Carbon Tax Contributes to Emissions Drop

Carbon tax has helped drive a sharp fall in the carbon emissions of Australia’s power generation as coal-fired stations are closed, mothballed or sell less into the electricity market.

As Victoria’s Yallourn brown coal-fired power station became the latest to announce a production cut, experts said falling electricity demand, more renewables like 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 started 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 is around 6.3 per cent.

The Climate Change Minister, Greg Combet, talked up the role of the new $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.”

The Coalition resources spokesman, Ian MacFarlane, said the cost of the shift in 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 that means coal is being taken offline,” he said.

But the energy analyst Hugh Saddler said that, at its current level of $23 a tonne, the carbon price was ”more important as a statement of intent”.

The big reasons black and brown coal generation were being ”pushed out of the market” were falling demand and the renewables energy target.

The chief executive of the Energy Supply Association, Matthew Warren, also said the decrease had more to do with lower demand.

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 rapid decline in coal-fired generation has led to industry calls for changes to the renewables target 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”.

Explaining the decision to cut one of Yallourn’s units, EnergyAustralia yesterday blamed the carbon price for ”significantly” increasing the cost of operations and the renewables energy target for ”acting to suppress wholesale electricity prices”.

While wholesale power prices have been declining, inefficiencies in the retail market have meant household bills have continued to soar.

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