The Beyond Zero Emissions 2020 Stationary Energy Plan shows one possible plan to transition to 100 per cent renewable energy in Australia. Using only currently commercially available technology, the plan would cost around $37 billion a year.
That sounds like a lot, but we can afford it.
When Labor caved in to the mining companies, it forfeited $60 billion in tax that would have been collected between 2012 and 2020. Labor is also reducing corporate tax from 30 per cent to 29 per cent, which will cost $2 billion a year from 2013.
According to the World Wealth Report from Merrill Lynch and CapGemini in 2009 there were 173,600 millionaires in Australia—collectively worth a whopping $521.4 billion. They could pay for the BZE plan and still be rich.
In 1986 the corporate tax rate in Australia was 49 per cent. Putting it back up would raise around $40 billion a year—enough to pay for the BZE plan.
We could also take a chunk out the Defence budget. Australia spent $25.7 billion on defence last year.
Bucketloads of money is potentially available for renewable energy.
Government funded the construction of coal-fired power stations in Australia through a combination of taxation and borrowing. It could do it again for renewable energy.
Can a carbon tax make renewable energy competitive?
Many in the climate movement support the carbon price plan in the hope it will lead to more renewable energy. But modelling by Beyond Zero Emissions based on data from the Australian Energy Market Operator show that even a high carbon price would at best lead to new gas plants, which produce nearly half as much in emissions as coal. Even this wouldn’t replace existing coal, but simply take up new energy demand.
The modelling argues “we would require in excess of $70 per tonne even for wind power, the lowest cost renewable” and for “baseload technologies such as concentrating solar thermal, the game changer we need to replace coal and gas, you would need in excess of $200 a tone for initial plants.”
In a recent Lateline interview, Climate Change minister Greg Combet said a carbon price will lead to gas, and didn’t mention renewables once. But the experience of the European emissions trading scheme, which ended up resulting in increased emissions, along with indications that the government will use similar compensation arrangements to the failed CPRS, suggests that even gas is unlikely.
If the government were serious they could simply legislate to stop new coal power plants.
Monica Prasad, a researcher at a Chicago university, conducted a study of carbon taxes in Europe from 1990 to 2006. She told ABC Radio National “I would say the key element is having a substitute for coal… investing in alternative energies, because without that, people are just going to continue to emit carbon dioxide and pay the tax. So you get a lot of tax revenue, but you don’t really get reduction in carbon dioxide emissions.
“Without the alternative energy you know, I feel that neither carbon tax nor cap and trade will really work because there will just be too much price volatility in the cap and trade, and there just won’t be substitution under carbon tax. People will just decide to pay the tax.”
What about revenue from a carbon tax?
The Greens and others in the climate movement have argued that revenue from the carbon tax could be spent on renewable energy. But Beyond Zero emissions point out that “it is likely that only a small fraction of the carbon tax revenue would actually be used for renewables. Even if 25 per cent of the total revenue is used, it would only be able fund a small rollout of an initially high-cost technology like solar thermal.”
In reality nothing like 25 per cent of carbon tax revenue will be spent on renewables. One of the principles agreed to in the carbon pricing framework agreement is “budget neutrality”, originally pushed by BHP CEO Marius Kloppers. It means the government will not invest in renewables, but channel money back into corporate bank accounts and small amounts into compensation for price rises. Greg Combet is always arguing against “picking winners”—choosing to invest in certain technologies, like solar and wind. Rather, he wants to leave our future up to the market.
How can we get 100 per cent renewable energy?
The technology is there, the money is there—but we face enormous corporate obstacles.
Government should just build large scale solar and wind directly. But they are more interested in pleasing Australian business than doing so. If we’re going to change that, we need to mobilise.
The recent GetUp! climate rally in Melbourne supporting a carbon price mobilised 8000 people at short notice. We should all be encouraged by that and begin the work of mobilising for renewable energy instead of market schemes.