Australia carbon emissions fell 7% in first year of carbon tax: report

Perth (Platts)--9 Jul 2013 435 am EDT/835 GMT

Australia's emissions of carbon dioxide from power generation fell by 12.2 million mt or 7% to 160 million mt of CO2 equivalent in the financial year ended June 30, the first full-year of the Australian government's carbon tax, energy consultancy Pitt & Sherry said Tuesday.

The Australian government under former prime minister Julia Gillard introduced a tax on industry carbon gas emissions on July 1 last year at a fixed price of A$23 per metric ton of CO2 ($23.90/mt).

Carbon gas emissions from Australian power generators have declined for the past four consecutive years, having dropped by 1.2 million mt in the 2011-12 financial year, 7.4 million mt lower in the 2010-11 year, and 5.8 million mt in the 2009-10 year, said the Canberra-based consultancy.

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Also in the 2012 financial year, electricity generation in Australia's National Electricity Market (NEM), which accounts for 90% of the country's electricity supply excluding Western Australia, fell by 2.2% to 191.5 TWh, said the energy consultancy.

Research by Pitt & Sherry indicates a complex relationship between electricity generation and carbon emissions and factors driving reduced electricity demand in Australia including the government's A$23 tax on emissions of greenhouse gases by industry.

"Given the complexity of the interactions it would be rash to assume that the acceleration in the downward trend experienced over the last year would continue if any one of these drivers were removed," said Hugh Saddler, Pitt & Sherry's principal consultant on energy strategies.

Power generation from Australia's black coal-fired power stations continued to fall in the 2012 financial year, extending a downward trend that started in mid-2010. It was 4.7 TWh lower at the end of the year to June 30.

Annualized power generation from lignite or brown coal-fired power stations in Australia rose slightly in June, but was 5.5 TWh down in the year.

"During the preceding five years, black coal generation had already fallen by over 15%, while brown coal-fired generation had actually increased slightly," said the energy consultancy.

Most of the decline in power generation from power stations fueled by black coal occurred in the Australian state of Queensland, while New South Wales power generation was largely unchanged.

"In Queensland, two of the four units at Tarong [power station] remained off line for the whole of May, as they had been since late last year," said Pitt & Sherry in a separate report.

Output from wind turbine and gas-fired generators fell slightly in Australia in the 2012-13 financial year, and hydro-electricity generation rose in the same period, it said.

"For the 2012-13 year, coal-fired generators supplied 72.5% of NEM generation, while gas-fired stations supplied 12.2% and hydro-electric and other renewable [energy sources] provided 15.3%," it added.

In a previous report in April, Pitt & Sherry said closure of energy-intensive industrial plants such as Norsk Hydro's Kurri Kurri aluminum smelter in New South Wales is estimated to have reduced power demand by 3.5 TWh on an annualized basis.

The closure of Shell's Clyde oil refinery in Sydney had also impacted demand for power in Australia over the past year, said the consultancy.

--Mike Cooper,

--Edited by Jeremy Lovell,

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