Consultation on the assumptions that underpin Australia’s
greenhouse gas emissions projections
Introduction
The Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education
(DIICCSRTE) undertakes annual modelling of the Australian economy to develop projections of
Australia’s greenhouse gas emissions. DIICCSRTE has now commenced the process of developing the
2013 Australian Emissions Projections.
The modelling results will also be a key input into the Climate Change Authority’s recommendations
on the level of greenhouse gas emissions caps for the carbon pricing mechanism, indicative national
emissions trajectory and carbon budget. The Climate Change Authority is due to provide these
recommendations to the Government by February 2014.
The proposed approach and assumptions that will underpin this modelling exercise are outlined
below. These assumptions should be treated as being preliminary in nature and may change during
the modelling process.
Comments are sought on the preliminary assumptions. The consultation process is explained at the
end of this note; comments must be received by Friday 3 May 2013.
Modelling framework
Consistent with previous practice, the 2013 projections will be developed using a suite of economic
models to capture global, national and industry level influences on Australian emissions levels.
Key models to be used in the exercise include:
 two top-down computable general equilibrium (CGE) models - the Global Trade and
Environment Model (GTEM) and the Monash Multi-Regional Forecasting model (MMRF);
 three bottom-up, sector specific models to analyse the electricity, agriculture and road transport
sectors; and
 the Model for the Assessment of Greenhouse-gas Induced Climate Change (MAGICC) to estimate
the atmospheric concentrations of greenhouse gases in various scenarios.
These models will interact in a similar manner to the approach taken by the Treasury in Strong
Growth Low Pollution (SGLP) in 2011. Chapter 2 and Appendices A and B of the SGLP report provide
details on the use of these models in SGLP and the associated data and assumptions. The SGLP
report can be found at:
http://archive.treasury.gov.au/carbonpricemodelling/content/report.asp
MAGICC assumptions
The Model for the Assessment of Greenhouse-gas Induced Climate Change (MAGICC) will be used to
estimate the atmospheric concentrations of greenhouse gases in various scenarios. The greenhouse
gas emissions trajectory produced by GTEM will be used as an input to the model, which will provide
results for greenhouse gas concentrations and temperature outcomes for the globe over time. The
default MAGICC settings and assumptions will be used.
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For more information on the MAGICC model, please refer to [http://www.magicc.org/].
GTEM assumptions
Underpinning the GTEM model will be updated assumptions about world economic parameters and
assumptions about international climate change mitigation action. More information about GTEM
can be found here:
http://www.daff.gov.au/abares/models
A detailed listing of the sources for these assumptions can be found in Appendix B to the SGLP
report.
MMRF assumptions
MMRF requires a range of exogenous (external) inputs in order to forecast growth in the Australian
economy and associated greenhouse gas emissions. Key exogenous inputs to the MMRF model
include:
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population growth;
international prices for emission-intensive commodities such as coal, gas and oil;
productivity growth rates and technological development; and
updated emissions data from the 2011 National Greenhouse Gas Inventory and relevant
quarterly updates.
A detailed listing of exogenous assumptions and their sources can be found at Appendix B to the
SGLP report accessible here:
http://archive.treasury.gov.au/carbonpricemodelling/content/report/11appendixb.asp
These assumptions will be updated based on the latest information available from the listed sources.
More information about MMRF can be accessed here:
http://www.monash.edu.au/policy/ftp/workpapr/g-223.pdf
Sectoral assumptions
Bottom-up sectoral models provide a more detailed representation of the drivers of emissions for
the particular sector. The assumptions underpinning bottom-up models can materially impact the
overall results and therefore should reflect the best available information.
Consistent with previous modelling, professional modelling organisations have been engaged to
undertake the bottom-up modelling of key sectors. Where possible, these models will be linked to
the macro-economic modelling undertaken for the project through common demand side forecasts
and macroeconomic assumptions derived from MMRF.
Three sectors that represent the majority of Australia’s emissions have been chosen for detailed
bottom-up modelling, namely the electricity, transport, and agriculture sectors.
In the electricity generation sector, ACIL Tasman has been engaged to provide annual projections for
total emissions. ACIL Tasman’s proposed approach and assumptions documentation can be found
here:
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http://www.climatechange.gov.au/government/submissions/~/media/government/submissions/ass
umptions-consultation-for-2013-emissions-projections/Electricity_assumptions.pdf
With regard to the transport sector, the Commonwealth Scientific and Industrial Research
Organisation (CSIRO) [will] provide annual projections of emissions and activity for the transport
sector to project total emissions. CSIRO’s proposed approach and assumptions documentation can
be found here:
http://www.climatechange.gov.au/government/submissions/~/media/government/submissions/ass
umptions-consultation-for-2013-emissions-projections/Transport_assumptions.docx
For the agriculture sector, the Centre for International Economics (CIE) has been engaged to provide
annual projections of emissions and economic outputs from each agriculture sub-sector, to project
total emissions. CIE’s proposed approach and assumptions documentation can be found here:
http://www.climatechange.gov.au/government/submissions/~/media/government/submissions/ass
umptions-consultation-for-2013-emissions-projections/Agriculture_assumptions.docx
For other sectors, such as forestry and land use change, fugitive emissions, waste, direct
combustion, and industrial process emissions, the Department will supplement economy-wide
modelling with in-house modelling based on data and information from:
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the National Greenhouse and Energy Reporting System (NGERS);
industry forecasters such as Wood Mackenzie and IbisWorld; and
the Bureau of Resources and Energy Economics.
Consultation
Written submissions are invited on the modelling assumptions described above and in the
associated references. Submissions must be received by Friday 3 May 2013 and can be sent via email
to:
emissions.projections@climatechange.gov.au
Submissions can been sent in the body of an email or attached as Microsoft Word (.docx) or Adobe
Acrobat (.PDF) documents.
Submissions may be published on the Department’s website. If you do not wish to have your
submission made public, please clearly indicate this at the time of submission.
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