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4. Emissions Reduction

In 2022, we administered schemes that reduced emissions by 61.3 million tonnes of carbon dioxide equivalent (CO2-e). This is an improvement on 2021 where the CER schemes reduced emissions by 58.1 million CO2-e.

In 2022, the Emissions Reduction Fund (ERF) issued equivalent to 17.7 million tonnes of CO2-e emissions abatement. This is a 4% increase compared to 2021.

The Renewable Energy Target (RET) contributed 43.6 million tonnes CO2-e of emissions reduction in 2022, a 6% increase from 2021. Of which, 26.1 million tonnes of CO2-e was from the Large-scale Renewable Energy Target (LRET) and 17.5 million tonnes CO2-e was from the Small-scale Renewable Energy Scheme (SRES). As discussed in the September 2021 QCMR, it is expected that renewables captured under the RET will continue to reduce emissions but at a reduced rate as the emissions intensity of the grid declines.

The RET added 8.6 million MWh of renewable energy to the grid in 2022. The emissions reduction estimate for 2022 was based on the average emissions intensity of the grid. This fell to 0.61 tonnes CO2-e per MWh compared to 0.65 tonnes CO2-e per MWh in 2021. This modest difference is due to the rapidly declining emissions intensity of the grid as uptake of renewable energy continues to increase.

We estimate scheme-based emissions reductions in 2023 to be 63.7 million tonnes of CO2-e. This is an anticipated increase of 4% compared to 2022 (see Figure 4.1).

We have incorporated National Electricity Market (NEM) and South West Interconnected System (SWIS) data when calculating our estimates. This provides a better estimate for the national emissions intensity factors for 2021 and 2022. A linear forecast has been used to estimate the 2023 emissions intensity factor for the emissions reductions from the RET.

Emissions reductions using thermal displacement

When using the thermal generation displacement approach, we estimate emissions reductions in 2022 to be 84.5 million tonnes of CO2-e. Every additional MWh of additional renewable generation displaces a MWh of either coal or gas generation. This includes renewables incentivised through the LRET and SRES schemes. The September 2021 QCMR provides a methodological overview of the emissions reduction estimates using average emissions intensity and emissions intensity of displaced thermal generation. The estimate of emissions reductions using thermal displacement is higher because electricity generated from displaced thermal fuel sources (primarily coal and gas) has a higher emissions intensity than electricity from the current generation mix in the NEM and SWIS. We estimate 0.93 tonnes CO2-e per MWh for thermal generation versus 0.61 tonnes CO2-e per MWh for the grid.

We project the 2023 estimate using the thermal displacement approach will be 90.8 million tonnes of CO2-e.

Table 4.1: Emissions reduction by estimation method
2022 Emissions reduction by scheme (million tonnes CO2-e)'Carbon content'' estimate
(conservative approach)
'Avoided emissions' estimate
(thermal displacement)

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