Carbon emissions from Australia's main power market have increased for the first time in two years as coal makes a comeback in the country's energy mix, according to energy consultants Pitt & Sherry.
Black and brown coal-fired power plants supplied 75.2 per cent of the NEM’s power last month, up from 73.8 per cent a year earlier.
A reduction in Snowy Hydro’s output also helped drag down the share of power from renewable sources, said Hugh Saddler, principal consultant with Pitt & Sherry.
Australia’s stationary power industry, which is directly covered by the carbon price, has been one of the few sectors of the economy to show a reduction in carbon emissions. In the year to last September, the industry’s emissions totalled 178.7 million tonnes of carbon dioxide equivalent, according to government data.
Soaring gas costs as domestic prices rise towards global levels have also prompted generators to lower or even close gas-fired power stations, such as in Queensland.
“That’ll be replaced by coal for sure, and that will mean emissions will come up,” Dr Saddler said.
“Coal’s going to keep coming back,” he said, adding that “it does have implications for the 5 per cent target”. The Abbott government has committed to cutting emissions by 5 per cent of 2000 levels by 2020, and any increase, such as from the power sector, will add to the task for its direct action plan.
The main constraint on emissions from the power sector may be falling demand for power, which has been sinking for the NEM for more three years. Last month’s announcement that Alcoa will shut its aluminium plant near Geelong later this year is likely to remove 3 terawatt-hours of annual demand alone, or about 1/15th of Victoria’s total, Dr Saddler said.
Wind power, which supplied 4.1 per cent of NEM’s power last month, may also see growth stall if the Abbott government lowers or delays the renewable energy target following a review now under way.
“It’s all going to go on hold,” he said. “There won’t be new (wind) projects commissioned with the RET review going on.”
Some 786 megawatts of new wind generation capacity is committed to be built, adding to the 2,743 MW already operating.
Snowy Hydro's output last month was the lowest in almost three years, with water storage levels dropping to the lowest since late 2011, Pitt & Sherry said in the latest CEDEX report.
Still, Snowy should be well-placed to ramp up hydro generation before July, when the carbon tax - which benefits hydro and wind power - is likely to be scrapped when the new Senate sits.
Hydro Tasmania, which supplies about twice Snowy's hydro power, has maintained its high levels of output. The operator's water storage levels, however, have dropped to 37 per cent of maximum capacity, well down on the 61 per cent recent high set in October 2012.
"In the absence of significantly above-average rainfall in south-eastern Australia, a trend of easing hydro output seems likely apart from a last hurrah in winter," Pitt & Sherry said.