An emissions trading scheme would be cheaper and more effective than Labor’s 50% renewables goal or the government’s Direct Action policy, Paul Hyslop says

The author of the $60bn price tag for Bill Shorten’s new renewable energy goal – cited by Tony Abbott as proof the scheme is unaffordable – says an emissions trading scheme like the one the Coalition abolished would be more cost-effective than either the coalition’s “Direct Action” plan or Labor’s new goal.



ACIL Allen Consulting chief executive, Paul Hyslop, told Guardian Australia his $60bn cost estimate of Labor’s goal to have 50% of Australia’s electricity generated by renewables by 2030 was based on a quick calculation of how much extra renewable capacity would be required, and the cost to deliver it though wind power.



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He said a carbon price would be much more cost effective than either a specific electricity sector goal, or the government’s own “Direct Action” plan.



“It would be much more sensible to have an economy-wide carbon price to meet a new emissions reduction target rather than just focus on the electricity sector,” he said.



“The reason an ETS is so powerful is that everyone faces a cost … the problem with Direct Action is that it doesn’t curb the behaviour of the people who aren’t involved in it.”



Labor has promised some kind of emissions reduction scheme as one of the policies to meet its new emission reduction targets. It says the renewables goal is an “aspiration”, which would not be met only by the current mandated subsidies, nor primarily by wind power.



ACIL Allen Consulting’s Owen Kelp told Sky News it was impossible to say whether Direct Action would cost more or less to achieve the same emissions reductions than Labor’s plan and Hyslop said Direct Action could be “pretty expensive” depending on its final design.



Climate policy is shaping as a central battleground in the federal election due next year and Labor’s new goals come as US Democratic presidential hopeful Hillary Clinton committed to the US generating enough renewable energy to power every home in the country within 10 years of taking office.



The reason an ETS is so powerful is that everyone faces a cost Paul Hyslop, ACIL Allen Consulting

Shorten is vowing to stare down a Coalition “scare campaign” and Abbott is again ramping up his attack on Labor’s renewables promise and its pledge to re-introduce an emissions trading scheme.



The Labor leader concedes some of his policies to meet the long term renewable goal – including an increase in the mandatory, legislated renewable energy target – could require a Coalition change of heart.



“What we recognise is that when it comes to the large-scale program in terms of renewable energy, we can only increase that by bipartisanship. We’ve given ourselves 15 years and one thing I know is that sooner or later, the once great Liberal party of Menzies and Malcolm Fraser … who believe in action on climate, will restore and become far less extreme rightwing and come back to the mainstream when Abbott is no longer their leader,” Shorten said, emerging from a meeting with former US vice-president Al Gore in Melbourne.



Tony Abbott claimed on Monday Labor’s ETS would be an “electricity tax scam” and has insisted it is a tax, even though Labor insists it is not because it does not begin with a fixed price.



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But Liberal frontbencher Malcolm Turnbull – who lost the party leadership over his support for an ETS – pointed out that all policies to push low-emission electricity generation come at a cost to households, including the ones the government supports, and that the cost of renewables is falling.



Turnbull said there was usually a distinction drawn between an ETS and a tax.



But he said every policy to push low-emissions generation came at a cost – which might in generic terms be called a tax – even the renewable energy target which the government itself supports.

“There has been a distinction drawn in the debate … between a fixed-price cost on carbon which people particularly called a carbon tax and one that is floating because it is related to the purchase of permits and that, of course, the price of the permits depends on supply and demand and that’s an ETS. And so in a lot of the literature and discussion you’ve talked about the virtues of a tax versus the virtues of an ETS,” he said.



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“But either way they are both a cost. So, yes, you can call them both generically a tax but equally the renewable energy target is a cost. So all of these measures, there is no such thing as a cost-free way of reducing carbon emissions. That is to say, as long as emissions-intensive forms of generating energy are cheaper than the low-emission forms and, of course, that is starting to change, the technological developments with solar in particular.



“But as long as that is the case, whether it’s a regulation, whether it’s a renewable energy target, whether it’s an ETS, whether it is a carbon tax, a fixed price, all of those can be seen on as a cost on the business of generating energy, therefore a cost on house holders purchasing energy and therefore in that sense a tax.”



The government recently persuaded Labor to agree to a reduced renewable energy target of around 23% of electricity generation by 2020. Abbott said Labor’s goal to achieve 50% renewables by 2030 was “bizarre”.



“Frankly at 23% that is more than enough, one of the truly bizarre decisions coming out of the Labor conference at the weekend was this move to increase the proportion of renewables in our system to some 50%. This constitutes a massive, absolutely massive, hit on consumers and jobs, because to move to 50% … by 2030 will mean a massive bill, perhaps $60bn or more … this massive and unnecessary commitment to renewables which will cause a massive overbuild of wind farms, all of which has to be paid for by consumers,” Abbott said.



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In 2009, Turnbull also wrote that any suggestions emissions could be cut without imposing a cost was “bullshit”.



“You cannot cut emissions without a cost … any suggestion that you can dramatically cut emissions without any cost is, to use a favourite term of Mr Abbott, “bullshit.” Moreover he knows it. The whole argument for an emissions trading scheme as opposed to cutting emissions via a carbon tax or simply by regulation is that it is cheaper – in other words, electricity prices will rise by less to achieve the same level of emission reductions,” he said at the time.