Chapter 8 -Costing Climate Change (cont.)
According to Garnaut, non-hydro renewables and CCS will account for 90 per cent of electricity generation in Australia by 2050. If supply increases by only 20 per cent on the 2014 level of 220,000 GWh, reaching 264,000 GWh, at a current carbon intensity of 0.87 tonnes per MWh, this translates into 230 million tonnes of CO2.22 With carbon priced at $250 per tonne, the additional cost of electricity would be $ 57,500 million, or, for a population which might by then be 30 million, close to an average of $2,000 per capita. And this is only for electricity, which is responsible for less than half of total emissions.
Direct effects on household energy consumers aside, Garnaut trivialises the costs of achieving Australia’s required 80 per cent emission reductions, which would necessitate abandoning existing technology and substituting it with totally unproven technologies. The mix of technologies differs from scenario to scenario, but Figure 5 is typical of the mix Garnuat forecasts.
Noteworthy is that by 2050 virtually all electricity is assumed to be generated from technologies that either don’t presently exist or are massively more expensive than those of today.
Critical in estimating the costs is the CO2 price necessary to drive the changes. This depends on the ease of substituting carbon emitting energy for other forms of energy or replacing energy by other goods and services. If the necessary tax were as low as $ 100 per tonne, this would treble Australia’s wholesale electricity price. Figure 6 illustrates this for Australian electricity supplies.
The only experience of that sort of price shock, which is far less than the IPCC considers necessary, was the quadrupling of oil prices during the 1970s.
However, that brought moderating effects through substitutions from oil to coal and gas and it led to increased oil discoveries. Climate change policy would prevent similar developments.
Climate Change The Facts 2014