Australia won't meet Paris climate change targets, urgent policy needed on emission reduction: Finkel report

Extract from ABC News

AM

By Julia Holman

Updated about 3 hours ago

Photo: The report by Alan Finkel recommends an emissions intensity scheme. (AAP: Julian Smith)

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A leaked report into the country's electricity market says Australia is not on track to meet the Paris climate change commitments and that investment in the sector has stalled because there is no long-term Government policy to reduce carbon emissions.

AM has obtained a copy of the preliminary independent report led by Australia's chief scientist Alan Finkel, which will be released later today at the COAG heads of government meeting.
It says there is an urgent need for a clear policy on reducing emissions, there is currently no way Australia can reduce carbon levels to what was promised it the Paris agreement, and is critical of elements of the Government's Direct Action policy.
The report also refers to an emissions intensity scheme as being a good option to reduce emissions and to keep electricity prices low, although this week the Government categorically ruled it out as a possible option for Australia's future energy policy.
Tristan Edis, the director of Green Energy Markets, said the findings would not be a shock to senior figures in the Government.

"Malcom Turnbull and the Energy Minister Josh Frydenberg already know all this stuff," Mr Edis said.

"There will be no surprises in this report, because they've been hearing it from their advisers, they've been hearing it from the public service, they've been hearing it from major stakeholders."
According to the independent report, commissioned in October following the South Australian blackout, Australia is facing a so-called energy "trilemma", with three big pressing issues facing the electricity sector.
Those are making sure there is a stable and reliable electricity market, reducing emissions and keeping prices down.

'No way we're going to make that target'

Mr Edis said it was no surprise the report says Australia will not reach its Paris climate change commitments to reduce emissions by between 26 and 28 per cent by 2030.
"It's staring you in the face that there's no way we can make the Paris targets with the existing policies," he said.

Photo: Dr Alan Finkel is calling for long-term energy policies, as current plans do not go beyond 2020. (AAP: Lukas Coch)

"It's blindingly obvious to everyone, so I mean, I can imagine Alan Finkel would not be prepared to put his name to the report without acknowledging that stark truth.
"Everyone looks at that target, and they look at the existing set of policies, and they go there's no way that we're going to make that target with the existing set of policies so we need some new policies but we've got no idea what they are."
He said the review states what most in the electricity sector already know, that an emissions intensity scheme could be a good policy to reduce emissions while stabilising the electricity grid.
"If you go and speak to major energy users, if you go speak to major electricity companies, you speak to people in the clean energy sector or the renewable energy sector, everyone is in agreement that we need something like an emissions intensity scheme to give us that clarity, that confidence to invest over the long-term," he said.
An emissions intensity scheme is like an cap and trade scheme, but just for the electricity sector. It was floated this week by Environment and Energy Minister Josh Frydenberg, before being categorically ruled out by the Prime Minister.

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The Finkel review also looks at the lack of a predictable and long-term energy direction, pointing that there is no clear plan beyond 2020.
One of the current policies is Direct Action, which pays polluters to cut their emissions via the emissions reduction fund.
But the report notes the fund is not helping the electricity sector to improve efficiency.
"It's not doing anything to address emissions in a meaningful way from the largest source of emissions in the economy which is the electricity sector," Mr Edis said.

"It's just stating the obvious really, these are just plain facts."

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Tony Wood, the energy program director at the Grattan Institute, said the review is not just about climate change policy, it is about the broader electricity market and energy security.
"In some ways what Dr Finkel is pointing out is exactly the reasons that Josh Frydenberg triggered the review in the first place," he said.
"It's not necessarily a pure condemnation of any individual but it is, broadly speaking, putting in perspective all the failings both at a state and federal level, and not necessarily at this current Government's feet either, of where we've got to, and the need to basically address them."
Dr Finkel's preliminary review says electricity prices are rising, and Mr Edis said it is important to act now to rein that in.
"We can already see prices in the wholesale electricity market, or the contract market next year, are higher than what they were when the carbon price was in place," he said.
The preliminary report will be released today at the COAG meeting, and the full report will be released in the first half of next year.