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For more than a decade now governments have been arguing about a price on carbon. (Reuters: Jason Lee)
The lack of a carbon price is paralysing investment
in Australia's energy sector and putting domestic power bills on track
to surge by up to 40 per cent, experts have warned.
Key points:
- Experts say without a carbon pricing plan, consumers will see electricity prices increase by up to 30 per cent
- Government is not in support of an Emission Intensity Scheme, says it won't solve the problem
- Experts and businesses say a lack of national energy policy has left Australia in the grip of an energy crisis
The policy vacuum is also raising questions about whether Australia will meet its commitments under the Paris Climate Agreement, with the Energy and Environment Minister admitting that the aspiration for net zero emissions by 2050 is uncertain.
Consumers on the eastern seaboard could see retail electricity prices rise by as much as 30 per cent by June, energy expert Danny Price told Four Corners.
"It is an unprecedented rise. That's simply because there's a shortage of supply in generation and that's simply because the market can't respond because of the lack of any carbon price," he said.
Mr Price is the architect of the Emissions Intensity Scheme (EIS), the one carbon pricing plan that after a decade of argument has emerged with the broadest support.
He said the cost of not putting an EIS in place could eventually see electricity price rises of "around 30 to 40 per cent" and he expects that by the end of next month retail electricity prices could rise "in the order of 20 to 30 per cent".
"If an Emissions Intensity Scheme had been put in place customers would have been seeing a price reduction in absolute terms," he said.
Supporters of an EIS include the Business Council, many big investors, the CSIRO, environmental groups and even the National Farmers Federation.
Innes Willox from the Australian Industry Group said an EIS was a good way to tackle the problem.
"An EIS is the best way to go and has always been the best way to go. We haven't seen a better solution," he said.
The Prime Minister walked away from supporting an EIS last December in the face of a threat of a backbench revolt from those within his own party who remain opposed to any form of carbon pricing.
The energy review being conducted by Chief Scientist Alan Finkel will likely be released in June.
Four Corners understands the review is modelling an EIS, but it is aware of the Government's position and it will also be looking at a range of other options.
The review is likely to conclude that Australia is now paying the price for a lack of decisive government action in climate and energy policy.
For more than a decade now governments have been arguing about a price on carbon.
The Abbott government repealed the previous Labor government's carbon tax in 2014, but many believe a carbon price is needed to ensure Australia meets its commitments signed up under the Paris climate change agreement.
Environment Minister Josh Frydenberg said an EIS would not solve the problem.
"There are various other options available to the Government to ensure we meet our 26 to 28 per cent emissions reduction targets by 2030," he said.
But the Government has also agreed to the broad principle of keeping temperature rises to 1.5 degrees Celsius by 2050.
To do that most scientists believe Australia and other developed countries will have to reach zero net emissions by 2050.
Mr Frydenberg told Four Corners he was less confident Australia would be able to meet that aspiration.
"We'll get to zero net emissions over the course of this century," he said.
'Catastrophic failure of national policy making'
Experts and business groups agree Australia is now in the grip of an energy crisis and that the lack of a coherent climate and energy policy has hurt Australian consumers and business badly.
Bluescope Steel has warned of an energy catastrophe and the squeeze on power is having an impact on small, medium, and large manufacturers.
Mr Willox said governments had ignored the warnings about gas supply in particular and the impact that would have on supply and price.
"Blind Freddy saw this coming," Mr Willox said.
"Only those who are neglectful or deceitful or those who didn't want to face this problem would not have known this was coming.
"We've had a catastrophic failure of national policy making."
Mr Willox said Australian industry was now looking over the precipice.
"It wouldn't be surprising if some big companies just make a decision to shut the doors and walk away sometime soon if this isn't fixed."
Businesses feeling the pressure of rising prices
Dave Karney is one of the many manufacturers in Australia under pressure.He runs a metal treatment factory in the industrial suburbs of Melbourne.
His gas bills will have more than doubled by next financial year and even if he can afford it he is having trouble securing a short-term contract for supply.
"Last financial year [we had] a half million dollar a year contract for gas. We'll pay about $750,000 this year and next financial year we're looking at about a $1.2 million gas bill," Mr Karney said.
"It's an uncontrolled and sudden shock to our business."
Australia's electricity system is also seeing huge stress due to the changing generation mix as more renewables are brought online and old coal fired power stations close.
Electricity prices have also been effected by upgrades to poles and wires and a reliance on more expensive gas.
This is causing uncertainty right across the electricity network but particularly for consumers on the brittle fringes of the grid.
Last year's blackout in South Australia cost cafe owner Kris Bunder $25,000 in lost revenue.
Like a lot of Australians, he just wants politicians to start telling the truth about power.
"Everyone keeps blaming everyone else," he said.
"I'd love both sides of government to come out and just find a solution."
Watch Four Corners at 8:30pm on ABC TV or iView.
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