Australia’s Carbon Dioxide Tax Con

Posted on Tue 05/17/2011 by TonyfromOz

I just hate writing about this subject, because every time I mention it, no one believes a word I have to say.

Why is that?

It’s because the data is in such huge numbers, so it actually sounds absurd, and because of that it makes me look like a bit of a crackpot who’s just making up the numbers as he goes along, trying to make it sound so big to support some sort of anti tax agenda.

I have no agenda. I’m just trying to point out something that very few people understand.

That’s also why I try and include as much supporting data as I possibly can, and also the maths, which I also try and explain fully.

So then, why do I even do it in the first place if people thing of me as a scaremonger, when it’s easier to just shut up and say nothing.

I do it because hidden in this new tax is one of the biggest cons that will ever be perpetrated on Australians.

Those seeking to introduce this legislation are claiming they are doing it for the sake of the environment, but really, it’s nothing to do with the environment.

It’s just about the money, and with this Post, I hope to show you just that. There will be maths, true, and there will be references and explanations to support what I’m attempting to say, and in the end, people will still not believe it, because those numbers are just so huge, and that’s what makes it easier to discount.

It’s also what those who are attempting to introduce this legislation to place that price on Carbon (Dioxide) are relying upon, that people won’t believe it because all the data is so huge that it actually does sound unbelievable.

Those seeking to introduce this iniquitous new tax have not explained it much at all, just waffling on in general terms of how the modelling hasn’t been finished yet, and that it really won’t have all that much effect on average Australians, and those costings have been sidetracked with talk that it’s really only aimed at the big ‘polluters’, so, the average man in the street really has nothing to fear from this.

There is also general talk about how it will be revenue neutral in a fashion, and that people and some businesses will be compensated for any effects this tax may cause.

Having said that, explanations have been thin on the ground of what are the actual ramifications.

One part of this new tax however, is something that can be calculated, and that’s what I’ll be doing here.

The part that can be calculated is in the area that effects electrical power generation, because that data is relatively firm. The problem for the general public however is that they have no inkling of what it actually means, and then no real idea of where to go to look at the data, to put it all together, and then do the maths from that, and therein lies the cunning of those seeking to introduce this legislation.

So, here I’m going to attempt to explain it by doing all those things.

Those Carbon Dioxide (CO2) emissions are coming from the burning of coal and the burning of natural gas, the two main processes used to generate the electrical power we all consume in virtually every area of our everyday lives.

The chart at left shows actual electrical power consumption by source in Australia. This chart is from the Government’s own database, Energy In Australia, and this is the link to that site. (pdf document)

At that site, it says that Australia consumes just on 300 TerraWattHours (TWH) of electrical power each year. While the figure there is a little less than that, it also says that consumption is increasing at 7% each year, so I have added two increments of 7% to that stated figure which is from two years ago.

Where I use TWH here, this is a unit of electrical power being consumed, and these are expressed in powers of ten. The home consumer would recognise KWH as KiloWattHours from their electrical power bill. The next term up is MegaWattHours. (MWH) After that comes GigaWattHours (GWH) and the largest is that TWH I use here.

From this chart, and from the total power consumption, we can calculate the power produced from each sector, how much coal and natural gas is being is burned, and from that, how much CO2 is being emitted, and from that, using the figure recommended to Government of $26 per ton, we can then calculate the total amount raised from this electrical power generating sector.

THE COAL FIRED POWER SECTOR.

Here I am adding the Black coal sector to the brown coal sector, and I am doing that for a reason.

The burning of coal produces an actual amount of CO2, and there is an average multiplier for that. There may be a slight difference in the amount of CO2 produced, but that average multiplier is in fact quite close to the mark across the coal fired spectrum.

So, in Australia, for all coal fired power, the total percentage is 76.3%.

Hence of that total 300TWH, the coal sector contributes just under 230TWH.

Now, with coal fired power the actual burning of coal over time varies. Those large scale coal fired plants run virtually continuously, 24/7/365, to supply the large scales of power required on that continuous basis. Smaller coal fired plants are used for Peaking Power periods, and only run for shorter periods. Some also are burning coal to stay at a state of readiness, and if their power is required, then they come ‘on line’ supplying their power to top up grid requirements, and this is referred to as ‘load following’. Because of this, those coal burn rates vary.

However, there is data that can be used to calculate this, and for that I will use the data from the US Energy Information Administration. Power consumption in the U.S. is similar to consumption in Australia, so it is a reasonable thing to use this data.

The data is available at this link for power consumed, and this link for coal being burned, and for the purposes of this Post, I have used the totals for end of year 2010.

From that we can now calculate that for the power consumption figure of 240TWH, then 127 Million tons of coal is being burned in Australia just just to produce electrical power from all those coal fired sources.

From that we can now calculate the amount of CO2 being emitted, and that multiplier is 2.86 Tons of CO2 for every one ton of coal. Here is the link to why this is so, and at that link is a further link to that U.S. government EIA site that confirms that multiplier factor.

So, if Australia burns that 127 million tons of coal, then the emissions of CO2 amount to 360 Million tons of CO2, just from the generation of coal fired power. A TOTAL of 360 MILLION TONS.

THE NATURAL GAS FIRED POWER SECTOR.

In Australia, as shown at the above chart, the Natural Gas fired sector shows 15.9% of all power consumed coming from this sector, hence 47.7TWH.

Here, these power plants are used mainly for that Peaking Power period, where they run for periods of time a lot less than those large scale coal fired plants that run for 24 hours of every day. Their design is best suited to run up to speed quickly and thus supply their power at short notice, hence their best use is for those Peaking Power periods.

However, natural gas consumption rates can be readily calculated again using that U.S. EIA database.

The data is available at this link for power consumed, and this link for natural gas being burned, and again I have used the totals for end of year 2010. For explanation here, consumption of natural gas is expressed here in mcf, and mcf is a thousand cubic feet of natural gas

From that data, we can also calculate Australian figures for consumption of Natural gas for power being consumed, and that is 371 Million mcf.

We can now calculate how much CO2 is emitted from the burning of this natural gas, and here the multiplier is 122 pounds (around 55 Kg) for every mcf, so the total CO2 emissions comes to A TOTAL of 22.6 MILLION TONS.

TOTALS FOR CO2 AND COSTINGS.

When we add together the CO2 emissions from both of these power generation sectors, that total comes in at 380 Million tons.

Using the recommended costing for each ton of CO2 being emitted of $26 per ton, we now have a total cost of $9.88 Billion.

Got that?

$9.88 Billion.

That’s just from the generation of electrical power.

All of that will be passed directly down to consumers in increases in the cost of electricity. It has to be passed down, because consider just one large scale power generating plant, Bayswater, which burns 8 million tons of coal each year, emitting 23 million tons of CO2, and at that $26 per ton cost, then their bottom line cost increases by almost $600 Million. No one power producer alone at just this one plant can afford an extra cost like this, so that cost will be passed down directly to consumers. Here is the link to Bayswater Power plant that shows the data for the plant, including the amount of coal being burned, that 8 million tons.

THE CON.

When a total has been ‘ballparked’ by people here in Australia, the Government always seeks to deflect that talk by changing the subject, saying that the modelling has not been completed, and telling us that people will be compensated for any increase in price of electricity, and that sections of Industry will also be compensated.

Figures of around $20 Billion in total have been mentioned, and here you must realise that the calculations I have made here are for the electrical power generating sector alone, and that supposedly emits 35 to 40% of all CO2 emissions, so my total of that $9.88 Billion is lower than the projected total because it is only from that power generating sector.

However, people will see that maximum amount and think that (the bulk of) that will be returned to Australians in the form of compensation.

This is where the con comes in.

As I have shown here, the electrical power generation component of that only comes in at that $9.88 Billion.

Electrical power is consumed in three sectors. Those are the Residential sector which consumes 38% of all power, Commerce at 37% and the Industrial sector at 24%.

So, keeping those percentages in mind, the Residential sectors 38% of that $9.88 Billion comes in at $3.76 Billion.

So now, we can work out approximately how each residential account might be affected.

There are 7.5 million residential accounts in Australia, so the average increase on an electricity bill now comes in at around $500 per year. If the average power consumption per residence in Australia is $1600 per year (or $400 per quarterly account) then the percentage increase averages out at around 30%, so to see what that might be for individual users, take out your last account and add that 30% to it. Some pay less, and some pay more, so that’s why I have used averages here.

The Australian Government has promised to compensate households for any increase in their electricity bill, and for the life of me, I fail to see how this will result in people using less electricity, thus driving down those emissions because less coal fired power will be consumed.

So, keeping in mind that the Government has said that there will be compensation for residential consumers, and that the Labor Government always says it is the only Party that looks after the less advantaged amongst us, that is obviously ‘Code’ for the Government placing a means test on that compensation, for the lower income section of the overall community. That same Labor Government has said that any compensation package will amount to more than what the increase in power bills might be.

So, can you see the Con here.

The Government is going to compensate that residential sector only, and only part of them.

So, they will be raking in $9.88 Billion just from the electrical power generating sector, and giving back just part of that residential sector’s commitment of $3.76 Billion.

So, when you consider the overall ‘take’ for the Government,they can in fact give away all that Residential sector’s $3.76 Billion in compensation, because they will be making more than $6 Billion, just in increased electricity charges from those other two consuming sectors, Commerce and Industry.

So, when you hear of wonderful compensation packages for residential power bill increases, be very aware that only part of what is being raked in will be given back to consumers.

Given that only 38% of all power is consumed in the residential sector, and part of that overall take only will be refunded, consumers will then also bear the added costs from the extra being paid in those other two sectors, most importantly, the Commerce sector, which accounts for all your shopping, especially for groceries etc, so refunding a little more than the Residential sector’s commitment to some lower income households will not cover the increases added to everything you purchase as those other two sectors factor in their increased costs for the electricity that they consume.

Now perhaps you can see why this Gillard led Labor Government so desperately wants to introduce this Price On Carbon.

This is a windfall of the highest magnitude.

It has absolutely nothing whatsoever to do with the environment and the reduction of CO2.

It’s just about the money.

Today’s news releases say that the price would need to be closer to $40 per ton to encourage a move away from coal fired power to natural gas fired power, and The Australian Greens Party would like to see the figure closer to $200 per ton, showing that they have not even bothered to do check the data and do the Maths as I have done here.

In some earlier Posts, I used the figure of 90 million tons of coal being burned in Australia. I have never attempted to inflate any figures to make the numbers larger, because even with those conservative totals I have used, the numbers are still staggeringly large.