Pro-rating Australia’s Emissions by Sector (Explaining Kyoto credits, Australia and the Emissions Budget for Paris—Part 2)

This post will go sector-by-sector through Australia’s emissions in order to determine which sectors are working for us in our attempts to meet our Paris goals, and which are working against us.

In my previous post in this series discussing Australia’s emissions budgets, I said that this was going to be a two part series. I’ve changed my mind. It will be at least three, and we’ll see how we go from there.

In that post, I explained how we calculate the emissions budget for the second commitment period of the Kyoto Protocol and for the Paris Agreement. This was so you could understand how our emissions budgets are calculated, and what it means to say ‘We won’t meet our Paris goals’. We won’t. Not by a long way.

The 2018 Emissions Projections

A new round of emissions projection data came out on the Friday before Christmas. I’m choosing to believe that the Government released it on this date because it was my birthday. I am choosing to believe that it did not deliberately release the data at a time when the minimum number of eyeballs are on the newspapers. You can make your own mind up on that one.

The new data has shifted our abatement task downward significantly. This is defensible. The 2017 projections were unduly pessimistic when it came to our electricity sector emissions over 2020-2030, and this round of data corrects that to a degree.

This is a chart I have created using the Government’s data to update what was in my previous post. The headline figure (how much we will miss Paris by) doesn’t match with the Government’s estimates, but theirs is higher. They have the abatement task for Paris at 691 Mt. This is because of a multitude of rounding issues over the seventeen years—individually insignificant, but adding up to a lot. I have redrawn the baseline using their methods and, due to those rounding issues, it is different.

So, despite what our Prime Minister, and Environment and Energy Ministers say, we will meet our Kyoto CP2 target (for 2013-2020) but are expected, by the Government’s own numbers, to completely miss our Paris target (for 2021-2030). Emissions are growing, when they should be in decline. Due to the weirdness of budgets, our emissions in 2021-2030 should be roughly 10% below what they were in 2010-2020. They aren’t. This is because we have no effective policy to reduce them in any sector.

The other day, the Energy Minister was pulled up by RN Breakfast’s Hamish MacDonald during a live interview for saying that Australia would meet Paris goals, when the Government’s own data shows otherwise.

Taylor pivoted in that interview and clarified that we are going to meet our Paris goals in the electricity sector. Strangely, this is something he neglected to mention earlier in the interview. I believe it can only have been a deliberate mislead.

To test whether he is right, you need to pro rate our emissions from the whole economy in order to look at just one sector. At an international level, there is no valid reason for us to do this sort of activity. Our emissions targets are to be calculated across the whole of the Australian economy.

That said, pro rating our emissions targets is a handy way to test which sectors of the Australian economy are in fact pulling their weight on climate change and meeting our international goals.

It is important to note that—in the strict sense—it is meaningless to say that you are going to ‘meet Paris’ in one specific sector. Meeting Paris can only be done across the whole of the economy. You can succeed in some, and fail in others, but this is all irrelevant. The Paris Agreement makes no distinction between different sectors. All that matters is the total across all sectors.

Pro rating our emissions just to the electricity sector reveals something, though. That is, despite Taylor’s claims to the contrary, we certainly aren’t going to meet Paris in the electricity sector. We only narrowly miss it—when compared to our failure in other sectors—but we still miss it.

Perhaps he misspoke. Perhaps he meant ‘energy’. People accidentally substitute ‘electricity’ for ‘energy’ all the time. The terms are different—energy includes electricity, but also other things—however, people understandably, but still mistakenly, interchange them all the time. Frontier Economics’ Danny Price, an absolute expert, did it just the other day in a different RN Breakfast interview. He didn’t even notice, and nor did anyone else on the panel.

So, how’s our performance across the entire energy sector, remembering that this is Angus Taylor’s portfolio?

Ah. Not good. We’re definitely not going to ‘meet Paris’ there.

The only other place we can look, then, is the National Electricity Market. (‘NEM’). The NEM is an interconnected grid between New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT. That’s a lot of Austrlia’s electricity emissions, but not all of them. It is certainly not all of Australia’s emissions either.

It’s not true to say that we will meet our Paris goals in 2022, as the Minister said in a media release. That isn’t actually possible because the budget is calculated over the full decade, and there aren’t nearly enough emissions reductions by 2022 to do that, but we can’t begrudge him the fact that we will probably, based on data that doesn’t quite exist,* meet Paris in the NEM.

Great. That’s about 29% of our emissions budget for Paris sorted. High fives all around.

What about the other 71%?

Thank Goodness for LULUCF

The only reason that we can say that we will meet our Kyoto CP2 goal and one of the only reasons we can say we are anywhere within shooting distance of Paris, is because of our land-use, land-use change and forestry emissions (commonly, ‘LULUCF’).

This is our emissions budget, and performance against the budgets in that sector.

There are some heroically optimistic projections for our LULUCF emissions. Currently, we have estimated negative emissions from that sector (i.e. drawing down greenhouse gases, rather than releasing them). This is despite huge amounts of land clearing in Queensland and New South Wales in the recent past.

We won’t know accurate information for the true scope of our recent LULUCF emissions for pretty close to a decade, but this certainly doesn’t seem to pass the sniff test. One of the reasons our LULUCF emissions in 1990 was so high was because of a spike in land clearing in Queensland. We’ve just had such a spike, followed by another in New South Wales, and this doesn’t appear in the Government’s data at all. That raises questions I can’t answer about the methods they are using to estimate our recent emissions. This will become more clear once the satellite data comes in. However, it takes a very long time to gather and process the satellite data (<10 years). The recent past is really a guess. It would seem, however, that it is not a very good one.

Nonetheless in that sector, we gain almost a gigatonne of credit for over-accomplishing on Kyoto CP2 under current estimates, and more than half a gigatonne for Paris.

This is what our emissions budget looks like without LULUCF included.

Without LULUCF factored in, we would miss Kyoto CP2 in a massive way, blowing our budget by 19%. We’d then blow Paris by nearly 30%.

We are so, so lucky to have the benefit of the Australia clause. That let us include LULUCF emissions in our overall budget. It is only an option because of Australia’s extensive lobbying at the UNFCCC back in 1997. Lucky we did that.

What about all of the other sectors?

Let’s work through the list to find out where we are winning and losing on climate change.

This is direct combustion (aka ‘stationary energy’). Direct combustion is all of our energy needs that aren’t electricity and transport, including the gas burned at home (stove, water heater, etc.) but mostly that which is burned in large facilities to produce heat for things like aluminium smelters. We’re not going well there.

Next, is transport: cars, trucks, buses, planes, etc. Here it seems that the efficiencies of the 21st Century are not having a very large effect on our total emissions.

Fugitive emissions are largely driven by leakage from gas wells and processing facilities. With our increased dominance in the global gas market (we recently became the world’s top gas exporter, after already being the top coal exporter), this was always going to increase. While the burning of gas overseas is not included in our budget, the leakage from our facilities is.

The emissions from leakage—poorly monitored and tracked in Australia and probably a vast underestimate—puts a serious dent in the ability of gas to be the transition fuel many claim it should be. This is, in part, because the methane that leaks out is around about 25 times more damaging to the climate than an equivalent amount of carbon dioxide.

Agriculture should be being dealt with under the Emissions Reduction Fund. That is kind of the purpose of that scheme. Even if we ignore all of the ERF’s own own set of heroic assumptions and count everything it bought as if it was real, we’re still going badly for Paris.

Industrial processes includes a plethora of different emissions from various chemical and processing facilities around the country, covering a diverse range of gases. It is also not looking good.

Finally, we have the waste sector, which I have not left for last because it is the only sector where we are expected to ‘meet Paris’, but because that is the running order of the Government’s data.

The waste sector largely represents a good news story to finish this post on.

There, our private sector has moved rapidly to reduce its emissions, in part for commercial reasons. But, in doing so, the sector has created massive employment, provided real environmental benefit and made money. All while, in several cases, providing electricity to the grid.

As I have published elsewhere, there are real concerns about how these operators getting paid—there appears to be a considerable degree of double-dipping. However, they nonetheless represent our potential to reduce our emissions in other sectors.

In waste, there were real, commercially-viable options to reduce emissions, and these were taken by the private sector, with the minimum of intervention from the Government.

Other sectors have similar opportunities to reduce emissions in a way that provides environmental as well as economic and social benefit. However, many sectors need a little Government support to get them across the line. In the case of electricity, a key aspect of that support will be the Commonwealth Government choosing to either help or just get out of the damned way. This is something that our current Government seems determined not to do, for largely ideological reasons.

We have so much potential here to reduce our emissions, grow our society and grow our economy, and lately this is being squandered.

One thing is for sure, though. We are not going to meet Paris, whether in a canter, a trot or a walk. At least not while our Government gallops in the opposite direction.


Continue reading this series:



* It’s actually impossible to test properly whether we will meet Paris in the NEM based on the Government’s data. The emissions for a crucial component of the baseline (our 2000 emissions, which the start point of the Paris baseline is drawn from) is missing from the Government’s data. Here, I have assumed that the proportion of Australia’s electricity sector emissions that came from the NEM in 1998 to 2004 (the start of the NEM to the end of the missing data) were consistent with what they were in the first five years of data.