Smart energy policy key to billion dollar savings Media Release

Sep 22, 2008 - 12:00am

Introducing an emissions trading scheme without complimentary measures such as energy efficiency and renewable energy targets could cost the electricity sector more than $40 billion, modelling commissioned by the Climate Institute reveals.

A report by leading energy modellers McLennan Magasanik and Associates (MMA) shows that moderately ambitious energy efficiency improvements and the Government’s renewable energy target (RET) will slash billions off the long-term cost of reducing emissions from Australia’s electricity sector which contributes around a third of total national carbon pollution.

“The modelling shows that the most cost effective way to clean up Australia’s electricity generating sector is by tapping into huge energy efficiency opportunities and unleashing our clean energy potential,” Climate Institute CEO John Connor said.

“A smart policy mix, especially if combined with extra policies to bring forward solar thermal and carbon capture and storage, can not only help transform our energy sector but provide important economic opportunities in the burgeoning clean energy market of the Asia Pacific region.”

The analysis also concludes that a soft start, limiting carbon price rises from $15 in 2010 to $35 a tonne by 2020 would not restrict pollution or only marginally reduce it even with comparable energy efficiency and renewable energy targets.

“Soft starts which put a brake on carbon prices also put the brakes on clean technology development. And, if Australia and other countries fail to set strong emission reduction targets we risk catastrophic climate change threatening our economy and children’s futures,” said Mr Connor.

Modelling also showed that energy efficiency and the RET would decrease electricity price impacts compared with introducing an emissions trading scheme on its own. While electricity prices do increase, with continuing economic growth, the proportion of average household incomes spent on electricity falling from 2.5 per cent today around one per cent in 2050.

Achieving the scientifically and internationally credible target of at least 25% off Australia’s total 1990 carbon pollution levels by 2020 will require additional measures to achieve reductions across energy, urban design, transport and agriculture. Separate analysis by The Climate Institute show this is affordable with at least half of the reductions coming as a net saving to the economy. 

“A smart mix of policies can ensure smart and affordable investments in making the shift to a globally competitive low carbon economy.”

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