CO2 Tax Australia – Labor Government Not Serious

Posted on Wed 08/17/2011 by


Here in Australia, the Labor minority Government is seeking to introduce legislation to place a cost on Carbon Dioxide (CO2) emissions.

The intent, they tell us, is to reduce those emissions.

Is that statement genuine, or is the Government cynically telling us this to hide the real intent.

While total CO2 emissions arise from many different sources, by far the largest emitter of CO2 comes from the burning of fossil fuels for the generation of electrical power. The largest of these emissions are from coal fired power plants, and to a lesser degree, Natural Gas fired power plants. The CO2 emitted from power generation has been quoted as high as 40%, but it would be closer to 30 to 35%, around one third of all CO2 emissions. Here in Australia, that percentage is most probably higher than that Worldwide average, because more than 90% of all power being generated is from sources that emit CO2, so for Australia, that percentage would most probably be closer to that 40%.

Now, while those CO2 emissions from all sources other than power generation may be able to be reduced, it is a difficult thing to reduce those emissions from the electrical power generating sector.

That real intent of placing a cost on those CO2 emissions in fact has little to do with lowering those emissions. It has more to do with raising huge amounts of money from a captive target that must keep doing what it does, generate large scale electrical power.

It’s a complex thing to understand, let alone to try and explain, but I’ll attempt to explain how this new tax is indeed just an artifice to raise huge amounts of money for the Government.

Look again at this deceptively simple diagram, which shoes actual power consumption. This is a generic diagram, and is similar across the Western World where there is a constant and reliable supply of electrical power for all consumers.

The horizontal axis is the hours in the day, and the vertical axis is a percentage of the total power being consumed across all sectors of consumption.

The dark line across that page is around 60 to 65%, and as you can easily see, the power below that line at that 60 to 65% is being consumed for every hour of those 24 hours.

The orange line indicates Summer consumption, and the blue line indicates consumption in Winter. Bar for an hour or so around 4AM, every watt being generated is required and required absolutely for 24 hours of every day.

Now look at this pie chart showing where all of Australia’s power is being generated. As you can see there, when adding together all the sources that emit CO2, (Coal, black and brown, Natural Gas, and Oil) you can see that the total comes to 93.3%.

When it comes to large scale coal fired power plants, the nature of those plants is that they generate huge amounts of electricity, and these plants are the ones that provide all that power below the dark line on the upper image, and this is referred to as the Base Load, that power that is required 24/7/365. The best case operation for those plants is that they hum along all day every day at their operating speed. If that operation is not kept at that level, those plants become inefficient, because running them up and down has huge drawbacks, is something that cannot be easily done in a short time, and in doing that, they actually consume more coal, thus emitting more CO2. That is why they are kept operating at their most optimum operating condition, and why these plants are ideal to supply that Base Load Power.

For times above that dark line, other power plants are brought on line to supply that power. These plants are, in the main, those Natural Gas fired plants, which can run up to speed relatively quickly and then provide power at short notice.

Now, you may notice an anomaly here when comparing the small pie chart with the larger consumption chart.

Add up the coal fired part only, and you’ll see that total comes in at 76.3%, and from the consumption chart, you’ll see that the dark line is around 60 to 65%.

That also can be explained.

While those large scale plants indeed hum along at their optimum level, smaller and older coal fired plants are kept running, but not actually delivering power. As I mentioned, it’s difficult to run large generators and their driving turbines up to speed. So while the really large ones are just humming along all the time, those smaller and older ones are in fact running, burning coal, emitting CO2, but not delivering the power that the generators produce.

This is called ‘Spinning Reserve’.

Because plants are inefficient if they run up and down all the time, they keep these spinning reserve coal fired plants ‘turning and burning’, so that at short notice, they can just effectively. flick the switch’, so to speak, and deliver that power for when it is required at short notice. These smaller and older coal fired plants are also used as backup for those times when the larger plants wind back one of their generators for scheduled maintenance.

They use these older and smaller plants for this purpose mainly because, being older, they are not as reliable as those larger plants. However, all the while they are still running the furnace which boils water to make the steam to drive the turbine which drives the generator.

So now, enter the CO2 Tax.

As I have mentioned, those large scale plants burn exactly the amount of coal they need to, so that the turbine turns. They do this because one of the biggest ‘outgoings’ they have is the cost of the coal that they burn. If they have to continually run the plant up and down, the plant actually burns more coal, hence more CO2 is emitted.

So, placing a cost on those emissions is not designed to lower those emissions. The only way large scale coal fired plants can lower their emissions is for them to shut down the process completely, and for a 5% emissions reduction, you may think this might mean very little, but 5% of a year comes in at 18 days. So, effectively, to reduce those emissions from those large scale coal fired plants means they shut them down completely for almost three weeks out of every year. That may seem a relatively easy thing, and if power is to be maintained, then that means some other CO2 emitting plant needs to be run up to replace that power.

See the point?

Now, another point with respect to this tax is that in effect this must increase the cost of power generation.

As we know, the plant operator will pass that cost down to all consumers, so in effect, the plant itself is not actually paying the cost for emitting that CO2. That is being paid by all consumers.

However, what may not be seen at first flush here is this.

The plant operator sells his power to the grid at the wholesale price, which, while a closely guarded price, is around three cents per KWH, and right now, I’m willing to bet some of you are thinking in reference to your most recent power bill which shows the retail price of electricity, what you pay as a Residential consumer is around 20 cents per KWH, showing a nice healthy difference between wholesale and retail.

The introduction of this new CO2 Tax will increase that wholesale amount paid by coal fired plant operators by around 2 to 3 cents per KWH, all of that passed down to you as consumers.

So, now, the wholesale price rises from around 3 cents per KWH to around 5 cents per KWH.

See now how coal fired power is beginning to look less attractive.

That’s a subtle thing that’s being done here.

Renewable Power, wind and the versions of Solar Power are far more expensive to generate and can be as high as, and higher than 20 cents per KWH, which is close to the retail cost. So, to make renewables more attractive, that cost has to come down. To achieve that, and this is ‘par for the course’ for all renewables, they enter into a subsidy agreement with Governments. That subsidy sees the Government paying the renewable plant operator 10 cents per KWH. So now, the renewable plant operator only needs to recover 10 cents per KWH when selling his power to the grid. If these subsidies were not in place, then no grid operator in his right mind would even consider purchasing renewable power at the full price, because there is the chance that it would be more expensive than selling it to consumers at the retail price.

Now, in a cunning move by introducing this CO2 Tax, the wholesale cost of coal fired power now increases, and that renewable power, while heavily subsidised by Government, looks to become a little more attractive, while still costing more.


A lot has been made of this Capacity Factor, (CF) mainly by those who support renewable Power, and in the main, have no real understanding of what that CF really indicates, and the explanations behind it.

It’s a known fact that all renewables have a low to very low CF. This means that the amount of power they deliver is considerably lower than what the Nameplate Capacity shows. That CF indicates how much time that these forms of power can deliver their power.

The page of statistics at this link is completely meaningless to everybody, except those who can interpret what they mean. Without explaining all of the intricacies, look at the bottom left of the list of figures where it says ‘Rolling 12 Months Ending in February’. Those figures there are for coal fired power. Note how last year that total power figure there at the bottom rose dramatically. That is the power supplied from coal fired sources. While renewable power plants went in at an ever increasing rate, mainly in the form of Wind Power, coal fired power actually rose, and that figure there is quite a substantial rise. In that same period, coal fired power plants were closed down. Those plants closing were not large scale plants, but smaller, and middling sized plants, older plants close to and beyond their use by dates. So, while coal fired plants closed and renewable plants came on line, coal fired power actually rose.

That is explained in more depth in the Post at this link.

At that same page of stats, and that same last figure for coal fired power, I can tell you that this equates to a Capacity Factor of barely 65%.

Why is that so low?

It’s artificially low, as I explained above. Many of those smaller plants are kept up and running for that spinning reserve, not delivering their power at all, until called upon for when extra power is required.

In the main, those large scale coal fired plants run at a CF of between 80 and 85%.

Again from that same set of figures, that CF is gradually rising, even as more and more smaller, older, less efficient, less reliable plants are removed from service.

Even as those older plants are removed, those levels of power they produced during peak power requirements still need to be there, and to that end, that extra power is being supplied by Natural Gas fired plants, and as you can see from that same page of statistics, the power produced for consumption from Natural Gas also rose quite dramatically.

One last thing from that same page of statistics, look at the data for Nuclear Power. The top set of figures date back to 1997, so here we have 14 years of data. Note how the power supplied from the Nuclear process has increased virtually every year.

Not one new Nuclear plant has been brought on line since 1974, now 37 tears ago.

The data for last year shows Nuclear Power to be operating at a Capacity Factor just greater than 90%, the single most efficient means of generating electrical power that there has ever been.

As for Wind and Solar Power, the data is on the page at this link.

This indicates how much power is produced for consumption from Wind, Solar Power, and other renewables.

It shows Wind operating at a CF of barely 25%, and Solar Power at a CF of barely 15%, equating to 6 hours a day for Wind, and 3.6 hours a day for Solar Power.

This is also explained in more detail in the Post at this link.

So, with the introduction of this Tax on those CO2 emissions, what is hoped is that this will drive the move away from Coal Fired Power towards Renewable Power.

It’s patently obvious that Renewables will never be able to supply the power that is needed, the huge levels of power that coal fired power delivers and delivers all the time.

It’s no good trying to make coal fired power look less attractive just by raising the price. If it can’t deliver, what’s the point?


Another startling example of the false promises being latched onto by the renewable power fraternity was shown the other day, when one of the Independent Members of the Australian Parliament who is propping up the minority Labor Government visited a new concentrating solar plant in Spain. Tony Windsor joined with Ross Garnaut, who led the Commission that gave the Labor Government the blueprint for this CO2 Tax, and these two men visited that solar plant in Spain, and then informed the press lobby with them that this was the way of the future for Australia.

This is a Plant that on one occasion recently generated power for a full 24 hour period of time from solar means alone. That was the part that was hyped, not that it was in midsummer on a hot bright cloudless day, not that it barely managed 20MW, not that it was for one day, but that this was the direction that the CO2 Tax will lead us, towards a ‘Clean Energy Future’ as it is referred to.

Even the plant’s own data says that this plant only has a CF of 62% for actual operation. It is claimed that the plant could have a CF of close to 74%, but again, that is at the maximum theoretical best case scenario, and the plant is currently running at that 62%. effectively meaning this solar plant is delivering power for only 15 hours of each day. Look again at the Load Curve image at the top of this Post which shows that 60 to 65% of all power is required 24/7/365.

In one of those media releases, that figure of that 62% was quoted as being comparable to some coal fired power plants, and one in particular was singled out, that being the Munmorah Plant on the New South Wales Central Coast, a plant that has a CF of that same 62%.

The two plants were favourably connected with that CF being the focus, the intent being that here was a solar plant that could actually replace a coal fired plant.

What was not mentioned in this form of comparison was what I suppose could be labelled inconvenient facts.

The Munmorah coal fired plant has two of its original 4 generators in operation. Those original generators were rated at 350MW when they first came on stream, but are now de-rated to 300MW, giving a total Nameplate Capacity of 600MW. At that 62% CF, this means Munmorah generates 3260GWH of power each year for consumption.

The Solar plant has a Nameplate Capacity of 20MW, and at that same 62% CF, it delivers 108GWH  of power each year for consumption.

So now, it’s not a case of a direct replacement one for the other, but an inconvenient truth that you will need 30 of these Solar Plants to replace this one coal fired plant.

What was also not mentioned was that this Munmorah plant has been in operation since 1969, so it is now 42 years old. It is approaching its use by date, it is old technology, and is not as reliable.

What was also not mentioned was that because of its age and its lower reliability, this is one of those plants that is used as that ‘spinning reserve’ I mentioned above. The plant is running on a near continuous basis, burning close to the same amount of coal it did when new, only now for only two of its original four generators. It emits around the same CO2 it always did when new.

Only now, the power is not required on the full time basis it was originally designed for. That power is only required for peak power demand periods when top up power is required for the grid. So less power is being supplied by this plant, which is why that capacity factor is so low, at that 62%.

It’s amazing how a different perspective is seen when all the facts are laid out.


We are told that by placing a cost on those CO2 emissions, a number of things will happen, foremost among them the lowering of those CO2 emissions from this CO2 emitting power generating sector. As I have shown, this is something that will not really be happening. It is also intended to facilitate a move away from coal fired power towards more renewables. Again, this may happen, mainly because of the price signal now that coal fired power will be more expensive, but again, that coal fired power has had its price artificially spiked up, while the renewable power sector has had its price artificially spiked down, and even then, coal fired power is still infinitely cheaper.

So, by placing that price on those emissions, this Government has shown it is not averse to using cynical means to raise money by saying it will only affect those big emitters, when it affects all of us as electricity consumers.

One important thing also not being told to you is that all of these large scale coal fired power plants have contracts to supply electrical power to the grids, and that most of those contracts are still valid until the mid 2020’s, and for even longer in some cases. So, there is no intent on the Government’s part to close those plants down, as they all have cast iron legal contracts to supply that power.

Those coal fired plants will still do what they always have done, produce huge amounts of electrical power, and do that cheaply. They will burn almost the same amount of coal. They will emit almost the same amount of CO2.

The only difference now is that the Government will be making huge amounts of money from it, money being paid not by the plant itself, but by every consumer of electrical power.

As I have said all along, this has nothing whatsoever to do with the environment.

It’s just about the money.

Below is a list of large scale coal fired plants in Australia. It shows the Nameplate Capacity of the plant, the amount of power the plant provides to the grids in those areas, and most importantly, the age of the plant. There are other coal fired plants in operation, but here I have listed just the main large scale plants, for the Eastern most populated part of Australia. When looking at this list, compare the power delivered from each with the power delivered from this ‘plant of the future’ Solar plant which produces only 108GWH of power each year, and you do the maths on how many solar plants would be needed to replace each of these coal fired plants, and keep in mind that you will still only be getting power for 15 hours a day.


Nameplate Capacity – 2640MW
Average Power Delivered – 17,0000GWH
Year Finished – 1986

Nameplate Capacity – 2640MW
Average Power Delivered – 17,000GWH
Year Finished – 1984

Nameplate Capacity – 2000MW
Average Power Delivered – 14,000GHW
Year Finished – 1973

Nameplate Capacity – 1400MW
Average Power Delivered – 9,000GWH
Year Finished – 1993

Nameplate Capacity – 1320MW
Average Power Delivered – 8,000GWH
Year Finished – 1978

Nameplate Capacity – 1000MW
Average Power Delivered – 6,000GWH
Year Finished – 1980


Nameplate Capacity – 700MW
Average Power Delivered – 4500GWH
Year Finished – 1988

Nameplate Capacity – 900MW
Average Power Delivered – 5800GWH
Year Finished – 2001

Nameplate Capacity – 1680MW
Average Power Delivered – 10,000GWH
Year Finished – 1976

Nameplate Capacity – 750MW
Average Power Delivered – 4700GWH
Year Finished – 2007

Nameplate Capacity – 850MW
Average Power Delivered – 5500GWH
Year Finished – 2002

Nameplate Capacity – 1400MW
Average Power Delivered – 9000GWH
Year Finished – 1996

Nameplate Capacity – 1470MW
Average Power Delivered – 9400GWH
Year Finished – 1984

Nameplate Capacity – 445MW
Average Power Delivered – 2800GWH
Year Finished – 2003

VICTORIA (All Brown Coal)

Nameplate Capacity – 1600MW
Average Power Delivered – 11,000GWH
Year Finished – 1971

Nameplate Capacity – 2200MW
Average Power Delivered – 14,500GWH
Year Finished – 1980’s

Nameplate Capacity – 1450MW
Average Power Delivered – 9500GWH
Year Finished – 1970’s