Carbon Regulator Agonistes
Any regulated scheme will generate anomalies. One has just come to light in New South Australia, where the Snowy River Hydro-Electric Power Generating Company has received received financial rewards for switching to gas-fired power generation, even though this has increased the company’s carbon emissions. The problem arises because of what they switched from: hydro-generated power, not coal-fired power. The scheme assumed the latter would be the case.
“Rewarding the electricity generator for switching from clean, hydro power to much more polluting gas-fired power was just one example of flaws in the scheme that have also led to windfall gains for some of Australia’s dirtiest power stations, critics say.
Research at the University of NSW shows some polluters have been rewarded for emissions cuts made before the scheme started and for cuts they would have made in the normal course of business.
Under the scheme, power plants and forestry groups that do something new to reduce greenhouse gas emissions are awarded certificates, each one representing the equivalent of one tonne of carbon dioxide avoided. They then sell these certificates to energy retailers, which have to meet mandatory emissions targets set by the State Government. The costs are passed on to electricity consumers.
Certificates have ranged in price between $6 and $13 since the scheme started in 2003, which means, on average, certificates generated by participants would be worth about $450 million, while Snowy Hydro’s certificates would be worth about $95,000.
“This scheme is very dangerous because it is creating the impression the Government is doing something about rising greenhouse gas emissions,” said a Greens member of the NSW Parliament, John Kaye.
“That gas [power] is there because it is servicing peak load and to protect Snowy’s long-term contracts.
“It is not displacing coal-fired electricity; Snowy Hydro is increasing its own greenhouse gas emissions footprint and getting a reward for it.” “