Exclusive: Research finds claims emissions targets make electricity more expensive are misguided
Emissions reduction targets, even relatively ambitious ones, will not
drive up power prices for Australian consumers, according to new
research from the Australian Council of Social Service (Acoss) and the
Brotherhood of St Laurence.
While the Morrison government has abandoned the national energy guarantee because conservatives complain that emissions reduction policies drive up power prices, the new research finds that critique is misguided.
Power prices for households would fall by 2030 under four different scenarios modelled by Frontier Economics – business as usual and emissions reduction targets of 26%, 45% and 65%.
The research says the price reductions would vary state-by-state, but business as usual would result in an average saving of 18.5%. Under the 26% scenario – which is the government’s now abandoned electricity target – the average saving would be 20.8%; under the 45% scenario, which is Labor’s target, the average saving would be 18.3%; and under the 65% scenario, the average saving would be 15.0%.
The savings are forecast by taking the residential retail price for 2030 for Queensland, Victoria, New South Wales and South Australia, and creating an average.
The modelling shows the benefits for households would increase if the government allowed emissions-intensive trade-exposed industries to be part of the emissions reduction effort, rather than excluding them, as was proposed under the now defunct Neg.
The chief executive of Acoss, Cassandra Goldie, told Guardian Australia the Frontier modelling made it clear that a variety of emissions reduction policies – the Neg, a clean energy target or an emissions intensity scheme “with the right settings” – could drive more rapid emissions reductions in the electricity sector and contribute to lower power bills.
“The idea that we need to choose between cheaper energy prices and limiting global warming is misleading and short-sighted, and does a huge disservice to our community, especially to people on low incomes,” Goldie said.
“People on low incomes are the most vulnerable to both escalating electricity prices and the effects of global warming. We must tackle both. Both are a social justice issue.”
The Neg, which would have imposed a 26% emissions reduction target on the electricity sector by 2030, has been shelved because the Coalition’s internal fight over emissions reduction got tangled up in the leadership war that resulted in Malcolm Turnbull being deposed and Scott Morrison taking over as leader.
Since junking the Neg, the new energy minister, Angus Taylor, has recommitted the government to pursuing heavy-handed interventions in the energy market worked up in the last days of the Turnbull government, including “last resort” divestiture powers to break up power companies if they engage in price gouging, and default pricing for consumers.
Taylor, who Morrison has dubbed the minister for lowering power prices, is also working up fresh options to take to cabinet.
The Greens are calling on the Coalition and Labor to allow the existing renewable energy target to be extended for the life of the next parliament.
The Greens climate change and energy spokesman, Adam Bandt, said rolling over the RET would allow “the renewables boom to continue while the climate and energy policy impasse is resolved after the next election”.
Bandt said the big build of renewable energy coming into the national electricity market courtesy of the RET was playing a significant role in driving down power prices, but the scheme wound down from 2020, and there was no clear sense of how the current energy policy deadlock would be resolved.
The latest renewable energy index compiled by Green Energy Markets has confirmed analysis by the Energy Security Board that wholesale electricity prices are on the way down because of an addition of 7,200 megawatts of extra large-scale supply from renewable energy.
“Our preference is to increase and extend the RET until 2030, but an interim measure to 2022 is needed to avoid an investment freeze in renewable energy,” Bandt said.
“If the RET isn’t extended, there’s a real risk that the next government will not be able to implement a new policy in time to avoid an investment drought.”
While the Morrison government has abandoned the national energy guarantee because conservatives complain that emissions reduction policies drive up power prices, the new research finds that critique is misguided.
Power prices for households would fall by 2030 under four different scenarios modelled by Frontier Economics – business as usual and emissions reduction targets of 26%, 45% and 65%.
The research says the price reductions would vary state-by-state, but business as usual would result in an average saving of 18.5%. Under the 26% scenario – which is the government’s now abandoned electricity target – the average saving would be 20.8%; under the 45% scenario, which is Labor’s target, the average saving would be 18.3%; and under the 65% scenario, the average saving would be 15.0%.
The savings are forecast by taking the residential retail price for 2030 for Queensland, Victoria, New South Wales and South Australia, and creating an average.
The modelling shows the benefits for households would increase if the government allowed emissions-intensive trade-exposed industries to be part of the emissions reduction effort, rather than excluding them, as was proposed under the now defunct Neg.
The chief executive of Acoss, Cassandra Goldie, told Guardian Australia the Frontier modelling made it clear that a variety of emissions reduction policies – the Neg, a clean energy target or an emissions intensity scheme “with the right settings” – could drive more rapid emissions reductions in the electricity sector and contribute to lower power bills.
“The idea that we need to choose between cheaper energy prices and limiting global warming is misleading and short-sighted, and does a huge disservice to our community, especially to people on low incomes,” Goldie said.
“People on low incomes are the most vulnerable to both escalating electricity prices and the effects of global warming. We must tackle both. Both are a social justice issue.”
The Neg, which would have imposed a 26% emissions reduction target on the electricity sector by 2030, has been shelved because the Coalition’s internal fight over emissions reduction got tangled up in the leadership war that resulted in Malcolm Turnbull being deposed and Scott Morrison taking over as leader.
Since junking the Neg, the new energy minister, Angus Taylor, has recommitted the government to pursuing heavy-handed interventions in the energy market worked up in the last days of the Turnbull government, including “last resort” divestiture powers to break up power companies if they engage in price gouging, and default pricing for consumers.
Taylor, who Morrison has dubbed the minister for lowering power prices, is also working up fresh options to take to cabinet.
The Greens are calling on the Coalition and Labor to allow the existing renewable energy target to be extended for the life of the next parliament.
The Greens climate change and energy spokesman, Adam Bandt, said rolling over the RET would allow “the renewables boom to continue while the climate and energy policy impasse is resolved after the next election”.
Bandt said the big build of renewable energy coming into the national electricity market courtesy of the RET was playing a significant role in driving down power prices, but the scheme wound down from 2020, and there was no clear sense of how the current energy policy deadlock would be resolved.
The latest renewable energy index compiled by Green Energy Markets has confirmed analysis by the Energy Security Board that wholesale electricity prices are on the way down because of an addition of 7,200 megawatts of extra large-scale supply from renewable energy.
“Our preference is to increase and extend the RET until 2030, but an interim measure to 2022 is needed to avoid an investment freeze in renewable energy,” Bandt said.
“If the RET isn’t extended, there’s a real risk that the next government will not be able to implement a new policy in time to avoid an investment drought.”
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