Biomass burner scheme ‘Pythonesque’

Crikey’s Andrew Macintosh writes that the Oakeshott-Windsor plan to burn up our forests lacks logic as well as common sense.

Imagine a climate policy plan that was incapable of lowering emissions but could increase them, that resulted in no net gain in the amount of renewable electricity generation, and that cost Australian taxpayers millions each year. While this might sound like it is from a Monty Python skit, it is the effect of a plan put forward last week by independents Rob Oakeshott and Tony Windsor, which will allow biomass burners using native forest wood waste to generate Renewable Energy Certificates (RECs) under the Large-Scale Renewable Energy Target (LRET) scheme.

The standard justification for this idea is that native forest wood-waste projects lower greenhouse gas emissions by displacing more carbon-intensive forms of electricity generation. Because of this, the native forestry industry claims it should be able to access RECs as a means of subsidising the activity.

At a superficial level, the argument sounds compelling – surely burning wood is cleaner than burning coal? However, on closer inspection, it is demonstrably false.

To understand why, you have to start with Australia’s emission targets, which cap national emissions. While the cap is in place, nothing that affects emissions within the sectors that count towards the cap should have any influence on the total national or global emissions outcome. All it will achieve is to change the distribution of emissions between sectors, countries and/or time. So, if native forest biomass projects did displace fossil-fuel-based electricity generation, as the industry argues it does, it would not lower emissions but simply mean that the emissions would come from another source.

An easy way to think of this is to envisage a magic tub of Neapolitan ice-cream that is always full, where you can change the proportions of chocolate, vanilla and strawberry. You can have more chocolate but it means having less vanilla or strawberry, or you can have more strawberry but less chocolate or vanilla, and so on. Whatever combination you choose, you’ll always end up with the same amount of ice-cream in the tub. The same goes for emissions under a cap; fewer emissions from one source means there must be more from another.

On 1 July 2015, when the carbon price becomes a cap-and-trade scheme, this will apply doubly. We will have an emission cap within an emission cap and no amount of abatement effort directed at the electricity sector, or any other ‘counted’ sector, will be able to lower net emissions.

The second hole on the independents’ plan is that allowing forest biomass projects access to RECs will not increase the amount of renewable electricity generation. This is because the LRET scheme sets a mandatory amount of renewable electricity that must be generated each year. Because of this, the only thing allowing native forest wood-waste into the scheme will achieve is to displace other forms of renewable electricity. Rather than having wind, hydro or some other form of renewable electricity, we’ll get native forest biomass. So, contrary to what is so often claimed, burning native forest biomass won’t displace fossil-fuel-based electricity generation and won’t increase renewable generation.

Substituting native forest biomass for another renewable generation source is particularly problematic because of the nature of the technology. The stated purpose of the LRET is to lower the cost of low-emissions technology and, thereby, reduce the long-term cost of cutting greenhouse emissions. Cutting emissions is primarily the job of the carbon pricing scheme and other regulatory mechanisms. Renewable-energy support schemes, such as the LRET, are supposed to complement the carbon pricing scheme by driving down the cost of alternative technologies more rapidly than would otherwise occur.

In the case of biomass burning, this is already a mature technology. It has been around for eons and the cost reduction benefits society will reap from allowing native forest biomass projects it to access RECs are likely to be negligible. This is not the same for many other types of renewables, which are immature and have a considerable way to go before they reach their potential. By pushing these other technologies aside, native forest biomass projects will undermine the very purpose of the LRET.

The damage done by including native forest biomass in the LRET may not end there. By increasing the profits from native forestry operations, the independents’ scheme could increase native forest harvesting. If Australia’s greenhouse accounting rules remain as they are, and forestry management is excluded from the national target, the impact of the increase in harvesting will be to increase global greenhouse emissions. If Australia amends its rules and counts forest management towards its emissions target, the increase in harvesting won’t increase global emissions but it will lead to a reduction in Commonwealth revenues from the carbon pricing scheme. Because of this, the Australian taxpayer could end up paying twice for these projects: once through the LRET scheme and again as a result of the lost scheme revenues.

To sum up, the plan can’t lower emissions but could increase them; it will displace other forms of renewable energy and sabotage the operation of the LRET scheme; and it could cost millions. For bad policy, it is hard to beat.

*Andrew Macintosh is the associate director of the ANU Centre for Climate Law & Policy