Thursday, July 11, 2013

Is the carbon price reducing emissions?

Good article at The Conversation looking at the carbon price one year on. We know that in the last year electricity demand and emissions have fallen, but how much of this is due to the carbon price, the renewable energy target (RET) or other one off events?

As I have mentioned here a few times here and is explained in the article, the main impact of carbon pricing is to change long term investments decisions. Once built power plants are around for a long time, so once a coal plant is built you essentially lock in it's emissions for the next 30-50 years. Carbon pricing (along with the RET) are changing investment decisions and so planned new power plants in Australia are now dominated by gas and wind not coal. That this is already occurring as can be seen by the list of electricity projects underway or planned as of late last year. (Since then, it is worth noting, one of the two coal projects underway has been scrapped). This data also shows how over the last few years a much greater percentage of power plants being built are renewables.

So while it is hard to say exactly how much of the emissions reductions in the electricity sector in the past year are due to the carbon price, it already seems clear that over the long term it is driving us towards a low carbon future.

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