AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS. Quarterly Update of Australia s National Greenhouse Gas Inventory

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1 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory March Quarter 2013

2 Commonwealth of Australia Published by the Department of the Environment: ISSN (print), ISSN (online) Copyright notice: Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia. Disclaimer: While reasonable efforts have been made to ensure that the contents of this publication are factually correct, the Commonwealth does not accept responsibility for the accuracy or completeness of the content, and shall not be liable for any loss or damage that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this publication. AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

3 CONTENTS 1. Overview 2 2. Sectoral analysis Energy Electricity Energy Stationary energy excluding electricity Energy Transport Energy Fugitive emissions Industrial processes Agriculture Waste Sectoral summary including land use, land use change and forestry Sectoral analysis Land use, land use change and forestry Deforestation Afforestation and reforestation Australia s first commitment period Kyoto target Emissions per capita and per dollar of GDP Updated Global Warming Potentials Technical notes Data tables Related publications and resources 28 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

4 1. OVERVIEW Table 1: National Greenhouse Gas Inventory 1, March quarter 2013, emissions growth rates March quarter Year to March Quarterly change seasonally adjusted and weather normalised trend 2 0.5% Quarterly change seasonally adjusted and weather normalised 0.2% Annual change over year to March 0.0% Summary of quarterly emissions Emissions increased in the March quarter 2013, with trend emissions growing by 0.5%. Seasonally adjusted and weather normalised emissions increased 0.2% on the previous quarter (Figures 1-3). Figure 1: National Greenhouse Gas Inventory 1, quarterly emissions growth rates, seasonally adjusted and weather normalised and trend 2, March quarter The primary contributor to the quarterly trend increase in emissions was increases in the fugitive emissions (section 2.4) and stationary energy excluding electricity (section 2.2) sectors reflecting increased economic activity in these sectors. This was partially offset by a trend decrease in emissions in the electricity sector (section 2.1) due to continued declines in electricity demand and changes in the generation fuel mix. 4% 3% 2% 1% 0% -1% -2% -3% -4% 4% 3% 2% 1% 0% -1% -2% -3% -4% Seasonally adjusted and weather normalised Trend Source: Department of the Environment estimates. 1 Excluding emissions from Land Use, Land Use Change and Forestry (LULUCF). 2 Original, seasonally adjusted, weather normalised and trend are defined in Section 8: Technical Notes. 2 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

5 Figure 2: National Greenhouse Gas Inventory, 3 quarterly, seasonally adjusted and weather normalised and original 2 emissions, March quarter Summary of annual emissions Annual emissions for the year to March 2013 are estimated to be Mt CO 2 -e. This represents zero growth in emissions when compared with the year to March Annual emissions to March each year are presented in Figure Mt CO 2 -e Figure 4: National Greenhouse Gas Inventory, 3 annual, original emissions, year to March quarter Original emissions Seasonally adjusted and weather normalised Mt CO 2 -e Source: Department of the Environment estimates. Figure 3: National Greenhouse Gas Inventory, 3 quarterly, trend emissions, March quarter Mt CO 2 -e Annual emissions Source: Department of the Environment estimates. For the year to March 2013, there was a decline in emissions from electricity (section 2.1), reflecting lower electricity demand and changes in the generation mix. This decline was largely offset by an increase in fugitive emissions (section 2.4), resulting from increased production activity in the coal mining and natural gas sub-sectors Trend Source: Department of the Environment estimates. 3 Excluding emissions from Land Use, Land Use Change and Forestry (LULUCF). AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

6 Sectoral summary The National Greenhouse Gas Inventory, disaggregated by sector for the year to the March quarter for 2012 and 2013, is presented in Table 2. This table excludes the LULUCF sectors of deforestation and afforestation and reforestation, which are discussed in sections 3 and 4. Figure 5: Emissions by sector, 4 Australia, year to March quarter, Waste The annual emissions by sector over the year to the March quarter are presented in Figure 5. This figure illustrates the relative size of each of the sectors in Table 2. The quarterly and annual changes in emissions for each of these sectors are presented in section 2. Mt CO 2 -e Agriculture Industrial processes Fugitive emissions Transport Stationary energy excluding electricity Electricity Source: Department of the Environment estimates. Table 2: National Greenhouse Gas Inventory, 4 original emissions by sector, year to March 2012 and 2013 Sector Annual emissions (Mt CO 2 -e) Year to March 2012 Year to March 2013 Change (%) Energy Electricity % Energy Stationary energy excluding electricity % Energy Transport % Energy Fugitive emissions % Industrial processes % Agriculture % Waste % National Inventory Total (excluding LULUCF) % Source: Department of the Environment estimates. 4 Excluding emissions from Land Use, Land Use Change and Forestry (LULUCF). 4 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

7 Sectoral trends since 1990 Since 1990, the National Greenhouse Gas Inventory (excluding LULUCF) has grown by 33.3%, reaching Mt CO 2 -e in the year to March 2013, compared with Mt CO 2 -e in the 1990 base year (year to June). Figure 7: Percentage change in emissions by sector since 1990, Australia, year to June, % The electricity sector has experienced the largest growth since 1990, increasing by 57.5 Mt CO 2 -e in the year to March In percentage terms, electricity and stationary energy excluding electricity grew 44.4% and 47.9% respectively. Emissions from transport grew 50.1%, fugitive emissions increased by 41.4%, industrial processes grew 29.3%, and agriculture increased by 4.2%. In contrast, emissions from the waste sector have declined by 26.5% since Change since 1990 (%) 45% 30% 15% 0% -15% -30% Figures 6 and 7 present the growth in emissions from each sector from the year to June 1990 to the year to June 2012, in Mt CO 2 -e and in percentage terms. Electricity Transport Industrial processes Waste Stationary energy excluding electricity Fugitive emissions Agriculture Figure 6: Change in emissions by sector since 1990, Australia, year to June, Source: Department of the Environment estimates. Forthcoming Recalculations Change since 1990 (Mt CO 2 -e) Electricity Transport Industrial processes Waste Source: Department of the Environment estimates. Stationary energy excluding electricity Fugitive emissions Agriculture A key input to Australia s National Greenhouse Gas Inventory is fuel consumption data produced by the Bureau of Resources and Energy Economics (BREE) through its annual Australian Energy Statistics. The dataset is updated annually and consists of detailed energy consumption, production and trade statistics. The 2013 edition of the Australian Energy Statistics was published in July and provides national energy data for as well as recalculations to earlier financial years. The recalculations reduce the level of fuel consumption in several sectors and will likely result in a decrease in estimated emissions. The net effect of the recalculations is estimated to be a reduction in the national inventory total by around 1% in and and 1½% in and The Department will incorporate the results in the next Quarterly Update. 5 The long term trends are displayed using years to June, consistent with Australia s international reporting. AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

8 2. SECTORAL ANALYSIS 2.1 Energy Electricity The electricity sector consists of emissions from the generation of electricity by combustion of fuels, mainly coal and natural gas. Renewable sources of electricity (such as hydroelectricity, wind and solar) do not emit greenhouse gases. Original emissions and seasonally adjusted and weather normalised estimates of quarterly emissions are presented in Figure 8. Figure 8: Electricity, quarterly, original emissions and seasonally adjusted and weather normalised, March quarter Electricity generation is the largest source of emissions in the national inventory, accounting for 34% of emissions in the year to March Electricity sector emissions have declined significantly from peaks recorded in Temperature influences electricity demand, and is an important predictor of electricity sector emissions in Australia. Adjustments for temperature effects are made to the time series of emissions, in order to more clearly reflect the impacts of other underlying factors. 6 Two temperature adjustments are made: Mt CO 2 -e (1) Seasonal adjustment electricity demand has two seasonal peaks each year, one in winter (associated with demand for heating) and one in summer (associated with demand for cooling). The seasonal adjustment is a first-order adjustment that systematically corrects for average seasonal fluctuations; and (2) Weather normalisation 7 - In addition to the average seasonal effects, there are frequent irregular temperature fluctuations around seasonal averages, which are not captured by the seasonal adjustment process. For example, an unusually cold winter will tend to result in even higher emissions than normal in the September quarter, since demand for electricity for heating is greater than normal. The weather normalisation is a second-order adjustment that systematically corrects for these additional temperature effects on electricity demand. More information on seasonal adjustment, trend, original and weather normalisation analysis is in Section 8 Technical Notes. Original emissions Source: Department of the Environment estimates. Seasonally adjusted and weather normalised emissions Original emissions from electricity generation increased by 3.6% in the March quarter An increase in original emissions is typical for the March quarter as hotter temperatures increase demand for electricity. On a seasonally adjusted and weather normalised basis, March 2013 emissions were 0.2% higher than the December 2012 quarter. Trend emissions decreased by 0.2% in the March 2013 quarter, moderated by the strong decline experienced in September Compared with the same quarter from the previous year, seasonally adjusted and weather normalised emissions in March 2013 were 5.5% below emissions from the previous year. These results cover all electricity emissions in Australia including the National Electricity Market (NEM), Western Australia s South West Interconnected System (SWIS) and other regional networks. 6 In the electricity sector, the seasonally adjusted and trend estimates include weather normalisation, since electricity emissions are significantly influenced by quarterly variations around average seasonal temperatures. All other sectors are presented without weather normalisation, as emissions in these sectors are not significantly influenced by variations from average seasonal temperatures. See Section 8: Technical Notes for more details on seasonal adjustment, trend analysis and weather normalisation. 7 The weather normalisation methodology is described in detail in Section 7: Special Topic of the December 2011 edition of the Quarterly Update. 6 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

9 The NEM covers Queensland, New South Wales, Victoria, South Australia and Tasmania and accounts for over 80% of total Australian electricity generation. Electricity demand in the NEM Figure 9. Figure 10: Annual electricity generation by fuel in the National Electricity Market, year to March quarter Over the year to March 2013, annual emissions from electricity generation fell by 6.1%. This was partially attributed to a decrease in demand in the NEM (Figure 9). Demand in the year to March 2013 was 2.4% lower than the year to March 2012, registering the lowest level seen since Tasmania joined the NEM in 2006 (Figure 9). Figure 9: Annual metered electricity demand in the National Electricity Market, year to the quarter, TWh Black coal Brown coal Gas Hydroelectric Other renewables March 2009 March 2010 March 2011 March 2012 March 2013 TWh Source: Australian Energy Market Operator (AEMO, 2013), obtained using NEM-Review software. Since 1990, emissions from the electricity sector have increased by 44.4%, reaching Mt CO 2 -e in the year to March 2013, compared to Mt CO 2 -e in the 1990 base year (year to June). However, annual emissions from electricity have decreased in recent years, remaining below their peak of Mt CO 2 -e in Source: Australian Energy Market Operator (AEMO, 2013), obtained using NEM-Review software. Note: The data in Figure 9 includes target demand and intermittent generation. Changes in the fuel mix used to generate electricity have also contributed to the recent decline in emissions. Over the year to March 2013, generation in the NEM from black coal decreased by 5.3% and brown coal generation decreased by 10.8%, with both fuels registering their lowest generation levels in more than a decade. Natural gas generation increased 9.4% to a record annual level while hydroelectric generation grew 33.6%. Generation from other renewables continues to grow, increasing by 6.2%, from a proportionately small base (Figure 10). 2.2 Energy Stationary energy excluding electricity Stationary energy excluding electricity includes emissions from direct combustion of fuels, predominantly in the manufacturing, mining, residential and commercial sectors. In the year to March 2013, stationary energy excluding electricity accounted for 17% of Australia s national inventory. Figure 11 presents the emissions per quarter from the major sub-categories for stationary energy excluding electricity, decomposed into the following categories: Energy industries includes fuel combustion in the petroleum refining, oil and gas extraction and processing, coal mining and solid fuel manufacturing sectors. Emissions from electricity generation are analysed separately (section 2.1); Manufacturing industries and construction includes fuel combusted in the manufacturing, non-energy mining and construction sectors; and 8 The data presented in Figure 9 represents demand for the year to the quarter in the x-axis. For example, December 2012 correlates to demand from 1 January 2011 to 31 December 2012 and September 2012 correlates to demand from 1 October 2011 to 30 September Other sectors includes fuel combustion by the commercial, institutional, residential, agriculture, fishery and forestry and military sectors. AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

10 In the March 2013 quarter, emissions from stationary energy excluding electricity increased by 0.8% in trend terms. The increase was driven by the maintenance of increased emissions from natural gas extraction (a sub-sector of other energy industries). This trend increase was partially offset by decreases in emissions from fuels combusted in the manufacture of non-ferrous metals (a sub-sector of manufacturing industries and construction, Figure 11) and fuels combusted in coal mining (a sub-sector of energy industries, Figure 11). Annual emissions in stationary energy excluding electricity increased by 1.6% over the year to March This increase is predominantly driven by increased emissions from fuels combusted in oil and natural gas extraction, compared with the previous 12 months. This annual increase was partially offset by decreases in fuels combusted in the manufacture of iron and steel and non-ferrous metals (both are sub-sectors of manufacturing industries and construction, Figure 11). Figure 11: Quarterly emissions from stationary energy excluding electricity, Mt CO 2 -e The main fuels used for transport are automotive gasoline (petrol), diesel oil, liquefied petroleum gas (LPG) and aviation turbine fuel. In the year to March 2013, transport accounted for 17% of Australia s national inventory. Emissions from the transport sector increased 0.9% in trend terms in the March 2013 quarter. Annual emissions from transport are estimated to have increased by 3.1% over the year to March The primary drivers were increases in the consumption of diesel oil in heavy-duty trucks and buses and light commercial vehicles, and in the consumption of aviation turbine fuel in civil aviation. In the Quarterly Update, percentage changes in national liquid fuel consumption apply across the multiple sectors that consume these fuels. Therefore, it is possible that increases in diesel consumption are somewhat overstated in the transport sector, and may be re-allocated to the stationary energy excluding electricity sector when final data sources become available. Annual consumption of the major liquid fuels is presented in Figure 12. This figure reflects all consumption, regardless of sector, however domestic transport accounts for over 70% 9 of liquid fuels consumed in Australia. The past five years have seen an overall decrease of 0.2% in consumption of all automotive gasoline (including ethanolblended) and strong increases in diesel and aviation turbine fuel consumption of 19.9% and 24.1% respectively. Figure 12: Consumption of major liquid fuels, year to March, Energy industries excluding electricity Manufacturing industries and construction Other sectors Sources: Department of the Environment estimates from AGEIS; ABS, Australian National Accounts: National Income, Expenditure and Product (tables 1 and 37); ABS, Production of Selected Construction Materials (table 2). Gigalitres Since 1990, emissions from the stationary energy excluding electricity sector have increased by 47.9%, to 96.4 Mt CO 2 -e in the year to March 2013, compared to 65.2 Mt CO 2 -e in the 1990 base year (year to June). 2.3 Energy Transport The transport sector includes emissions from the direct combustion of fuels in transportation by road, rail, domestic aviation and domestic shipping. Automotive gasoline Ethanol blended Diesel Aviation turbine fuel Liquid petroleum gas Fuel oil Sources: BREE 2013, Australian Petroleum Statistics. 9 Bureau of Resources and Energy Economics (2013). Australian Energy Statistics: Table F 8 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

11 Since 1990, emissions from the transport sector have increased by 50.1%, to 93.1 Mt CO 2 -e in the year to March 2013, compared to 62.0 Mt CO 2 -e in the 1990 base year (year to June). Passenger cars were the largest transport source, contributing 42.6 Mt CO 2 -e. This is an increase of 20.6% from Heavy-duty trucks and buses increased 86.3% to 21.2 Mt CO 2 -e and light commercial vehicles increased 90.4% to 14.2 Mt CO 2 -e. Emissions from domestic air transport have experienced the largest growth since 1990, increasing 166.8% to 7.8 Mt CO 2 -e. 2.4 Energy Fugitive emissions Fugitive emissions occur during the production, processing, transport, storage, transmission and distribution of fossil fuels such as black coal, crude oil and natural gas. Emissions from decommissioned underground coal mines are also included in this sector. In the year to March 2013, fugitive emissions accounted for 8% of Australia s national inventory. Fugitive emissions from fuel extraction have increased 3.8% in trend terms in the March quarter Annual emissions in this sector have increased by 12.7% over the year to March This annual increase was driven by a 6.3% increase in raw black coal production 11 and a 12.9% increase in production of natural gas. 10 Coal mine emissions increased, in part, due to the resumption of a portion of NSW underground production following operational setbacks encountered in the previous annual period. In addition, production from NSW open cut mines saw a 12.0% increase. The great majority of increased coal production is exported, with black coal exports increasing by 10.1% over the corresponding period. Since 1990, fugitive emissions have increased by 41.4%, reaching 45.8 Mt CO 2 -e in the year to March 2013, compared to 32.4 Mt CO 2 -e in the 1990 base year (year to June). Fugitive emissions from solid fuels contributed the largest volume of emissions, growing 65.4% from 19.3 Mt CO 2 -e in 1990 to 31.9 Mt CO 2 -e in the year to March Figure 13 provides further detail on the sources of fugitive emissions from coal mining. Fugitive emissions have not grown as fast as coal production principally because, since 1998, there has been an increasing trend in activity from surface mines compared to underground mines. Within underground mines, there has also been a decreasing share of production from the gassiest of mines, and technologies have been implemented to currently recover around 20% of coal mine waste gases from underground coal mines for electricity generation. Figure 13: Fugitive CO 2 -e emissions from coal mining from Australia s National Inventory Report, year to June, Mt CO 2 -e Underground mines Post mining Open cut mines Decommissioned mines Flaring Production Sources: Department of the Environment estimates. Fugitive emissions from the extraction of oil and natural gas have increased 5.8% from 13.1 Mt CO 2 -e in 1990 to 13.9 Mt CO 2 -e in the year to March Since 1990, fugitive emissions growth of 22.9% in natural gas extraction has been tempered by a 1.1% decrease in venting and flaring and a 31.9% decline in oil extraction. 2.5 Industrial processes Emissions from industrial processes occur as the result of by-products of materials and reactions used in production processes. In the national inventory, this sector includes emissions from processes used to produce chemical, metal, and mineral products, as well as emissions from the consumption of synthetic gases. In the year to March 2013, industrial processes accounted for 6% of Australia s national inventory Mt Figure 14 presents the emissions per quarter for the major sub-sectors comprising industrial processes; chemical industry, consumption of hydrofluorocarbons (HFCs) and sulphur hexafluoride (SF 6 ), metal production, mineral products and other production. 10 BREE, Resources and Energy Quarterly, June Quarter AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

12 Figure 14: Quarterly emissions from industrial processes, Mt CO 2 -e Chemical industry Mineral products Consumption of halocarbons and sulphur hexafluoride Sources: Department of the Environment estimates based on Resources and Energy Quarterly, June Quarter 2013 (BREE). Trend emissions for industrial processes increased by 1.1% in the March quarter Over the year to March 2013, a 17.9% reduction in iron and steel production contributed to the decrease of 0.4% in industrial processes emissions compared to the year to March This annual decrease includes a drop in emissions resulting from the closure of a blast furnace in Since 1990, emissions from industrial processes have increased by 29.3%, to 31.9 Mt CO 2 -e in the year to March 2013, compared to 24.7 Mt CO 2 -e in the 1990 base year (year to June). Increases in emissions from the chemical industry and mineral products have been partially offset by a decrease in emissions from metal production. Industrial processes emissions from metal production decreased 35.3% to 10.1 Mt CO 2 -e in the year to March 2013, compared with 15.6 Mt CO 2 -e in the 1990 base year (year to June). Since 1990, emissions from the chemical industry are up 185.3% to 5.9 Mt CO 2 -e and emissions from the consumption of halocarbons and sulphur hexafluoride have grown from 0.2 Mt CO 2 -e in 1990 to 9.2 Mt CO 2 -e in the year to March Agriculture Metal production Other production Emissions from agriculture include methane and nitrous oxide from enteric fermentation in livestock, manure management, rice cultivation, agricultural soils, savanna burning and field burning of agricultural residues. In the year to March 2013, agriculture accounted for 16% of Australia s national inventory. The agriculture sector is the dominant source for both methane and nitrous oxide emissions. Agriculture emissions have increased by 3.0% for the year to March 2013 compared with the previous twelve months. This increase is primarily driven by increases in emissions from savanna burning and enteric fermentation emissions from livestock. With two years of high rainfall the area of savanna burnt is forecast to increase significantly in Australia s 2012 and 2013 National Inventory Reports (to be submitted in 2014 and 2015 respectively). These good seasonal conditions have also contributed to high levels of crop production and increases in livestock populations as farmers rebuild their herds following the prolonged drought. Emissions for the year to March 2013 were 90.1 Mt CO 2 -e, which is 4.1% higher than the 1990 base year emissions of 86.5 Mt CO 2 -e. Agricultural emissions by sub-sector are presented in Figure 15. Figure 15: Agriculture emissions from Australia s National Inventory Report by sub-sector, to and preliminary estimates for Mt CO 2 -e Source: Department of the Environment estimates. 2.7 Waste Enteric fermentation Manure management Agricultural soils Prescribed burning of savannas Rice cultivation and field burning of agricultural residues The waste sector includes emissions from landfills, wastewater treatment, waste incineration and the biological treatment of solid waste. Emissions largely consist of methane, which is generated when organic matter decays under anaerobic conditions. In the year to March 2013, waste accounted for 2% of Australia s national inventory. Emissions of carbon dioxide from the decay of organic matter under aerobic conditions do not count towards the national inventory since an equivalent amount of carbon dioxide is considered to have been removed from the atmosphere during the life cycle of the living biomass (for example, during plant growth). 10 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

13 Across the year to March 2013, annual emissions from waste decreased 0.3%. Figure 16 presents the relative size of the various waste sub-sectors. The largest sub-sector is solid waste disposal on land. Figure 16: Waste emissions from Australia s National Inventory Report by sub-sector, to Mt CO 2 -e Solid waste disposal on land Wastewater handling Waste incineration and biological treatment of solid waste Source: Department of the Environment estimates. Since 1990, emissions from the waste sector have declined by around 26.7%, to 12.8 Mt CO 2 -e in the year to March 2013, compared to 17.4 Mt CO 2 -e in the 1990 base year (year to March). While methane generation from landfills has increased since 1990, emissions from this source have been significantly reduced through growth in methane recovery. Methane recovery has increased from 0.6 Mt CO 2 -e in 1990 to over 6.0 Mt CO 2 -e in the year to March AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

14 3. SECTORAL SUMMARY INCLUDING LAND USE, LAND USE CHANGE AND FORESTRY Table 3: National Greenhouse Gas Inventory, net emissions by sector, year to March 2012, 2013 Sector Annual net emissions (Mt CO 2 -e) Year to March 2012 Year to March 2013 Change (%) Energy Electricity % Energy Stationary energy excluding electricity % Energy Transport % Energy Fugitive emissions % Industrial processes % Agriculture % Waste % National Inventory Total (excluding LULUCF) % LULUCF Deforestation % LULUCF Afforestation and reforestation % Total (including LULUCF) % The national inventory disaggregated by sector for the year to the March quarter for 2012 and 2013 is presented in Table 3. This table includes estimates for Kyoto Protocol Article 3.3 LULUCF activities. 11 Further discussion of the LULUCF estimates is presented in section 4. In addition to deforestation, afforestation and reforestation emissions, Australia estimates and reports all emissions and removals from forest land, cropland and grassland as well as those resulting from conversions of forest land to grassland or cropland and vice versa. These are estimated and reported in accordance with UNFCCC reporting requirements and are published annually in the National Inventory Report. Sectoral trends since 1990 Land use, land use change and forestry Net emissions from LULUCF activities were estimated at 21.4 Mt CO 2 -e in the year to March 2013, which consisted of net emissions of 44.9 Mt CO 2 -e from deforestation and net removals (sequestration) of 23.5 Mt CO 2 -e from afforestation and reforestation. This amounts to a substantial decline since 1990, when net emissions from Land Use Change 11 were Mt CO 2 -e. Under Kyoto accounting rules, afforestation and reforestation only includes net removals from new forest plantings established since Therefore, net removals in 1990 are zero. Figure 17 illustrates the trends since 1990 and over the first commitment period of the Kyoto Protocol ( ). Figure 17: Net emissions from land use, land use change and forestry activities, 12 calendar years, 1990, and preliminary estimates for 2012 Mt CO 2 -e The estimates for deforestation and afforestation and reforestation are subject to a greater level of uncertainty than the other sectors in the national inventory. See section 8 for more detail on uncertainties Land Use Change Deforestation Afforestation and reforestation Source: Department of the Environment estimates. 12 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

15 4. SECTORAL ANALYSIS LAND USE, LAND USE CHANGE AND FORESTRY 4.1 Deforestation 12 Under the Kyoto Protocol, deforestation is defined as the direct, human-induced removal of forest cover on land that was forest on 1 January Emissions result when cleared vegetation is burned or left to decay, and as soil carbon levels decline over time. Net quarterly emissions from deforestation are estimated to be 11.6 Mt CO 2 -e in the March quarter Satellite images are not yet available to support the emissions estimates for Therefore, the preliminary estimates for deforestation are subject to change and have a greater level of uncertainty than the other sectors in the national inventory (see Quarterly Uncertainty in section 8). Figure 18: Net emissions from deforestation, calendar year, and preliminary estimates for Annual emissions over the year to March 2013 are estimated to be 44.9 Mt CO 2 -e, an increase of 14.4% when compared with the previous year. This predicted increase is partly the result of an increase in the farmers terms of trade in Analysis has found a positive relationship between rates of land clearing and changes in the farmers terms of trade, with a one-year lag. The preliminary quarterly estimate of emissions from deforestation has been projected based on historical rates of land clearing and projections of the farmers terms of trade. For farmers and other landowners, economic considerations are an important driver of land clearing. When the prices of agricultural products, for example beef, are high, landowners have a strong incentive to clear land and expand production. Figure 18 provides an overview of annual emissions from deforestation 14 since Deforestation emissions have declined considerably over this period. Mt CO 2 -e Source: Department of the Environment estimates. Kyoto period 12 Deforestation, afforestation and reforestation are consistent with Kyoto Protocol Article 3.3. Land Use Change is consistent with Kyoto Protocol Article Estimates of the farmers terms of trade are published by ABARES in the publications Agricultural Commodity Statistics and Agricultural Commodities. 14 Deforestation emissions under Kyoto accounting rules can only be calculated for the Kyoto period, from 2008 onwards. UNFCCC reporting for land use change is presented in the chart to provide a historical time series, although the two series are not strictly comparable. Unlike UNFCCC reporting, Kyoto accounting rules for deforestation include only deforestation and any subsequent afforestation or reforestation activities of land that was forested in AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

16 4.2 Afforestation and reforestation 15 Under the Kyoto Protocol, the afforestation and reforestation sector covers new commercial and environmental forest plantations by direct human action on land not forested in Net emissions are typically negative, as sequestration of carbon in biomass of growing trees outweighs emissions from harvesting activities. Net quarterly emissions from afforestation and reforestation are estimated to be -4.6 Mt CO 2 -e in the March quarter Figure 19 presents emissions estimates for this sector from 1990 to On an annual basis, net sequestration decreased by 10.9% to Mt CO 2 -e over the year to March These estimates have been calculated with the application of the Kyoto Protocol harvest sub-rule for the years covered by the first commitment period of the Kyoto Protocol. Figure 19: Net emissions from afforestation and reforestation, calendar year, and preliminary estimates for 2012 Mt CO 2 -e Source: Department of the Environment estimates. Satellite images are not yet available to support the emissions estimates for Therefore, the preliminary estimates for afforestation and reforestation are subject to change and have a greater level of uncertainty than the other sectors in the national inventory (see Quarterly Uncertainty in section 8). 15 Deforestation, afforestation and reforestation consistent with Kyoto Protocol Article AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

17 5. AUSTRALIA S FIRST COMMITMENT PERIOD KYOTO TARGET Australia remains on track to meet its Kyoto Protocol target of limiting emissions to 108% of 1990 levels, on average, over the Kyoto period Over the first four reporting years in the Kyoto period ( , , , and ), Australia s net emissions averaged 105% of the base year level. Using the preliminary estimates for the energy, industrial processes, agriculture and waste sectors and projections for Article 3.3 LULUCF activities, Australia had an estimated net surplus over the year to June 2012 of 15.5 Mt CO 2 -e. Total net surplus over the entire 5-year first commitment period is estimated as 89.0 Mt. Table 4: Accounting for Australia s Kyoto Target: , , , and preliminary estimates, year to June (a) Emissions Mt CO 2 -e Article 3.1 Annex A sectors Preliminary Energy Industrial Processes Agriculture Waste National Inventory total Article 3.3 KP LULUCF activities (b) Afforestation/Reforestation Deforestation (1) Kyoto Protocol Total (2) Australia s Assigned Amount Units (c) Surplus Assigned Amount Units (2) (1) (d) (a) (b) (c) Totals may express slight differences due to rounding effects. Consistent with the convention used for Australia s international reporting, estimates for LULUCF sectors are presented on a calendar year basis (year to December), while estimates for all other sectors in the national inventory are presented on a financial year basis (year to June). Source: The Australian Government s Initial Report under the Kyoto Protocol, revised submission, October Australia s commitment and assigned amount are not allocated to individual years the number shown is an annual average of the assigned amount. (d) The first commitment period under the Kyoto Protocol extends from 2008 to A positive net balance should be maintained over the life of the commitment period. Any net surplus of assigned amount units available in the initial years may be used to cover any deficits arising from growth of emissions in the remainder of the commitment period. AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

18 6. EMISSIONS PER CAPITA AND PER DOLLAR OF GDP Australia s emissions per capita and per dollar of gross domestic product (GDP) have declined over the last twenty years. For the year to March 2013, national inventory emissions per capita (excluding LULUCF) were 24.4 t CO 2 -e per person, compared to 24.6 t CO 2 -e in , representing a 1.1% decline. Figure 20 provides an overview of emissions per capita and per dollar of real GDP over the years to March , illustrating the declining trends. Figure 20: Emissions (excluding LULUCF) per capita and per dollar of real GDP ( prices), years to March When LULUCF activities are included (deforestation, afforestation and reforestation), the year to March 2013 estimate is 25.3 t CO 2 -e per person, compared to 32.4 t CO 2 -e in , representing a 21.9% decline. Australia s population grew strongly over this period, from 17.0 million in March 1990 to around 23.0 million in March 16, (growth of 35.8%). National inventory emissions per dollar of real GDP (excluding LULUCF) fell from 0.57 kg CO 2 -e per dollar in to 0.38 kg CO 2 -e per dollar in the year to March 2013, which is a decline of 34.3%. 18 t CO 2 -e per person Emissions per capita Emissions per dollar of real GDP kg CO 2 -e per $ of real GDP Australia s GDP grew significantly over this period, from $728 billion in the year to March 1990 to $1,483 billion in the year to March 2013 (growth of 103.8%). Source: Department of the Environment estimates, ABS (2013), Australian Demographic Statistics , and ABS (2013), Australian National Accounts When LULUCF is included (deforestation, afforestation and reforestation), the estimate is 0.75 kg CO 2 -e per dollar, compared to 0.39 kg CO 2 -e per dollar in the year to March 2013, which is a decline of 48.1%. 18 These declines have resulted from specific emissions management actions across sectors, the large decline in land use change emissions over the period, and structural changes in the economy. 16 Australian Bureau of Statistics (2012), Australian Demographic Statistics, pub. no Australian Bureau of Statistics (2013), Population Clock prices. 16 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

19 7. UPDATED GLOBAL WARMING POTENTIALS Global Warming Potentials (GWPs) are used to convert masses of different greenhouse gases into a single carbon dioxide-equivalent metric (CO 2 -e). In broad terms, multiplying a mass of a particular gas by its GWP gives the mass of carbon dioxide emissions that would produce the same warming effect over a 100 year period. Australia s National Greenhouse Gas Accounts apply GWPs to convert our emissions to a CO 2 -e total. At the 2011 United Nations Framework Convention on Climate Change meeting in Durban, South Africa, countries agreed to adopt updated GWPs including new greenhouse gases published in the Intergovernmental Panel on Climate Change s (IPCC) 2007 Fourth Assessment Report from 2015 onwards (reporting emissions for the 2013 inventory year) and for commitments under a second commitment period under the Kyoto Protocol. These GWPs replace those used from the IPCC s Second Assessment Report. The IPCC Fourth Assessment Report can be found at the following web address: contents.html Table 5 shows a comparison of the current and updated GWPs. Table 5: Global Warming Potentials Gas Current GWPs Updated GWPs CO CH N 2 O HFC HFC-125 2,800 3,500 HFC-134a 1,300 1,430 HFC-143a 3,800 4,470 CF 4 6,500 7,390 C 2 F 6 9,200 12,200 SF 6 23,900 22,800 Under current policy, the updated GWPs will be used from the reporting year for the National Greenhouse and Energy Reporting (NGER) scheme. Waste deposited before 1 July 2017 will continue to use the current GWPs while waste deposited after this date will use the updated GWPs. The updated GWPs are included for the first time in this Quarterly Update for information only, and for comparative purposes, to provide some initial insight into the effect of the updated GWPs on Australia s emission estimates in the future. Table 6 shows the effect of the updated GWPs on Australia s March 2013 quarterly emissions. Table 6: March Quarterly Emissions using update GWPs Sector Current GWPs Mt CO 2 -e Updated GWPs Mt CO 2 -e Energy Electricity Energy Stationary energy excluding electricity Energy Transport Energy Fugitive emissions Industrial processes Agriculture Waste National Inventory Total (excluding LULUCF) Land Use, Land Use Change and Forestry Total (including LULUCF) Source: Department of the Environment estimates. Source: IPCC Fourth Assessment Report (2007). AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

20 8. TECHNICAL NOTES Quarterly Coverage This report provides estimates of Australia s national inventory up to the March quarter of 2013 and includes emission sources listed under Annex A of the Kyoto Protocol energy, industrial processes, agriculture and waste sectors. Since the December quarter 2011 edition, this report also includes quarterly estimates for Kyoto Protocol Article 3.3 activities (deforestation, afforestation and reforestation). International Guidelines The National Greenhouse Gas Inventory is prepared in accordance with the IPCC 1996 Revised Guidelines for National Greenhouse Gas Inventories, the IPCC 2000 Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories and the IPCC 2003 Good Practice Guidance for Land Use Land Use Change and Forestry. Where appropriate, elements of the 2006 IPCC Guidelines for National Greenhouse Gas Inventories are being progressively implemented. Greenhouse Gases Consistent with the requirements of the Kyoto Protocol, this report covers sources of greenhouse gas emissions and removals by sinks resulting from human (anthropogenic) activities for the major greenhouse gases carbon dioxide (CO 2 ), methane (CH 4 ), nitrous oxide (N 2 O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs) and sulphur hexafluoride (SF 6 ). Global warming potentials (GWPs) have been used for each of the major greenhouse gases to convert them to carbon dioxide equivalents (CO 2 -e). As greenhouse gases vary in their radiative activity and in their atmospheric residence time, converting emissions into CO 2 -e allows the integrated effect of emissions of the various gases to be compared. The GWPs used in this Report were the 100-year GWPs contained in the 1995 IPCC Second Assessment Report (IPCC 1996), as agreed for use under the first commitment period under the Kyoto Protocol. The National Greenhouse Accounts to be published in 2015 will adopt the GWPs contained in the 2007 IPCC Fourth Assessment Report (IPCC 2007), by international agreement. Quarterly Methodology and Growth Rates Emission estimates have been compiled by the Department using the estimation methodologies incorporated in the Australian Greenhouse Emissions Information System (AGEIS) and documented in the National Inventory Report. The estimates are calculated using the latest national inventory data and indicators from external data sources (listed below). These data are used to determine growth rates, which are applied to infer quarterly emissions growth. Quarterly growth rates are calculated as the percentage change between the estimates for the previous quarter and the current quarter. Annual growth rates are calculated as the percentage change between the estimates for the twelve months to the end of the equivalent quarter last year, and the twelve months to the end of the current quarter. Forthcoming Recalculations A key input to Australia s National Greenhouse Gas Inventory is energy activity data produced by the Bureau of Resources and Energy Economics (BREE) through its annual Australian Energy Statistics. BREE and preceding organisations have collected energy statistics by fuel and economic sector for over 35 years. The data set consists of detailed historical energy consumption, production and trade statistics compiled from various sources and is used to meet Australia s reporting commitments to the International Energy Agency. The 2013 edition of the Australian Energy Statistics was published in July As well as providing national energy data for for the first time the Australian Energy Statistics included a number of recalculations to earlier financial years. The recalculations reduce the level of fuel consumption in several sectors and will likely result in a decrease in estimated emissions. The net effect of the recalculations is estimated to be a reduction in the national inventory total by around 1% in and and 1½% in and The Department will incorporate the results in the next Quarterly Update. Source Data Preliminary activity data are obtained under the National Greenhouse and Energy Reporting system (NGERs) and from a range of publicly available sources, principally: ABARES Agricultural Commodities ABS Australian National Accounts: National Income, Expenditure and Product AEMO Market data extracted using NEM-Review software 18 AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter 2013

21 BITRE Domestic Totals & Top Routes airline_activity-time_series.aspx BREE Resources and Energy Quarterly (formerly available under Australian Mineral Statistics from ABARES, Department of the Environment Australian Greenhouse Emissions Information System, RET Australian Petroleum Statistics As additional data become available from the Department s reference sources these preliminary activity data will be overridden and the estimates of emissions revised before submission to the UNFCCC. Original Time Series The ABS defines an original time series as showing the actual movements in the data over time. Seasonal Adjustment Analysis The ABS defines seasonal adjustment as follows: A seasonally adjusted time-series is a time-series with seasonal component removed. This component shows a pattern over one year or less and is systemic or calendar related. SEASABS is the main seasonal adjustment tool used by the ABS. The actual quarterly data have been adjusted using SEASABS to remove the effects of seasonal factors. SEASABS analysis for the quarterly update uses a 5 term Henderson moving average. Trend Analysis The ABS defines trend adjustment as follows: A trend time-series is a seasonally adjusted time-series that has been further adjusted to remove irregular components. In the context of the quarterly data, examples of irregular components include extreme weather events (such as floods or fires). The trend series reflects the seasonally adjusted series with irregular components smoothed and provides the best indication of underlying movements in the inventory. Weather Normalisation The seasonally adjusted and trend estimates are further adjusted to correct for the effects of variations around average seasonal temperatures. This process is termed weather normalisation, and is designed to provide a clearer indication of the underlying trends in the emissions data. Seasonal temperatures are an important predictor of emissions in Australia due to their influence on demand for electricity for heating and cooling (air conditioning). The seasonally adjusted series corrects for the regular effects of differences in average temperatures between seasons. The weather normalised series further corrects for fluctuations in average seasonal conditions. The weather normalisation methodology is based on the Bureau of Meteorology concept of heating and cooling degree days, and is applied to total emissions (excluding LULUCF) and the electricity sector. The methodology is described in detail in Section 7: Special Topic of the December 2011 edition of the Quarterly Update. Quarterly Uncertainty For all sectors except LULUCF, the Department s assessment is that the 90% confidence interval for the national inventory is ±1% (i.e. there is a 90% probability that future revisions will be limited to ±1% of the current estimate). The estimates for LULUCF are subject to a greater level of uncertainty than the other sectors. This is due to the combined uncertainties in the detection of deforestation and forest harvesting events; the measurement and estimation of carbon stocks and sequestration rates in living biomass and soils; and the influence of weather and climate conditions. Sectoral Emission Sources Energy Electricity: Emissions from the combustion of fuel used to generate electricity for public use. Stationary energy excluding electricity: Energy industries: petroleum refinery, gas processing and solid fuel manufacturing (including coal mining and oil/gas extraction and processing); Manufacturing industries and construction: direct emissions from the combustion of fuel to provide energy used in manufacturing such as steel, non-ferrous metals, chemicals, food processing, non-energy mining and pulp and paper; and Other sectors: energy used by the commercial, institutional, residential sectors as well as fuel used by the agricultural, fishery and forestry equipment. This also includes all remaining fuel combustion emissions including those produced by combustion of engine lubricating oil and military fuel use. AUSTRALIAN NATIONAL GREENHOUSE ACCOUNTS Quarterly Update of Australia s National Greenhouse Gas Inventory, March Quarter

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