shut.
Explaining its decision to cut one of Yallourn’s four units,
EnergyAustralia, formerly known as TRUenergy, blamed the carbon price for significantly increasing the cost of operations and the RET for ”acting to suppress wholesale electricity prices”.
While wholesale power prices have been declining, inefficiencies in the retail market, including over-investment in electricity networks, have meant household bills have continued to soar.
The Productivity Commission yesterday recommended changes, including eliminating regulations that allow ”excessive” returns to network businesses.
In June, the Australian Energy Market Operator said demand in the national electricity market was 5.7 per cent lower than forecast because of increased energy efficiency, solar photovoltaics and a decline in energy-hungry manufacturing.
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