<p>Climate Change Mitigation Scenarios</p><p>Modelling report provided to the Climate Change Authority in support of its Caps and Targets Review © Commonwealth of Australia 2013</p><p>ISBN 978-0-642-74928-4</p><p>This publication is available for your use under a Creative Commons BY Attribution 3.0 Australia licence, with the exception of the Commonwealth Coat of Arms, the Treasury and logo, photographs, images, signatures and where otherwise stated. The full licence terms are available from http://creativecommons.org/licenses/by/3.0/au/legalcode. </p><p>Use of this material under a Creative Commons BY Attribution 3.0 Australia licence requires you to attribute the work (but not in any way that suggests that the Treasury and the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE) endorse you or your use of the work). </p><p>Material used ‘as supplied’</p><p>Provided you have not modified or transformed this material in any way including, for example, by changing the text; calculating percentage changes; graphing or charting data; or deriving new statistics from published statistics – then use the following attribution: </p><p>Source: The Treasury and DIICCSRTE.</p><p>Derivative material</p><p>If you have modified or transformed this material, or derived new material from the report in any way, then use the following attribution: </p><p>Based on The Treasury and DIICCSRTE data. </p><p>Use of the Coat of Arms</p><p>The terms under which the Coat of Arms can be used are set out on the It’s an Honour website (see www.itsanhonour.gov.au).</p><p>Other uses</p><p>Inquiries regarding this licence and any other use of this document are welcome at:</p><p>Manager Communications The Treasury Langton Crescent Parkes ACT 2600 Email: [email protected]</p><p>Director Projections Team Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education GPO Box 9839 Canberra ACT 2601 CONTENTS</p><p>EXECUTIVE SUMMARY...... 1</p><p>CHAPTER 1: INTRODUCTION...... 11 1.1 Context for the report...... 11 1.2 Scenario design...... 11 1.3 Modelling framework...... 12 1.4 Model limitations and uncertainty...... 14</p><p>CHAPTER 2: GLOBAL PROJECTIONS...... 17 2.1 Baseline...... 17 2.2 Global action scenarios...... 18 2.3 Global results...... 20</p><p>CHAPTER 3: AUSTRALIAN PROJECTIONS...... 37 3.1 Description of scenarios...... 37 3.2 Economic growth in the central policy scenario...... 40 3.3 Australia’s abatement task and net emissions...... 44 3.4 Domestic emissions projections...... 46 3.5 Covered emissions...... 71 3.6 Economic effects in alternative price scenarios...... 72 3.7 Implications of alternative targets...... 84</p><p>APPENDIX A: MODELLING FRAMEWORK AND ASSUMPTIONS...... 89</p><p>APPENDIX B: CHANGES SINCE THE 2012 PROJECTIONS...... 111</p><p>APPENDIX C: CARBON FARMING INITIATIVE...... 117</p><p>REFERENCES...... 127</p><p>Page iv Abbreviations and acronyms</p><p>ABARES Australian Bureau of Agricultural and Resource Economics and Sciences</p><p>ABS Australian Bureau of Statistics</p><p>AEEI Autonomous energy efficiency improvement</p><p>AEMO Australian Energy Market Operator</p><p>ALPF Australia’s Low Pollution Future</p><p>B20 A blend of 20 per cent biodiesel with 80 per cent conventional diesel</p><p>BITRE Bureau of Infrastructure, Transport and Regional Economics</p><p>CCA Climate Change Authority</p><p>CCS Carbon capture and storage</p><p>CER Certified Emission Reductions</p><p>CFI Carbon Farming Initiative</p><p>CGE Computable general equilibrium (model/s)</p><p>CNG Compressed natural gas</p><p>CO2 Carbon dioxide</p><p>CO2-e Carbon dioxide equivalent</p><p>CoPS Centre of Policy Studies (Monash University)</p><p>CSIRO Commonwealth Scientific and Industrial Research Organisation</p><p>DIICCSRTE Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education</p><p>EMF Energy Modelling Forum</p><p>ESM Energy Sector Model</p><p>ETS Emission Trading Scheme</p><p>EU25 European Union — 25 countries</p><p>GCOMAP Generalised Comprehensive Mitigation Assessment Process</p><p>GDP Gross domestic product</p><p>GGAS Greenhouse Gas Reduction Scheme (New South Wales)</p><p>GNI Gross national income</p><p>GSP Gross state product</p><p>Gt Gigatonne</p><p>GTAP Global Trade Analysis Project</p><p>GTEM Global Trade and Environment Model</p><p>Page v Climate Change Mitigation Scenarios</p><p>GWh Gigawatt hour</p><p>GWP Gross world product</p><p>HGWP High global warming potential</p><p>IEA International Energy Agency</p><p>IMF International Monetary Fund</p><p>IPCC Intergovernmental Panel on Climate Change</p><p>Kg Kilogram</p><p>LNG Liquefied natural gas</p><p>LPG Liquefied petroleum gas</p><p>LRET Large-scale Renewable Energy Target</p><p>LULUCF Land use, land use change and forestry</p><p>MAC Marginal Abatement Cost</p><p>MAGICC Model for the Assessment of Greenhouse Gas Induced Climate Change</p><p>MMA McLennan Magasanik and Associates</p><p>MMRF Monash Multi-Regional Forecasting (model)</p><p>Mt Megatonne</p><p>MWh Megawatt hour</p><p>NEM National Electricity Market</p><p>OECD Organisation for Economic Co-operation and Development</p><p>OPEC Organization of the Petroleum Exporting Countries </p><p>PAGE Policy Analysis of the Greenhouse Effect</p><p> ppm Parts per million</p><p>PPP Purchasing power parity</p><p>PV Photovoltaic</p><p>SRES Small-scale Renewable Energy Scheme</p><p> t Tonne</p><p>TWh Terawatt hour</p><p>UNFCCC United Nations Framework Convention on Climate Change</p><p>Page vi</p>