The Climate Institute today released a discussion paper from
economists at CSIRO and the Australian National University on the impact
of emissions trading on household energy budgets. This first of its
kind analysis finds that for most households wage growth will outstrip
increases in energy prices, improving energy affordability over coming
years. Energy efficiency policies and some targeted payments can ensure
this happens for all families.
In the most likely outlooks, the
proportion of average households income required to meet current energy
needs is projected to fall from just above 9% (in 2005) to around 8%
(between 7.8% and 8.6%), as incomes rise more than energy prices.
low income groups emission trading price impacts are of concern to
2020. With high carbon prices the proportion that low income individuals
– the worst affected group – spend on energy increases slightly (by
0.3%) to just under 13% by 2020. If support is given to energy
efficiency alongside emissions trading, spending needed to meet energy
needs falls around 12% in 2020 even if oil prices continue to increase.
budget payments of around $350 million/year between 2010-2025 are
required to fully insulate low income groups from increased direct
energy prices (up to $445/year per household in 2025). This could easily
be financed from revenue to be raised from emissions trading.
avoid the worst costs of dangerous climate change requires policies
that boost investment in clean technology and put a price on greenhouse
polluting technology,” said Erwin Jackson, Director of Policy and
Research, at the Climate Institute. “This economic analysis suggests
that as the Government implements the necessary long-term plan for the
low carbon economy the affordability of energy for most Australians is
likely to improve substantially over coming years.”
it finds that two key measures – energy efficiency and a Government
energy affordability payment could be used to insulate low income
households from any short term consequences.
families, concerns about the increased cost of energy and other goods
and services are real but can be overcome if we have a fair and
effective distribution of the multi-billion bonus to government coffers
provided by the emissions trading system.”
“The revenue from the
emissions trading scheme is likely to be equivalent to around one third
of total current state taxes in Australia. As a priority, the Federal
Government should establish a multi year, multi-billion dollar fund in
next years Budget to offset price increase impacts in low income groups.
Additional revenue should also be targeted at energy affordability and
public transport programs to build long-term national resilience to
future price rises.”
“An emissions trading scheme guided by strong
reduction targets and smart policies can provide a strong dividend to
help ensure Australia’s transition to a globally competitive low carbon
economy actually improves energy affordability for all Australian
families,” concluded Mr Jackson.