Joint study costs greenhouse gas reductions
Posted: 3 May 2006
The Australian Gas Light Company (AGL), in collaboration with Frontier Economics and WWF Australia, released a study which makes a pragmatic economic evaluation of how greenhouse gas emission reductions could be achieved in the electricity sector.
The study, Options for Moving to a Lower Emission Future, found the electricity generating sector’s greenhouse gas emissions could be reduced from current levels of nearly 200 million tonnes per annum to 120 million tonnes per annum by 2030, while still meeting growing electricity demand with a managable impact on the economy over time.
“This joint study maps a lower emissions adjustment path for the electricity sector which could be used to help businesses invest in new technological solutions over time to minimise the cost of reducing greenhouse gas emissions,” AGL Managing Director Paul Anthony said.
“The cost of greenhouse gas emissions is already being factored into AGL’s business decisions, the most recent example being AGL’s acquisition of the Southern Hydro renewable power generation assets in October 2005. By factoring carbon costs into business decisions, AGL continues to develop a well-balanced energy business consistent with the transition to a lower emissions future.”
The acquisition of Southern Hydro has reduced the overall greenhouse gas intensity of AGL’s generation portfolio, with around 40 per cent producing zero greenhouse gas emissions.
The study found that the cost to the economy of reducing greenhouse gas emissions in the electricity generating sector could be between $5.19 billion net present value (NPV) and $24.16 billion NPV to 2030.
Depending upon the reduction pathway chosen, this cost could equate to between one to two per cent of Australia’s present gross domestic product of $860 billion1.
“While much of the policy debate has been about long term targets and the possible mechanisms used to reduce greenhouse gas emissions, this study for the first time provides costing analysis on potential interim and long-term targets and the different approaches that could be taken for meeting those targets”, Mr Anthony said.
“This report supplements the existing policy debate as the target and reduction pathway influences the cost of reducing greenhouse emissions. A Staged Transition Pathway would allow existing power generation plants to be more fully utilised and provide time for new technologies to be developed”, Mr Anthony concluded.
In this context, gas fired power generation is expected to play a key role in the transition to a lower emissions future.
Posted by Richard Price, Editor, EnergyME.com
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