Opportunities to Reduce Tasmania S Greenhouse Gas Emissions

Tasmanian Climate Action Council’s advice to the Tasmanian Government on the
Tasmanian Wedges Report[1]

Opportunities to Reduce Tasmania’s Greenhouse Gas Emissions

Table of contents

Chair’s Foreword

Executive Summary

The Wedges Report

Overarching Issues for Government

Opportunities by sector

Need for decisive action

1.Context and Background

2.The Tasmanian Wedges Report and Key Findings

3.Overarching Issues in the Transition to a Low Carbon Tasmania

3.1.Government leadership and action

3.2.Implications of the CPRS deferral

3.3.Setting of interim targets

3.4.Avoiding new or additional emissions intensity

3.5.Imported energy

4.Opportunities by sector

4.1.Energy

4.2.Manufacturing and Industrial Processes

4.3.Transport

4.4.Agriculture

4.5.Forestry

4.6.Waste management

4.7.Community

5.Summary of Recommendations

Appendix

Chair’s Foreword

Over the past two years, Tasmania has generated considerable momentum on climate change action, with its Climate Change (State Action) Act 2008, and the establishment of both the Tasmanian Climate Change Office (TCCO) and the independent Tasmanian Climate Action Council (TCAC).

The Tasmanian Government is acting in its own back yard too by reducing its own emissions following its Australia first whole-of-government emissions audit, and with the help now of a network of climate change champions across each of the Agencies.Early reports on those efforts are now available on the TCCO website.

Over its first year of operation, the TCAC has focused on providing the Premier and Minister Assisting the Premier on Climate Change with advice for climate change leadership by the Tasmanian Government, including the adoption of a principle based approach to climate efforts where Tasmania strives for:leadership; shared responsibility; best practice; accelerated outcomes; creative thinking and innovation; and openness and transparency on all climate change action across government, business and the community.

Amongst its recommendations, the TCAC has advised that planning schemes need to incorporate sustainability objectives; that the built environment must be transformed to achieve emissions reductions; that business must be engaged in climate change mitigation; that state infrastructure planning must prioritise climate change preparedness; and that the community must be engaged in climate action.

Recently the TCAC has been charged with reviewing and responding to the Tasmanian Wedges Report in order to present its advice to Government on priority actions, now in the context of no likely national carbon price in the near future.The TCAC argues in its advice here that urgent action is still highly desirable.

Tasmania is well placed to act decisively on climate change.It has the renewable energy capacity, the considerable gains to be made from adopting energy efficiency, the economic development opportunities to be associated with a low emissions brand, and carbon rich storage in its forests and agricultural lands.

So it is with much pleasure that the TCAC presents its advice here to the Minister for Climate Change, Nick McKim MP, and through him to the Tasmanian Government, the Parliament, and to the Tasmanian community and its businesses and industries.

We hope that our advice stimulates debate about climate action for years to come, and we look forward to robust political and community debate about pathways to a more sustainable, low carbon future where Tasmania can show leadership at all times, indeed where in the future it is known globally for doing so.

Associate Professor Kate Crowley

Chair, Tasmanian Climate Action Council

Executive Summary

The Wedges Report

In January 2010, the Tasmanian Government sought the advice of the Tasmanian Climate Action Council (the Council) on the findings of the report Tasmanian Greenhouse Gas Emission Reduction Project - Understanding the Potential for Reducing Tasmania’s Greenhouse Gas Emissions (commonly referred to as the Tasmanian Wedges Report).

The Government specifically sought the Council’s advice on recommended policy actions and initiatives, consistent with Tasmania’s legislated emission reduction target[2]. Details of the context and background to the Wedges Report and to the Government’s request for advice are set out inSection 1 of this report to government.

The Council considers that the Wedges Report has delivered on its core objective to identify and quantify greenhouse gas emission reduction opportunities, and the related costs, for Tasmania.While the Wedges Report’s emissions abatement modelling has assumed that a national Carbon Pollution Reduction Scheme (CPRS) would be in place in mid-2011, the Council does not consider that the delayof a price on carbon until 2013,at the earliest, materially impacts on the Wedges Report’s findings.

In framing its advice to government, the Council specifically draws attention to the two critical findings of the Wedges Report. First, that under a business-as-usual scenario, Tasmania's greenhouse gas emissions are projected to increase by around 45% by 2050[3]. Second, that sufficient abatement options, if fully realised, are available for Tasmania to meet its legislated emission target.

Key findings of the Wedges Report are summarised in Section 2 of this report.

Overarching Issues for Government

Section 3 of this report sets out the overarching issues that the Council believes the Government will need to address in making the transition to a low carbon Tasmania, consistent with the legislated emission reduction target.

Government leadership

The Council considers that leadership by the Tasmanian Government in responding to climate change will be critical. The Council recommends that the Tasmanian Government demonstratesthe required leadership by:

• Ensuring that the right policy settings are in place to facilitate investment in, and deployment of, low carbon technologies, while driving the changes needed in market and consumer behaviour over the coming decades.
• Focusing action on emission reduction across those areas of the economy in which Tasmania has a significant comparative advantage and where the most significant economic opportunities exist, including:
• renewable energy development, generation and transmission;
• energy efficiency across industry, business and the community; and
• innovative and sustainable agriculture.
• Implementing a whole-of-government approach to ensure that all Government policy, investment, development, and infrastructure decisions take due account of climate change, its potential impacts and emission reduction targets.
• Adopting an active role in communicating the importance of climate change mitigation and the importance of, and progress towards, the State’s emissions reduction target.

National policy setting

The Wedges Report is clear that Tasmania’s abatement action will need to be embraced alongside national policy action including an effective carbon price and renewable energy targets. In light of developments around the deferral of the proposed CPRS, it is therefore important that the Government actively lobbies for early implementation of an effective national carbonprice.

The setting of interim targets

The Wedges Report stated that the setting of interim targets to allow for a smooth adjustment to the 2050 target is not recommended at this stage. However, the Council believes that interim targets are important and needed, despite the uncertainty around national targets, and that it is appropriate for the Council to provide advice on their setting.

However, due to the complexity of the issues involved, and the need for further consideration and discussion, the Council’s formal advice on the setting of interim targets will be provided, separately to this advice on the Wedges Report,later this year.

Avoiding emissions lock-in

It is clear from the Wedges Report that if the Tasmanian Government is to optimise the State’s future transition to a low carbon economy, it must take immediate action to prevent‘business as usual’ investment decision-making that results in ‘locking in’ additional emissions intensity into the system. It is more efficient and cost-effective in the long-term to prevent the lock-in of new emissions intensity than it is to retrospectively introduce changes to existing infrastructure or plant or be forced in the future to contemplate the early retirement of capital stock.

The Council believes all sectors of government, especially the State’s planning system and State Economic Development and Infrastructure Strategies, are critical in this regard. Given that the State’s large industrial facilities already account for around a third of Tasmania’s total emissions, it is important the Government seek to attract only ‘best in class’ large scale industrial developments –to accelerate the future deployment of low carbon technologies.

Imported energy

The Wedges Report modelling suggests the majority of the projected rise in Tasmania’s electricity demand would be supplied from imported coal-fired electricity.

Under current national carbon accounting methodologies, however, imported electricity emissions are not included as part of Tasmania’s emissions inventory and are therefore outside the scope of emissions subject to the State’s legislated reduction target. As a result of this accounting treatment of imported electricity generation, the Tasmanian Government has less incentive to invest in or encourage energy efficiency improvements to reduce this rise in energy demand.

Despite this, the Council notes that there are strong economic (as well as environmental) incentives for Tasmania to address these imported emissions and to tap the benefits from harnessing Tasmania’s renewable resources. The Government needs to raise awareness of the State’s growing dependence on imported coal-fired electricity and to set a separate target for renewable energy exports.

Opportunities by sector

The Wedges Report identified a range of emissions reduction opportunities across the major sectors of Tasmania’s economy. The Council has considered these and made a number of recommendations in Section 4 of this report.

The focus of the Council’s recommendations includes stationary energy (energy generation and fuel combustion), industrial processes and transport, which collectively account for three quarters of Tasmania’s emissions abatement potential.The Council has also considered Tasmania’s other important sectors of agriculture and forestry as well as the community sector and waste management.

Energy

Tasmania has a number of comparative advantages in terms of renewable and low emission electricity generation (hydro, wind, gas, biomass, solar, tidal and geothermal).The Council believes this must be a priority for action by the Government. Consequently, the Council recommends the Government immediately develop a comprehensive State Renewable Energy Strategy as part of an over-arching goal of achieving net electricity export status by 2020.

In line with this, efficient planning arrangements, efficient networks and good grid connectedness will be required if Tasmania is to ultimately attract a higher portion of the available capital for renewable energy projects.Energy efficiency must also be a priority and the Council recommends that the Government develops a state based energy efficiency strategy that includes clear energy efficiency targets and the funding of demonstration projects.

The Council recommends that the recently established Tasmanian Renewable Energy Development Board be given a clear mandate to oversee the growth of the local renewables industry and thenecessary policy settings andmarket conditions needed for attracting private investment.

Industrial processes

The Wedges Report found that the manufacturing sector accounts for 31% of Tasmania’s total greenhouse gas emissions.The vast majority of these emissions arise fromdirect fuel combustion and industrial processing at the State’s six largest industrial facilities. This presents a significant challenge but also a unique opportunity for reducing Tasmania’s emissions.

The Council recommends that the Government develops individual emissions reduction ‘partnerships’ with the State’s largest industrial emitters and actively pursues opportunities to convert direct coal combustion to gas or biomass cogeneration (or tri-generation) systems.

Transport

While transport is currently the third largest source of emissions in Tasmania, it presents a challenge in achieving significant near-term reductions due to the lag time between initial investment and the eventual, measurable benefits of any action.

The Wedges Report identifies new generation biofuels for freight vehicles and buses as representing some 44% of the potential transport emission savings. In line with this finding, state strategies for supplyand production of biofuels for transport should be developed.

The Council also believes that all long term planning initiatives, particularly those relating to Tasmania’s freight transport system, must fully factor in emissions and efficiency impacts and requirements.Additionally, initiatives to reduce demand for passenger vehicle travel need to be pursued.

Agriculture

International emissions reporting methodologies applying to agriculture are likely to change significantly in coming decades and the inclusion of soil carbon in emissions reporting, for example, could significantly alter the State’s agricultural emissions profile.So, until fuller carbon accounting for agriculture, land use and land use change is developed and adopted, the setting of a meaningful emission abatement policy direction will remain problematic.

Under current accounting rules, however, the agriculture sector currently accounts for 25% of Tasmania’s emissions, making it the State’s second largest source of emissions.

While reforestation of agricultural land provides the clearest short term abatement opportunity in the sector, the Council believes that any policies to actively promote farm-based forest replanting will need to be balanced with policies that adequately protectexisting and future farming.

Beyond reforestation, Tasmania must be an early adopter of sustainable farming approaches as they prove to be commercially viable.This includes more holistic sustainable farming systems - including optimal feed mix, fertilizer usage, minimum tillage, and other landcare strategies. The Council believes that sustainable farming provides a number of important abatement opportunities and long-term productivity gains for Tasmanian agriculture, particularly in the high emissionlivestock (sheep and cattle) farming sectors.

The Council also believes that the Tasmanian agricultural sector has an opportunity to be a ‘fast follower’in the adoption of alternative fuel sources such as biofuels and the production and application of alternative fertilizers such as seaweeds and compost solutions.

Forestry

Like agriculture, meaningful emissions abatement policy development in the forestry sector remains problematic as internationally agreed emissions accounting rules currently do not cater for a range of forestry emissions sources and bio-sequestration opportunities.

Given this, the Government should commission a complete and independent carbon cycle assessment of Tasmania’s forestry estate (regrowth, old growth and plantation) to guide policy towards managing the forestry estate in a sustainable and profitable manner andoptimising climate change outcomes.

The significant potential for forestry biomass (waste or dedicated) as a renewable energy resource should also be assessed as identified in the Wedges Report.

Waste management

While the waste sector accounts for around only 4% of Tasmania’s total greenhouse gas emissions, the Wedges Report found that it was possible for 80% of these emissions to be abated.Although this abatement potential is modest in the big picture, it is relatively cost effective and would provide important signalling benefits for the community.

Beyond recycling and public education programs, the Tasmanian Government should evaluate waste to energy options wherever large quantities of waste are produced and disposed of, includingthe use of waste organic material as an energy source for power generation or process heat, and for the production of char material (stable carbon).

Community

Community action is already identified as a priority in the current Tasmanian Government climate change policy and the Wedges Report identified the need to reduce barriers to behavioural change across the community.

The Council recommends that the Government develop a comprehensive Community Climate Action Strategy to focus action on:

• community-based engagement and education;
• energy, water and transport efficiency initiatives; and
• recycling and waste minimisation.

Initiatives to improve the energy and water efficiency of the Tasmanian housing stock over the next decade are particularly important, as isthe enhancement of public transport opportunities.

The Tasmanian Government should also begin development of a state based adaptation strategy to prepare the Tasmanian community for more extreme weather events, whilst helping communities to adjust to the social, economic and environmental impacts that ultimately arise from global warming scenarios.

Need for decisive action

Critically, the lack of effective national policy means that the Tasmanian Government must act decisively to ensure that the State’s projected emissions growth is addressed and reversed.Without decisive near-term action to reduce emissions in some of the State’s key emissions sectors, future efforts to meet the State legislated emissions reduction target will become increasingly difficult and expensive.

Policy making at the State level must be carefully prioritised over the coming years to ensure that State actions complement any future introduction of an effective national carbon price.In particular, the Tasmanian Government should ensure that barriers to private investment and other actions facilitating a transition toward a low carbon economy are identified and addressed.It is particularly important that Tasmanians and Tasmanian businesses are prepared to respond to the impacts of a future carbon price and to take up the most cost effective opportunities to reduce emissions.

The Council believes that if the Government adopts the recommendations set out in this report, Tasmania will be firmlyon thepath towardsmeeting its legislated emission reduction targets.

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