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Grattan institute suggests low-emission technology scheme

A new report has argued that further government action is needed to bring down the cost of low emissions technology  16000646 800482683 0 0 7049648 300

The federal government's carbon tax scheme, which came into effect on July 1, has drawn criticism for forcing electricity suppliers to raise electricity prices throughout the country.

However a new report from the Grattan Institute has argued that the carbon tax is not only an essential part of the response to climate change, but also that further government action will be needed to bring down the cost of low emissions technology.

The report, titled Building the bridge: a practical plan for a low-cost, low-emissions energy future, suggests a government scheme which would see six-monthly auctions held over the next ten years.

These auctions would award long-term power contracts to project developers to purchase electricity at a lower price, which it is hoped would make future low-emission projects viable.

"Right now, investors are reluctant to back low-emissions technologies because they are expensive and high risk," said Grattan's energy program director Tony Wood (July 15). 

"There is also real uncertainty [that the] government will make decisions that keep the carbon price rising over time and give these technologies a chance in the market against traditional electricity sources."

While the Grattan Institute admits this scheme would only produce about five per cent of Australian power, it is hoped that it would be enough to provide an incentive for the implementation of low-emissions projects in the country.

From there, government support could be withdrawn as these projects achieve commercial viability.

"This proposal is not just another subsidy for renewable energy of the sort we have today, but addresses a real and recognized limit to carbon pricing," Mr Wood added.

Posted by Charlie Moore