The 1 June 2007 report from the Prime Ministerial Task Group on Emissions Trading recommended that a carbon emissions trading scheme be introduced. This has been endorsed by the Prime Minister and presents more opportunities to increase the value of our business from our existing generation, and for developing new green energy products and services.

The details of Australia’s proposed carbon scheme, yet to be determined, will affect the extent to which Hydro Tasmania can benefit from the new system. It is important for Hydro Tasmania to have a significant level of input into the debate surrounding the design of a carbon scheme. Hydro Tasmania has been working with both Federal and State Governments over the past two years, outlining its support for the introduction of a cap and trade emissions trading scheme. This has included submissions to the Prime Ministerial Task Group and the states’ National Emissions Trading Taskforce discussion paper Possible Design for a National Greenhouse Gas Emissions Trading Scheme.

Global approach

At an international level, Hydro Tasmania is taking an active role to influence how the Intergovernmental Panel on Climate Change is determining formulae for calculating greenhouse gas emissions from reservoirs through the International Hydropower Association. It has representation on the Asia Pacific Partnership for Clean Development and Climate (AP6) Renewable Energy and Distributed Generation Task Force, and on the Board of the International Hydropower Association.

Our performance

Hydro Tasmania recognises that to have credibility in the climate change debate we will need to reduce our emissions, which are at present very low in relation to the energy industry. A specific program is yet to be devised.

Hydro Tasmania has been working with government agencies at a State level as a member of the Tasmanian Interdepartmental Committee on Climate Change to develop the Tasmanian Climate Change Strategy. This strategy will drive improvements in energy efficiency and greenhouse gas emission reductions statewide.

The challenge

In 2004, Hydro Tasmania fully funded a CSIRO study that assessed future catchment yields and provided one possible future climate scenario for Tasmania, which was completed in December 2005. The findings indicate that while the average annual rainfall is expected to increase, the monthly variation in rainfall is likely to lead to an overall decrease in production. This is thought to be due to higher rainfall in a shorter period over winter, sustained lower rainfall for the rest of the year and higher evaporation levels. The South Esk-Great Lake catchment is expected to experience the most significant reduction in inflow and generation. Anecdotally this is already happening, with the last 10 years showing the lowest inflow for this catchment in the 83 years of records.

Over 2006/07, based on the results of the CSIRO climate change study, Hydro Tasmania implemented Project RaIN (Reassessment of Inflow Norms) to investigate the impact on operations with various rainfall scenarios. The financial impact of these changes is also being modelled.

Project RaIN has reviewed inflow history and found a statistical change in the inflows over the historical records and reduced inflow over the last 11 and 31 years. This change related not just to an annual change but also to a change in seasonality with drier autumns and wet springs (the former being statistically significant). The study showed a potential decrease in electricity production of approximately six per cent across all catchments. The 11-year record was found to be not statistically significant, perhaps due to the relatively short period. The last 31 years have been adopted as a basis of future planning, with a regular review of the assumption. This scenario provides greater variability on which to model extreme events for storage management. Coincidentally, the change in seasonal variability over the past 31 years reflects that being predicted in the climate change modelling.

Antarctic Climate and Ecosystems CRC has been able to attract significant support from many organisations, including Hydro Tasmania, to undertake a further study on climate change impacts with more emission scenarios, global models, and extreme event models. Government funding is being sought for this study, expected to cost in the order of $3 million and to last three years. Such a study would provide Hydro Tasmania with more confidence on the future climate and potential risks to, and impacts on, the business.