THE electricity sector would not be part of a "Safeguard Mechanism" emissions reduction program announced earlier this week, a spokesperson for Energy and Climate Change Minister Chris Bowen confirmed.
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The government had announced the plan as applying to more than 200 of the country's biggest greenhouse gas emitters - the list of which, as reported by the Newcastle Herald today - is top-heavy with electricity generators.
But a spokesperson for Mr Bowen told the Herald today that "electricity is still not part of the scheme, as was the case under the previous government".
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This meant that power generators including AGL - which tops the list kept by the Clean Energy Regulator - "aren't included" in the scheme.
The minister's spokesperson clarified things further, in saying that the scheme applied only to Scope One emissions - the "direct" emissions of a particular business - and not the Scope Two emissions, which are also tracked by the Clean Energy Regulator and cover the emissions incurred from the inputs to a particular business, such as grid electricity consumed.
The spokesperson said this meant that the "electricity emissions for facilities such as Tomago Aluminium" would not included in the count.
As the Herald reported today, Tomago reported total emissions in 2020-21 of almost eight million tonnes, but the bulk of this amount - more than 6.7 million tonnes - is classified as Scope Two.
Calculations of the cost to Tomago were based on the total Scope One and Two emissions, and a carbon credit price of $75 a tonne, which is a ceiling put on these credits by the federal government, rather than the current market price.
While facilities can choose what decarbonisation pathways best suit them, if they were to choose to use offsets where decarbonisation is required, the current price is $35, not the $75 price ceiling.
Mr Bowen's spokesperson said that "over 80 per cent of emissions covered by the scheme already have their own corporate net zero by 2050 commitments (or greater)".
On this basis, the cost to Tomago would appear to be less than the $30 million a year estimate used by the Herald.
The spokesperson said the scheme essentially treats the electricity sector as a single organisation.
"Essentially, electricity has a 'sectoral' rather than individual baseline, because of how they operate bidding into the same market at regular intervals, and because of the renewable energy target, and the proliferation of low emissions electricity over past years, that sectoral baseline does not get breached, effectively excluding grid electricity generators," the spokesperson said.
"We've kept that same architecture on generators from the previous government. Overall the focus is on incentivising reductions of direct emissions, rather than emissions from electricity which is on large decline."
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Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
