A “climate sharing system” has been proposed as the best way for Australia to tackle global climate change and avoid a domestic energy crisis.
Australia is rich in uranium, coal, gas, sun and wind, but a range of factors have now put the nation’s energy grid in a fragile state.
These include the steady closure of coal-fired power stations, long-term contracts to ship Australian gas overseas and wind power supply inconsistencies.
The Australian government has also failed to introduce a carbon pricing system or an emissions trading scheme. Amid the uncertainty this creates for the energy industry, providers have been reluctant to invest in new infrastructure or generating capacity. The results have been exorbitant energy price rises and blackouts – there was a state-wide blackout of South Australia in September 2016.
University of Adelaide resource economics professor Mike Young is an internationally renowned water industry expert who played a leading role in creating Australia’s water sharing system. He has proposed a plan where climate shares would be allocated to all power stations and other major greenhouse gas emitters in proportion to their current emissions.
“These systems are known to work so why not do them in carbon,” he told a Rural Media South Australia luncheon in Adelaide today.
“The system is surprisingly simple and easily understood. Every investor and every emitter is given a carbon account that looks just like a bank account. Emission allocations are credited to this account and as you use them, they are debited.”
Under the proposal, polluters could emit only according to the number of shares held, and these are systematically reduced over time.
Each year companies would be asked to give up 1% to 2% of their shares to be auctioned off.
Companies would have the opportunity to buy the shares back – and more – if they chose.
Shares could also be mortgaged or sold off with the money invested in cleaner technologies such as renewable energy to reduce emissions.
Australia has one of the highest per capita rates of greenhouse gas emissions. In 2016 this amounted to almost 540M.t of CO2. More than a third of these emissions came from electricity generation.
At a potential starting price of A$100 (£57) a share, Young said the “climate sharing system” in Australia would be worth about $54bn (£31bn), and administered by a new external body.
“What’s happening at the moment is we are having these big power spikes and surges because people don’t know what to do, the industry doesn’t know what to do and there’s no confidence about the long-term investment,” said Young.
“This solves that problem by putting a long-term plan together. It’s an industry-based plan where we put our scarce climatic resources to its best use and that’s what we’ve done with water.”