Direct Action can only reduce Australia’s emissions by 11 per cent by 2025 based on 2000 levels, according to a new report by energy market analysts RepuTex. The news comes as figures show both electricity emissions and demand have risen under the Abbott government.

The 11 per cent figure is well short of the 24-28 per cent cut the government is reportedly considering, and less than a third of the 36 per cent cut recommended by the statutory Climate Change Authority.

With China and the US adopting ambitious reduction targets, Australia is being pressured to step up and offer a credible commitment for the Paris Climate Conference in December.

However, Reputex analysis indicates that under current policy settings, only a 280 million tonne cut in emissions is “realistically achievable”, which is just a reduction of 11 per cent based on 2000 levels.

“While Australia has many options to reduce emissions – such as through greater fuel switching away from fossil fuel electricity – current government policy is unlikely to incentivise many low-carbon activities from being implemented,” RepuTex head of research Bret Harper said.

He said Direct Action would need to be “significantly strengthened” to meet a fair reduction target.

“We forecast that the Emissions Reduction Fund will be fully committed as early as next year, which means that the government’s key emissions reduction mechanism will stop supporting new emissions projects well before our 2020 target deadline, let alone any post-2020 target,” Mr Harper said.

“In parallel, the government’s proposed Safeguard Mechanism takes a light touch approach by setting baselines too high to curb emissions growth, particularly from the critical power, LNG and coal sectors.

“Businesses therefore have no additional financial incentive to invest in emissions reduction projects or offsets.”

The government is set to announce its emissions target later this month.

Mr Harper said the focus would then turn to how this target will be achieved.

“At this point, the ‘how’ is still a gaping hole for the market,” he said.

Electricity emissions rise since carbon tax axed

The dire need to address the climate policy gap has been illustrated in pitt&sherry’s latest carbon emissions index, which shows that since the carbon tax was axed, emissions from electricity have steadily risen, up 4.3 per cent in the last year.

The culprit has been the return of coal.

Emissions and demand, with the introduction and repeal of the carbon tax marked by the two vertical lines.
Emissions and demand, with the introduction and repeal of the carbon tax marked by the two vertical lines.

“The total coal share in the year to June 2015 was 75.8 per cent, well above its share of 72.7 per cent in the year to June 2014, but below the 78.1 per cent level in the year to June 2012, on the eve of the carbon price,” the report says.

In more worrying news, demand for electricity has started to increase for the first time since around 2010.

The Cedex report says that the axing of the carbon tax and “lack of energy efficiency policy ambition” are factors in the return of electricity demand growth.

“A stall commenced under the previous federal government, then policy effectiveness was deliberately reduced under the current federal and several state governments with the ending of several programs.”

The report said demand growth would likely be filled by coal.

“Over the next year coal seems certain to increase its share at the expense of gas, while wind generation will inevitably stagnate because of the lack of new construction over the past two years.”

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