Detractors miss the point; emissions trading will lead to economic boom

Clean Energy Council
4 July 08

The Clean Energy Council refuted claims that emissions trading will lead to an economic downturn citing that emissions trading with complementary measures will unlock over $20 billion in clean energy investment. A robust, broad-based Emissions Trading Scheme beginning in 2010, with mid-range abatement targets based on the science and an explicit trajectory, will lead to a boom in both traditional and new sectors of the economy.

However, without complementary measures such as the 20% by 2020 renewable energy target and energy efficiency targets, an Emissions Trading Scheme alone will not deliver a strong market signal to transition the economy and deliver the necessary deep cuts to Australia's greenhouse gas emissions.

Rob Jackson, Clean Energy Council General Manager-Policy said: "It's imperative that emissions trading begins in 2010 to provide business certainty because long-term energy infrastructure investment decisions are being made right now. An early start and a secure trajectory will give business the sign it needs to invest in emissions reduction."

"We anticipate the Garnaut report will cover complementary measures including a renewable energy target, defined energy efficiency targets, removal of market and systemic barriers, and a funding stream to support the entry of new clean technologies."

"It will take some time for the Emissions Trading Scheme alone to deliver a carbon price high enough to stimulate renewable energy investment. Complementary measures, including energy efficiency and a 20% renewable energy target in place now, will build critical industry capacity and take the pressure off an ETS to reach a high carbon price quickly."

"Significant carbon reduction is achievable and affordable. A 20% RET will unlock the vast clean energy investment potential in Australia: the Clean Energy Council has identified over 14,000 megawatts or around 40,000 gigawatt hours per year of renewable energy projects."

"In addition, through energy efficiency, we can save 30-35% of our existing energy use in buildings at zero cost or even at a profit by 2020. This will reduce the overall abatement task and create high quality jobs in energy services along the way."

"A broad scheme covering all industries will ensure that the entire economy moves towards low carbon choices; however the scheme's start should not be prevented by uncertainty in this area as sectors can be added when information about their emissions becomes available."
Key elements of a successful Emissions Trading Scheme design

• A ‘cap & trade' scheme commencing 2010
• complimentary measures to ensure least cost and minimal disruption to the economy
• The emission trajectory to be in line with scientific evidence, match the Kyoto target for Australia to 2012 and then set to meet the government's target of 60% reduction by 2050.
• Multiple trajectories with a five-year notice period to provide investor certainty
• Trajectories should only be able to be tightened to provide market predictability
• Coverage should include all known GHG gasses and all industries with the scheme widening as emissions calculation accuracy improves
• allow for unlimited banking and very limited borrowing to cover administrative oversights only in balancing annual liability
• removal of existing market and non-market barriers
• A significant proportion of permit revenue used to fund Australian R&D programs.
• Transitional support for disproportionally impacted business, communities and individuals should be part of the design
• Offset credit permits and their use to be comprehensively defined to maintain scheme credibility