Lethal Heating: 03/28/19

28/03/2019

Heavyweights Now Speaking With One Voice On Climate Change Risks

Fairfax - Sam Hurley*

Climate change is reshaping Australia's economy and financial system, and its consequences will be devastating without urgent action. If that message had not hit home, the Reserve Bank of Australia's intervention last week made it clear.

Reserve Bank deputy governor Guy Debelle focused on how climate change can complicate setting interest rates. Credit: Alex Ellinghausen

In last week's address to a Centre for Policy Development public forum, RBA Deputy Governor Dr Guy Debelle said climate change will have "first order economic effects" and could have major consequences for financial stability if transitions are disorderly and abrupt.
Hot on Debelle's heels, APRA subsequently released its first climate risk stocktake, calling for banks, insurers and superannuation funds to step up their responses. Its survey of 38 large entities suggests many are dragging the chain on climate-related financial analysis and disclosure.
The laggards can expect pressure to mount. APRA, its international counterparts and investors have signalled they want a little less conversation and a lot more action.
Looking beyond the headlines, there are three takeaways from recent, co-ordinated interventions by the RBA and other regulators on climate change.
First, for the regulators, this is about economics and not politics. The Reserve Bank, ASIC and APRA now speak with one voice on the serious economic challenges climate change poses.
The RBA's statement built on equally powerful markers laid down by APRA's Geoff Summerhayes in 2017 and ASIC's John Price in 2018. Just as the RBA is considering how climate influences monetary policy, APRA and ASIC are examining the implications for financial stability and whether companies, investors and directors are doing enough to respond.
This clear public stance matters. In an era defined by a cautious (and often downright craven) approach to climate in politics and business, influential independent voices have stepped up in a way that is reverberating in boardrooms around the country.
This is no small thing. Summerhayes and Debelle were both appointed to their current positions by a federal treasurer (now Prime Minister) notorious for waving a lump of coal around in parliament. Their statements are reminders that, when we get it right, good governance and strong institutions trump politics.
The second key takeaway is that policy matters enormously. Dr Debelle emphasised that "the policy environment has a key effect as well as the climatic environment" when it comes to the economic impacts of climate change. He warned that decisions taken now could "limit or eliminate" our ability to manage future climate impacts.
APRA's Geoff Summerhayes has also warned that policy delay or inaction, rather than minimising risks for businesses and the economy, could simply make these risks "greater and more abrupt."
These are not partisan points. They are sober reminders that policy failures make climate risks even harder to manage for regulators and businesses alike.
Dr Debelle also made a subtler observation: policies to support a smooth economic transition must carefully balance impacts across society. He used the example of trade policy, where overall gains from trade could have been used to compensate those who lose out. As he flatly points out, "In practice, the compensation has generally not occurred."
Adjustment costs from reform have "fallen on groups that have not received their share of the benefits." Over time, this failure has not just undermined support for free trade – it has also contributed to a destabilising turn in politics.
Here the speech provides a crucial insight: managing the distributional aspects of climate policy will be critical to sustaining good outcomes.
The third key takeaway is that we ignore international developments at our peril. Dr Debelle cited policy-driven changes in China's demand for Australian resources as a present-day example of climate risk for Australia. There are many others.
Global finance is being reshaped by new standards, regulations, financial products and markets to support a zero-carbon transition. Australia needs to access these markets – for goods, for services and for capital – to power its economy. But it will get harder to do so on favourable terms unless we lift our game, and our ambitions, on climate and sustainability.
Our regulators are on the case: the RBA has joined the global central banks' Network for Greening the Financial System, while APRA is a prominent voice in the global Sustainable Insurance Forum.
It is time the government itself engaged seriously in the sustainable finance agenda, too, rather than sitting on the sidelines.

*Sam Hurley is Policy Director at the Centre for Policy Development, which hosted last week's speech by Dr Guy Debelle and earlier statements by ASIC and APRA.

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'Coal To Blame' For Last Year's Record Emissions From Energy

AFR - Angela Macdonald-Smith

Carbon dioxide emissions from energy production rose at the fastest rate for five years in 2018, increasing 1.7 per cent last year to a record 33.1 billion tonnes, with the use of coal for electricity generation the primary culprit, according to the International Energy Agency.
China, India and the US accounted for 85 per cent of the increase, with emissions declining in Japan and Mexico and in several European economies including Germany, France and the UK. The electricity sector was to blame for almost two-thirds of the growth, the IEA carbon report said.

Coal is still in high demand for electricity generation in Asia. Phil Hearne

The 560 million tonne rise in emissions was equivalent to the total emissions from international aviation and was driven by higher energy use from the robust global economy, as well as weather conditions in some regions that increased demand for heating and cooling.
Energy demand worldwide grew 2.3 per cent last year, its fastest pace this decade, with natural gas accounting for 45 per cent of the increase.
Coal-fired power plants drove a 2.9 per cent increase in CO2 emissions, up 280 million tonnes from 2017 to breach the 10 gigatonne threshold for the first time. Coal-fired electricity generation accounted for 30 per cent of global emissions, mostly from Asia, where the average age of plants is only 12 years, leaving decades still to run on the average lifetime of about 40 years.

"Global emissions are still rising, demonstrating once again that more urgent action is needed on all fronts." — IEA executive director Fatih Birol

The IEA said although 2014-16 had seen a stagnation in CO2 emissions, even as the global economy expanded, the dynamics changed in 2017 and 2018 when higher energy productivity and lower-carbon options did not scale up fast enough to counteract the rise in demand.
That meant that despite the growth in renewables and the contribution of nuclear power, CO2 emissions rose almost 0.5 per cent for every 1 per cent gain in global economic output, faster than the average 0.3 per cent increase since 2010.
IEA executive director Fatih Birol described last year's increase in global energy demand as "extraordinary“, saying 2018 was "another golden year for gas".
But while the increased use of gas helped limit the growth in emissions, he said the trend underscores the urgency of emissions reductions.
"Despite major growth in renewables, global emissions are still rising, demonstrating once again that more urgent action is needed on all fronts — developing all clean energy solutions, curbing emissions, and spurring investments and innovation, including in carbon capture, utilisation and storage," Dr Birol said.

Coal use in power generation accounted for a third of the total increase in CO2 emissions last year (Photograph: Shutterstock)

Demand for fossil fuels met almost 70 per cent of the increased demand for all fuels for the second straight year. Although solar and wind generation expanded at double-digit pace – including a 31 per cent jump for solar – that was not enough to meet higher power demand that drove up the use of coal.
Global gas demand expanded at its fastest rate since 2010, up 4.6 per cent, driven by coal substitution, especially in China, where gas use soared almost 18 per cent. Coal-to-gas switching avoided almost 60 million tonnes of coal demand, with the transition helping avert 95 million tonnes of CO2 emissions, the IEA said, calculating that without the switching, which was most significant in China and the US, emissions would have increased 15 per cent more.
Demand for oil increased 1.3 per cent, led by the expansion in petrochemicals in the US, while coal use was up 0.7 per cent and nuclear grew by 3.3 per cent thanks to new capacity in China and the restart of four reactors in Japan.
For the first time, the Paris-based IEA assessed the impact of fossil fuel use on global temperature increases and determined that CO2 emitted from burning coal was responsible for more than 0.3C of the 1C increase in global average annual surface temperatures above pre-industrial levels.
This makes coal the single largest source of global temperature increase.
The global average annual concentration of CO2 in the atmosphere averaged 407.4 parts per million last year, up 2.4 ppm since 2017. This compares with pre-industrial levels of 180 to 280ppm.
Electricity demand grew at 4 per cent, the fastest since 2010 and almost double the rate of total energy demand, as electricity positions itself as the fuel of the future.
Australia was one of the few regions that saw a decline in electricity demand.

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What Are Major Parties’ Climate Change Policies?

NEWS.com.au - Charis Chang

World leaders have been warned that civilisation could collapse

Climate change action is likely to feature prominently at the federal election and could decide the future of a number of politicians.
We’ve seen both major parties stumble over their policies amid warnings the world only has about 10 years to act on climate change and tussles over whether Australia’s emissions are actually going up or down.
Most recently former prime minister Tony Abbott, under pressure in his electorate from independent Zali Steggall, did a backflip on his view that Australia should withdraw from the Paris Agreement.
Meanwhile you’ve got Nationals leader Michael McCormack suggesting Labor’s proposed 45 per cent renewable energy target would mean night-time sport would be scrapped.
There’s a power play going on in the Nationals as some MPs, including Barnaby Joyce, push for a new taxpayer-backed coal-fired power plant, while others in the Coalition fear the move would alienate Liberal voters in southern states who are calling out for action on climate change.
Here’s what you need to know about the major parties’ climate change policies.

Are we building new coal-fired power stations?
If Labor wins the election, no.
If the Coalition is returned, maybe.
Basically the Morrison Government hasn’t ruled out supporting coal projects as part of its Underwriting New Generation Investments program.
The program involves the government (in other words: taxpayers) taking on the risk of building new electricity generators and covering any losses if the project became a white elephant because of changes to climate policy for example.
“About 10” coal projects are being considered for funding but overall there were more than 60 proposals submitted for new electricity generation.
Meanwhile, some Nationals, such as Mr Joyce, are going even further and calling for the government to fund a coal-fired power station in Queensland.

The Hazelwood power station in the Latrobe Valley was closed in 2017. Picture: Paul Crock/ AFPSource:AFP

But Prime Minister Scott Morrison has pointed out there is one major sticking point when it comes to building a new coal-fired power station in Queensland.
“For such a (coal) project to proceed, it would require the approval of a Queensland state government. The Queensland state government has no intention of approving any such projects,” Mr Morrison said.
“So I tend to work in the area of the practical. The things that actually can happen. And what actually can happen is the investments that we are making in renewable projects and reliable projects.”

The goals
Labor continues to support a 45 per cent emissions target by 2030, and a 50 per cent renewable energy target.
The Liberal party has committed to a 26 per cent emissions reduction target by 2030.

Labor policies
Labor has a $15 billion energy plan and it includes reviving former prime minister Malcolm Turnbull’s National Energy Guarantee (NEG).
Labor leader Bill Shorten has said he would adopt the energy policy, which has the support of business groups in Australia.
It involves retailers, such as gas, solar and wind farm owners, signing contracts to supply a minimum amount of energy that could be available at all times.
Electricity sold to consumers must produce an average emissions level that meets the 26 per cent reduction target in the Paris Agreement target.
Labor will also give 100,000 households (with incomes below $180,000) a $2000 rebate to buy and install a battery for their solar panels. It’s estimated this could allow them to save more than 60 per cent off their power bills.

Labor leader Bill Shorten. Picture: AAP/James Ross Source:AAP

Most significantly, it will double the amount of government financing available for clean energy projects through the Clean Energy Finance Corporation, from $10 billion to $20 billion.
Mr Shorten has also promised $5 billion to modernise Australia’s transmission network — which transports power around the country — including a Basslink cable to connect Tasmania with the mainland.
A Clean Energy Training Fund will be established to train workers in the skills they need for clean energy industries and an independent Just Transition Authority will be established to oversee the closures of coal-fired power stations in the future including pooled redundancy schemes and economic diversification plans.
Labor will also require large generators to give at least three years notice if they plan to shut down.
An independent Energy Security and Modernisation Fund will be created to upgrade energy networks and build new ones. Businesses will also be encouraged to improve productivity and efficiency so they can get more out of the energy they consume through a new Energy Productivity Agenda.

Liberal policies
Prime Minister Scott Morrison has staked his environmental reputation on a new Climate Solutions Fund.
The 10-year fund is an extension of former PM Tony Abbott’s “direct action” Emissions Reduction Fund.
Mr Morrison has said the $2 billion fund will ensure Australia meets its 2030 emissions reduction targets without “taking a sledgehammer” to the economy.
The fund will partner with farmers, local government and businesses to deliver “practical” solutions to climate change.
Examples of projects include improving the energy efficiency of commercial and public lighting, planting trees and collecting gas that is generated in landfills from decaying organic material.

Prime Minister Scott Morrison famously took a lump of coal into the House of Representatives. Picture: AAP/Mick Tsikas Source:AAP

Mr Morrison has committed $1.4 billion in equity into making Snowy Hydro 2.0 — another Turnbull proposal — a reality. The huge pumped hydro project involves pumping water up a hill during times when electricity is cheap, storing it, and then releasing the water to generate power when it’s needed.
The government is also funding a feasibility study into Battery of the Nation, another pumped hydro project in Tasmania.
Some National MPs are calling for the government to fund new coal-fired power plants.
They also want to push through so-called “big stick” measures to stop energy companies ripping consumers off. The government has shelved its laws for “divestiture”, which would allow the government of force the breakup of large energy companies, until after the election.

PM Scott Morrison with Energy Minister Angus Taylor, Finance Minister Mathias Cormann and Environment Minister Melissa Price visiting the Snowy Hydro Tumut 3 Power Station in NSW. Picture: Kym Smith Source:News Corp Australia

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