Electricity generation in a carbon constrained world: the role for gas

Abstract

In March 2009, the Australian government published draft legislation for its proposed emissions trading scheme—the Carbon Pollution Reduction Scheme (CPRS). The CPRS is the main instrument that will be employed to achieve Australia’s stated objective of greenhouse gas mitigation, together with the new renewable energy target (RET) mandating that 20% of Australia’s electricity will be provided by renewable energy by 2020. The stated objective is to achieve a 5% reduction in emissions from the year 2000–2020.

The objective of a 5% reduction in emissions (identified as CPRS-5 in the Treasury modelling undertaken for Garnaut and the Australian Government) is a more modest target than scientific opinion tells us is required to achieve temperature stabilisation at a level around two degrees higher than the average level now.

Yet this target has been selected on the assumption that the rest of the world does not take more substantial action. If Australia seeks to achieve more than the rest of the world there will be a negligible impact on global emissions while we will export investments and jobs to less ambitious countries.

In any case, a 5% reduction in emissions from 2000 levels will be difficult to achieve in the absence of major technological change being realised before 2020. It represents a reduction from the year 2000’s levels of 25% in per capita terms, and around 25% from projections of emissions under business-as-usual assumptions.

Stationary energy, mainly power generation, is responsible for about half of Australia’s greenhouse gas emissions. Because this is also a sector where low emissions technologies are already available, it is expected that much of the heavy-lifting in regard to greenhouse gas mitigation will have to come from this sector.

Much of the new investment in the power generation sector to 2020 will come from renewables so as to meet the RET, which equates to around 45,000 GWh of renewable generation by 2020.

But what of base load generation? Apart from geothermal, that has yet to be technically and commercially proven in Australia, renewables are generally ill-suited to base load generation.

Base load power in Australia has traditionally been provided by black and brown coal and with its high emissions it is unlikely to be seen as a future option in a carbon-constrained world. Lower emissions options for base load generation include:

1. coal with carbon capture and storage (CCS);

2. geothermal energy;

3. nuclear energy; and,

4. combined cycle gas turbine (CCGT).

The first three options are all problematic in Australia, and would not be able to provide significant generation capacity before 2020.