`Efficiency and forestry', not switch in energy, key to cuts

Australian
Friday 15/2/2008 Page: 8

FORESTRY and more efficient use of energy, rather than gas or renewables, can spearhead deep cuts in Australia's greenhouse emissions by 2020, according to research by heavyweight business consultants McKinseys. The report, to be released today by the global A-list consultants, backs environmentalists' claims that Australia can afford to cut its greenhouse emissions by nearly 40 per cent over the next 12 years. Major energy users dismissed the claim as "literally fantastic."

The report claims deep emission cuts of 30 per cent by 2020 based on 1990 levels could be achieved at a cost of about $3 billion a year, or up to $65 per tonne of greenhouse emissions. Australia is currently 9 per cent above its 1990 emissions. The report claims the first quarter of the 40 per cent emissions cuts could come by improving the efficiency of energy use in factories, offices and households through insulation and retrofitting of electric motors and air-conditioning systems, which would deliver huge savings in power bills.

A further 31 per cent would come from avoiding further land-clearing and deforestation, coupled with rapid, widespread tree-planting programs to provide one of the cheapest ways for Australia to offset its greenhouse emissions. The McKinsey modelling predicts there will be some new geothermal and wind energy generation by 2020, but by comparison very little switching from coal to gas-generated electricity.

Opposition environment spokesman Greg Hunt yesterday predicted the Rudd Government would abandon its Mandatory Renewable Energy Target to include all low-emission options by the 2009 budget. The self-commissioned report, An Australian cost curve for greenhouse gas reduction, follows similar McKinsey analyses in the US, Britain and Germany. The report's author, Stephan Gorner, said that compared with most other developed economies, Australia was in a unique position to develop large-scale forest sinks as a relatively cheap way to quickly deliver large cuts in net emissions.

He said that without forestry and the big gains available by replacing coal with zero-emissions energy, Australia would find it much more difficult to achieve the deep targets proposed. "We are not daydreaming and thinking about breakthrough technologies," Mr Gorner said. "Everything here is live and operating." Climate Institute Australia policy director Erwin Jackson said energy efficiency was still the bridesmaid of greenhouse policy and that the McKinsey research highlighted the need for urgent government action to drive savings across the economy.

Australian Industry Greenhouse Network chief Michael Hitchens doubted such cuts were possible and warned that the report dangerously omitted many of the broader costs arising from this scale of emissions cut. "If we need an emissions price of $60 a tonne, as they suggest, then that will cost far more than $290 per household," Mr Hitchens said. "This means something like 16c (more for) each litre of petrol, a 30 per cent increase in household power bills and maybe the doubling of gas prices."