With the Australian carbon price system coming into effect from this month, companies around the nation can no longer pollute the atmosphere with impunity, while sending a signal to industries to adopt stronger environmentally friendly practices. The carbon price also has the consequence of weeding out inefficient energy producers, especially traditional coal power plants, leading to a less carbon intense economy and a shift in the energy market towards cleaner alternative sources. Read more

ACF release (1 July 2012):

With the carbon price taking effect from today, big companies will no longer be able to pollute our shared atmosphere for free, sending a strong positive signal to industries that clean up their acts.

The Australian Conservation Foundation said the price on pollution was a strong step for our environment and would start Australia’s shift to a cleaner economy.

An ACF study examined all the likely places evidence should be found if companies were going to be affected by the carbon price: share prices, investment analyst views, reasons given for job cuts and listings on the stock exchange. The study found no evidence to indicate the price on pollution would hurt companies listed on the ASX.

“The price on pollution is a move towards doing what’s best for all Australians, not doing what’s best for a handful of companies that value high profits ahead of the national interest,” said ACF CEO Don Henry.

“From today Australia is finally putting its money where its mouth is on climate change – it is no longer free for big companies to pollute our shared atmosphere.”

ACF’s economic adviser Simon O’Connor said his analysis of share prices and ASX data showed the market was not expecting any value to be lost from Australian listed companies as a result of the carbon price.

“Australia’s four most exposed companies all saw their share prices increase more than the ASX benchmark when the price on pollution overcame the last major hurdle to becoming law,” Mr O’Connor said.

“In fact, BlueScope Steel’s share price went up by 5 per cent on the day of the House of Representatives vote and by 13 per cent in the week prior.

“We couldn’t find a shred of evidence to support the claims that the price on pollution will cause significant economic damage to Australian companies. It’s time to deflate the hot air and get on with the job of moving to a cleaner economy,” he said.

Source: www.acfonline.org.au

By Tristan Edis for Climate Spectator (4 July 2012):

Only four days since the carbon price has been instituted and we can chalk up some quick wins (if only the federal government would let the natural course of events actually occur).

A few days ago, Climate Spectator outlined how South Australia wouldn’t miss the fact that coal power station Playford was to be closed for good and Northern was also going to be put out of action for six months of the year.

On Friday, the bailout announced for Energy Brix suggests that it’s on its last legs too, if only the government didn’t jump in to prop the thing up for another two years.

Also the June 30 deadline for HRL to reach financial close on its new 600MW brown coal power station, in order to qualify for clean coal funding support from the federal government, has passed without any word from either the government or the company. This suggests this project proposal has finally been euthanised after being announced as the recipient of $150 million in state and federal government subsidies back in early 2007.

The carbon intensity of the project is twice that of a natural gas combined cycle power plant and no noticeable improvement on a conventional new black coal power plant. Even back in 2007, when this project was announced as a successful recipient of funding under the Howard government’s Low Emissions Technology Demonstration Fund (LETDF), questions were being raised about the likelihood of it raising bank financing. Indeed documents released under freedom of information and reported by The Age showed the project was initially rejected for federal funding in 2006 on the basis it was ”not realistically based” and involved ”a high degree of risk”.

In an environment where both sides of politics publicly state the need to drastically reduce emissions, it is ridiculous that any bank or government would sink hundreds of millions of dollars into a brand new power station with a lifetime of 30 to 40 years, whose original design actually had worse emissions intensity than a modern black coal power station. While infrastructure might one day be built to capture the emissions from the plant and pipe it underground, you’d be a bigger punter than Kerry Packer to allocate money on that coming true.

And yesterday we learned that Munmorah coal-fired power station, which was on its last legs having been mothballed since August 2010, will now be closed and decommissioned permanently.  While it was already slated for retirement in September 2014, what we’ve learnt since electricity market liberalisation is that businesses can manage to keep these assets going for many more years than the engineers originally envisaged, provided market conditions are conducive – Hazelwood being the most prominent example.

According to Munmorah’s owner, Delta Electricity, in 2010 they had gained planning approval for the rehabilitation of Munmorah’s turbine units 3 and 4 and associated infrastructure, which would have reduced the plant’s operating costs and allowed baseload operation at 700 megawatts. While you’d always have to doubt the likelihood of that project proceeding, the fact that it has now been ruled out is unambiguously a good thing for Australia’s greenhouse gas emissions.

Delta Electricity provided the following explanation for closing the plant:

“Decreasing energy demand in NSW has created an excess supply situation. Munmorah’s place in the market has been overtaken by newer and more efficient generators and alternative electricity sources.

The station’s ageing infrastructure and high maintenance costs mean that it is not economically viable to operate. The carbon tax further erodes its viability.”

A carbon price of $23 per tonne of CO2 is clearly not going to lead to any kind of renewable energy nirvana, nor will it shut down coal overnight. But we now have a situation where a combination of reduced electricity demand and the 20 per cent Renewable Energy Target, and high black coal prices have created conditions that are acting to remove a lot of the food the herd of fossil fuel generators need to survive and prosper.

The carbon price is then acting much like a pack of wolves does in nature. While they tend to leave the strong within the herd unharmed e.g. Loy Yang A, they act to weed out the old, the weak, and maladapted young such as HRL’s power station proposal.

This may not be the desired end point on carbon emissions, but it most certainly represents progress over no carbon price at all.

Source: http://www.climatespectator.com.au