By Phil Soos, cross-posted from Independent Australia:
The Government has prioritised economically supporting the fossil fuels industry instead of tackling urgent climate change issues, writes Philip Soos.
AUSTRALIA’S CLIMATE CHANGE culture war is a hideous spectacle. Despite the obvious reality of human-caused climate change and the urgent need to act, the powerful fossil fuels industry (FFI) has captured the Coalition Government to wring the last dollar of profit from their soon-to-be stranded assets.
The Coalition has proudly undone policies designed to mitigate climate change, notably in scrapping the carbon pricing scheme and reducing the federal Renewables Energy Target (RET). These government actions were driven by willful ignorance, lavish campaign contributions and the persistent revolving door between government and industry delivering financial reward and influence to those eager to act against the common good.
One conservative ideological obsession is the incessant complaining about subsidies to the renewable energy sector. Such support is provided by federal and state RET programs, about $2.5 billion annually for investment by the Clean Energy Finance Corporation (CEFC) and Australian Renewable Energy Agency (ARENA), and various initiatives by state governments.
Yet the same ideologues who stridently oppose renewable energy subsidies remain silent or actively rent-seek for more support to the FFI. Research demonstrates that FFI subsidies tower over those received by renewables.
Negative externalities
Externalities are a cost or benefit imposed upon third parties who were not party to the transaction that generated the cost or benefit. The FFI generates negative externalities in pollution costs though few see how pervasive these are.
There have been numerous studies published, typically in developed nations, attempting to estimate just how widespread the costs have become.
The following lists some of the research:
- Globally, the FFI has looted an average US$12.7tn (1995-2013) to US$27tn (1959-2013), rising to an upper range of US$115.5tn (1995-2013) to US$246.1tn (1959-2013);
- The single largest global externality arises from coal power generation and, in aggregate, all externalities equated to US$7.3tn or 13 per cent of global GDP in 2009;
- The cost of coal in the U.S. conservatively doubles to triples the price of electricity from coal per kWh generated;
- The U.S. EPA’s estimate of the social cost of carbon of US$37 per ton was found to be a gross underestimate and instead ought to be closer to US$220, demonstrating the costs are many times larger;
- If FFI externalities were internalised, a gallon (3.8 litres) of petrol would cost an extra US$3.8, US$4.8 for diesel and electricity generated from coal would rise US24c per kWh and US11c for gas;
- The total social cost of a gallon of petrol was estimated in a 1998 report at between US$5.60 and US$15.14, rather than the then market price of US$1;
- Energy subsidies reached US$5.3tn or 6.5 per cent of GDP globally in 2015, with coal accounting for the largest portion;
- A summary of 63 external cost estimates demonstrates coal, oil and gas have the largest maximum, mean and median costs in terms of cents per kWh generated;
- The health costs arising from air pollution stemming primarily from the FFI in Australia has been estimated from $11.1bn to $24.3bn;
- The cost of deaths from air pollution, mostly generated from coal and oil consumption, was estimated at US$1.5tn in OECD nations in 2010 and US$5.8bn in Australia;
- The cost of air pollution in the Greater Sydney area was estimated at a midpoint of $4.7bn annually between 2000-2002; and
- Australia’s energy sector receives a carbon subsidy of between $14bn to $39bn annually, with the electricity industry accounting for between $7bn to $20bn.
There is no time series available demonstrating the ongoing negative externalities arising from the consumption of gas and black and brown coal in the generation of electricity nationwide, so I’ve developed a general estimate. This report calculates that greenhouse and health care costs amount to $52/MWh for brown coal, $42/MWh for black coal and $19/MWh for gas in Australia. In 2017, these costs amounted to $8.2bn for electricity generation alone.