Lethal Heating: Climate Action Tracker: Australia

Overview
There has been no improvement in Australia’s climate policy settings over the last year, and the 2018 CAT assessment confirms all previous assessments that its emissions are set to far exceed its Paris Agreement NDC target for 2030.
We rate the NDC target itself “Insufficient“, with a level of ambition that—if followed by all other countries—would lead to global warming of over 2°C and up to 3°C.
In addition, if all other countries were to follow Australia’s current policy settings, warming could reach over 3°C and up to 4°C (“highly insufficient”).

Commitments with this rating fall well outside the fair share range and are not at all consistent with holding warming to below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government targets were in this range, warming would exceed 4°C.

Commitments with this rating fall outside the fair share range and are not at all consistent with holding warming to below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government targets were in this range, warming would reach between 3°C and 4°C.

Commitments with this rating are in the least stringent part of their fair share range and not consistent with holding warming below 2°C let alone with the Paris Agreement’s stronger 1.5°C limit. If all government targets were in this range, warming would reach over 2°C and up to 3°C.

Commitments with this rating are consistent with the 2009 Copenhagen 2°C goal and therefore fall within the country’s fair share range, but are not fully consistent with the Paris Agreement. If all government targets were in this range, warming could be held below, but not well below, 2°C and still be too high to be consistent with the Paris Agreement 1.5°C limit.

This rating indicates that a government’s efforts are in the most stringent part of its fair share range: it is consistent with the Paris Agreement’s 1.5°C limit.

This rating indicates that a government’s efforts are more ambitious than what is considered a fair contribution: it is more than consistent with the Paris Agreement’s 1.5°C limit.

While the Federal Government continues to maintain, most recently in its “2017 Review of Climate Change Policies”, that Australia is on track to meet the 2030 target, the Climate Action Tracker is not aware of any factual basis, published by any analyst or government agency, to support this.
To the contrary, Australia’s emissions are increasing, and the latest projection published by the government at the same time as the Climate Policies Review shows that emissions are still projected to grow instead of leading to a reduction in line with the 2030 target.
While the Federal Government continues to promote coal as a solution to energy security issues, downplay renewable energy and obfuscate on its climate policies, the reality on the ground at the state level, public opinion and across the business sector in Australia, is very different.
The Federal Government is proposing an electricity sector emissions reduction pathway with proportional reductions to the overall emissions reductions, contrary to independent advice and analysis that shows the electricity sector needs to and can reduce emissions faster than other sectors such as industry or agriculture.

Interactive Graphic

Pledges And Targets
Australia ratified the Paris Agreement on 6 November 2016. In its NDC, Australia announced a 26–28% reduction of greenhouse gas emissions by 2030 below 2005 levels, including LULUCF. This translates into a range of 415–427 MtCO2e allowed emissions levels in 2030 incl. LULUCF (equivalent to a reduction of 19–21% below 1990 emissions levels incl. LULUCF).
Analysis of the effect of the NDC on likely fossil fuel and industrial GHG emissions is made difficult by the fact that the NDC target includes LULUCF emissions, which are substantial and fluctuate significantly (Figure 2 under “Data Sources and assumptions” in our Australia report).
We have estimated levels of emissions excl. LULUCF resulting from the NDC by subtracting projected emissions for the LULUCF sector in 2030 from the targeted level incl. LULUCF. We estimate that the NDC translates into emissions levels of 413-424 MtCO2e excl. LULUCF, equivalent to 3% to 6% above 1990 emissions levels excl. LULUCF.
In its NDC, Australia states it reserves the right to adjust their target “should the rules and other underpinning arrangements of the agreement differ in a way that materially impacts the definition of our target.” This adds high uncertainty to Australia’s contribution to the Paris Agreement.
The conclusions of the present CAT assessment are subject to the same uncertainty and will need to be revised if Australia makes any adjustments to its target and proposed LULUCF accounting approaches.
The Australian Government has already indicated that it supports in principle the use of international units (Australian Government, 2017a, p. 41ff) which would further reduce the domestic emissions reductions.

Fair Share
We rate Australia’s NDC target for 2030 “Insufficient”.
The “Insufficient” rating indicates that Australia’s climate commitment in 2017 is not consistent with holding warming to below 2°C, let alone limiting it to 1.5°C as required under the Paris Agreement, and is instead consistent with warming between 2°C and 3°C.
If all countries were to follow Australia’s approach, warming would reach over 2°C and up to 3°C. This means Australia’s climate commitment is at the least stringent end of what would be a fair share of global effort, and is not consistent with the Paris Agreement’s 1.5˚C limit, unless other countries make much deeper reductions and comparably greater effort.
The CAT ratings are based on climate commitments in (I)NDCs. If the CAT were to rate Australia’s projected emissions levels in 2017 under current policies, we would rate Australia “Highly insufficient,” indicating that Australia’s current policies in 2017 are not consistent with holding warming to below 2°C, let alone limiting it to 1.5°C as required under the Paris Agreement, and are instead consistent with warming between 3°C and 4°C: if all countries were to follow Australia’s approach, warming could reach over 3°C and up to 4°C.
This means Australia’s current policies are not in line with any interpretation of a “fair” approach to the former 2°C goal, let alone the Paris Agreement’s 1.5°C limit.

Current Policy Projections
Australia’s current policies fall far short of the emissions reductions required to meet the 2030 target put forward in its NDC.
Under current policies in place, Australia’s total GHG emissions excl. LULUCF are projected to rise to 533 MtCO2e by 2020 and 548 MtCO2e by 2030. This is equivalent to an increase in emissions from 2005 levels (excl. LULUCF) of 6% and 9% by 2020 and 2030 respectively (when compared to 1990 levels (excl. LULUCF) this results in an increase of 33% and 37% respectively).
To meet its 2030 emissions targets, Australian emissions should decrease by an average annual rate of 1.3 to 1.5 per cent until 2030; instead, with current policies, they are set to increase by an average annual rate of 0.4% per year.
Australia’s Emissions Reduction Fund (ERF) is a reverse auction mechanism that aims to “reduce emissions at lowest cost over the period to 2020” (Australian Government, 2014, p. 68). However, this so-called “centrepiece” of the Australian Government’s policy suite to reduce emissions does not set Australia on a path towards meeting its NDC target.
The ERF’s sixth auction took place in December 2017, with AUD$104 million committed to purchase 7.95 million tonnes of abatement (an average price per tonne of abatement of AUS$11.82 (US$9.22) (Australian Government, 2017b). Compared to previous auctions, participation in the fifth and sixth auction was low, reflecting the negative market sentiment in the ERF.
The administrative complexity of the fund, as well as the low average auction price, pose barriers of participation, in particular for high emitting companies (Reputex, 2017). The fund is also plagued by a mismatch of its abatement profile (concentrated in the land sector) with Australia’s emissions profile, which is driven by industrial and power sectors.
There is a high risk of reversal of stored carbon in land sector projects being emitted again (Vorrath, 2017, CCA 2017). There are also serious doubts about the additionality of many of the ERF projects (Baxter, 2017). The ERF is also the subject of fiscal concern due to its cost to the taxpayer.
The government-appointed advisory body Climate Change Authority has recently reiterated its advice to not rely on the ERF and introduce new policies aiming at decarbonisation and structural change (CCA, 2017).
Alongside the reverse auction, the ERF includes a safeguard mechanism, which began operations in July 2016, with a goal of limiting significant emissions increases from large industrial sources to a baseline emissions level.
This mechanism applies to around 140 businesses that have facilities with direct emissions of more than 100 ktCO2e.
High-emitting industrial facilities covered by the safeguard mechanism are projected to drive national emissions growth through to 2030, as they are permitted to increase emissions baselines, leading to a projected increase of emissions from these facilities by 16% since the commencement of the scheme (Reputex 2018), potentially cancelling out publicly funded emissions reductions under the ERF (The Guardian, 2018b).
The government is now consulting with industry stakeholders on how to make the safeguard mechanism “fairer and simpler”, without addressing these issues, and with the proposed changes risking an increase in the level of emissions allowances (Australian Government, 2018).

⬤ Energy
Australia’s primary energy consumption is dominated by fossil fuels; in 2015-16 37% come from oil, followed by 32% coal, 25% gas, followed by a mere 6% of renewable energy (Australian Government, 2017c).
Federal and State energy ministers commissioned a review of the national electricity market, the so-called Finkel review, in 2016.
The review highlights “the need for a clear and early decision to implement an orderly Transition” and recommends that the Australian State and Territory governments agree to an emissions reduction trajectory for the National Electricity Market and the adoption of a Clean Energy Target (Finkel, 2017).
The minimum electricity sector emissions reduction pathway suggested in the Finkel Report (26–28% reduction from 2030 levels from 2005) however, is not consistent with other scientific assessments, as its reductions only track the (already insufficient) 2030 reductions proposed for the entire Australian economy (Hare et al., 2017).
Australia’s Renewable Energy Target, introduced in 2010, aims at increasing the share of electricity generation from renewable sources.
It consists of two targets: the Small-scale Renewable Energy Scheme, which supports small-scale installations like household solar panels and solar hot water systems, and the Large-scale Renewable Energy Target (LRET). The LRET originally aimed to achieve 41 TWh of additional renewable electricity generation by 2020, but, in 2015, the government reduced this target to 33 TWh. In the same year, coal consumption rose by 3%, due to increased black and brown coal use in electricity generation (Australian Government, 2016).
Coal has featured prominently in in Government statements on energy security and the future of Australia’s power system.
However, on the ground, there is little appetite for new coal generation from utilities and industry, nor from the general public. Nine coal power stations have been retired in the last five years, including Hazelwood, a 1,600 MW lignite coal-fired plant. This illustrates the economic challenges coal plants face in Australia against continuously decreasing costs of renewables and storage.
There is increasing concern about the lack of reliability of aging coal fire power plants, with renewable energy and increasing use of modern storage technologies proving to contribute more and more to reliability (IEEFA, 2018),(Gas Coal Watch, 2018; RenewEconomy, 2018).
Due to the politically unstable environment on climate policy, investment uncertainty remains high over what kind of power plants to build as ageing coal plants are shut down or are increasingly unreliable.
Wholesale power prices have doubled since the carbon price scheme and related legislation was axed, fuelling calls for an emissions intensity-based carbon pricing scheme for the electricity sector (Morton, 2017). Even this measure was ruled out by the Turnbull government, although analysis suggests it could save households and businesses up to AUS$15 billion in electricity bills over a decade (Morton, 2016).
On the subnational level, climate action is more visible. South Australia is close to achieving its a 50% renewable energy target by 2025, and aims to achieve net zero emissions by 2050 (Government of South Australia, 2016).
South Australia is a global leader in terms of share of variable renewable energy (wind and solar PV now at a share of 48%, second globally behind Denmark) as well as storage technology, with the world’s biggest lithium ion battery, one of the world’s biggest solar thermal plants and a plan for the world’s biggest “virtual power plant”, for solar panels and batteries to be installed on more than 50,000 homes (The Guardian, 2018d), and investments into green hydrogen from renewable energy for storage and export, although it is unclear whether the newly elected government will still pursue the existing targets and plans (Australian Associated Press, 2018).
A recent study finds that Australia could build an affordable and secure electricity network with 100 percent renewable energy, using existing technologies (Blakers, Lu, & Stocks, 2017).
A report by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and Energy Networks Australia (ENA) finds that a decarbonised energy grid by 2050, with half of generation produced and stored locally, will save billions in upfront capital costs and consumer bills, and deliver a secure electricity system (Australia Energy Networks & CSIRO, 2016).
The National Energy Productivity Plan 2015–2030 aims to improve energy productivity by 40% by 2030 through “encouraging more productive consumer choices and promoting more productive energy services” (Australian Government, 2015).
However, research suggests that much more ambitious improvements are possible, with a doubling of energy productivity possible by 2030 with net benefits for GDP (Energetics, 2015).
Within the energy sector, direct combustion emissions are increasing and projected to increase further with the ramping up of LNG export facilities, mainly in Western Australia and Queensland. Australia is projected to become the world largest LNG exporter by 2020.
This increase in gas production is also leading to an increase in fugitive emissions, with questions regarding the emissions reporting leading to concerns that emissions might be higher than presently reported (Hare, Roming, Hutfilter, Schaeffer, & Beer, 2018).

⬤ Transport
Emissions in the transport sector are increasing and are projected to increase further. Despite this development, there are barely any policies in place.
The Government is relying on financing for businesses to upgrade their fleets, with just over 1000 lower-emissions vehicles financed through industry partnerships (Government Climate Policy Review 2017, p33) The Government provides exemptions from some vehicle taxes for highly efficient vehicles. Only six ERF projects have been registered to improve vehicle efficiency (ref. see above), mostly focusing on heavy transport and ships.
The Government established a Ministerial Forum to coordinate Federal and State government approaches to addressing emissions from motor vehicles, including consideration of a fuel efficiency standard for light vehicles (Government Policy review, 2017).
In contrast to other developed countries, Australia does not have any efficiency or emissions standards for passenger vehicles, which cause the largest share of emissions, only relying on information programmes such as the Green Vehicle Guide.
Compared to other countries, the uptake of electric vehicles (EVs) is very slow in Australia. The current uptake rate is around 0.1% of new vehicle sales. This is projected to increase to only 0.3% by 2020 and 15% by 2030 (Australian Government, 2017a, p. 37).
Despite this slow progress, no policies are in place to incentivise use or support charging infrastructure. The only exception is the State of South Australia, which has recently introduced a tax incentive for EV purchase.

⬤ Industry
Industrial processes and product use emissions are projected to be unchanged between 2017 and 2020 and decrease slightly below 2020 levels by 2030.
The decrease is projected primarily due to a recently legislated phase-down of HFCs, which will reduce the permitted amount of bulk HFC gas imports into Australia from 2018 (Australian Government, 2017b). Legislation was passed by Parliament on 19 June 2017 enabling the start of a phase- down of HFC imports from 1 January 2018.
The phase-down will reduce the total quantity of permitted HFC imports every two years until an 85 per cent reduction from 2011–2013 levels is achieved from 2036 (Government, 2017).

⬤ Agriculture
Agriculture emissions are projected to increase by 8% per cent above 2020 levels in 2030, with beef cattle projected to continue to be the biggest contributor, with an increase in grain fed beef cattle and growth in exports contributing to the increase in emissions (Australian Government, 2017b).

⬤ Forestry
According to the latest projection report, net emissions from the LULUCF sector are expected to decrease slightly to become a small net sink in 2020, with a short-term rise in land clearing emissions offset by higher carbon sinks from forests and plantations.
From 2021 to 2030, net emissions are projected to increase initially, before stabilising around 2025, with emissions from land clearing projected to follow a declining trend, assuming a relatively stable clearing rate and a high proportion of clearing activity of young, less biomass-intensive, regrowth forest.
However, it is not clear how these projections take into account the alarming increase in deforestation rates observed and projected in particular in Queensland, where about 395,000 hectares of native vegetation were cleared in 2015-16, 33% more than the previous year (Queensland Government, 2017), with estimates that three to six million hectares of forest could be lost by 2030 in Eastern Australia, making it Australia the only developed country deforestation hotspot in the world (The Guardian, 2018c; WWF, 2018).

Assumptions

⬤ Pledge
Targets for 2030 were calculated using CRF 2016 data that is converted from AR4 into SAR by our scientific collaborator, the Potsdam Institute for Climate Impact Research (PIK). For a detailed description on the assumptions used regarding base year emissions, emissions data sources, LULUCF accounting rules supporting this analysis please consult our Australia report.

⬤ Current policy projections
The current policy projection is based on the Australia’s December emissions projections 2017. The CAT always provides current policy projections excluding LULUCF.
To this end, we subtracted the projections provided for LULUCF.
For the purposes of this analysis growth rates were applied onto the historical CRF2017 that is converted from AR4 into SAR by our scientific collaborator, the Potsdam Institute for Climate Impact Research (PIK).

Links

26/06/2018

Climate Action Tracker: Australia

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