Cautious response to report

A REPORT predicting brown coal’s role in Australia’s electricity generation and consumption will be wiped out within decades, has been cautiously received locally.

One industry insider said the Bureau of Resources and Energy Economics projections, one of which showed brown coal’s share of energy generation would drop from 44 per cent now to just five per cent in 2034-35 and zero by 2049-50, was based on a model assuming a very high carbon price.

The source said a critical variable driving the projection was Federal Treasury figures assuming a $70 per tonne price on carbon in 2034-35 and $131 per tonne in 2049-50, compared to the current fixed price of $23 per tonne.

From 2015, however, carbon prices would be market-driven, which the source said would likely be set by European prices where prices for 2020 permits were currently trading at less that $15 AUD.

In releasing the report, ‘Australian energy projections to 2049-50’, BREE executive director Professor Quentin Grafton said its findings suggested Australia’s energy future would be “markedly different to its current structure”, owing to more than half of all electricity projected to be generated by renewable technologies by 2049-50.

Professor Grafton said the “strong growth” in renewable’s would result from its “increased competitiveness… under carbon pricing”, as well as “advances in their technologies and a decline in their capital costs”.

The industry source said, however, while projections indicated a fall in brown coal use for energy generation, they did not “appear to account for how brown coal may be used for other purposes”, namely export.

The source said the potential for exporting brown coal could see a change in its traditional use and the “emergence of new industries”.

Local power generators are currently working with a range of parties to develop technologies and projects to produce coal-derived products, including coal drying and conversion of brown coal to liquids, gases and chemicals.

The BREE report warned “the longer term role of coal” would be “heavily dependent on technological developments related to carbon capture and storage (CCS)” but said the deployment of those technologies would be limited “in the short to medium term” because of its high cost.

“Nevertheless, coal and gas-fired electricity generation with CCS are projected to come online from mid 2030s… under the assumed carbon price modelled by Treasury,” it said.

Latrobe City Council general manager governance Carol Jeffs said council did not intend to look at the BREE modelling in detail given council was “responding to a low carbon emission future in one shape or another” and the features of this response “remain the same regardless of what the change actually is”.

“We are already preparing for a future state that is likely to be carbon-constrained,” Ms Jeffs said, adding initial actions were currently being implemented.

Ms Jeffs concurred with industry views that the projections did not constitute a forecast and relied on “a whole lot of” variables and assumptions around reduced demand, the take-up of renewables and a high carbon price.

“Our focus is on the future and alternative uses for brown coal, and attracting investment for that, is very much on our agenda… as well as being focused on aviation and other manufacturing (possibilities).”