Steps to a smarter carbon policy

The Energy Networks Association (ENA) has released a report by engineering consultant Jacobs analysing alternate carbon policy options. The company’s modelling considered the impacts of three different policy settings aimed at achieving 26–28% emissions reduction on 2005 levels by 2030.

ENA CEO John Bradley said the analysis confirms that if governments focus on outcomes, rather than picking technology winners, Australia can meet the same carbon target while saving customers $216 per year and achieving economic savings of $900 million.

“If markets are allowed to work, each technology finds its efficient role,” Bradley said. “Jacobs saw renewable generation reaching the 33,000 GWh target by 2020 in all scenarios examined and continuing to grow beyond 2020.

“If we have outcome-focused carbon policy, our power system is in a stronger position to support more renewable energy, while avoiding reliability and security risks for customers.”

The ENA also released ‘Enabling Australia’s Cleaner Energy Transition’, which includes seven proposed steps for smarter carbon policy — starting with securing enduring, nationally integrated measures with more consensus.

“If we can secure tangible progress with consensus today, we can review and tighten our carbon targets and refine emissions trading options over time,” Bradley said.

The ENA’s seven steps to a smarter carbon policy are as follows:

1. Pursue an enduring, stable and nationally integrated carbon policy framework based on consensus.
2. Introduce a ‘Baseline and Credit’ Scheme leveraging the current legislative architecture of the Emissions Reduction Fund Safeguard Mechanism.
3. Over time, consider options to increase economic efficiency by moving to a carbon price mechanism, with appropriate financial transfers and household support and without risking subsequent policy ‘churn’.
4. If governments maintain direct incentive programs, transition Commonwealth and state programs to focus on least cost abatement outcomes, which are scale-neutral and technology-neutral.
5. Continue to review Australia’s abatement targets (in the form of intended nationally determined contributions or INDCs), within the five-yearly cycle proposed following the COP21 Agreement in Paris.
6. Incorporate an explicit, independent assessment of national energy market implications when developing jurisdiction initiatives on carbon and renewables policy.
7. Ongoing support for research, development and demonstration on a diverse range of low emission technologies.

The Jacobs report ‘Australia’s Climate Policy Options: Modelling of Alternate Policy Scenarios’ can be accessed here. The ENA paper can be accessed here.