Energy Industry's Mixed Response to Emissions Target
Having now had time to digest not only the new emissions target of 26-28% reduction on 2005 levels, but also the modelling behind how Australia will be able to meet this target, various heads of the Energy Industry have given mixed response to the proposed target.
The key area of debate is about how Australia will meet this target. With many suggesting that the existing Emissions Reduction Fund (ERF) policy alone will either not be able to meet the target or come at too high of a price for Australia's economy to bear.
An AGL spokesman says that "reducing emissions will require policy mechanisms that support long-term, efficient investment decision making and also facilitate the gradual substitution of older, less efficient coal-fired power stations with renewable generation."
Matthew Warren, head of the Energy Supply Association, says that a rethink on policy will be required to meet the 26-28% target, with the idea that if Australia were to purchase carbon abatement from on international market that the cost to Australia would be significant - "we won't be able to buy our way to 26-28% and beyond", Warren suggested.
Concerns about how this target will be met may prove divisive for the major energy generators in Australia. Origin Energy, who own the smallest percentage of renewable generation assets out of the "big three” retailers, have echoed a more conservative line which is being towed by the Prime Minister and Federal Government - that the target is in-line with other countries around the world.
With the Liberal Government quick to label the Emissions Trading Scheme proposed by the Labor party as just another Carbon Tax, it could prove difficult if they are required to back track and adopt a trading scheme of their own - with the goal of purchasing emission reductions from overseas. Certainly it seems that just as soon as the Renewable Energy Target (RET) was revised, that another new policy make-over may be require to meet post 2020 emissions reduction targets.