Study claims clean energy can cut bills

Australian
Wednesday 3/10/2007 Page: 8

A NATIONAL clean energy target on top of emissions trading could cut household electricity bills by up to 5 per cent next decade even though renewable technologies are more expensive, according to research to be released today. Economic analysis commissioned by the renewable energy industry claims a clean energy target (CET) would drive down the cost of renewable energy. The report backs the decision by the Howard Government last week to set a national clean energy target of 15 per cent but has been questioned by the gas industry, which says renewable energy remains a more expensive energy source. One senior industry source said the conclusions sounded "preposterous".

The two-year study by McLennan Magasanik Associates for the Renewable Energy Generators Australia (REGA) found that early action on installing clean energy would save $800 million by 2050, compared with relying solely on emissions trading. The report said the rapid deployment of clean energy under a CET would incur a slightly higher cost on the economy until 2020, but then deliver bigger savings through to 2050 as low-emission technologies became cheaper through regular use. The report argues more renewables would lower prices by increasing competition, driving down the cost of developing technologies and cutting fossil fuel costs. "Cost savings occur through the displacement of fossil fuel generation by renewable energy, which leads to a reduction in fuel costs and emissions, principally due to lower coal and natural gas use," the report says.

Australian Petroleum Production and Exploration Association chief executive Belinda Robinson said the gas industry remained concerned that the objective of emissions trading to deliver the least cost abatement would be undermined by any renewable energy targets acting in parallel. "You will be prescribing at least half of the new energy required to the most expensive form of energy for the same environmental outcome," Ms Robinson said.

REGA chief executive Susan Jeanes said the research was commissioned following the release of the Government's energy white paper in 2004 to model a more comprehensive and independent future for the renewable energy industry. "The report clearly shows that the current debate about clean energy targets in Australia is the right one, and there are real longterm benefits from acting early in this sector," she said.

Labor environment spokesman Peter Garrett said the modelling highlighted the importance of a comprehensive approach to tackling climate change. "A strong renewable energy target is an extremely affordable proposition and combined with a carbon price under emissions trading, can achieve substantial emissions reductions," he said. Victorian Energy Minister Peter Bachelor said the report vindicated the Government's decision to implement a 10 per cent renewable energy target by 2016.