POWER September 2014 - 8

Australia Kills Carbon
Price, Faces Murky Carbon
Future
Australia in July became the first nation
to abolish a price on carbon, after the
Senate passed the Abbott government's
repeal bills by a vote of 39-32. Yet the
country's carbon conundrum continues
because Prime Minister Tony Abbott must
still get his Direct Action Plan, a proposed
replacement for the country's emissions
trading scheme, to pass the Senate.
Abbott, the Liberal Party's leader, campaigned
and won the September 2013
prime ministerial election on the platform
that he would scrap the " punitive " carbon
levy. But his victory this July didn't come
without a fight from the Labor and Greens
parties in the Senate.
Opponents now argue that the coalrich
country is effectively in a " carbon
coma. " It no longer has a hard cap on carbon
emissions; it is no longer required to
achieve its long-term emissions reduction
target of 80% by 2050; and, more troubling
according to some, is that the repeal
bills also call for the abolition of the
profit-making Clean Energy Finance Corporation
as well as the Australian Renewable
Energy Agency.
Abbott's Direct Action Plan instead
proposes to curb Australia's carbon emissions
by 5%, based on 2000 emissions,
by 2020. As described in the government
documents-which acknowledge " the science
of climate change " -the centerpiece
of that plan is the $2.5 billion Emissions
Reduction Fund (ERF), a pool of capital
to support " direct action " by industry to
reduce emissions. According to a white
paper setting out the final design of the
ERF released on April 24, the government
will use the fund to purchase lowest-cost
abatement (in the form of Australian carbon
credit units) from a wide range of
sources across the economy. It will then
provide incentives for carbon emitters to
take action to reduce their emissions.
A bill to implement the ERF passed the
House of Representative on June 25, but
it now faces a standoff in the Senate,
which is controlled by the Labor, Greens,
independents, and several smaller parties.
The carbon tax repeal only passed after
the Abbott government spent two weeks
wrangling with unpredictable " crossbenchers, "
or independents. Bill Shorten, who
has led the Labor Party as well as the opposition
since October 2013, in July called
8
the Direct Action Plan a " boondoggle, an
inefficient mechanism where you pay wads
of taxpayer money to big polluters for little
likely result. "
But the Business Council of Australia,
the Australian Industry Group, and the
Minerals Council of Australia have backed
Abbott's plan, urging the Senate not to
delay its passage.
Power generators, which had cited the
carbon tax for past retail power price
increases, neither publically hailed the
carbon price's repeal nor bemoaned it.
Removal of the carbon price in wholesale
markets would not be simple, announced
the Energy Supply Association of Australia
in July: " It will vary depending on the different
types of financial contracts. " And
it added: " How much a retailer changes
its prices will be determined by its change
in costs, as well as the competitive landscape.
How fast it can change its prices
depends on a number of factors. "
For an in-depth look at resource-rich
Australia's generation troubles in the context
of its contentious carbon policy fight,
see " Australia's Carbon Policy Predicament, "
in POWER's April 2014 issue.
Above-Average Growth
Reported for Nuclear,
Renewables in 2013
Despite stagnant economic growth globally,
primary energy consumption surged
in 2013, with growth for nuclear power
and renewables in power generation expanding
at above-average rates, BP said
in its recently released Statistical Review
of World Energy 2014.
According to the report, world power
generation grew 2.5% in 2013, slightly up
over 2012 (which saw 2.2% growth over
2011) but below the 10-year trend (3.3%).
And while electricity generation fell for the
1. A generation change. Power generation
(in TWh) has surged over the last two
decades in Asia. Source: BP Statistical Review
of World Energy 2014
■ Africa ■ Asia Pacific ■ Europe and Eurasia
■ Middle East ■ North America ■ South and
Central America
2003
World
16,787 TWh
2008
World
20,277 TWh
2013
World
23,126 TWh
third year in a row in member countries of
the Organisation for Economic Co-operation
and Development (OECD), it surged 4.8% in
non-OECD countries. China, followed by the
U.S., was the world's largest power generator
(Figure 1). Meanwhile, India overtook
Japan to take third place.
Globally, coal consumption grew 3%
in 2013-below the 10-year average of
3.9%-but coal is still the fastest-growing
fossil fuel, the report suggested. Growth
was particularly marked by increased
consumption in Asia. Even though China
recorded the " weakest absolute growth
since 2008, " that country still accounted
for 67% of coal's global growth, with India
accounting for 21%.
Nuclear saw its first increase since
2010, climbing 0.9%. Nuclear consumption
grew in the U.S., China, and Canada,
but was offset by declines in South Korea,
Ukraine, Spain, Russia, and Japan-whose
nuclear output has fallen 95% since 2010
with nearly all of its reactors still offline
after the Fukushima disaster.
Renewables generation, on the other
hand, soared 16.3% and accounted for a
record 5.3% share of global power generation,
said the report. Globally, wind energy
(up 20.7%) again accounted for more
than half of renewable power generation
growth, and solar power generation grew
even more rapidly (33%).
Natural gas consumption also grew in
2013, although below the historical average,
with consumption lax in every region
except North America.
Hong Kong Mulls How to
Best Replace Coal Power
Since March, Hong Kong has been contemplating
two options as it prepares to phase
out its coal-fired power plants-which currently
produce more than half of its electricity-to
improve an enduring local and
regional air quality and visibility crisis. One
option calls for buying more power from
coal-heavy mainland China, and the other
is to increase self-sufficiency by increasing
local power production from natural gas. A
decision is to be made later this year.
The two options, proposed by the Hong
Kong government's Environment Bureau,
have been touted as the most achievable
means to meet the Special Administrative
Region's projected electricity consumption
of 50 billion kWh by 2023-which would
represent a 16% increase over 2012-even
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