Australia's Emissions Projects 2019 · Web viewAustralia’s emissions projections 2019 is licensed by the Commonwealth of Australia for use under a Creative Commons By Attribution

Australia’s emissions projections 2019December 2019

1

© Commonwealth of Australia, 2019.

Australia’s emissions projections 2019 is licensed by the Commonwealth of Australia for use under a Creative Commons By Attribution 3.0 Australia licence with the exception of the Coat of Arms of the Commonwealth of Australia, the logo of the agency responsible for publishing the report, content supplied by third parties, and any images depicting people. For licence conditions see: http://creativecommons.org/licenses/by/3.0/au/

This report should be attributed as ‘Australia’s emissions projections 2019, Commonwealth of Australia 2019’.

The Commonwealth of Australia has made all reasonable efforts to identify content supplied by third parties using the following format ‘© Copyright, [name of third party]’.

Further information about projections of greenhouse gas emissions is available on the Department of the Environment and Energy’s website: www.environment.gov.au. To contact the Projections team, please email [email protected]

DisclaimerThe views and opinions expressed in this publication are those of the authors and do not necessarily reflect those of the Australian Government or the Minister for Energy and Emissions reductions.

Image credit© Copyright Department of the Environment and Energy (taken by staff).

2

Executive Summary The 2019 projections show that Australia will overachieve on its 2020 and 2030 targets.

Australia’s 2020 target (5 per cent below 2000 levels) Australia will overachieve on its 2020 target by 283 million tonnes of carbon dioxide equivalent (Mt CO2-e). This is an improvement of 43 Mt CO2-e, since the 2018 projections. After including Australia’s overachievement from the first commitment period of the Kyoto Protocol (2008–

2012) of 128 Mt CO2-e, overachievement increases to 411 Mt CO2-e. Emissions in 2020 are projected to be 534 Mt CO2-e which is 6 Mt CO2-e lower than the previous estimate

of 540 Mt CO2-e. Compared to the 2018 projections, there have been downward revisions of projected emissions in 2020

in:

the direct combustion sector – due to a decline in fuel combustion in the manufacturing sector; the transport sector – due to a decline in the consumption of petrol; the agriculture sector – due to floods in early 2019 and the ongoing effects of the drought.

Some of this revision down is offset by small increases in projected emissions in 2020 for the fugitive emissions, industrial processes and product use, and waste sectors.

Australia’s 2030 target (26–28 per cent below 2005 levels) Emissions in 2030 are projected to be 511 Mt CO2-e, 52 Mt CO2-e lower than the 2018 estimate for 2030

of 563 Mt CO2-e. To achieve Australia’s 2030 target of 26 to 28 per cent below 2005 levels, emissions reductions of 395 to

462 Mt CO2-e between 2021 and 2030 are required. When overachievement of 411 Mt CO2-e from previous targets is included, Australia will overachieve by 16 Mt CO2-e (26 per cent reduction) and will require 51 Mt CO2-e of cumulative emissions reduction between 2021 and 2030 to meet the 28 per cent reduction target.

Compared to the 2018 projections, the downward revision in the 2019 projections reflects:

the inclusion of the Climate Solutions Fund which will reduce emissions by 103 Mt CO2-e, particularly in the Land Use Land Use Change and Forestry (LULUCF) sector;

the inclusion of other measures in the Climate Solutions Package including energy efficiency measures in the electricity and direct combustion sectors;

stronger renewables deployment – due to increased uptake of small and mid-scale solar photovoltaics (PV) projected by the Clean Energy Regulator (CER) and Australian Energy Market Operator (AEMO), and the inclusion of 50 per cent renewable energy targets in Victoria, Queensland and the Northern Territory; and

updated forecasts of electricity demand.

3

Figure 1: Change in the cumulative emissions reduction task over time, 2030 target1,2

1 For a target of 26 per cent below 2005 levels.2 The cumulative emission reduction targets from the 2018 and 2019 projections is inclusive of overachievement from

Australia’s previous targets.

4

ContentsExecutive Summary................................................................................................................................ 3

Australia’s 2020 target (5 per cent below 2000 levels)........................................................................3

Australia’s 2030 target (26–28 per cent below 2005 levels)................................................................3

Contents................................................................................................................................................. 5

Introduction........................................................................................................................................... 10

Projection results.................................................................................................................................. 11

Australia’s progress toward meeting the 2020 target........................................................................11

Australia’s progress toward meeting the 2030 target........................................................................12

Overall results................................................................................................................................... 14

Sectoral trends...................................................................................................................................... 17

Electricity........................................................................................................................................... 14

Direct combustion............................................................................................................................. 20

Transport........................................................................................................................................... 23

Fugitives............................................................................................................................................ 28

Industrial processes and product use................................................................................................35

Agriculture......................................................................................................................................... 40

Waste................................................................................................................................................ 44

Land use, land use change and forestry...........................................................................................47

Sensitivity Analyses.............................................................................................................................. 55

Low economic growth sensitivity.......................................................................................................55

High economic growth sensitivity......................................................................................................55

Strong technology uptake sensitivity.................................................................................................55

Emissions Projections by economic sector...........................................................................................57

Appendix A – Methodology................................................................................................................... 59

Accounting approach........................................................................................................................ 59

Methodology for calculating Australia’s cumulative emissions reduction task to 2020......................59

Methodology for calculating Australia’s cumulative emissions reduction task to 2030......................60

Emission Projections by Economic Sector........................................................................................61

Data sources..................................................................................................................................... 62

Consideration of policies...................................................................................................................62

Institutional arrangements and quality assurance.............................................................................63

Difference between projections and forecasts...................................................................................63

Feedback.......................................................................................................................................... 64

5

Introduction Emissions projections are estimates of Australia’s future greenhouse gas emissions. They provide an indicative assessment of how Australia is tracking against its emissions reduction targets. They also provide an understanding of the expected drivers of future emissions.

Australia’s targets are tracked against an emissions budget. The cumulative emissions reduction task represents the total emissions that must be avoided or offset for Australia to achieve its targets. If the emissions reduction task is a negative value, this indicates Australia is on track to overachieve on its targets.

The 2019 projections include:

A projection of emissions for 20203, which provides an estimate of Australia’s emissions reduction task to meet its 2020 emissions reduction target.

A projection of emissions from 2021 to 2030, which provides an estimate of Australia’s emissions reduction task to meet its 2030 emissions reduction target.

Sensitivity analyses to illustrate how emissions may differ under changes in economic growth and technology uptake.

These projections update Australia’s emissions projections 2018.

This report contains a high-level description of projections methods. A detailed description of the methodologies applied and key data inputs to the projections can be found in the 2019 Projections Methodology paper on the Department’s website.

3 All year references refer to Australian financial years unless otherwise stated. For example 2020 refers to the financial year 2019–20.

6

Projection results Australia’s progress toward meeting the 2020 targetAustralia has a target of reducing emissions to 5 per cent below 2000 levels by 2020.

Australia is expected to surpass the emissions reductions required to meet its 2020 target (5 per cent below 2000 levels) by 264 Mt CO2-e. These estimates are calculated against an emissions budget for the period 2013 to 2020. If Australia’s overachievement of 128 Mt CO2-e from the first commitment period of the Kyoto Protocol is included, the overachievement is 411 Mt CO2-e.

Table 1: Cumulative emissions reduction task, 2013 to 2020

Calculation of 2020 emissions reduction task Emissions (Mt CO2-e)

Cumulative emissions 2013–2020 4,243

Emissions budget 2013–20204 4,508

Unadjusted emissions reduction task -264

Voluntary action5 9

Waste Protocol units6 -28

Emissions reduction task -283

Overachievement from 2008–2012 -128

Emissions reduction task with overachievement -411

Note: totals may not sum due to rounding.

Australia’s emissions in 2020 are expected to be 534 Mt CO2-e (Figure 2) compared to a notional point target of 509 Mt CO2-e. Australia is set to overachieve its 2020 target because the target is calculated as a budget over the period 2013–2020 (see Table 1).

4 Description and quantification of the emissions budget is detailed in Appendix A.5 Voluntary actions refers to individuals and companies offsetting their emissions to become ‘carbon neutral’ and households buying

GreenPower.6 Under the carbon tax, many landfill operators charged their customers in relation to future emission liabilities that were expected to accrue

as the waste being deposited decayed over many decades. The voluntary Waste Industry Protocol allows landfill operators to acquit these charges by emission abatement credits and voluntary transferring them to the Commonwealth.

7

Figure 2: Projected emissions in 2020 over time

Changes since the 2018 projectionsSince the 2018 projections, projected emissions in 2020 have been revised upwards for the fugitive emissions, industrial processes and product use, and waste sectors. This has been more than offset by reductions in emissions in 2020 due to:

reduced fuel consumption in manufacturing reported in the direct combustion sector. a decline in the consumption of petrol in the transport sector. floods in early 2019 and the ongoing effects of the drought.

Australia’s progress toward meeting the 2030 target Australia has a target to reduce emissions to 26-28 per cent below 2005 levels by 2030.

Australia will overachieve its 2030 target by 16 Mt CO2-e of cumulative emissions between 2021 and 2030.

Table 2: Cumulative emissions reduction task 2021 to 2030

Calculation of 2030 emissions reduction task

26 per cent below 2005 level in 2030 (Mt CO2-e)

28 per cent below 2005 level in 2030 (Mt CO2-e)

Cumulative emissions 2021-2030 5,169 5,169

Emissions budget 2021-2030 4,777 4,710

Voluntary action 3 3

Emissions reduction task 395 462

Overachievement of Australia’s previous targets

-283 (2013–2020)-128 (2008–2012)

Total overachievement -411

Emissions reduction task including overachievement

-16 51

8

Emissions to 2030Emissions are projected to decline to 511 Mt CO2-e in 2030 which is 16 per cent below 2005 levels. This is driven mainly by declines in the electricity sector because of strong uptake of rooftop solar and the inclusion of the Victoria, Queensland and Northern Territory 50 per cent renewable energy targets. Agriculture emissions are expected to increase as average seasonal conditions are assumed to return.

Australia’s abatement task to meet the 2030 target is projected to be between 395 Mt CO2-e (26 per cent reduction) and 462 Mt CO2-e (28 per cent reduction) over the period 2021 to 2030. When overachievement of Australia’s 2020 target is included the task is reduced to -16 Mt CO2-e and 51 Mt CO2-e.

This projection does not yet include the impacts of measures which have not yet been implemented, specifically the electric vehicle strategy (up to 10 Mt CO2-e). The strategy has not been included in the figures in Table 2.

Figure 3: Projected emissions in 2030 over time

Changes since the 2018 projections The decrease in the emissions reduction task for the 2030 target is primarily driven by the inclusion of the Government’s Climate Solutions Package. The Climate Solutions Package includes the following measures:

the Climate Solutions Fund – $2 billion in funding to purchase low-cost abatement. energy efficiency measures – energy rating labels for space heating, improving energy efficiency

standards for commercial and residential buildings, and the Energy Efficient Communities program. the Battery of the Nation and Marinus Link.

The Department of the Environment and Energy is currently preparing a National Strategy for Electric Vehicles. Emissions reductions resulting from this strategy have not been included in the 2019 projections as the strategy has not been finalised. They will be included in future emissions projections.

Further information on the Climate Solutions Package is available on the Department of the Environment and Energy website.

9

The 2019 projections include a significant increase in the deployment of small-scale solar photovoltaics (PV, <100 kW) which has led to a declining trend in electricity emissions. Over the period to 2030 it has been projected that an additional 15 GW of small-scale PV is installed in Australia. This is based on input data from the Clean Energy Regulator (CER) to 2024 and the Australian Energy Market Operator (AEMO) over 2025–30. Up to mid-2019 around 9 GW of small-scale PV has been installed in Australia.

The 2019 projections also include the effects of the 50 per cent renewable energy targets in Queensland, Victoria and the Northern Territory.

Overall resultsFigure 4: Australia’s emissions, 1990 to 2030

Table 3: Sectoral breakdown of 2019 projections results to 2030

Emissions by sector (Mt CO2-e) National Greenhouse Gas Inventory

Projection

2000 2005 2019 2020 2030

Electricity 175 197 180 170 131

Direct combustion 75 82 101 104 106

Transport 74 82 100 102 108

Fugitives 40 39 56 60 59

Industrial processes and product use 27 32 35 35 32

10

Agriculture 78 76 67 67 74

Waste 16 14 12 12 11

Land use, land use change and forestry 51 89 -19 -16 -10

Total 536 611 532 534 511

Note: totals do not sum due to rounding.

Figure 5: Australia’s emissions projections, 1990 to 2030 and the 2030 emissions reduction task

Other metricsThe emissions intensity of the economy (Gross Domestic Product (GDP)) has continued to decline and is projected to fall by 60 per cent from 2005 to 2030. Emissions per person are also expected to fall by 40 per cent from 2005 to 2030.

11

Figure 6: Emissions per person and emissions intensity of GDP, 2005 to 2030

12

Sectoral trends This chapter sets out the emissions projections associated with each sector. The sector breakdown is consistent with the international guidelines for reporting under the United Nations Framework Convention on Climate Change (UNFCCC). These sectors are described in Table 4 below:

Table 4: Projections sector coverage

Sector Coverage

Electricity Emissions from the combustion of fuels to generate electricity

Direct combustion Emissions from the combustion of fuels to generate steam, heat or pressure, other than for electricity generation and transport

Transport Emissions from the combustion of fuels for transportation within Australia

Fugitives Emissions released during the extraction, processing and delivery of fossil fuels

Industrial processes and product use

Emissions from non-energy related industrial production and processes. Includes emissions from hydrofluorocarbons (HFCs) (used in refrigerants and air conditioning)

Agriculture Emissions from livestock, manure management and crop residue

Emissions from rice cultivation, application of nitrogen to soils, and burning of agricultural residues

Waste Emissions from the disposal of solid waste and wastewater

Land use, land use change and forestry

Emissions and sequestration from activities occurring on forest lands, forests converted to other land uses, grasslands, croplands, wetlands and settlements

13

Emissions from electricity generation are the result of fuel combusted for the production of electricity in the National Electricity Market (NEM), Western Australia’s Wholesale Electricity Market (WEM), the other small grids and off-grid.

The NEM is the electricity market covering the east coast of Australia. It comprises five regions – Queensland, New South Wales (including the ACT), Victoria, Tasmania, and South Australia – and represents approximately 85 per cent of electricity generation in Australia. The WEM operates in the South West of Australia. The other grids comprise the small grids (the Darwin Katherine Interconnected System (DKIS), the North West Interconnected System (NWIS), and Mt Isa) and off-grid electricity generation.

Full market modelling is completed for the NEM, WEM, NWIS and DKIS as part of the projections.

Emissions trendsSince 2016, emissions in electricity have been falling, driven by large amounts of renewable generation entering the market. Over the projections period, emissions are projected to decline to reach 170 Mt CO2-e in 2020, and 131 Mt CO2-e in 2030.

These declines are driven by the projected continued decarbonisation of electricity generation across the country, including the country’s largest market, the NEM. Large deployment of renewables, in particular rooftop solar, form a growing share of generation in the NEM.

14

Figure 7: Electricity emissions, 1990 to 2030

National Electricity Market (NEM)Emissions in the NEM decrease by 11 Mt CO2-e from 2019 to 2020, then decrease a further 35 Mt CO2-e to 2030, as this grid is projected see a growing share of renewable generation.

Renewables in the NEM

The NEM is projected to see large additions of renewable capacity over the decade to 2030.

The high penetration of intermittent renewable generation requires more firming capacity. In the modelling undertaken for the projections this is shown in the build of 0.4 GW of pumped hydro capacity that is additional to the Snowy 2.0 (2 GW) and Battery of the Nation (1.2 GW) projects, and battery storage. This pumped hydro capacity supports the balancing of high levels of intermittent renewables operating during the day by being able to charge during the day and dispatch at night, along with more baseload generation such as coal. In reality a range of technologies has the potential to provide firming capacity including pumped hydro, gas and batteries. The Government has announced the Grid Reliability Fund and the Underwriting New Generation Initiative (UNGI) to support the introduction of firm generation or technologies that can provide reliability to the grid. These are not included in the projections.

Much of the new build in renewables is driven by strong uptake in rooftop solar. The Clean Energy Regulator’s modelling, adopted in these projections, show strong uptake in rooftop solar to 2024.

Large amounts of utility scale renewables also enter the market in the early 2020s. However, the continued growth in rooftop solar slows the uptake of utility scale over the long-term in the projections, as large quantities of solar competes during the middle of the day. The result is more limited uptake of large-scale solar beyond the mid-2020s.

Coal and gas generation in the NEM

Emissions from coal generation decline over the projections period as total coal generation declines. Coal refurbishments and the closure of Liddell in the calendar year 2022, consistent with the announced closure date, lower coal generation over the early 2020s. Emissions from coal generation are projected to decline faster from 2028 to 2030 with coal retirements, including the Yallourn power station.

15

The remaining coal fleet continues to support generation, particularly when renewables cannot generate, and are able to compete with other baseload generation through low marginal costs. Although the overall capacity of the coal fleet is reduced, the remaining fleet is used at a higher capacity.

The projections modelling also shows a reduction in gas generation due to the relatively high fuel costs of gas generation along with the penetration of renewables. Gas generation remains low during the projections period at six per cent of generation in 2020 and less than two per cent in 2030.

Demand in the NEM

The projections use the AEMO demand forecasts, under which the NEM sees little growth in demand as energy efficiency reduces future demand. The projections further include savings from energy efficiency measures announced under the Climate Solutions Package. The uptake of electric vehicles grows over the projections period but only accounts for three percent of demand in 2030.

Western Australia Wholesale Electricity Market (WEM) and the Darwin Katherine Interconnected System (DKIS)Emissions in the WEM are projected to decrease by 4 Mt CO2-e from 2020 to 2030.

Emissions decrease in 2021 as increased renewable capacity, particularly wind, comes online and generation from coal declines. Emissions increase in 2022 and 2023 as low renewables build, higher gas prices and growing demand results in increased coal generation. This increase in generation from the coal fleet more than offsets the decline in generation from the planned retirement of unit 5 of the Muja C plant in 20237.

Emissions in the WEM are then projected to decline as the planned retirement of the final unit of Muja C occurs in 20258 and the generation amongst the remaining fleet declines as renewables, particularly wind, grows in generation share in the mid-2020s. Emissions level off by 2030 as the large-scale build slows. The projections modelling shows a build of battery storage to support this renewable generation.

Gas generation also declines in the WEM, as projected in the NEM, although on a smaller scale. Gas generation declines to the middle of the projections period, but remains a significant share of generation by 2030.

The Darwin Katherine Interconnected System (DKIS), which is the largest electricity grid in the NT, but less than one percent the size of the NEM, sees emissions decline as solar (both large-scale and rooftop) come online to meet the NT government’s 50 per cent renewable energy target, displacing gas generation. The size of the grid means these declines are small relative to overall electricity sector emissions.

Off-grid electricity, and the North West Interconnected SystemEmissions from off-grid electricity use increase by 2 Mt CO2-e to 2020 before remaining relatively steady, as declining emissions from remote industry sites and communities are offset by increased electricity use to support the production of LNG.

Mining and remote communities

Emissions in mining and remote communities remains steady to 2020, before decreasing by 1 Mt CO2-e by 2030. Electricity demand grows slowly at an average of one percent over the projections period. This is mainly underpinned by slow growth in key mining commodities and increased energy efficiency at these operations.

Additional demand is more than met by increasing solar generation. Mining operations and communities are incentivised to switch to more hybrid systems to reduce the high fuel costs of diesel, which currently supply approximately 30 per cent of generation for this subsector.

7 This closure occurs in the 2023 financial year, calendar year 2022. 8 This closure occurs in the 2025 financial year, calendar year 2024.

16

The North West Interconnected System (NWIS) in Western Australia also remains steady to 2020 and then falls 1 Mt CO2-e over the period to 2030 as demand is met with increasing solar generation.

Electricity to support the production of LNG

Electricity use in LNG follows the trend of total LNG production. Emissions increase by 2 Mt CO2-e from 2019 to 2020 as facilities ramp up to full production, and rise a further 0.5 Mt CO2-e to 2030 following smaller production increases.

Electricity emissions from LNG facilities decline slightly from 2020 to 2025 as the Darwin LNG facility goes offline for maintenance. From 2025 emissions increase again as production increases because of the return of the Darwin LNG facility, and the addition of another train at the Pluto facility. The projections include the announced battery at the Darwin LNG plant. Electricity generation emissions at the Darwin LNG facility are projected to reduce by 20 per cent9, in line with Conoco Phillips’ announcement.

Table 5: Electricity emissions, Mt CO2-e

Emissions by grid 2020 2025 2030 Change 2020 to 2030 (%)

National Electricity Market 139 121 104 -25

Queensland 44 46 35 -21

New South Wales/ACT 52 40 35 -33

Victoria 40 34 33 -17

South Australia 2 1 0 -82

Tasmania 0 0 0 -2

Western Australia Wholesale Electricity Market

11 9 8 -31

Other grids, including off-grid 20 19 19 -7

Total electricity sector 170 149 131 -23

Note: totals may not sum due to rounding

9 http://www.conocophillips.com.au/newsroom/news-releases/story/innovative-darwin-lng-battery-project-to-reduce-carbon-emissions/

17

http://www.conocophillips.com.au/newsroom/news-releases/story/innovative-darwin-lng-battery-project-to-reduce-carbon-emissions/

Figure 8: Fuel generation mix, 2020 to 2030 (GWh)

Table 6: Renewable share of generation, %

Percentage of renewables10

2020 2025 2030

National Electricity Market 31 41 51

Queensland 22 26 4611

New South Wales/ACT 19 32 40

Victoria 36 47 51

South Australia 69 87 96

Tasmania 100 100 100

Western Australia Wholesale Electricity Market

20 43 55

Other grids, including off-grid

2 13 18

Total electricity sector 27 38 48

10This high share of renewable generation requires additional firming, shown in the model as pumped hydro capacity and to a lesser extent, battery storage. These are not shown in this table.

11Renewable share is defined in this table as renewable generation sent out over total generation (excluding from the storage in pumped hydro and batteries). Queensland’s energy target has been considered under this projections as a consumption target, in line with assumptions that will underpin AEMO’s 2019–20 Integrated System Plan. A consumption target takes account of factors such as exports that this number does not.

18

Table 7: Installed capacity by technology, GW

Installed capacity 2020 2025 2030 Change 2020 to 2030 (%)

Coal 25 22 18 -26

Gas 21 19 19 -7

Hydro 6 6 6 0

Wind 10 13 18 75

Large-scale solar 5 7 8 67

Mid-scale solar (100kW to 5MW) 0 2 2 319

Small-scale solar (≤100kW) 11 21 26 137

Other 4 3 3 -19

Pumped Hydro 3 3 6 139

Large-scale batteries 0 1 2 534

Total (excludes storage) 81 93 100 23

Comparison to previous projectionsElectricity emissions are projected to be 0.4 Mt CO2-e higher in 2020 and 32 Mt CO2-e lower in 2030 compared to the 2018 projections.

Lower demand forecast in the NEM, with higher penetration of renewable generation, driven by uptake of rooftop solar and renewable policies, has delivered the majority of the revision by 2030. Emissions from the NEM are projected to be 27 Mt CO2-e lower in 2030 compared to the 2018 projections.

19

Emissions from direct combustion are from the burning of fuels for energy used directly, in the form of heat, steam or pressure (excluding for electricity generation and transport). The direct combustion emissions are produced from almost all sectors of the economy. The direct combustion sector consists of six subsectors: energy, mining, manufacturing, buildings, agriculture, forestry and fishing, and military.

Emissions trendsDirect combustion emissions have increased from 1990-2019 at an average rate of 1.5 per cent per year. Emissions are projected to grow more slowly at 0.4 per cent per year from 2019 reaching 106 Mt CO2-e in 2030 (Figure 9). Energy efficiency measures, technological improvement and fuel switching are the major factors contributing to the slower growth rate.

Figure 9: Direct combustion emissions, 1990 to 2030

20

Manufacturing

Manufacturing of goods and commodities is the largest subsector, contributing 30 Mt CO2-e in 2020 and 31 Mt CO2 -e in 2030 (Table 8), around 30 per cent of direct combustion emissions. Nearly half of these emissions result from the manufacture of basic nonferrous metals, such as alumina, aluminium and nickel. Emission increases in ammonia production are offset by declines in cement production which results in manufacturing emissions remaining relatively stable to 2030.

Energy

The projected emissions in the energy subsector are mainly driven by the growth in LNG production. LNG is the largest individual source of emissions within the direct combustion sector. All other industries within the energy subsector are expected to remain relatively stable over the projections period, with the exception of the domestic gas production and distribution where a slight increase is projected (Figure 10). Emissions from the energy subsector are projected to be relatively stable to 2025 (27 Mt CO2-e) and then increase by 5 per cent to 28 Mt CO2-e in 2030 (Table 8, Figure 10).

Figure 10: Energy subsector emissions, 1990 to 2030

21

Buildings

The building subsector includes all the emissions from fuel combustion in residential and commercial buildings. Emissions in this sub-sector are projected to decrease by 4 per cent over the 2020s (Table 8). Emissions in the buildings sub-sector are primarily driven by gas consumption in residential and commercial buildings. Residential and commercial sector gas consumption is projected to fall as energy efficiency measures in the Climate Solutions Package will more than offset the impact of increased dwellings connecting to the gas network.

Mining

The mining subsector consists of coal mining and other mining. Direct combustion emissions from coal production are expected to remain stable at 9 Mt CO2-e in 2020 and 2030. Other mining includes all mining other than coal and is primarily made up of emissions from iron, gold and copper ore mining. Despite the relative increase in commodity production, emissions from the mining sub-sector are projected to be stable at 19 Mt CO2-e (Table 8). This is mainly due to emissions reduction from technological improvements such as advanced engine technologies, autonomous technologies, and electrification of mining equipment. Technological improvements delivers a range of productivity benefits, including fuel consumption savings and efficiency improvements.

Agriculture, Forestry and Fishing (Energy use)

Emissions from agriculture, forestry and fishing activities, which includes fuel used for on-farm vehicles and machinery, is projected to grow steadily over the projections period. This is modelled based on ABARES’ projections of the gross value of farm production which is projected to increase over the early 2020s. The increase in emissions is projected to be partially offset by fuel switching from diesel and energy efficiency improvements.

22

Military

The military subsector covers fuel use by military vehicles (e.g. trucks, planes) and fuel used for training within Australia. This is one of the smallest subsectors in the direct combustion projections. Emissions from the military subsector remain flat over the projections period (Table 8).

Table 8: Direct combustion emissions, Mt CO2-e

Emissions by subsector 2020 2025 2030 Change 2020 to 2030 (%)

Manufacturing 30 31 31 2

Energy 27 27 28 5

Buildings 19 18 18 -4

Mining 19 19 19 0

Agriculture, Forestry and Fishing 8 9 9 15

Military 1 1 1 0

Total 104 104 106 2

Note: totals may not sum due to rounding

Comparison to previous projectionsCompared to the 2018 projections, direct combustion sector emissions are projected to be 3 Mt CO2-e lower in 2020 and 1 Mt CO2-e lower in 2030. The reduction in direct combustion emissions are mainly due to lower than projected emissions in 2019 reported in the National Greenhouse Accounts, an improved outlook for the technological improvements in mining, and energy efficiency measures in buildings announced as part of the Climate Solution Package.

23

Emissions in the transport sector are the result of the combustion of fuels for transportation. This includes road, domestic aviation, rail, domestic shipping, off-road recreational vehicle activity and gas pipeline transport. Road transport includes cars, light commercial vehicles, motorcycles, rigid trucks, articulated trucks and buses.

Emissions from electricity used in electric vehicles and rail are accounted for in the electricity sector.

As Australia’s population and economy has grown, transport activity and hence transport emissions have increased. This projection shows a stabilisation of emissions, especially from road transport, despite a growing economy, population and transport activity. The cause of this shift is improvements in engine efficiency and the emergence of electric vehicles.

Emissions trendsTransport emissions have grown since 1990 and are projected to reach 102 Mt CO2-e in 2020. Over the projections period to 2030 transport emissions continue to rise and then plateau around the mid-2020s (Figure 11).

Transport emissions are projected to be 108 Mt CO2-e in 2030, an increase of 7 Mt CO2-e and 7 per cent above 2020 levels.

24

Figure 11: Transport emissions, 1990 to 2030

Road transport

The biggest contributor to emissions in the transport sector is road transport. Emissions from cars and light commercial vehicles are projected to increase to 2025 due to increased transport activity demands from a growing population, however from 2025 emissions start to decline (Table 9). Increases in activity from 2025 to 2030 are more than offset by improvements in vehicle efficiency, fuel switching away from diesel and an increasing share of electric vehicles.

Emissions from heavy vehicles increase to 2030 as the increased freight load in Australia results in increased fuel consumption. Emissions growth is projected to slow from 2025 as efficiency improvements and fuel switching slows the growth in emissions.

Table 9: Transport emissions, Mt CO2-e


Passenger vehicles 44 44 43 -2

Buses 3 3 3 1

Rigid trucks 9 10 10 14

Articulated trucks 13 14 15 14

Light commercial vehicles 17 17 17 1

Motorcycles <1 <1 <1 4

Domestic aviation 9 11 12 31

Domestic shipping 2 2 3 26

Railways 4 4 5 13

Other transportation12 <1 <1 1 30

25

Total 102 107 108 7


Light vehicle emissions

Light vehicles (passenger vehicles and light commercial vehicles) are the largest source of emissions within the transport sector (Table 10). Over the projection period to 2030, emissions from light vehicles are relatively stable (Figure 12). Emissions from this source are projected to reach their highest point in 2025 (62 Mt CO2-e) and emissions are then projected to decline to 60 Mt CO2-e in 2030.

Light vehicle emissions are projected to decline by 1 per cent over the 2020s (Table 9). This decline is projected to occur despite the distance travelled by passenger vehicles increasing by 18 per cent over the same period (Table 10). This downwards trend in emissions is caused by increased sales of electric vehicles, especially in the second half of the 2020s (Table 10, Figure 12).

Table 10: Projected activity from light vehicles

2020 2025 2030 Change 2020 to 2030 (%)

Activity (billion km travelled) 294 322 347 18

Number of EVs (including plug-in hybrid) of the light vehicle stock (‘000)

9 242 1,177 12,980

% of EVs (including plug-in hybrid) of the light vehicle stock 0 1 6

Number of EVs (including plug-in hybrid) new light vehicle sales (‘000 per year)

5 55 230 4,567

% of EVs (including plug-in hybrid) in new sales of light vehicles

0.5 5 19

12Other transportation includes off-road recreational and pipeline transport.

26

Figure 12: Light vehicles emissions and the proportion of EVs in the light vehicle fleet

Passenger vehicle engine performance

The projections modelling includes assumptions about improvements in the emissions efficiency of passenger vehicle engines (Table 11). Over the projection period, new internal combustion engines are projected to decrease emissions per kilometre travelled by 11 per cent. For the purpose of modelling the road transport sector it was assumed that passenger vehicle fuel efficiency improvement would be slightly above the historical trend of 1 per cent per annum at 1.2 per cent per annum13.

Although electric vehicles have no direct combustion emissions they increase electricity use, which is accounted for in the electricity sector. The emissions intensity of electric vehicles has been estimated by multiplying the demand for electricity by the projected average emissions factor for electricity in the National Electricity Market (Table 11). Over the projections period to 2030, new electric vehicles are assumed to have increased energy efficiency. With the average emissions intensity of grid electricity projected to decline, the emissions associated with the use of new electric vehicles per kilometre travelled is projected to improve by 33 per cent over period 2020 to 2030 (Table 11).

Table 11: Projected emissions intensity of new passenger and light commercial vehicles

2020 2025 2030 Change 2020 to 2030 (%)

Internal combustion engines (g CO2-e per km)14

177 166 157 -11

Electric drivetrain (g CO2-e per km)14 153 129 103 -33

13Graham, P.W., Reedman, L.J. and Havas, L. 2018 Transport sector emissions projections 2018, Report for Department of Environment and Energy. CSIRO, Australia.

14This is an average of small, medium and large passenger vehicles and light commercial vehicles.

27

Non-road transport

Emissions from non-road sectors are projected to grow to 2030 with most of the growth occurring in domestic aviation due to increasing demand for air travel. Emissions from domestic shipping and rail are projected to increase as they take on an increased freight load.

Comparison to previous projectionsCompared to the 2018 projections, transport sector emissions are projected to be 3 Mt CO2-e lower in 2020.

Recent trends in transport fuel consumption have resulted in a small downward revision of transport emissions in 2020. There has been a steady decline in petrol consumption over recent years and the recent trend for increasing diesel consumption slowed during 2018/19.

During 2019 the Department of the Environment and Energy commissioned a projection of the electrification of trucks and buses in Australia15. This work concluded that there is likely to be more growth in electric buses than was included in the 2018 projections and that the uptake of electric trucks would not materially increase beyond the 2018 projection. As a result, electric buses have increased in the projection from 0.3 per cent of vehicle stock in 2030 to 6 per cent of vehicle stock in 2030. This update has caused the projected transport emissions in 2030 to decline by 1 per cent.

15Keypath consulting and Ndevr Environmental (2019) Australian Electric Truck and Bus Projections to 2030, Report for the Department of the Environment and Energy.

28

Fugitive emissions are released during the extraction, processing and transport of fossil fuels. Fugitive emissions do not include emissions from fuel combusted to generate electricity, operate mining plant and equipment or transport fossil fuels by road, rail or sea.

Overall fugitive emissions are projected to decline over the period to 2030 by 1 per cent (1 Mt CO2-e).

Figure 13: Fugitive emissions, 1990 to 2030

29

Coal fugitive emission trendsFugitive emissions from coal are projected to be 26 Mt CO2-e in 2020, 43 per cent of all fugitive emissions. Emissions are projected to increase to 29 Mt CO2-e in 2030. The increase is mainly due to increased production of coking coal for export at underground mines.

Fugitive emissions of carbon dioxide and methane are released at coal mines during the extraction of coal. There is wide variation in the gas content across Australian coal basins and across coal fields within the basins due to distinct geological and biogenic processes, including the way the coal was formed, tectonic history, and groundwater flows. This variability results in a small number of underground mines in the Southern, Hunter and Newcastle basins in New South Wales and the Bowen basin in Queensland having a large impact on total emissions. There are over 100 operating coal mines in Australia. The largest ten emitting mines account for 53% of fugitive emissions.

The primary drivers of emissions are the amount of coal produced, the emissions intensity of the mine and the amount of methane captured. Around 45 per cent of methane from underground coal mines is captured for flaring or for electricity generation.

Australia’s coal production is projected to increase to 2030 in line with projections from the Office of the Chief Economist and the International Energy Agency (Table 12). Coking coal production is projected to increase to meet demand for global steel production. Thermal coal production is projected to increase to 2024, and then decline slightly to 2030. Brown coal production, which is only used domestically for electricity generation in Victoria, is projected to decline.

Table 12: Run-of-mine coal production in Australia, Mt16

2020 2025 2030

Black Coal 595 602 625

Brown Coal 39 35 34

Total 634 637 659

Coking coal is extracted from a higher proportion of underground mines compared with thermal coal. The increase in coking coal production from 2024-2030 is projected to be met from new mines, mostly in the Bowen basin in Queensland. The projections also include emissions from abandoned coal mines that continue to emit, at a declining rate, after they cease production.

Over 80 per cent of Australia’s coal is extracted from open cut coal mines which have a lower emissions intensity than underground mines. Emissions from open cut coal mines are projected to remain relatively unchanged from 2020 to 2030 as emissions from new mines are largely offset by planned closures of existing mines. Brown coal production is projected to decline, with a small impact on fugitive emissions. Although brown coal currently accounts for around 7 per cent of Australia’s coal production it accounts for less than 0.1 per cent of fugitive emissions.

Oil and gas fugitive emission trends Fugitive emissions from oil and gas are projected to be 34 Mt CO2-e in 2020, 57 per cent of fugitive emissions. By 2030, emissions are projected to decline by 13 per cent to 30 Mt CO2-e, representing 51 per cent of fugitive emissions.

16Run of mine coal production relates to the amount of raw material extracted from the mine. In their Resource and Energy Quarterly the Office of the Chief Economist publishes forecasts of saleable coal which is less than runofmine coal production. Saleable coal is around 80 per cent of run-of-mine production.

30

Liquefied Natural Gas (LNG)

In 2020 fugitive emissions from LNG are projected to be 17 Mt CO2-e in 2020 and then fall to 13 Mt CO2-e in 2030. By 2020, Australia’s 10 LNG facilities will all have commenced production (Figure 14). Increased emissions are projected in the near term due to high flaring activity that often occurs in the initial years of an LNG project before emissions stabilise. It is not expected that flaring emissions from projects will reach these high levels again, once flaring activities at the facilities reach a steady state (Figure 15).

Over 2023 the Darwin LNG facility is assumed to be taken offline for maintenance, leading to a small decline in LNG production and similarly in LNG emissions. By the mid-2020s emissions grow again as the Darwin facility returns to capacity, a second train at the Pluto facility is assumed to come online (2025) and the North West Shelf facility shifts its feed gas to other basins, including the Browse basin, which has a higher CO2 concentration. These emission increases are offset by the carbon dioxide injection project at the Gorgon LNG facility. The project, which commenced in August 2019, is assumed to abate around 3.4 Mt CO2-e a year once operating at capacity.

Figure 14: LNG projects in Australia

Table 13: LNG production in Australia, Mt

LNG production 2020 2025 2030

Total 82 79 87

31

Figure 15: LNG fugitive emissions

Domestic natural gas

Fugitive emissions from domestic natural gas are projected to be 16 Mt CO2-e in 2020 and remain broadly at that level in 2030 (Table 14). The major users of domestic natural gas are the electricity, industrial, commercial and residential sectors.

The emissions projections see declining levels of domestic gas consumption over the projections period to 2030. This is largely driven by lower levels of gas powered generation in the National Electricity Market (NEM) because of high gas prices and growing renewable generation. Gas use in the industrial sector is forecast to remain flat while the commercial and residential sectors see declines in gas use over the projections period.

The projections assume an increase in unconventional gas production in the eastern Australian gas fields to meet east coast supply. This offsets any reductions in emissions from lower gas consumption. In 2030 emissions from domestic natural gas remain at 16 Mt CO2-e.

Oil

Fugitive emissions from oil are projected to be 1 Mt CO2-e in 2020 and remain at that level to 2030 (Table 14). Crude oil and condensate production is projected to decline slightly in the short term and remain flat over the projections period. Refinery output is also projected to decline over the projections period.

Table 14: Fugitive emissions, Mt CO2-e


LNG 17 10 13 -24

32


Domestic natural gas 16 16 16 -1

Oil <1 <1 <1 -10

Open cut mines 7 7 8 4

Underground coal mines 18 18 22 18

Total 60 52 59 -1


Comparison to previous projectionsFugitive emissions from coal are projected to be 1 Mt CO2-e lower in 2020, 2 Mt CO2-e lower in 2030 and 19 Mt CO2-e lower cumulatively over the period 2021 to 2030 compared to the previous projection. The decrease reflects an updated outlook for certain gassy mines, a higher proportion of coal produced from open cut mines compared with the last projection and higher methane capture rates.

Fugitive emissions from oil and gas are projected to be 5 Mt CO2-e higher in 2020, 1 Mt CO2-e lower in 2030 and 17 Mt CO2-e lower cumulatively over the period 2021 to 2030 compared to the 2018 emissions projections. The decrease is largely due to improvements in inventory methods for estimating fugitive emissions from oil.

33

LNG related emissions in the emissions projections Emissions related to LNG are accounted for in three sectors of the emissions projections:

the electricity sector the direct combustion sector, and the fugitives sector

Around 80 per cent of emissions related to LNG are from the fugitive and direct combustion sectors (see Figure 16).

Figure 16: LNG related emissions in the projections, 2020 and 2030

Table 15: LNG emissions in the projections, Mt CO2-e

Sector 2020 2025 2030

Electricity 7 7 7

Direct Combustion 18 18 19

Fugitives 17 10 13

LNG total 42 34 39

Emissions projections total 536 520 515

Emissions projections without LNG 494 486 475


LNG related emissions in the direct combustion and electricity sectors are from the combustion of raw natural gas for driving compressors or generating electricity on-site.

Fugitive emissions from LNG are emissions released intentionally or unintentionally in the exploration, extraction, production, processing, storage and delivery of LNG. The biggest sources of LNG fugitive emissions is from gas venting and gas flaring.

Venting is in the intentional release of gas (including carbon dioxide and methane) usually from routine operations. Flaring is the burning of excess gasses that cannot be recovered or reused during plant

34

operations and is important in managing the pressure, flow and composition of the gas in production and processing.

Fugitive emissions are dependent on the carbon dioxide content of the raw gas which varies between gas fields. The carbon dioxide content of coal seam gas fields that supply the Queensland LNG facilities is generally much lower than the conventional off-shore gas fields of Western Australia and the Northern Territory that supply gas to the remaining LNG plants in Australia.

The global LNG market has grown in response to strong Asian demand. In recent years, oil and gas extraction has been the largest contributor to Australia’s mining industry value-added growth. This has been driven by the growing export volumes associated with demand from Asia. The estimated export value of Australia’s LNG in 2020 is around $50 billion17.

The rapid expansion of Australia’s LNG export industry has placed upward pressure on Australia’s emissions. In the coming years with the ramp up in large LNG projects complete and relatively low investment in oil and gas production projected, the oil and gas sector is expected to provide a smaller contribution to Australia’s GDP growth18.

LNG emissions are projected to be 42 Mt CO2-e in 2020, falling to 39 Mt CO2-e in 2030. Over the period 2021 to 2030, related LNG emissions are projected to be 363 Mt CO2-e.

17Office of the Chief Economist (OCE) 2019, Resources and Energy Quarterly September 2019, Commonwealth of Australia, Canberra. 18Ibid.

35

The industrial processes and product use (IPPU) sector includes emissions from non-energy related production processes. Emissions from this sector include by-product gases from chemical reactions in production processes, the release of synthetic greenhouse gases from commercial and household equipment, combustion of lubricant oils not used for fuels, and carbon dioxide used in food and beverage production. Energy-related emissions are accounted for in the direct combustion sector.

Table 16 below lists the subsectors that comprise the IPPU sector and the main production processes which drive emissions from these subsectors.

Table 16: Production processes in industrial processes and product use

Subsector Main production processes

Metal industry Iron and steel, and aluminium production

Chemical industry Ammonia, nitric acid and titanium dioxide production

Mineral industry Cement clinker and lime production

Product uses as substitutes for ozone depleting substances

Hydrofluorocarbons used in refrigeration and air conditioning equipment, foam, fire protection and aerosols

Non-energy products from fuel and solvent use Emissions from lubricant oils not used for fuel

Other production Carbon dioxide used in food production

Other product manufacture and use Sulphur hexafluoride used in electrical switchgear

Emissions trendsIndustrial processes and product use emissions are projected to reach 35 Mt CO2-e in 2020. Over the projections period, emissions will gradually decline reaching 32 Mt CO2-e in 2030, 8 per cent below 2020 levels. Cumulative emissions from this sector are 334 Mt CO2-e from 2021 to 2030.

36

Figure 17: Industrial processes and product use emissions, 1990 to 2030

Table 17: Industrial processes and product use emissions, Mt CO2-e


Product uses as substitutes for ozone depleting substances

12 10 9 -26

Other production <1 <1 <1 5

Other product manufacture and use <1 <1 <1 15

Non-energy products from fuel and solvent use <1 <1 <1 0

Mineral industry 6 5 5 -2

Metal industry 11 11 11 0

Chemical industry 6 6 6 11

Total 35 33 32 -8


Hydrofluorocarbon emissions

Product uses as substitutes for ozone depleting substances, or hydrofluorocarbons (HFCs), is the largest source of emissions in the IPPU sector in 2020, contributing 12 Mt CO2-e or 35 per cent of total emissions. Emissions from HFCs peaked in 2019 (13 Mt CO2-e), after which emissions are projected to decrease to 9 Mt CO2-e in 2030. Changes in emissions in the HFC sub-sector is main the driver for changes in the IPPU sector as a whole.

The decrease in HFC emissions results from the HFC phase-down implemented through the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 and associated Regulations. The HFC-phase down legislates an annual import quota on bulk imports of HFCs that will reduce until 2036.

37

This projection includes proposed measures to inform owners of refrigeration and air conditioning equipment of the benefits of regular maintenance. These measures will reduce refrigerant leaks, improve the energy performance of refrigeration and air conditioning equipment and reduce emissions from HFCs. The component of the measures relating to industrial processes and product use provides abatement of 7 Mt CO2-e from 2021 to 2030. The remaining abatement from this measure relates to lower energy use, and has been reflected in lower demand in the energy sectors.

Other industry emissions

The metal industry subsector is projected to remain steady across the projections period, contributing around 11 Mt CO2-e each year. Following the projected decline in HFC emissions, the metal industry is projected to become the largest contributing subsector to IPPU emissions in 2024. In 2030, 34 per cent of emissions in the IPPU sector will be attributed to the metal industry.

Aluminium smelter emissions in the emissions projections Emissions at aluminium smelters are primarily accounted for in three sectors of the emissions projections:

the electricity sector the direct combustion sector, and the industrial processes and product use (IPPU) sector.

There are currently four aluminium smelters operating in Australia: Bell Bay (Tasmania), Boyne Island (Queensland), Portland (Victoria) and Tomago (New South Wales). These smelters produce around 1.5 million tonnes of primary aluminium per year of which approximately 90 per cent is exported.

The largest source of emissions for an aluminium smelter is indirect emissions associated with electricity generation (known as Scope 2 emissions). These emissions occur at the power stations and not at the aluminium smelter. Emissions from this source (estimated using grid average emission factors) are projected to fall as the emissions intensity of the grid declines to 2030.

The direct combustion of fuels are a relatively small source and is mostly associated with the combustion of natural gas to bake carbon anodes in the smelting process and control temperature of molten aluminium in the casting process. IPPU emissions are primarily the carbon dioxide emitted from the oxidation of the carbon anodes. This source also includes perfluorocarbon emissions.

IPPU emissions from aluminium production have been trending down since 1990 as a result of improvements in process controls. IPPU emissions have declined by 64 per cent from 1990–2017 which includes a 96 per cent decline in perfluorocarbon emissions.

Global aluminium demand has decreased in response to the trade tensions between the US and China, slowing global economic growth and lower demand from the global automotive industry. As a consequence, the export value of Australia’s aluminium will decline from $4.2 billion in 2019 to estimated $3.4 billion in 202019. These projections assume Australia’s four aluminium smelters will continue operating around current levels to 2030 (Table 18).

The energy intensity of Australia’s smelters is lower than international counterparts in North and South America, and Europe and higher than China20. Emissions from aluminium smelters are projected to be 18 Mt CO2-e in 2020, 14 Mt in 2030 and around 150 Mt CO2-e from 2021-2030. Indirect emissions from electricity generation are projected to fall as the emission intensity of the grid falls, while direct combustion and industrial process emissions are projected to remain relatively steady. The emissions intensity of the aluminium smelters will decrease through the projection period (Table 19).

19Office of the Chief Economist (OCE) 2019, Resources and Energy Quarterly September 2019, Commonwealth of Australia, Canberra. 20International Aluminium Institute, http://www.world-aluminium.org/statistics

38

Table 18: Aluminium Production, Mt

Sector 2020 2025 2030

Aluminium Production 1.5 1.6 1.6

Table 19: Aluminium Production emissions (Mt CO2-e) and emissions intensity (Mt CO2-e/Mt Al) in the projections

Sector 2020 2025 2030

Electricity (indirect emissions) 15 13 11

Industrial processes and direct combustion 3 3 3

Total emissions 18 16 14

Emissions intensity 11.5 10.2 8.8

Chemical industry emissions make up 14 per cent of emissions in the IPPU sector in 2019, and are projected to increase by 1 Mt CO2-e from 2020 to 2030, to 6 Mt CO2-e. The main drivers for projected emission growth is the increased production forecasts for facilities producing nitric acid and ammonia. These forecasts increase in line with growth in the iron ore and coal mining industries, which influence demand for explosives, as well as increasing demand from the fertiliser industry.

Figure 18: Emissions by subsector in 2020

Comparison to previous projectionsCompared to the 2018 projections, emissions are projected to be 0.6 Mt CO2-e higher in 2020 and 0.7 Mt CO2-e lower in 2030. The cumulative difference from 2021 to 2030 is an increase of 0.7 Mt CO2-e.

39

The largest revisions occur in the HFC subsector. Modelling of HFC emissions have been updated revising how the legislated HFC phase-down impacts pre-charged equipment, calibration with atmospheric observations, and the update of projection inputs. The 2019 projections also include proposed abatement measures to improve maintenance and leak testing of refrigeration and air conditioning equipment. Emissions from 2020 are projected to decline to 9 Mt CO2-e in 2030, which is a decline of 2 Mt CO2-e from the 2018 projections. The downward revision in the HFC subsector results in a cumulative reduction of 11 Mt CO2-e from 2021-2030.

Revisions in the HFC subsector are offset by higher emissions in the metal and chemical subsectors. Increased emissions in the metal industry follow revised production forecasts for the iron and steel industries. This results in metal emissions in 2030 being 1 Mt CO2-e higher in the 2019 projections, and a cumulative increase of 8 Mt CO2-e from 2021 to 2030. Chemical industry emissions include new facilities assumed to come online in the early 2020s, in addition to higher than expected increases in nitric acid production seen in 2019.

40

The agriculture sector includes emissions from biological processes associated with agricultural commodity production. This includes emissions from enteric fermentation (the digestive process of ruminant animals such as sheep and cattle), agricultural soils, manure management, liming and urea application, rice cultivation and field burning of agricultural residues. The agriculture sector does not include emissions from energy used in farm machinery or electricity use.

The bulk of agriculture emissions are methane and nitrous oxide. The emissions projections presented below are expressed as carbon dioxide equivalent.

Emissions trendsAgriculture emissions are projected to be 67 Mt CO2-e in 2020, the same as current levels, due to drought restricting growth in agricultural activities. Agriculture emissions are projected to be 74 Mt CO2-e in 2030, 11 per cent above 2020 levels, as agricultural activities slowly return to expected average seasonal conditions21.

21Expected average seasonal conditions reflect agricultural growth rates for commodities taken from ABARES and CSIRO. Growth rates reflect historical averages, as climate-adjusted productivity estimates are not currently available. More information is available in The Methodology report, Methodology for the 2019 Projections, on the Department’s website.

41

Figure 19: Agriculture emissions, 1990 to 2030

Grain fed beef and grazing beef trends

Agricultural outputs have a strong dependence on short-term climate variations, as shown in Figure 19, with on-going drought conditions leading to elevated levels of cattle sold in the short-term. There is an increase in grain fed beef in feedlots due to these cattle historically being more drought resistant than grazing beef. Grain fed cattle are also more emissions intensive than grazing beef due to higher energy uptake and an increased concentration of manure in feedlots.

Production of grain-fed beef is expected to grow as feed grain prices are predicted to fall due to improved winter crop production, a lower Australia dollar and an increase in global demand, improving the competitiveness of Australian beef exports. Table 20 shows that grazing beef emissions are projected to increase by 5 per cent from 2020 to 2030, an increase of less than 2 Mt CO2-e. Although grazing beef are anticipated to return to expected average seasonal conditions, the impact of drought and floods in recent years result in a lower percentage increase from 2020 to 2030 when compared to grain-fed beef.

Fertiliser trends

Fertiliser emissions reflect crop and animal production, generally declining in periods of drought, in line with crop and livestock production. Compared to the 2018 projections, fertiliser emissions have decreased by 23 per cent in 2030, the largest percentage change out of all agricultural commodities. Although fertiliser emissions are lower than the 2018 agriculture projections, there remains an upward trend in the 2019 projection from 2020 to 2030 as production is anticipated to return to expected average seasonal conditions.

Table 20: Agriculture emissions, Mt CO2-e


Grazing beef 31 32 32 5

Grain fed beef 3 3 4 29

Dairy 8 8 9 5

Sheep 14 15 15 13

42


Pigs 1 1 1 6

Crop 4 4 4 7

Other animals 1 1 1 8

Fertilisers 3 3 4 50

Lime and urea 3 3 4 29

Total 67 71 74 11


Other Livestock

Enteric fermentation emissions from livestock account for 73 per cent of total agriculture emissions, so changes in livestock numbers are a key driver of total emissions in this sector. Emissions from enteric fermentation are projected to be 49 Mt CO2-e in 2020 and 53 Mt CO2-e in 2030, an increase of 8 per cent. Figure 20 shows how grazing beef cattle is the largest contributing commodity to enteric fermentation emissions at 46 per cent in the year 2020, followed by sheep at 20 per cent.

Emissions from sheep are projected to fall in the short term as a result of continued dry conditions, before returning to expected average seasonal conditions. Strong international prices for sheep meat are anticipated to support a faster rebuilding of flock, compared to beef cattle. International import prices are also rising in the short term for pig meat due to the spread of African swine fever, pushing up Australian pork prices.

The subsector ‘Other animals’ includes emissions from commodities such as goats, horses, deer, buffalo, donkeys, emus and camels. Other animals are projected to slowly increase in emissions from 2020 to 2030 but will continue to account for less than 1 Mt CO2-e.

Figure 20: 2020 and 2030 livestock emissions, commodity categories

43

Comparison to previous projectionsCompared to the 2018 projections, emissions are lower in 2020 by 4 Mt CO2-e and lower in 2030 by 3 Mt CO2-e (i.e. emissions grow more slowly over the period). The largest revisions are in the grazing beef cattle and dairy numbers, which are significantly lower than last year. There was an upward revision of 2018 cattle numbers due to stronger than expected herd and flock building, however the lower cattle numbers forecast for 2020 have lowered total agriculture emissions overall. Unlike grazing beef and dairy cattle, grain fed beef is projected to maintain strong demand in international markets which has influenced a slight upwards revision from last year’s projections. Projected emissions from dairy cattle have declined as milk production is forecast by Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) to decrease in 2020 due to dry conditions and constrained profitability in the industry.

Figure 21: Changes from 2018 Agriculture Projections, cattle commodities

44

The waste sector covers emissions from the disposal of organic materials to landfill and wastewater emissions from domestic, commercial and industrial sources. Emissions are predominantly methane, generated from anaerobic decomposition of organic matter.

Emissions trendsWaste emissions are projected to be 12 Mt CO2-e in 2020, the same as current levels. Waste emissions are projected to decline to 11 Mt CO2-e in 2030 as a result of lower emissions from landfills driven by a decline in the amount of waste deposited and an increase in methane capture.

Solid Waste

Emissions emanate from waste deposited at landfills over more than 50 years depending on the type of waste and the conditions at the landfill. Therefore changes in the type and amount of waste deposited impact the generation of emissions over an extended period.

The projections take account of current policies and measures including the National Food Waste Strategy target to reduce food waste landfilled by 50 per cent per capita by 2030. The projections also include state and territory resource recovery targets. These measures contribute to a reduction in the amount of waste deposited at landfills and a change in the composition of waste.

45

Figure 22: Waste deposited at landfills, 2018 to 2030

A gradual decline in emissions from landfill is projected due to a forecast reduction in waste deposited at landfills, a declining proportion of food waste and a projected gradual increase in methane capture rates.

Emissions from the biogenic treatment of solid waste or compositing are projected to increase to 2030 as an increasing proportion of food waste is assumed to be diverted from landfills to composting.

Domestic and commercial wastewater emissions are projected to increase gradually as facilities support a larger population while emissions from industrial food production are projected to remain relatively unchanged to 2030.

Figure 23: Waste emissions, 1990 to 2030

46

Table 21: Waste emissions, Mt CO2-e


Solid waste - waste to landfill 8 7 7 -17

Solid waste - composting <1 <1 <1 84

Solid waste - incineration <1 <1 <1 7

Wastewater – domestic and commercial

2 2 2 6

Wastewater – industrial 1 1 1 0

Total 12 11 11 -8


Comparison to previous projectionsCompared to the 2018 projections, emissions are higher by 1 Mt CO2-e in 2020, 1 Mt CO2-e in 2030 and 17 Mt CO2-e cumulatively from 2021–2030. The 2019 projections are based on a new facility-by-facility model that takes account of the latest data, policies and developments impacting the waste sector. The 2018 projections assumed a rapid increase in methane capture rates at landfills in the early 2020s which is no longer considered likely. The 2019 projections assume a more gradual increase (0.3 per cent per annum) in the national methane recovery rate reaching 49 per cent in 2030.

47

The land use, land use change and forestry (LULUCF) sector includes both sources of greenhouse gas emissions and sinks that remove carbon dioxide from the atmosphere and sequester it as carbon in living biomass, debris and soils. The most influential source of emissions is clearing of forests. Other land sector categories (see below) include the establishment and ongoing management of forests, grazing land, and croplands.

The LULUCF sector projections are based on the UNFCCC inventory structure as described in Australia’s National Inventory Report 2017. The major categories used include:

forest land, including forest land remaining forest and land converted to forest (e.g. harvest and regeneration of native forests, establishment and harvest of plantations, wildfires and prescribed burning) and includes sinks from regrowing forest on previously cleared land, and carbon stored in harvested wood products and their disposal in landfill

forest clearing, emissions from the UNFCCC land use classification of forest converted to other land uses, includes direct clearing-related emissions and delayed emissions from previous clearing, mainly through the gradual loss of soil carbon over a number of years but excluding sinks from regrowing forests on previously cleared lands

cropland, i.e. woody horticulture and changes in soil carbon under herbaceous crops grasslands, i.e. changes in soil carbon through pastoral activities, fire management in savanna

rangelands and changes in shrubby vegetation extent on grasslands and wetlands and settlements, gains and losses of woody vegetation that is not already classified as forest

land (e.g. sparsely planted trees or shrubs) on wetlands and within settlement boundaries (from ABARES’ catchment-scale land-use mapping), as well as aquaculture activities, dredging of seagrasses and mangrove and tidal marsh conversions not already reported in forest land or forest conversions.

Emissions trendsLULUCF emissions have decreased since 1990 and are projected to reach -16 Mt CO2-e in 2020. Over the projection to 2030 the emission sink declines to -10 Mt CO2-e in 2030. This represents an increase of 37 per cent on 2020 levels. The sector is still a net sink.

48

Figure 24: Emissions and removals from land use, land use change and forestry (LULUCF), 1990 to 2030 (Mt CO2-e)

Table 22: Emissions and removals from land use, land use change and forestry (LULUCF), Mt CO2-e


Forests -63 -56 -52 17

Agricultural and other land -0.5 1 0 176

Forest conversion to agriculture and other land 48 44 42 12

Net LULUCF emissions -16 -11 -10 95

Harvested native forests

One of the main drivers in the declining trend in LULUCF emissions over the past decade has been the decline in log harvesting activity in Australia’s native forests.

Data published by the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) in the Australian Forest and Wood Production Statistics (AFWPS) September and December 2018 shows a reduction in harvesting over the period 2008 to 2013 and a stabilisation of the harvesting rate at about 4 million cubic metres per year (Figure 25).

49

Figure 25: Historical and projected harvested native forests emissions and harvesting activity

The decline in the rate of harvesting has resulted in an increase in sequestration from around -5 Mt CO2-e per year to around -30 Mt CO2-e per year. This has been a significant shift and is one of the main reasons the LULUCF sector is a net sink (Figure 25). Sequestration increases as the rate of harvesting reduces because previously harvested forests continue in their maturation phase during which they are a net sink.

The projections of emissions from harvested native forest is based on projected harvest rates published by ABARES22. The ABARES harvesting projections show harvesting falling slightly from current levels but staying around 4 million cubic metres per year.

The ABARES harvesting projections are the activity data used to drive the native forest sub-sector emissions projections model. The emission projection for this source shows the sink maintaining at around -30 Mt CO2-e per year, reducing a little as the forests reach a mature phase when the rate of sequestration and emissions from the decay of debris begin to equalise. The ABARES projection does not include the Victorian Government’s recent decision to phase out Native Forest Harvesting.

Bush fires are large source of emissions in Australia’s forest sector. Australia’s national greenhouse gas inventory includes all anthropogenic fires. Approaches have been developed to identify non-anthropogenic natural disturbances, and carbon stock loss and subsequent recovery from nonanthropogenic natural disturbances are modelled to average out over time, leaving greenhouse gas emissions and removals from anthropogenic fires as the dominant result. Consistent with this method, the emissions projections include emissions from prescribed burning and assumes that emissions from wildfires average out over time.

Comparison to previous projectionsThe projections have been revised to reflect updates and improvements in the most recent National Inventory Report, submitted in April 2019. Compared to the 2018 projections, emissions are projected to be 2 Mt CO2-e lower in 2020 and 9 Mt CO2-e lower in 2030.

There are two main factors driving the LULUCF projections.

First, the Australian Government’s Climate Solutions Fund announced in February 2019 is estimated to deliver 103 Mt CO2-e of additional abatement over the period 2021-2030. The Fund is designed to continue the success of the Emissions Reduction Fund, which has funded abatement predominantly in the LULUCF

22Burns, K, Gupta, M, Davey, S, Frakes, I, Gavran, M & Hug, B 2015, Outlook scenarios for Australia’s forestry sector: key drivers and opportunities, ABARES report to client prepared for the Department of Agriculture, Canberra, April.

50

sector. For these projections it has been assumed that the majority of the CSF would fund further activity in the LULUCF sector, with 78 Mt CO2-e abatement included in this projection over the period 2021-2030.

Second, updates to the reporting of emissions in Australia’s national inventory has shown LULUCF continuing as a sink of around -19 Mt CO2-e in 2019 whereas the 2018 projections projected LULUCF emissions to be -16 Mt CO2-e in 2019. This lower starting point contributes to the lower emissions series.

51

Sensitivity Analyses Emissions projections are inherently uncertain, involving expert judgement and assumptions about global and domestic economies, policies and technologies. Sensitivity analyses have been prepared alongside the baseline emissions projections to assess how emissions are impacted by different economic and technology assumptions. The sensitivities do not assume any policy changes.

Three sensitivities have been prepared:

low economic growth high economic growth, and strong technology uptake.

When considered with the baseline projections, they present a possible range of emissions trajectories to 2030.

Low economic growth sensitivityThe low economic growth sensitivity assumes low economic growth both in Australia and across the globe. Compared to the baseline, these economic conditions are assumed to decrease demand for Australia’s products both domestically and internationally. This reduces energy demand from industry and households. In this sensitivity there is a weak economic case for fuel switching and adoption of energy efficiency.

Emissions in 2030 are projected to be 422 Mt CO2-e, 21 per cent lower than baseline emissions in 2020 and 17 per cent lower than the baseline emissions in 2030. In this sensitivity, Australia overachieves on its 2030 target by 88 to 155 Mt CO2-e, 139 Mt CO2-e more than the overachievement under the baseline.

High economic growth sensitivity The high economic growth sensitivity assumes high economic growth both in Australia and across the globe. Compared to the baseline, strong economic growth is assumed to increase demand for Australia’s products both domestically and internationally. This sees increased energy demand from industry and households. The economic conditions also create a strong economic case for fuel switching and adoption of energy efficiency.

Emissions in 2030 are projected to be 580 Mt CO2-e, 9 per cent above baseline emissions in 2020 and 13 per cent above the baseline emissions in 2030. In this sensitivity, the 2030 emissions reduction task is 912-979 Mt CO2-e, 928 Mt CO2-e higher than the emissions reduction task under the baseline.

Strong technology uptake sensitivity This sensitivity assumes a higher rate of technology change in Australia and the globe compared to the baseline. In this sensitivity, the costs of technologies, particularly renewables, batteries and electric vehicles, decline faster than in the baseline, encouraging greater uptake by households, businesses and industry. Globally, energy demand is lower due to efficiency improvements or competition from other countries or for other fuels, including renewables. This in turn lowers demand for Australia’s coal and LNG exports.

Emissions in the strong technology uptake sensitivity are projected to be 466 Mt CO2-e in 2030, 13 per cent below baseline emissions in 2020 and 9 per cent lower than baseline emissions in 2030. In this sensitivity, the 2030 emissions reduction task is 156-224 Mt CO2-e, 173 Mt CO2-e higher than the emissions reduction task under the baseline.

52

Figure 26: Sensitivities against baseline, 1990 to 2030

Table 23: Sensitivity results compared to baseline, Mt CO2-e

2005 2020 2025 2030

Baseline 611 534 516 511

Low economic growth 611 524 466 422

High economic growth 611 539 569 580

Strong technology uptake 611 529 499 466

Table 24: Cumulative emissions reduction task to 2030 under baseline and sensitivity analyses, Mt CO2-e

Cumulative emissions reduction task (26% below 2005)

Cumulative emissions reduction task (28% below 2005)

Baseline 395 462

Baseline with overachievement -16 55

Low economic growth -155 -88

High economic growth 912 979

Strong technology uptake 156 224

53

Emissions Projections by economic sectorThe emissions projections are prepared under the rules for reporting applicable to the United Nations Framework Convention on Climate Change (UNFCCC).

Emissions projections by economic sector provides information on projected emissions disaggregated by Australia-New Zealand Standard Industry Classifications (ANZSIC).

As part of ongoing improvement of the emissions projections, work has been undertaken to enable the preparation of the projections by economic sector. This has been done to show emissions under industries more people recognise. The emissions projections results have been mapped from emissions reporting sectors to economic sectors utilising the same methodology as is applied for the preparation of the National Inventory by Economic Sector23. Table 25 shows that, on an ANZSIC basis, electricity, gas and water, and primary industries are the largest sources of emissions.

Emissions from the electricity, gas and water economic sector are projected to fall by 40 Mt CO2-e from 2020 to 2030 as the emissions intensity of electricity generation declines.

Emissions from agriculture, forestry and fishing are currently at their lowest level since 1990 due to the drought and a net sink from forests. Emissions are projected to increase by 15 Mt CO2-e from 2020 to 2030 as livestock numbers increase over the projections period and the net sink from forests declines.

Emissions from mining decline from 2020 to 2025 due to lower fugitive emissions from LNG production before increasing to 2030 as coal and LNG production are forecast to grow. Other economic sectors are projected to be relatively unchanged from 2020 to 2030.

Table 25: Emission projections by economic sector, Mt CO2-e

Emissions by economic sector 2020 2025 2030

Primary Industries24 156 158 172

Agriculture, Forestry and Fishing 58 68 73

Mining 98 90 99

Manufacturing 55 55 56

Electricity, Gas and Water 185 163 145

Services, Construction and Transport 71 73 75

Residential 67 67 65

Total 534 516 511


23http://www.environment.gov.au/climate-change/climate-science-data/greenhouse-gas-measurement/publications/national-inventory- economic-sector-2017

24Primary Industries includes the subsectors of Agriculture, Forestry and Fishing, and Mining.

54

Figure 27: Emission Projections by Economic Sector25

25Primary industries is shown in its separate subsectors of Agriculture, Forestry and Fishing, and Mining, on this chart.

55

Appendix A – MethodologyAn extensive methodology for Australia’s emissions projections is provided as a separate document alongside the report. The methodology report, Methodology for the 2019 Projections, can be found on the Department’s website.

Accounting approachThe emissions projections are estimated on a United Nations Framework Convention on Climate Change (UNFCCC) accounting basis consistent with Australia’s accounting for the 2030 targets. Reporting years for all sectors are reported for financial years as key data sources are published on this basis. For instance, ‘2030’ refers to financial year 2029–30.

Methodology for calculating Australia’s cumulative emissions reduction task to 2020Australia assesses progress against its 2020 target, of five per cent below 2000 levels, using an emissions budget approach. A trajectory to achieve the emissions budget is calculated by taking a linear decline from 2010 to 2020, beginning from the Kyoto Protocol first commitment period target level and finishing at five per cent below 2000 level emissions in 2020. Australia’s progress is assessed as the difference in cumulative emissions between projected emissions and the target trajectory over the second commitment period of the Kyoto Protocol (2013 to 2020).

Australia’s 2020 target is inclusive of all emissions and removals of greenhouse gases reported in its annual national inventory under the Kyoto Protocol. This includes the gases CO2, CH4, N2O, HFCs, PFCs, SF6 and NF3 and the energy, industrial processes and product use, agriculture and waste sectors and Kyoto Protocol LULUCF sub-classifications (deforestation, afforestation, reforestation, forest management, cropland management, grazing land management and revegetation). LULUCF emissions from Kyoto Protocol classifications are different to the LULUCF emissions based on UNFCCC classifications published in this report and used for the 2030 target.

56

Figure 28: Australia’s cumulative emissions reduction task to 2020

2013 2014 2015 2016 2017 2018 2019 2020 2013–2020

Budget trajectoryMt CO2-e

614 599 585 571 556 542 528 513 4508

2019 projections

538 533 527 527 529 528 530 532 4243

Methodology for calculating Australia’s cumulative emissions reduction task to 2030Australia also assesses progress against its 2030 target, of 26 to 28 per cent below 2005 levels, using an emissions budget approach. Australia considers its 2030 emissions budget as a ten year commitment from 2021 to 2030. A trajectory to achieve the emissions budget is calculated by taking a linear decline from 2020 to 2030, beginning from the 2020 target of 5 per cent below 2000 levels and finishing at 26 per cent and 28 per cent below 2005 levels in 2030. Australia’s progress is assessed as the difference in cumulative emissions between projected emissions and the target trajectory from 2021–2030.

Australia’s 2030 target is inclusive of all emissions and removals of greenhouse gases reported in its annual national inventory under the UNFCCC. This includes the gases CO2, CH4, N2O, HFCs, PFCs, SF6 and NF3 and the energy, industrial processes and product use, agriculture and waste sectors and UNFCCC LULUCF sub-classifications (cropland, forest land, grassland, harvested wood products, settlements and wetlands).

57

Figure 29: Australia’s cumulative emissions reduction task to 2030

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2021–2030

Budget trajectory (26% target)Mt CO2-e

504 498 492 486 481 475 469 463 458 452 4777

Budget trajectory (28% target)Mt CO2-e

502 495 488 481 474 468 461 454 447 440 4710

2019 projections 524 522 521 517 516 514 513 515 515 511 5169

Emission Projections by Economic SectorThis report uses the ANZSIC hierarchy from the Australian and New Zealand Standard Industrial Classification 2006 (ABS cat no. 1292.0). The mappings applied are based on the allocations used for the National Inventory by Economic Sector 2017.

The emission projections by economic sector allocates Australia’s total emissions on a UNFCCC reporting basis consistent with Australia’s 2030 target. The National Inventory by Economic Sector 2017 allocates Australia’s total emissions on a Kyoto reporting base, consistent with Australia’s 2020 target.

58

Data sources The key data sources include:

historical emissions data from the National Inventory Report 2017, released in May 2019, and the Quarterly Update of Australia’s National Greenhouse Gas Inventory 26,

macroeconomic assumptions of gross domestic product and exchange rates consistent with the Australian Government’s 2019–20 Budget,

population growth from the Australian Bureau of Statistics and the Treasury; and commodity forecasts and activity levels informed by a number of publications and data from government

agencies and other bodies, including:

the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES 2019) the Department of Industry, Innovation and Science the Bureau of Infrastructure, Transport and Regional Economics the Australian Energy Market Operator.

The Department applies consistent assumptions across all sectors of these projections.

Consideration of policiesThe projections are developed on the basis of the following adopted policies and measures:

the Emissions Reductions Fund the Climate Solutions Package Large-scale Renewable Energy Target and the Small-scale Renewable Energy Scheme Implemented initiatives under the National Energy Productivity Plan, the ARENA and the CEFC State renewable energy targets in Queensland, Victoria and the Northern Territory State-based waste policy frameworks and the National Food Waste Strategy, and The legislated phase-down of hydrofluorocarbons Energy Performance, refrigeration and air conditioning measures.

They do not take account of estimates of abatement from potential future policies and measures and in particular do not yet include the electric vehicle strategy included in the Climate Solutions Package.

Emissions Reduction Fund The projections are developed on the basis of current policies and measures. One of these measures is the Emissions Reduction Fund (ERF). The ERF is a voluntary scheme that provides incentives for emission reduction projects. Eligible project types include energy efficiency, vegetation, savanna burning, agriculture, industrial fugitives, transport and waste. Total funding allocated to the ERF is $2.55 billion and is projected to contribute 61 Mt CO2-e of abatement to 2020, and 240 Mt CO2-e over the period 2021 to 203027.

Climate Solutions FundThe Climate Solutions Fund (CSF) was announced in February 2019 to provide an additional $2 billion to continue purchasing low-cost abatement and build on the momentum of the ERF. Total funding allocated to the CSF is $2 billion and is projected to contribute 103 Mt CO2-e over the period 2021 to 203028.

26June Quarter 2019. 27Abatement from the ERF includes the results of the first nine auctions, with calculated estimates for future auctions based on set

assumptions. 28The assumptions underpinning estimated abatement for the CSF at the time of the policy announcement were retained for this year’s

projections.

59

Institutional arrangements and quality assuranceThe projections are prepared by the Department of the Environment and Energy using the best available data and independent expertise to analyse Australia’s future emissions reduction task. The Department engages with a technical working group comprising of representatives from Commonwealth agencies to test the methodologies, assumptions and projections results. Australia makes formal submissions on its emissions projections to the United Nations and these are subject to UN expert review. The last review was completed in 2018.

The preparation of the emissions projections underwent a performance audit by the Australian National Audit Office (ANAO) in 2016 and 2017. The audit found the arrangements for preparing, calculating and reporting on Australia’s greenhouse gas emission projections were largely effective. The audit report, Accounting and Reporting of Australia’s Greenhouse Gas Emissions Estimates and Projections is published on the ANAO website.

Difference between projections and forecastsThe Department prepares emissions projections using the latest data including production and activity levels, commodity prices and macroeconomic assumptions. The Department makes reasonable assumptions about this data into the future based on the advice of other government agencies and external consultants. These include macroeconomic forecasts by the Australian Treasury; activity forecasts by other government agencies such as the Australian Bureau of Agricultural and Resource Economics and Sciences and the Department of Industry, Innovation and Science; forecasts by other public bodies such as the Australian Energy Market Operator; and announced investment intentions by businesses.

The projections are modelled taking this data into account and indicate what Australia’s future emissions could be if the assumptions that underpin the projections continue to occur. For example, the projections presume that assumptions around the current rates of economic and population growth, the take up of certain technologies and the impacts of current government policies will remain valid. The projections do not attempt to account for the inevitable, but as yet unknown, changes that will occur in technology, energy demand and supply and the international and domestic economy.

In contrast, emissions forecasts speculate on the expectations or predictions of what will happen in the future and thus what future emissions will be. In a forecast the assumptions represent expectations of actual future events or changes. For example, this could mean forecasting emissions based on alternative predictions of how technology may evolve, how consumers and businesses will react to these technological changes and subsequently what impacts this would have on emissions. Alternatively this could mean forecasting emissions based on expectations about restructures in the Australian economy. Often a number of different scenarios that reflect different forecast assumptions are undertaken at the same time.

Both projections and forecasts are inherently uncertain, involving judgements about the future growth path of global and domestic economies, policies and measures, technological innovation and human behaviour. This uncertainty increases the further into the future emissions are projected (or forecast).

The distinction between forecasts and projections can also be seen in the Treasury’s economic estimates underlying Australian Government fiscal projections. The estimates divide the forecast horizon into two distinct periods: the near-term forecast period which covers the first two years beyond the current financial year; and the longer-term projection period which includes the last two years of the forward estimates, and up to 36 more years for intergenerational analysis. The economic estimates over the forecast period are based on a range of short-run forecasting methodologies, while those over the projection period are based on medium-to long-run rules.

60

Feedback The Department of the Environment and Energy welcomes feedback regarding Australia’s Emissions Projections at [email protected].

61

mailto:[email protected]

Documents

Australia's Emissions Projects 2019 · Web viewAustralia’s emissions projections 2019 is licensed by the Commonwealth of Australia for use under a Creative Commons By Attribution