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The Renewable Energy Target a needed, effective tool for emission reductions
Apr 05, 2012 - 8:00am
The Renewable Energy Target (RET) is an effective, efficient policy mechanism that helps Australia significantly reduce its emissions, grows jobs and investment, and reduces long term costs. Efforts by some in the Australian Industry Greenhouse Network (AIGN) to attack it represent cynical and costly carbon protectionism.
“The large scale deployment of renewable energy is a precondition for effective climate policy,” said Erwin Jackson, Deputy CEO of The Climate Institute. “This has been recognised by groups such as the OECD through to over 100 countries who now have made strategic economic decisions to invest in clean energy to build the industries and technologies they will needed meet long-term emission targets. Clean energy investment now accounts for over 40 per cent of global investment in power generation.”
He added: “The AIGN arguments are a wolf in sheep’s clothing. They dress up their case in economic arguments to disguise that they are just seeking to reduce the amount major polluting industries pay to help the nation move to clean energy. This just shifts the effort on to households and other businesses that would pay higher energy costs than they need to.”
The International Energy Agency has said that a pollution price is fundamental in driving systematic change across the entire economy, but combined with targeted, complementary policies, pollution can be cut even more quickly and, in the long-term, more cheaply.
This is supported by independent modelling commissioned by The Climate Institute, which found that the RET will reduce the investments required in the electricity sector to meet a long-term pollution target by $5 to $6 billion due to fast-tracked market experience and innovation.
Without the RET and in the absence of higher carbon prices, renewable energy in Australia will take much longer to develop. This will increase the economic costs of reducing emissions in the longer-term and make the structural adjustment to a world moving to clean energy more difficult.
Between 2010 and 2030 the RET will increase the share of Australia’s electricity coming from renewable energy to 20 per cent and drive thousands of jobs and investments worth tens of billions of dollars in regional areas.
The RET is projected to reduce carbon pollution by around 30 million tonnes in 2020 – around 15 per cent of current electricity emissions.
While the RET is a relatively low-cost and highly effective mechanism for deploying renewable energy, the impact on bills is substantially higher than it needs to be. This is because the legislation includes an exemption to some of Australia’s largest polluting trade-exposed industries, meaning they do not have to pay for the full costs of the scheme. This means that rather than being shared across all energy users, the cost of the RET is being paid in full by households and those businesses that are not eligible for an exemption.
Last year The Climate Institute released a policy brief assessing the impact of exempting big polluting companies from the full cost of the RET on electricity bills. This provides some important lessons for the current carbon price debate, particularly the cost to households from overly generous subsidies to polluting companies. The full brief can be viewed here.
"It appears that some in the AIGN are playing a game of cynical and costly carbon protectionism,” Jackson said.
“On one hand they are waging a war against the carbon price and its future limits on carbon pollution. On the other hand, they are using the carbon price as justification to attack other policies that can play a vital role in shifting investment to a smarter, cleaner and healthier economy.”
For more information
Kristina Stefanova | Communications Director, The Climate Institute | 02 8239 6299
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