Power bills will not bear cost of clean power boom

Sydney Morning Herald
Thursday 27/5/2010 Page: 8

A RENEWABLE energy scheme before the Federal Parliament will drive $14 billion of clean power investment by 2020 according to new modelling, but the head of the Climate Change Department has warned that Australia still cannot meet its promised emission reduction targets without a broad price on carbon.

Modelling released by the government yesterday shows the new renewable energy target - which requires 20% of energy to be sourced from renewables by 2020 - will increase the average household power bill by $41 a year. The scheme amendments before the Parliament will be responsible for just $2 of that.

The modest price rises mean it is likely the changes will pass with bipartisan support, as the original renewable energy target legislation did, allowing billions of dollars of renewables investment to begin. National Party senators had raised concerns about much higher price rise estimates, but Coalition sources said yesterday the amended legislation was now likely to pass. But according to the secretary of the Department of Climate Change, Martin Parkinson, without a carbon price Australia still cannot meet the emission reduction targets of between 5 and 25% by 2020 that have been pledged by both the Prime Minister and the Opposition Leader.

Kevin Rudd has said he still wants to introduce his carbon pollution reduction scheme, but will not revisit it until 2012. The renewable energy target modelling uses two scenarios - one with the carbon pollution reduction scheme coming into effect in 2013 and one in 2014. Tony Abbott has said he would not have a "great big new tax on everything" but will review his "direct action" model in 2015 and has not ruled out some form of carbon price. Other senior Coalition figures, including the shadow treasurer, Joe Hockey, have said a carbon price is inevitable.

"We face a choice between economically efficient, low-cost, market-based action or a recourse to high-cost policies that we know have been inadequate in the past. The gap here is not partisan politics; it's economics," Dr Parkinson said in a speech to the Property Council of Australia. "A carbon price must begin to be implemented by around the conclusion of the present Kyoto commitment period. No long-term solution is possible without the creation of market incentives."

He said Australia had to take other action: the renewable energy target to start the process of changing the way we generate electricity and new measures to promote energy efficiency, particularly in buildings, to reduce our energy consumption.

Dr Parkinson chairs a group that is preparing new energy efficiency policies that are likely to be the basis of the government's climate change policy for the next election. The renewable energy target legislation required amendment because the high take-up of small domestic energy-efficiency measures swamped the scheme. This meant its incentives were insufficient for the large-scale generation capacity it was originally intended to promote. According to the Clean Energy Council the scheme would reduce emissions by 380 million tonnes.