Reducing Greenhouse Gas Emissions in the Queensland Electricity Supply Industry: Gas and Carbon Tax Scenarios

This article examines various greenhouse gas scenarios for the electricity supply industry in the coal-rich state of Queensland. The authors use a dynamic partial equilibrium model of the Queensland electricity system to examine the effects of four alternate policy scenarios: a business-as-usual case, a centrally planned gas-fired case, and two carbon tax scenarios- the first in which the merit order of coal and gas plant is reversed, and the second in which fuel switching is undertaken. The results indicate that no scenario is capable of delivering sufficient cuts in emissions to meet a 'Kyoto equivalent' industry target. While fuel switching brought about the greatest reduction in emissions, the high cost of this scenario indicates that a more efficient outcome for the electricity supply industry in Queensland would be a broad-based Australia-wide approach to emissions abatement, so that carbon reductions can be accessed from industries capable of achieving lower cost emissions abatement. Copyright 2004 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.