Investor News

Government squanders taxpayer billions on expensive CO2 reduction schemes

On Tuesday, 15 February 2011, environmental headlines read:

'Climate cash goes up in smoke'


'Billions blown on carbon schemes'

These reports in both the SMH and The Age have revealed the excessive cost of largely inefficient government-backed CO2 reduction schemes, finally alerting the broader public to the disappointing reality of many so-called 'solutions'.

The news reports highlighted the following:

  • $5.62 billion spent on CO2 reduction programs over 10 years
  • Average cost of $168 per tonne of CO2 saved (fiscal abatement cost)
  • Solar panels cost $300 a tonne CO2 saved
  • Ethanol costs $400 a tonne CO2 saved
  • Public support for climate action is being lost due to higher electricity prices

One can't help but ask why successive Governments have spent $5.62 billion of taxpayer dollars over the past ten years to achieve so little? Why has it taken ten years for the real cost to be disclosed? What solutions are available to help meet the national 5% target by 2020? Why the likes of Coldry were denied funding or support despite the potential to deliver significant reductions?

While it is encouraging to see that the mainstream media have caught on to the abatement cost issue, subscribers to our email updates were alerted to the issue when we released our report on CO2 reduction in the Victorian market last November (click here).

And again, when 'Age' business reporter Mat Murphy ran a small article in December on Coldry as a cheaper emission reducer (click here).

And possibly caught our Chief Executive Kos Galtos on SkyNews being interviewed about the very same thing on 5 January (click here).

We stated in that article;

Costly abatement measures risk real CO2 action

Whatever the reasons behind a decade of misspent taxpayer dollars, the fact ECT has a cost-effective Coldry-based solution means the Government can now take action to reduce CO2 while meeting its least-cost obligation to the public.

Put simply, Coldry can achieve Victoria's 20% CO2 reduction target for 27% less cost than gas and 46% less cost than wind per tonne of CO2 saved

What does that mean to Australia? When you consider Victoria's brown coal power generators account for 34% of CO2 emissions from electricity generation, we can easily assess the impact of Coldry deployment on Australia's emissions and achievement of targets in 2020:

  • National Target: 5% reduction on 2000 levels, or 496 million tonnes - 5% = 471 million tonnes
  • Current emissions of 548 Mtpa minus target emissions of 471 Mtpa = 77 Mtpa need to be eliminated by 2020

Scenario 1: Meet Victoria's legislated 20% CO2 reduction with a partial deployment of Coldry

A 20% reduction in Victoria power generation emissions means a saving of 13 Mtpa nationally at a cost of around $22 per tonne saved.

Scenario 2: Replace Victoria's brown coal power stations with a 100% Coldry-based solution

A reduction of 42% in CO2 from power generation in Victoria translates to a national reduction of around 27 Mtpa or a whopping 35% of the national target.

The key again is abatement cost. A Coldry-based solution can achieve these reductions for less than $25 per tonne of CO2 saved.

We are calling on the Government to provide disclosure and benchmarking of abatement costs (estimates and actual results) when assessing applications for funding or tracking performance results. And where the cost per tonne is excessive, provide a clear, transparent explanation to justify the decision to spend taxpayer money or pull the plug.

In fairness, the reports also highlighted that some of the Government's programs are quite cheap in reducing CO2. Initiatives like replacing hot water systems or light bulbs with more efficient ones have cost as little as $1 a tonne. But the overall tonnes saved are so low they don't contribute nearly enough toward achieving the 2020 target.

Unfortunately, there has been a dogmatic approach to selecting, funding and supporting CO2 reduction technologies. Bureaucrats have 'chosen' costly schemes like solar panels and ethanol subsidies. The abatement cost in many cases is prohibitive compared to Coldry and should only be a solution of last resort.

Solutions need to be supported by Government on an incremental, least-cost basis, in line with policy and public expectations, to ensure we achieve real CO2 action.

Coldry can deliver real CO2 reduction at minimum cost.

Update... Japan wastes billions on 'fruitless' carbon programs

In a follow-up to the above, The Japan Times Online have exposed the same problem in Japan, with ¥6.55 trillion (A$78 billion) of public monies poured into 'fruitless' programs over the past six years - click here to view the article.

A review by Japan's Department of Internal Affairs and Communication has highlighted the 'poor outcomes' and urged 'corrective action' by the various Ministries.

The notion that the Government needs to achieve results when spending taxpayers' money is front and centre, holding the various Ministries accountable for the poor results.

This echoes the same fundamental problem experienced here in Australia; bureaucrats mismanaging public funds by choosing costly, inefficient schemes while ignoring solutions that can actually deliver the millions of tonnes in CO2 cuts necessary at a reasonable cost.