Below is information that we provided to the Tasmanian Climate Change Act review, February 2021.
Introduction
Climate Tasmania is pleased to have been asked to provide information to Jacobs, the consultants tasked with the independent review of the Tasmanian Climate Change Act.
Information about the review process is available here.
[Note: in this document “emissions” by our definition cannot be negative. We use “sequestration” to identify what others might call negative emissions. “Net emissions” denotes emissions minus sequestration.]
Tasmanian emissions reduction target
Whether or not achieving net zero emissions by 2050 is ambitious depends on the definition of “net zero emissions”, and in particular what sequestration is used to subtract from the actual emissions. If the only sequestration that is counted is sequestration which is highly likely to remain contained for many centuries, then perhaps a target of net zero before 2050 might be acceptable.
The problem is that net zero targets which ignore the persistence of the sequestration are highly misleading.
The existing Act currently sets Tasmania’s emissions reduction target of 60 per cent of 1990 levels by 2050. The Tasmanian Government has committed to achieving net zero emissions by 2050.
A good non technical discussion of this issue can be found here.
Setting a future emissions reduction target for Tasmania.
Broadly, Climate Tasmania’s view is that the State’s targets should be based on science (such as the IPCC Special Report SR15 and more recent advice) and the Paris Agreement’s target of limiting warming to 1.5 °C. If Tasmania is to be a leader in the energy transition, then the slowest it should reduce its emissions is the rate identified in the IPCC’s SR15 report as being required to keep warming to 1.5 °C. This is the minimum rate of change needed to be able to be seen as part of the solution, rather than as part of the problem.
Another important issue is where the State should be in the transition from fossil fuels (coal, oil, and gas). Tasmania is a leader in that transition for electricity, but has no targets or mechanisms for the transition for all other uses of fossil fuels. The transition is definitely underway internationally, and the State Government should consider what are the risks, benefits, and opportunities of being in a leading, middle, or lagging position with respect to this transition.
Other targets for Tasmania, such as interim and sectoral targets.
There should be separate targets for emissions and for sequestration, and both should have interim and sectoral targets. For sequestration, it would be good to differentiate between different types based on their 99% probable half lives of sequestration. For example, sequestration pathways could be classified as short term (half life 99% probability of 20 years), medium term (half life 99% probability of 100 years) or long term (half life 99% probability of 500 years). Interim targets are essential, because otherwise governments could ignore the issue for a parliamentary term.
The Tasmanian Government has already legislated renewable electricity targets, but with no legislated mechanism to achieve those targets. The advantage of sectoral targets is that allows the Government to apportion reductions between easy- and hard-to-mitigate sectors.
Sectors and industries having the greatest opportunities for Tasmania to reduce its carbon emissions.
Smaller to medium scale, lower temperature uses of natural gas and LPG are relatively easy to replace. Where heat pumps are able to achieve the output temperatures required, they are highly likely to be cheaper (or much cheaper) to run; if heat pumps are not available then a clean burning renewable fuel made from waste biomass (such as wood pellets from waste sawdust) is likely to be cost competitive on operating costs.
Land transport provides the largest opportunity, potentially followed by anything powered by a diesel engine. Battery electric vehicles will certainly dominate the light duty passenger car segment, and should also dominate the smaller delivery vehicle segment. Tasmania, with its relatively short cargo movement distances and only a few major routes, is ideally suited to vehicle electrification. Electric buses are already one of the fastest growing electric vehicle types worldwide. The rate of heavy vehicle electrification will depend on continuing reductions in battery costs and improvements in their energy density. Unmodified diesel engines can run renewable diesel, which can be made in Tasmania. Diesel engines which can run on ethanol have been available since the 1920s, and technology is also being developed which may enable internal combustion engines to run on ethanol, sustainable (‘green’) hydrogen or sustainable ammonia, or mixtures of these fuels.
An opportunity for land transport in urban areas involves changing planning and urban design approaches to make active transport (walking, cycling, etc) safer and more attractive. The increased use of active transport in Tasmania is a major opportunity for health gains and reductions in social inequality.
Marine transport has some opportunities: Short run ferry routes (such as that contemplated for Hobart) can be battery electric. Longer runs with diesel engines can use renewable diesel; hydrogen fuel cell ships are also a possibility.
All the above are examples of replacement technologies for fossil fuels. Methane emissions, whether fossil or biogenic, (apart from those from ruminant animals) can be addressed by considering methane as an air pollutant and using air pollution regulatory approaches to minimise leaks and releases. Work is underway on reducing methane from ruminant animals. Land management should have a unified focus on reducing emissions and increasing sequestration.
Benefits to Tasmania were the Government to prioritise low carbon economic opportunities over economic opportunities that are relatively emissions intensive.
The transition to a very low carbon economy is both necessary and inevitable. Investments in emission intensive developments will lead to economically damaging stranded assets and are therefore to be discouraged. Further, as other countries signal their intent to impose tariffs on emissions intensive goods, the continued pursuit of emissions intensive industries presents an unreasonable risk to future prosperity. Currently, Tasmania can generate all its electricity on island, but all oil and gas fuels are imported. The overall strategy should be to phase- out fossil fuels and to electrify as much of the remaining energy use as possible. Climate Tasmania has had difficulty finding out the amount spent on fossil fuels imported into Tasmania each year: we understand that the amount is between A$1 billion and A$2 billion per year. This is a large economic leakage which the “phase-out and electrify” strategy will largely eliminate: a major economic benefit.
The other direct economic benefit is that switching from fossil fuels to renewable electricity will be deflationary. At this time of historic low interest rates, many of the phase-out changes will have increased capital costs but lower operating costs. Consider parcel delivery vans. Right now, electric vans are more expensive to purchase, but significantly cheaper to operate, with lower fuel costs and almost no maintenance costs. After an initial payback period during which the higher price of vans is recouped through lower running costs, electric van operators would be able to out-compete their fossil-fuelled competitors, leading to lower costs across the economy. This experience is expected to be common where electrification substitutes for petroleum.
Because of its compact size and small population, Tasmania can serve as a test bed for very widespread transport electrification. This will build on our existing clean, green image and develop a market for consulting, training and demonstration services off island, as well as enhancing tourism. Tasmania should be the go-to place for people to see how to phase out fossil fuels successfully.
The land management sector has several potential benefits from a low carbon approach. Regenerative agriculture offers increased sequestration together with improved soils, improved biodiversity and improved drought resilience. Reducing methane emissions from ruminant animals offers increased productivity.
The parts of Tasmania’s economy, community and environment facing the greatest threat from climate change.
Direct threats are those from extreme weather, bushfires, heat, drought, sea level rise, marine temperature changes, etc. These direct threats will adversely impact our economy, community, and economy. Tasmania is no different to any other jurisdiction in regard to threats to the community. In particular climate change is already adversely affecting the lives of the least advantaged members of society. Recently published data demonstrates an increase in demand on public hospital services by 5% during high heat events in Tasmania.
Tasmania also has a significant proportion of the population living in coastal communities. There will be a threshold where local and state governments cannot afford the adaptation methods to protect vulnerable coastal communities.
In addition, there are transition threats which could, if unmanaged, materially add to the disruption caused by the direct threats. In brief, the transition threats include:
- Stranded assets, which in Tasmania are likely to be on the fossil fuel demand side – primarily equipment which relies on petroleum. Tasmanians are continuing to buy such equipment in the expectation it can be used for its economic life, and we need a clear and unequivocal policy signal that fossil fuels are to be phased out to help Tasmanians to avoid continuing to purchase assets which are likely to be stranded. If Tasmania leads the mainland States in phasing out fossil fuels, then perhaps Tasmanians might be able to sell their otherwise stranded assets to people on the mainland.
- Shifting skills demands. For example, the move to electric vehicles is likely to reduce the need for motor mechanics and reduce the incomes of the service departments of car dealerships. There will be increases in other areas to compensate. Climate Tasmania’s proposed Energy Transition Authority would work with TAFE Tasmania to identify such changes in skills demand as far in advance as possible, as well as working with the employers in the industry to help manage the transition.
- The largest transition risks are likely to be related to the petroleum supply industry. Tasmania’s fuel supply will increasingly come from places like Singapore and Japan. The oil majors are already suffering some financial difficulties, and to expect this large international industry to perfectly maintain a consistent, but dwindling supply of quality fuels to all parts of the world over a 10 to 20 year time horizon marked by steadily reducing sales of most (but not all) products, is crazily optimistic in our opinion. Tasmania is a very small fuel market a long way away from major fuel refineries. Fuel supply disruptions are a definite transition risk.
- Site environmental contamination is another petroleum transition risk. Do service station owners and fuel distribution companies currently post bonds against site clean-up costs for when their sites are closed down because their sales have dried up?
Key climate change risks and their consideration by Government.
Most major Government decisions should include consideration of climate change, both the impact of the proposed change on emissions, and the impact of the changing climate on the facilities or systems subject to the decisions. Sections 9 and 11 of Climate Tasmania’s Drafting Instructions for a new Climate Change Act contain more detail about the processes we envisage as being necessary.
The science can provide projections for vulnerable coastal regions and the risks for communities should be clearly presented. Similarly, projections for increased fire danger should be used to inform and ultimately prevent inappropriate approvals related to new subdivisions.
Climate change is forcing the Tasmanian community to undergo a series of major changes, whether we like them or not, and whether we plan properly for them or not. In this circumstances it is essential that the Government is as transparent as possible about the risks we all face. The Covid-19 pandemic has shown that the Australian community has the ability to listen to their Governments if the messages are clear, based on expert advice, and if members of the community are confident they are being told the full story. Government decision making and risk reporting therefore should be as transparent as possible, and the risks being reported on need to include the transition risks as well as the direct climate risks.
Appendix: Stranded Assets
Stranded assets are assets on either the fossil fuel supply side, or on the demand side, that cannot be used to their full economic value or lifetime because of the imperative to manage climate risks. Stranded assets can range in size from oil or gas fields, mines, production facilities, pipelines, refineries, distribution terminals, etc, to cars, trucks, tractors, ships, aircraft, gas hot water heaters, gas home heating systems, etc.
A recent Carbon Tracker report has sought to quantify the stocks and flows of the fossil fuel system on both the supply and demand side in order to give some dimensioning to the potential size of the stranded assets problem1.
Kingsmill Bond, Carbon Tracker Energy Strategist and report author, said:
“We are witnessing the decline and fall of the fossil fuel economy. Technological innovation and policy support is driving peak fossil fuel demand in sector after sector and country after country, and the COVID-19 pandemic has accelerated this. We may now have seen peak fossil fuel demand as a whole. This is a huge opportunity for countries that import fossil fuels which can save trillions of dollars by switching to a clean energy economy in line with the Paris Agreement. Now is the time to plan an orderly wind-down of fossil fuel assets and manage the impact on the global economy rather than try to sustain the unsustainable.”
Carbon Tracker’s research found that the stock of demand side fossil fuel infrastructure is larger than the stock of supply side fossil fuel infrastructure. Thus the analysis of the potential economic impacts of the stranding of fossil fuel supply assets may be missing an even larger impact from the stranding of demand assets. Carbon Tracker’s research also found that trying to delay the transition from fossil fuels will ultimately be futile, and will cause additional direct economic harm as well as harm through increased climate disruption.
