1 Introduction
1.1 Research framework and chapter structure
2 Theoretical description of the mechanisms
2.1 Revenue support mechanisms
2.2 Cost of capital support mechanisms
2.3 Negative externality levies
3 Literature review
3.1 Waste management and climate policy
3.2 Market mechanisms in the context of international climate change cooperation
Table 1 Summary of nationally determined contributions of selected countries in Asia & the Pacific and contribution of waste |
Country | 2030 Target | Base year | Base year emissions | Intention to use markets | ||
---|---|---|---|---|---|---|
Total (tCO2e) | Waste (tCO2e) | Waste (%) | ||||
Australia | 43% reduction in total absolute emissions by 2030 | 2005 | 608,650,000 | 14,280,000 | 2.35% | Maybe |
China | 60-65% reduction in emissions intensity per unit GDP by 2030 | 2005 | 7,250,000,000 | 127,000,000 | 1.75% | Yes |
India | 45% reduction in emissions intensity per unit GDP by 2030 | 2005 | 1,820,000,000 | 67,800,000 | 3.73% | Yes |
Indonesia | 29% (unconditional) and 41% (conditional) reduction on business as usual | 2005 | 628,000,000 | 93,800,000 | 14.94% | Yes |
Japan | 46% reduction in total absolute emissions by 2030 | 2013 | 1,340,000,000 | 22,530,000 | 1.68% | Yes |
Malaysia | 45% reduction in 2005 absolute emissions by 2030. | 2005 | 252,000,000 | 21,900,000 | 8.69% | No |
New Zealand | 50% reduction in 2005 absolute emissions by 2030. | 2005 | 57,240,000 | 4,380,000 | 7.65% | Yes |
Philippines | Peak in absolute emissions by 2030. 75% reduction, 2.5% of which is unconditional. | 2005 | 159,000,000 | 16,400,000 | 10.31% | Yes |
Singapore | Reach an absolute target of 60mt of emissions by 2030. | 2005 | 36,300,000 | 338,000 | 0.93% | Yes |
South Korea | 40% reduction on absolute emissions by 2030 from 2018 base year. | 2018 | 739,000,000 | 19,200,000 | 2.60% | Yes |
Thailand | Unconditional 30% reduction against business as usual and conditional 40%. | 2005 | 350,000,000 | 19,400,000 | 5.54% | Yes |
Vietnam | Unconditional 16% reduction on business as usual and unconditional 44%. | 2005 | 217,000,000 | 12,400,000 | 5.71% | Yes |
Source: NDC Registry (https://unfccc.int/NDCREG accessed on 13 June 2023) |
3.3 Exploring additionality
Fig. 2 Illustration of how carbon finance impacts project financial performance by raising returns above hurdle rates. Source: Rossetto, D. (2014). Case studies of climate resilience in urban areas and their funding UNFCCC Standing Committee on Finance Annual Forum - Montego Bay, Jamaica, 21 & 22 June 2014. Montego Bay, UNFCCC, Page 14 |
3.4 Project-based mechanisms in the context of Australia
Fig. 3 Voluntary private and state and territory demand for ACCUs and reason for cancellation. Source: Clean Energy Regulator |
Table 2 Summary of landfill charges across Australian states |
State | Metropolitan | Regional |
---|---|---|
New South Wales | \$146/tonne | \$84/tonne |
Queensland | \$80/tonne | \$80/tonne |
South Australia | \$143/tonne | \$71/tonne |
Tasmania | \$20/tonne | \$20/tonne |
Victoria | \$125/tonne | \$110/tonne |
Western Australia | \$70/tonne | \$70/tonne |
Source: Clean Energy Finance Corporation and Arup [17], Page 19 |
3.5 Summary of the literature review
4 Methodology
4.1 Design
4.2 Data collection
Table 3 Total ACCU issuance during the period 31/12/2012 to 30/06/2022 |
Financial year | Total ACCUs issued |
---|---|
2021-22 | 16,508,527 |
2020-21 | 16,466,275 |
2019-20 | 15,476,458 |
2018-19 | 13,663,409 |
2017-18 | 12,207,903 |
2016-17 | 13,151,991 |
2015-16 | 10,719,735 |
2014-15 | 9,318,106 |
2013-14 | 4,380,473 |
2012-13 | 1,750,179 |
Total | 113,643,056 |
Source: Clean Energy Regulator, 12 April 2023 |
Table 4 Parameters of the two theoretical projects |
Parameter | Project one (Biogas) | Project two (Energy from waste) |
---|---|---|
Technology | Complete system with feedstock logistics, pre-treatment, digesters, gas management, CHP units, heat recovery, electrical generation, equipment & balance of plant. | Incineration (mass burning) with reciprocating grate and mechanical draft cooling tower. |
Installed capacity (MW) | 2 MW | 30 MW |
Fuel | Agricultural residues, energy crops, food waste, manures, sewage, municipal solid waste | Solid waste |
Capital cost | AUD \$28.6 million, including land. | AUD 594.94 million, including land. |
Operation & maintenance cost | AUD \$ 1.85 million per year. | AUD 6.4 million per year |
Annual electricity generation | 16,700 MWh per year. | 207,675 MWh per year |
Economic life | 20-25 years | 30 years |
Investment evaluation period | 20 years | 20 years |
Source: Australian Energy Market Operator 2022 Cost and Technical Parameter Review |
Table 5 Average annual wholesale electricity prices during the 2020/21 and 2021/22 financial years (AUD) |
Financial year / state | NSW | Queensland | South Australia | Tasmania | Victoria |
---|---|---|---|---|---|
2020-21 | 72 | 66 | 53 | 45 | 51 |
2021-22 | 144 | 178 | 125 | 90 | 104 |
Source: Australian Energy Regulator |
Table 6 ACCU auction results including contracted volumes and clearing prices |
Auction | Date | Volume | Price (AUD) | Optiona |
---|---|---|---|---|
1 | April 2015 | 47,333,140 | \$13.95 | No |
2 | November 2015 | 44,861,010 | \$12.55 | No |
3 | April 2016 | 45,949,842 | \$10.23 | No |
4 | November 2016 | 26,668,883 | \$10.69 | No |
5 | April 2017 | 8,805,722 | \$11.82 | No |
6 | December 2017 | 7,803,535 | \$13.08 | No |
7 | June 2018 | 6,323,594 | \$13.52 | No |
8 | December 2018 | 3,267,279 | \$13.87 | No |
9 | July 2019 | 59,000 | \$14.17 | No |
10 | March 2020 | 1,424,771 | \$16.14 | Yes |
11 | September 2020 | 6,284,717 | $15.74 | Yes |
12 | April 2021 | 6,623,286 | \$15.99 | Yes |
13 | October 2021 | 6,840,577 | \$16.94 | Yes |
14 | April 2022 | 7,593,036 | \$17.35 | Yes |
Source: Clean Energy Regulator, 16 June 2023 aThe fifth column with the heading option refers to the introduction of a right for successful proponents that would allow them to exit contracted arrangements with the ERF and sell ACCUs instead on the market. In effect, this is a put option underwritten by the ERF |
5 Results
Fig. 4 Breakdown of ACCUs issued between 01/07/2012 and 30/06/2022 by method type. Source: Based on data from the Clean Energy Regulator |
Fig. 5 Breakdown of ACCUs issued between 01/07/2012 and 30/06/2022 by waste method. Source: Based on data from the Clean Energy Regulator |
Fig. 6 Pre-tax equity returns based on forward electricity wholesale prices assumed to be equivalent to NEM average by state in 2020-21 |
Fig. 7 Pre-tax equity returns based on forward electricity wholesale prices assumed to be equivalent to NEM average by state in 2021-22 |