Aug 03, 2007 - 5:31am
New economic modelling on the future of Australia’s electricity sector
shows immediate action on emissions trading, backed up by a clean energy
target and comprehensive energy efficiency policies offer the most
economically and environmentally effective way of reducing greenhouse
“This research highlights that it would be reckless to
delay action, or only take half measures, because of the risk it would
pose to the Australian economy.” said Chief Executive of The Climate
Institute, John Connor.
The modelling by McLennan Magasanik
Associates (MMA) - one of Australia’s leading electricity sector
modellers - was commissioned by The Climate Institute and has been
released today ahead of the report of the Prime Minister’s Emissions
Trading Task Group due later this week.
The research maps a series
of scenarios from a soft start to emissions trading through to more
comprehensive policies including energy efficiency and clean energy
targets, with each scenario achieving an 80% reduction in emissions from
the electricity sector by 2050.
It shows that we will need a
national energy efficiency plan, a clean energy target and an emissions
trading scheme in place from 2010 if we are to protect both the economy
and the planet.
“We’ve based the 80% target on the scientific
consensus that developed nations such as Australia will need to cut
emissions by 60-90% by 2050 if we are to avoid dangerous climate change
impacts. Accounting for 30% of Australia’s overall greenhouse
pollution, our electricity sector needs to make a decisive switch to
clean energy but it should be backed up with an economy wide approach
that links into international carbon markets like the $36 billion Kyoto
“Making significant cuts to greenhouse pollution from our
electricity sector is affordable and achievable if we act now with a
realistic carbon emissions trading scheme, a market based clean energy
target and comprehensive energy efficiency policies.”
new research shows is that all new electricity can and must be sourced
from clean energy and that Australia must lead and not lag the world in
cutting energy waste.”
“Making the switch to clean energy and
cutting our greenhouse pollution can place Australia in a leadership
role for global efforts to protect the planet but also position
Australia at the leading edge of the booming global clean energy market
already worth $75 billion in 2005.”
SUMMARY OF KEY RESULTS
mix of policies - emissions trading, market based clean energy targets
and energy efficiency policies - is the most cost effective policy
response to reducing greenhouse pollution from the electricity sector.
This mix will:
- reduce carbon price increases by around a
third and electricity price increases by around 20% over the first two
decades of action.
- reduce resource costs in the industry by $13.4 billion by 2050.
reduce additional household weekly expenditure between 2010 and 2030 by
around 50% (to just an additional 0.3% of weekly spend at that time –
around $3-4 per week extra in 2010-2020 but a near zero relative
increase in 2050).
A wait and see scenario with a soft
start to carbon pricing does not significantly reduce emissions in the
short-term, leads to higher carbon prices and electricity prices over
the medium to long-term, and does not promote the deployment of clean
energy over the next decade. This delayed approach would:
reduce emissions by 11 million tonnes in 2020 and results in continued
short-term emissions growth of plus 8% on today’s levels.
make carbon prices jump sharply to more than six times the level of the
previous decade when full emissions trading is introduced in the 2020.
This rapid price increase risks significant shocks to the industry and
- mean carbon prices around 20% higher in the
2020s, 60% higher in the 2030s and 90% higher in the 2040s, compared to
more decisive early action.
- mean electricity prices are lower
in the next decade, but then jump nearly 75% in the 2020s and are around
10% higher than if more decisive early action had been taken.
create a long-term increased cost to the industry of 15-28% (up to $4
billion) higher than introducing an emissions trading scheme backed by
Cost effective energy efficiency programs are critical to cutting the cost of reducing emissions:
inclusion of even a moderate energy efficiency program with an
emissions trading scheme reduces the electricity sectors’ cost of
achieving the emission reduction target by nearly 50% or about $12
The range of energy technologies currently
available or expected to be available in the coming decades in the
electricity sector can achieve 80% reductions in emissions by 2050:
In the short term, renewable energy sources – in particular wind and
bio energy could account for 18-25% of national generation by 2020 and
gas-fired generation 24-27% by 2020.