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Carbon intensity drops with more coal closures


The Age, 18 October 2012

The amount of CO2-e involved in the production of electricity has plummeted since the introduction of the carbon price.

Although several factors are at play including decreasing demand, increase of low-cost wind and solar PV generation and the RET, what can’t be disputed is that the carbon pricing mechanism is having the Government’s desired effect. The announcement yesterday of the scaling down of production at Victoria’s brown-coal generator, Yallourn comes after a string of other reductions in carbon production including Tarong and Swanbank B in QLD; the confirmation that Munmorah will not be back on line in NSW; Playford B in SA and Energybrix also in Victoria.

Carbon intensity (the tonnage of CO2-e involved in the generation of a megawatt of electricity) has been the lowest in SA where the percentage of wind is the highest of any state in the country as well as the world. According to AEMO SA’s average carbon intensity during September 2012 was as low as 45%.

Coal generators lament that the cost of production is too high for them to compete with wholesale prices lowered.

This may be good news for consumers as the amount of carbon price passed through into end-users bills is calculated as a factor of carbon intensity in the NEM. This means that with a carbon intensity of 90%, only nine-tenths of the $23 carbon price is passed through. With the closure of more coal generators, this may result in a further saving.