Even before Eraring was extended, NSW was set to miss climate targets

The decision to extend the life of the Eraring power station until 2027 will pump an extra 12 million tonnes of greenhouse emissions into the atmosphere over two years.

The deal, inked by the NSW government and Origin Energy last Thursday, is aimed at keeping the lights on and avoiding price spikes while more renewable energy and storage comes online.

Aside from taxpayers underwriting private profits and losses, the main cost is the effect it will have on the climate.

NSW Environment and Energy Minister Penny Sharpe said for both those reasons, the government was keen to keep the agreement as short as possible. “The starting principle was not a day longer, not a dollar more,” she said.

The Eraring coal-fired power plant will pump out an extra 12 million tonnes of greenhouse emissions over two years, assuming it runs at half capacity.Credit: Nick Moir

Even before Eraring was extended, NSW was not on track to meet its legislated targets to reduce greenhouse emissions by 50 per cent on 2005 levels by 2030 and 70 per cent by 2035. An update in April showed the state is instead tracking for 44-50 per cent by 2030 and 65-70 per cent by 2035.

Technically, the Eraring extension will not affect the 2030 targets, as long as the power station is closed before then. The targets are about the emissions that year, rather than a cumulative total.

But in terms of climate science, an extra two years of emissions is important. Eraring historically generates nearly 10 per cent of the state’s greenhouse emissions, excluding emissions from land use, according to publicly available data.

In the 2023 financial year, Origin Energy reports that Eraring produced 12.15 terawatt hours of electricity, and greenhouse gases equivalent to 11.86 million tonnes of carbon dioxide.

The NSW government agreement commits Origin to producing at least 6 terawatt hours a year - though the company can generate more based on market demand.

Six terawatt hours is roughly half Eraring’s capacity and therefore half its regular emissions, but that’s still about 6 million tonnes of greenhouse gases a year or 12 million over two years.

Regardless, most energy experts believe the extension was necessary for energy reliability because of a supply shortfall identified by the Australian Energy Market Operator.

Clean Energy Council policy director Christiaan Zuur said: “Unfortunately, a historic lack of support for renewables and grid-scale storage has meant that the government has had to take the steps announced today.”

Electricity generation including Eraring accounts for about 35 per cent of total greenhouse emissions in NSW. Sharpe said the government was making planning approval for new wind solar and storage projects easier, and acknowledged that enlisting households was an obvious next step.

NSW Environment and Energy Minister Penny Sharpe and NSW Treasurer Daniel Mookhey have announced that the operating life of Eraring power station will be extended for two years.Credit: Nick Moir

On Friday, she announced a long-awaited policy to reduce the cost of a household battery by $1600 to $2400 for a home or business, and provide a $250-$400 incentive to connect to a virtual power plant.

Solar panels produce electricity during the middle of the day when demand is lowest. A household battery, which typically costs from $9000 to $15,000 before any subsidy, lets the owner store the energy from their panels to use at night, or export to the grid at peak times. A virtual power plant allows electricity customers to share solar capacity stored in batteries across the grid when needed.

Sharpe said she will have more to say in the consumer energy strategy in the coming months.

“Twenty per cent of the work is being done by people in the community who are already there and already doing it, and there are massive opportunities for us to really build on that,” Sharpe told reporters on Thursday, referring to the one million NSW households already with solar panels.

Other strategies include households electrifying their appliances to move off gas, which is also a cost-of-living measure even without solar because gas is so expensive.

Electric vehicles can also work as batteries if vehicle-to-grid charging is enabled.

Some other ideas touted by environmentalists to reduce the state’s emissions are more contentious.

The Narrabri gas project

For example, opponents of Santos’ Narrabri gas project in the Pilliga say it should be cancelled because emissions from the project are already baked into the 2030 projections even though it is yet to go ahead.

Based on the publicly available environmental impact statement, the project is expected to have a daily production of up to 200 terajoules. This will mean downstream greenhouse emissions equivalent to 3.77 million tonnes of carbon dioxide a year.

It will also directly contribute greenhouse gas equivalent to either 530,000 or 960,000 tonnes of carbon dioxide a year, depending on whether it generates its own electricity or connects to the grid.

The project was already approved in 2020, but almost certainly can’t go ahead without the Narrabri lateral pipeline, which is yet to be approved.

One of the arguments against the pipeline is that, like a road or a railway, it would decrease the cost of entry to the market for other operators.

Climate Councillor and economist Nicki Hutley said it would open up the region for further gas projects, just as similar projects had done in Queensland and the Northern Territory.

“The economics of it would require that it gets used to close to capacity; otherwise it’s not an economic enterprise,” Hutley said.

Proponents say NSW needs gas for the energy transition and the state will face a shortfall without new development. Santos was contacted for comment.

Native forest logging

Proposals to end the unprofitable native forest logging industry are similarly contentious because the forestry industry has political support on the Coalition side from the Nationals, and the Labor side from many trade unions.

Yet deciding to phase out native forest logging could be the largest single opportunity to reduce expected emissions from land use, since the emissions projections assume no change to forestry policy. Agriculture Minister Tara Moriarty declined to comment.

One study by Australian National University’s Andrew Macintosh for Frontier Economics estimates that ending logging on the South Coast would reduce net emissions equivalent to 950,000 tonnes of carbon dioxide a year from 2022 to 2041.

That’s just the South Coast, which is about one quarter to one third of the size of the North Coast logging sector.

Justin Field from the Forest Alliance NSW said the majority of logged native forests is left on the forest floor, becomes waste from processing or goes into low-value short-lived products like paper and firewood.

“This carbon is released quickly and takes decades if not centuries to be recaptured in regrown forests,” Field said. “The big carbon gains are to be made by protecting what’s standing and allowing logged and degraded forests to recover.”

Premier Chris Minns has previously said that hardwood logging “has a future” in NSW, but he is also attracted to the idea of protecting native forests by developing a new marketplace in carbon offsets.

Planning overhaul

In the same week as the Eraring and household battery announcements, the NSW Environment Protection Authority announced draft rules for planning applications covering climate emissions.

EPA chief executive Tony Chappel said large-emitting projects must provide detailed and consistent information about greenhouse gas emissions in their environmental impact statement, and “it would be open to the decision maker to decide if a project had an unacceptable impact”.

However, Environmental Defenders Office chief executive David Morris said the planning legislation must explicitly link to the emissions targets, or else “you end up with a target that’s actually a little more than an ornament”.