Options for moving towards a lower emission future

Transcription

1 Options for moving towards a lower emission future A report by AGL, Frontier Economics and WWF-Australia on the economic costs of different emission reduction pathways in the Australian electricity sector. May 26

2 !"#$"%&""%' (")&' $%*+,!-*"$##$"$###.!-*"$##$"$''$ /.$") 12 3&%%",!-*"&#*$%44)).!-*"&#*$%44## /.+$) 55 $%%",!-*"$#$)"++"+.!-*"$#$)""%*% 667 /215$%%* , !9 :1;<=/> 7 +'%%"+#4%'4,9 85 #+%+$"*'4%+ /5 "&%)'++&"$4 2

3 Contents 1. Introduction 6 2. Climate science determining a target for the electricity sector The greenhouse effect Impact of increasing greenhouse gas concentrations The need to reduce emissions What global emission reductions are necessary? Australian contribution to global emission increases The intergovernmental response The Australian Government s response The business response Beyond the initial Kyoto Protocol target: a transitional approach A transitional target for the Australian electricity sector A model of the National Electricity Market The National Electricity Market The national gas market Outline of the economic model Key assumptions in the economic model Scenarios modelled Emission reduction pathway modelling results Cost of meeting electricity demand during the modelling period Emissions Marginal costs of generation Marginal costs of abatement New generation capacity installed Generator output Policy implications Challenging target Staged Transition minimises costs New technology development Energy efficiency 54 3

4 List of figures and tables Figure 1: Atmospheric concentration of carbon dioxide and temperature Figure 2: Per capita greenhouse gas emissions Figure 3: Emissions per unit of economic output Figure 4: Proportion of energy production Figure 5: Australian greenhouse gas emissions Figure 6: Global energy growth Figure 7: Energy consumption growth forecast Figure 8: Australian natural gas reserves Figure 9: Emission intensities of gas, coal and petrol Figure 1: Potential new entrant traditional thermal technologies Figure 11: Example of a load duration curve Figure 12: Cost structure of different technologies with a carbon constraint Figure 13: Emission reduction pathways Figure 14: NPV cost of meeting electricity demand Figure 15: Emission profiles of scenarios Figure 16: Marginal costs of generation (BAU) Figure 17: Marginal costs of generation (Staged Transition 25%) Figure 18: Marginal costs of generation (Linear 25%) Figure 19: Marginal costs of generation (Staged Transition 1%) Figure 2: Marginal costs of generation (Linear 1%) Figure 21: Marginal costs of generation (Staged Transition 25% EE) Figure 22: Marginal costs of generation (Linear 25% EE) Figure 23: Marginal costs of abatement Figure 24: New generation capacity installed (BAU) Figure 25: New generation capacity installed (Staged Transition 25%) Figure 26: Difference in installed capacity (Staged Transition 25% relative to BAU) Figure 27: New generation capacity installed (Linear 25%) Figure 28: Difference in installed capacity (Linear 25% relative to BAU) Figure 29: New generation capacity installed (Staged Transition 1%) Figure 3: Difference in installed capacity (Staged Transition 1% relative to BAU) Figure 31: New generation capacity installed (Linear 1%) Figure 32: Difference in installed capacity (Linear 1% relative to BAU) Figure 33: New generation capacity installed (Staged Transition 25% EE) Figure 34: Difference in installed capacity (Staged Transition 25% EE relative to BAU) Figure 35: New generation capacity installed (Linear 25% EE) Figure 36: Difference in installed capacity (Linear 25% EE relative to BAU) Figure 37: Generator output (BAU) Figure 38: Generator output (Staged Transition 25%) Figure 39: Difference in output (Staged Transition 25% relative to BAU) Figure 4: Generator output (Linear 25%) Figure 41: Difference in output (Linear 25% relative to BAU) Figure 42: Generator output (Staged Transition 1%) Figure 43: Difference in output (Staged Transition 1% relative to BAU) Figure 44: Generator output (Linear 1%) Figure 45: Difference in output (Linear 1% relative to BAU) Figure 46: Generator output (Staged Transition 25% EE) Figure 47: Difference in output (Staged Transition 25% EE relative to BAU) Figure 48: Generator output (Linear 25% EE) Figure 49: Difference in output (Linear 25% EE relative to BAU) Table 1: Greenhouse gases Table 2: Emission reduction pathways Table 3: Total targeted emissions over entire 24 year period to 23 Table 4: Emission reduction pathways for the electricity sector Table 5: Greenhouse intensity of different states Table 6: Energy efficiency assumptions Table 7: NPV cost per person 4

5 Glossary 7 7? A $ $ 92.B 5 8@ ) 8 7 </ 8 C D 6 / /99 / 99 ( E ( E 6,< 6, 5< 8 / B78 1, , $. 1 51( (19 85 /3 8 >? 6> ( /C /D / / /8 < 625< 8 * 8.7 :1 6 (9 99 AF, 7 51(7 5 5

6 1. Introduction $%%+ 7)9GH, ( ,6 5 6 I 6@ 6 (9 99 ( J ", ( A 6 7 ( ( , $45 $%&% , ( ,8 7 6! $ B 7 & 65( , B ! &, , The statement is available at 6

7 2. Climate science determining a target for the electricity sector 2.1 The greenhouse effect 25 8.A ( 8886, 826 I 876 7I ( I775 7, 6" Figure 1: Atmospheric concentration of carbon dioxide and temperature $ $)%88 7 &)" & ( Derived from various journal articles published by Jouzel, J et al. Data is available at 3 Pearce, F, Atmospheric CO 2 Accumulating Faster than Ever, New Scientist, March 26. 7

8 , 75!6 8 2.K9 $ LK9A 4 L.K $ L K * L,7 8 8,2" Table 1: Greenhouse gases 4 ppm in atmosphere Increase since 175 Heat trapping potential (carbon dioxide equivalents) Main source of gas 92. &*+ &%M " 7 1 "'+ "+%M $& 7 6. %&" "+M $#* 5 A5 7 2 %%%%%"4 : "$%%% 7 /7 2 %%%%%) "%%M +'%% %%%%%%4$ : $$$%% < B8 B *%M 7 8 KL ,2"5 78 B8I 78, B Impact of increasing greenhouse gas concentrations,,8 K$%%"L 7 / 99 K/99L! +, %* %$ 98 26"#+%"##&, 226%"%$ 5, ( 7/99 *! 4 Compiled from information obtained from the Intergovernmental Panel on Climate Change ( 5 Watson, R T et al, Climate Change 21: Synthesis Report. A Contribution of Working Groups I, II, and III to the Third Assessment Report of the Intergovernmental Panel on Climate Change, Pittock, B (ed), Climate Change - An Australian Guide to the Science and Potential Impacts, 23. 8

9 8252 %' B B A8( *M5 A The need to reduce emissions,,8 7/998 D 7."%% D7 88 D ( $"%% D 7 K&)"88L 26+4%88#'%88 7 / ! ',78(5 2526"4 9+) 9,8 D 766 8"%%%%5 78 8/7(5 2 ( D (5 7B55 / B 77B5 7.6 ) 9(5 ( 7 27 B ( 7 B 2 7 8C88, B # 55$"%%1 9 8 "+%%% 5 57 "% "" 7 Compiled from information obtained from the Intergovernmental Panel on Climate Change ( 8 Australian Greenhouse Office, Climate Change Risk and Vulnerability Promoting an Efficient Adaptation Response in Australia, A Report by The Allen Consulting Group, March 25, pp Australian Greenhouse Office, Climate Change Risk and Vulnerability Promoting an Efficient Adaptation Response in Australia, A Report by The Allen Consulting Group, March 25, p Australian Medical Association and Australian Conservation Foundation, Climate Change Health Impacts in Australia: Effects of Dramatic CO 2 Emissions Reductions, Schwartz and Randall, An Abrupt Climate Change Scenario and Its Implications for United States National Security, A report by the Global Business Network for the United States Department of Defense, 24; Brauch, H G, Threats, Challenges, Vulnerabilites and Risks in Environmental and Human Security, in: Studies Of University: Research, Counsel, Education, 1-25, publication series of UN University's Institute of Environment and Human Security; Bonn, October 25. 9

10 , N "$ N( ( , 8E( 8 7 "&, , ,6 ( 7/ What global emission reductions are necessary?, %566, $ B "4 A 6 (5D ( B D 87 2( 8 1$%%+@ $ 92 8 " , ,@ %88 $ 9 E8 8 2D66 B 8(6, "+M8825+%M25$%+% 8 "##%,@A 79 H "+&%M25$%$% 8 2 E5 / 25 2 J "* 12 Thomas, C et al, Feeling the Heat: Climate Change and Biodiversity Loss, Nature p 427, , 8 Jan Australian Greenhouse Office, Climate Change Risk and Vulnerability Promoting an Efficient Adaptation Response in Australia, A Report by The Allen Consulting Group, March 25, pp 69-7; Pittock, B (ed), Climate Change - An Australian Guide to the Science and Potential Impacts, Watson, R T et al, Climate Change 21: Synthesis Report. A Contribution of Working Groups I, II, and III to the Third Assessment Report of the Intergovernmental Panel on Climate Change, Council of the European Union Conclusions, 23 March 25, p Council of the European Union Conclusions, 23 March 25, p 16. 1

11 86B B $ #%*'%88K+M #+M 7L "'!,6 7, 57 4!" $M76.4%% (4'+882.BK27 2( 4%%882.BL "),7 97< 227 B5 $%%4H ( )%M %M 25$%+%J "),9 *%M 25$%+%6 2 B "# A Australian contribution to global emission increases "+M 7 2"+M$M A $& 6 I888 8 $% 17 Jenkins, G et al, Stabilising Climate to Avoid Dangerous Climate Change A Summary of Relevant Research at the Hadley Centre, Meinshausen, M et al, Can 2 C Warming be Avoided, Swiss Federal Institute of Technology, Quote available at 19 Preston, B L and Jones, R N, Climate Change Impacts on Australia and the Benefits of Early Action to Reduce Global Greenhouse Gas Emissions, CSIRO, International Energy Agency, Key World Energy Statistics,

12 25 Figure 2: Per capita greenhouse gas emissions 2 t of CO2 per capita Australia China France Japan South Africa US UK Figure 3: Emissions per unit of economic output kg CO2 per 25 GDP (PPP) Australia China France Japan South Africa US UK 2 5"M 7 2, "*M $'M 7 2 5I $" I 5 5I Pew Center on Global Climate Change, Climate Data: Insights and Observations,

13 Figure 4: Proportion of energy production $$ 1% Hydro electric Nuclear energy 8% Coal Coal 6% Natural gas 4% Natural gas 2% Oil Oil % Australia World 2.6 The intergovernmental 6 (9 99K@ 999L 2D ,E5 / 7 "*25$%%+,/ 6725"+) $%%)$%"$K 8 L,85 2D 7/ 7 8 K." L #+M 7"##%@ 7E5 / #$M 7"##% 8 "%)M 7"##%, 6 ( 2 E5 76 ( / 7E5 / $%"$ <2$%%+ ( / $4 E5 / "$C5 7 E 9C8!/799/8K/*L 55 B 6 ( BP, Statistical Review of World Energy, Meeting details obtained from 13

14 2.7 The Australian Government s response "##% 6+4& 72. B, 77 25$%"$ 6 2 +)+ 72.B,B 2 "%)M 7"##% ( E "##%+ 6 "##% 7 Figure 5: Australian greenhouse gas emissions + 62 "##% &&M 7"##% 25$%"$, O 55 75"##% $%%& 55 6$*),65&)M "##%5 $%%&6"#% 4'M"##%,7 6 ( E5 7"%)M "##% $4 2.8 The business response, 22 55( 68 ( E5 / P2 (I 6 ( ( B 7 24 Australian Greenhouse Office, Tracking the Kyoto Target, 25; Australian Greenhouse Office, State and Territory Greenhouse Gas Emission Inventories: An Overview,

15 7 6( ( ,5 ( Q ( $%%* 92 < / D 7 B 8 6?"%% >?+% 8 6>,92 < / D $%% 6 R4% ,B /8 87 (8 D %2(6'+M 76 S8 D BK 2 8 L 8 725, 786 ( ( ( /959 8 P7 9 I $* E ) (KP IL ,D ( $* $' 7 8 (2 8$%%*9 7/ , 2 6 ( $) 26 Pew Center on Global Climate Change, Agenda for Climate Action, Summary of conference available at 27 Submissions to - A National Emissions Trading Scheme: Background Paper; submissions available at 28 Australian Business Roundtable on Climate Change, The Business Case for Early Action,

16 2.9 Beyond the initial Kyoto Protocol target: a transitional approach, B A ( B ( 7* Figure 6: Global energy growth $# Mature market economies Emerging economies Transitional economies Asia Quadrillion btu ,@ ! < 8 25"+&%M 7E5 225$%$% < E5 255 &% ,5D 6. 8 ( $%$+ 6 (5 2 8 B6 *%M25$%+% E5 7"%)M 7"##%")526$%"$$%&%$%&% #%M 7"##%2 2 4)' $%&% 29 US Energy Information Administration, International Energy Outlook, European Union, Action on Climate Change Post 212: A Stakeholder Consultation,

17 &%M 2 6"##%25$%&% &%M 25$%&%*%M 25$%+% 2.1 A transitional target for the Australian electricity sector '%M #%M 7"##%25$%&% (25 52( ( 2 (28 5, B A (D ( !,5 7722,7 87 8, 7 8/526 7, ( E5, $%%& 64'M"##%,

18 Sector 199 Emissions (million tonnes) Table 2: Emission reduction pathways &" 21 Emissions forecast by AGO (million tonnes) Target for 23 EU Approach (million tonnes) Target for 23 WWF Approach (million tonnes) 55 "#+ $)+ $$% "#" " "$# $%% "$% "$%,8 *$ # $# &+ &+ $$ #4 ## "%+ )) "% "% ) 4 5 $' 4$ 4$ +" "$* 4& 4& "% 5( % $" $" &%, +4& +)+K"%)ML 4)'K#%ML &)%K'%ML!9 5 $%"$ )+ 7 #%M 7"##%$%&%4)' 7 '%M 7"##%&)%,2$ $%% $%"$ "$% $%&%7P@88 I P88 I , $%&% 7"$% ! 5$%&% "$% 75 B "$% 25$%&% !@ $%&%, $ &%%, 865,,2&,!@88 B 5A $%&%, A 688.5&%% 7 865K865L $%&% 31 Australian Greenhouse Office, Tracking the Kyoto Target,

19 Table 3: Total targeted emissions over the 24 year period to 23 Staged Transition Linear, 4%#" &)%% K L ( 779 / E5 K$%"$L (5 6 2(27,57 8 $%%', Table 4: Emission reduction pathways for the electricity sector Year Linear (million tonnes) Staged Transition (million tonnes) $%%' "#+ "#+ $%%) "#$ "#4 $%%# ")# "#& $%"% ")+ "#$ $%"" ")$ "#" $%"$ "'# ")# $%"& "'* ")' $%"4 "'& ")+ $%"+ "'% ")& $%"* "*' ")" $%"' "*& "'# $%") "*% "'' $%"# "+' "'+ $%$% "+4 "'& $%$" "+" "'% $%$$ "4' "*' $%$& "44 "*4 $%$4 "4" "*" $%$+ "&) "+# $%$* "&4 "+" $%$' "&" "4& $%$) "$) "&+ $%$# "$4 "$' $%&% "$% "$% 19

20 3. A model of the National Electricity Market $ &+%%/C25$%&%,7 5 8 ' Figure 7: Energy consumption growth forecast &$ Gas 6 PJ 5 Oil 4 3 Brown coal 2 1 Black coal The National Electricity Market / 8 "##% "##% 5( , 51(2 8 "##),6 ( (8, 51( ,8825 5KL ,( O , , O 7 72( , B8,2+ 32 Australian Bureau of Agricultural and Resource Economics, National and State Energy Trends, 25. 2

21 Table 5: Greenhouse intensity of different States && State Predominant fuel Greenhouse intensity (t/mwh) 3 6 "&#$ 6 ( "%+4 O ( "%+) K3 %#*% 8 L, A5 %%%* 9 : "%+& 7 5K.8 O,L, ( 7, ( PI58, , ! / 6!, / ,2 7 7/ !, (7 28 5, A 66( B2 7 2,5( , , 9, 2"&M O 772 6! ,K1,L!, 8 B $%$%5$%"%6 2B 8#+%% 755 9, 2!, 9, 2B 9, '$' 8825$%%' "&MO!,"&M BO "&M The national gas market / O 9,"#*%"#'% 657 D ( ,7 8 5! ( 33 Australian Greenhouse Office, Factors and Methods Workbook,

22 76D ( B8 (58, (26 ( ( K7 ( L 8 7,2 "+%%% /C (/.8 88( &4, 88825$%%4:%+ "'& /C &+ Figure 8: Australian gas reserves &* # $%%&' ()* +,$-$,# -!" "4M *#5 &' A B7.8 ( A 67 ( D 8 D /. 5 "%%%%/C $%%# 78 D 34 Assuming the PNG pipeline is constructed. 35 AGL, Annual Report, Chart produced by AGL utilising information from Geoscience Australia and individual company reports. 37 BP, Statistical Review of World Energy,

23 , K8L , % ( 8 2 %) 7 81, 7 8 8# Figure 9: Emission intensities of gas, coal and petrol &) kg CO2e per GJ Black coal Natural gas Automotive gasoline 3.3 Outline of the economic model, AF (,. 8 88, AF , ( 8 39 K /3L 7 7 5, A ( 8 2! 885B8,P2( I,B2 6 2 (5 B , Australian Greenhouse Office, Factors and Methods Workbook, The net present value (NPV) of an investment is the present (discounted) value of future cash inflows minus the present value of the investment and any associated future cash outflows: ie the net result of a multi-year investment expressed in today s dollars. 23

24 2 5 (5 2 B "%12( , P 75I, $, "% Figure 1: Potential new entrant traditional thermal technologies Emissions Variable cost 1..8 $/MWh Emissions tonnes/mwh 2.2 Supercritical brown coal Ultrasupercritical black coal IGCC black coal Supercritical black coal Combined cycle gas Open cycle gas 7 7 7( , , ( "" 6 58, "%%M 7KL B5, 587 7( AF 24

25 13 Figure 11: Example of a load duration curve MW % 1% 2% 3% 4% 5% 6% 7% 8% 9% 1% Percentage of time K8( L K2 L , K8(L "$ K85 7 L 25

26 Figure 12: Cost structure of different technologies with a carbon constraint Open cycle gas Combined cycle gas Black coal Annual cost ($ per MW) Black coal is cheapest Combined cycle gas is cheapest Open-cycle gas is cheapest Capacity factor "$ AF, K9L 25K99L2( 8, K 857 7%ML ( K 8( L ( 8 /8 7 5$%&%M ( *%M 2 8 AF , , K6 9LA , AF K2 K@L, L!, /3 7, 72K2 8L 6 7, (

27 3.4 Key assumptions in the economic model,7 6(58 2! < 627 $ $%%' $%&%, 62 $%% < 67 2 $%%%%%$%%' &"+%%% $%&%, ( , , , , ,8 7$+M ,8 7"%%M, 6P2(IP2 6I ,( Scenarios modelled, 7 AF8 4.8@ $%%' 7"$% $%&%, 8 7 $457 $%%' $%&%,77! K@L!@@ $+M!@$+M $%&%B B5 8 2D ,B $+M8 8, $+M!@, $+M $%&%, B D ,B $+M 8 8 "%%M!@"%%M $%&%B B5 27

28 8 2D ,B "%%M 8 8, "%%M!@, "%%M $%&%, B D ,B "%%M 8 8, 8 7 7, 6"& Figure 13: Emission reduction pathways Staged Transition Linear 17 million tonnes , , , ,2* ! $+M6575KL!@ $%&%B B D ,B $+M 8 8, $+M6!@ $%&%, B D ,B $+M8 8 28

29 A 627( Table 6: Energy efficiency assumptions Residential Commercial Primary metal/industrial Year Annual GWh Annual GWh Annual GWh $%%' *&* 4"$ 4)4 $%%) ""*& '+4 ))+ $%%# "+%* #'* ""4' $%"% "')4 ""+* "&+) $%"" $%$& "&"$ "+4% $%"$ $$&' "4+% "'%& $%"& $4&& "+'' ")+$ $%"4 $*"& "*#4 "#)# $%"+ $')$ ")%& $"") $%"* $#4" "#%* $$&# $%"' &%#$ $%%4 $&+4 $%") &$&* $%#) $4*& $%"# &&'4 $")' $+*) $%$% &+%* $$'& $**# $%$" &*&4 $&++ $'** $%$$ &'+' $4&+ $)*% $%$& &)'* $+"& $#+" $%$4 &##$ $+)) &%&# $%$+ 4"%+ $**" &"$4 $%$* 4$"4 $'&$ &$%) $%$' 4&$" $)%" &$)# $%$) 44$+ $)*) &&*) $%$# 4+$' $#&4 &44* $%&% 4*$* $### &+$" 29

30 4. Emission reduction pathway modelling results 4.1 Cost of meeting electricity demand during the modelling period,8k /3L R44)"2, ( A 6 5 7, 6"4 Figure 14: NPV cost of meeting electricity demand $8 $7 $6 $ $bn $4 $3 $ $1 $ BAU Staged Transition 25% Staged Transition 1% Linear 25% Linear 1% Staged Transition 25% EE Linear 25% EE, , $+M 252 R#2 7,, 76 7! 8 7 P I.8 5, 2 7, (55 ( /3 B , ( B 625 3

31 , I</52 R)*%2 4%, 7, $+M865 /3R)+*2 2 "M 78</, 7$+M865R"'*'2 /3 2 $M 78</ 76B /3 88 7R4"+K, $+ML 4", 8 8 K /3L 67,2' Table 7: NPV cost per person Staged Transition 25% Staged Transition 1% Linear 25% Linear 1% Staged Transition 25% EE Linear 25% EE, )+* """* "'*' $4"* +"# "&'# KR2 /3L, 4"+ +4$ )+' ""'$ $+$ **# 88 KR /3L " , $+M R)+*2 /3 $45 8 5R+"#2 /3, "4 8 8(57 6, 7 26, $+M"%%M 2 R$*2 /3 4 Australian Bureau of Statistics, Australian Economic Indicators, 135., p 18 (based on 24/5). 41 Based on a population of 2,68, obtained from 31

32 4.2 Emissions , "+, 27 7" Figure 15: Emission profiles of scenarios 26 BAU Staged Transition 25% Linear 25% million tonnes $%&% 6 8 6! 5 KLT 5 67 P2(IP2 6I ,.8 6"+ 78 D 26 $%&%8B,, 2S2(S8 S2 6S8 52( D ,S2 6S ( 78 $%%# $%"$7 S2(S , $%"& $%"' B 4.3 Marginal costs of generation, , K L,8 (

33 , (K 1L 8"*2 Figure 16: Marginal costs of generation (BAU) 6 NSW Qld SA Snowy Tas Vic 5 4 $/MWh O R"+ R$%81, ( A 6.8, $%&% $%%#$%""85, $%%# B 76B , $+M"%%M $+M"%%M,5 "' $$,

34 Figure 17: Marginal costs of generation (Staged Transition 25%) 7 NSW Qld SA Snowy Tas Vic $/MWh Figure 18: Marginal costs of generation (Linear 25%) 7 NSW Qld SA Snowy Tas Vic $/MWh "'") 6 7, $+M 2 7 O, 7 8 5, 7 7 7, $+M, $+M, , $+M KL 34

35 A B5, $+M Figure 19: Marginal costs of generation (Staged Transition 1%) 1 9 NSW Qld SA Snowy Tas Vic $/MWh Figure 2: Marginal costs of generation (Linear 1%) 12 NSW Qld SA Snowy Tas Vic 1 8 $/MWh "#$% ,75 7"%%M 8, "%%M 35

36 Figure 21: Marginal costs of generation (Staged Transition 25% EE) 7 NSW Qld SA Snowy Tas Vic $/MWh Figure 22: Marginal costs of generation (Linear 25% EE) 7 NSW Qld SA Snowy Tas Vic $/MWh $"$$ ( ,.86 B K L7 6 7A

37 4.4 Marginal costs of abatement, R$% K685L R*% R"%% K88 8 L, 6$& 12 Figure 23: Marginal costs of abatement 1 Staged Transition 1% Staged Transition 25% Linear 1% Linear 25% Staged Transition 25% EE Linear 25% EE 8 Current Price of Certificate in EU ETS $/tonne ,7 72 $%&% 788!"%%M8 72 7R)% R"%%8 K 88 L 86R*%8 5$+M "%%M $+M 6 K 88 L, @,$%")K"%%M L $%$& K$+M L 4.5 New generation capacity installed B1 7858(85N85B7 8( 8 BA 67 $%"%$%"+K8 8 L62 85B,6 85@ 6$4 37

38 Figure 24: New generation capacity installed (BAU) Black coal Hydro Gas Renewable 35 3 MW K L 7 2 B ( Figure 25: New generation capacity installed (Staged Transition 25%) Black coal Hydro Gas Renewable MW $+$* 6 85, $+M 726@, $+M 85 38

39 Figure 26: Difference in installed capacity (Staged Transition 25% relative to BAU) 2 Black coal Gas Hydro Renewable MW , $+M 2( , $%")5K8$%")L ( 62, (B, $+M 62B 5 $%") ( K L 39

40 Figure 27: New generation capacity installed (Linear 25%) Black coal Hydro Gas Renewable MW Figure 28: Difference in installed capacity (Linear 25% relative to BAU) 25 2 Black coal Gas Hydro Renewable MW $'$) 685$+M 785$+M@ 85, 5 726$+M, $+M, 7 7 6B(7 7, 88K5L $%$% 7 72 $%$&$# &$8 57, "%%M"%%M 4

41 Figure 29: New generation capacity installed (Staged Transition 1%) Black coal Hydro Gas Renewable MW Figure 3: Difference in installed capacity (Staged Transition 1% relative to BAU) 15 Black coal Gas Hydro Renewable 1 5 MW

42 6 Figure 31: New generation capacity installed (Linear 1%) 5 4 Black coal Hydro Gas Renewable MW Figure 32: Difference in installed capacity (Linear 1% relative to BAU) Black coal Gas Hydro Renewable MW , 7 6"%%M , ( 6.8@ , (

43 9 86"%%M, "%%M 2( 8558, ( , 6 2 K $%$%L (67 && &* , $+M$+M Figure 33: New generation capacity installed (Staged Transition 25% EE) Black coal Hydro Gas Renewable MW Figure 34: Difference in installed capacity (Staged Transition 25% EE relative to BAU) 15 Black coal Gas Hydro Renewable 1 5 MW

44 6 Figure 35: New generation capacity installed (Linear 25% EE) 5 4 Black coal Hydro Gas Renewable MW Figure 36: Difference in installed capacity (Linear 25% EE relative to BAU) Black coal Gas Hydro Renewable MW

45 4.6 Generator output &' $ Figure 37: Generator output (BAU) Black coal Brown coal Gas Hydro Renewable TWh Figure 38: Generator output (Staged Transition 25%) Black coal Brown coal Gas Hydro Renewable TWh (.86 8, , K85 7 L ( 88 B 45

46 A &) 6 8, $+M,D $%"# &# @, $+M Figure 39: Difference in output (Staged Transition 25% relative to BAU) Black coal Brown coal Gas Hydro Renewable 5 TWh %4" 6 8$+M $+M@, $+M 7 2(2 6 8, , , $+M $%$%A 6$+M $%"+,7, 8 7 8,( K2 8 L ( , 46

47 Figure 4: Generator output (Linear 25%) 35 Black coal Brown coal Gas Hydro Renewable TWh Figure 41: Difference in output (Linear 25% relative to BAU) 2 15 Black coal Brown coal Gas Hydro Renewable 1 5 TWh

48 35 Figure 42: Generator output (Staged Transition 1%) Black coal Brown coal Gas Hydro Renewable TWh Figure 43: Difference in output (Staged Transition 1% relative to BAU) Black coal Brown coal Gas Hydro Renewable 5 TWh $ , "%%M"%%M 726@ $+M"%%M "%%M,258 5(62 K628L 48

49 35 Figure 44: Generator output (Linear 1%) Black coal Brown coal Gas Hydro Renewable TWh Figure 45: Difference in output (Linear 1% relative to BAU) 2 15 Black coal Brown coal Gas Hydro Renewable 1 5 TWh

50 4* 4# 6 8, $+M$+M , $+M$+M B 2D 35 Figure 46: Generator output (Staged Transition 25% EE) Black coal Brown coal Gas Hydro Renewable TWh Figure 47: Difference in output (Staged Transition 25% EE relative to BAU) 15 1 Black coal Brown coal Gas Hydro Renewable 5 TWh

51 35 Figure 48: Generator output (Linear 25% EE) Black coal Brown coal Gas Hydro Renewable TWh Figure 49: Difference in output (Linear 25% EE relative to BAU) 2 15 Black coal Brown coal Gas Hydro Renewable 1 5 TWh (56 6 $458, 6 D 8( 75 75, D

52 5. Policy implications, , , ! 7 8 2( , B , , , A B7$%&% 7 2 7, $+M 2 R)+*2 /38 8B 7 72 R4"+ / , $+M 8 B 7 7R$+$ /388, ( (( B, , 7 5(( , B (88 52

53 , / R$+$R""'$ A 6 ( Challenging target, ,2 76 (58 6 8!, B5 675 A B (7, $458 7 $%%' $%&%7 5( , B25$%&% Staged Transition target minimises costs 2, A 6, $%&% (2 525 $%&% 825$+M, 865 /3 7R)+*2 $+M R"'*'2 /378 25"%%M, 865 7R"""*2 /3 865R$4"*2 / ( New technology development, , A (5 7 8! 6, 5< 8!, 6, 5 < 8K,<LR+%% D 53

54 625< 8!,625< 8 K<LR"%% , D 8 D , 8 5 ( P 7 I.8 (2 8 D 5.4 Energy efficiency, A ( $%&% 54