The government’s climate advisory body has delivered a stark assessment of the Coalition’s policies, stating it was unlikely that its Direct Action policy would meet Australia’s 5% emissions reduction target and calling for the renewable energy target (RET) to remain intact.

The Climate Change Authority, which the Coalition unsuccessfully attempted to abolish, has conducted two statutory reviews for the government: one on the RET and one on the carbon farming initiative (CFI).

The existing CFI is being expanded into the $2.55bn Emissions Reduction Fund (ERF), which is the centrepiece of the Coalition’s Direct Action climate plan. The fund will provide voluntary grants to businesses that wish to reduce their greenhouse gas emissions.

The review by the Climate Change Authority (CCA) said the evidence showed the ERF, in its current form, would “fall well short of achieving the reductions required to meet Australia’s minimum 2020 target”, which is a 5% emissions reduction based on 2000 levels.

This damning assessment adds to previous independent modelling showing the policy would be insufficient. The government has conducted no modelling of its own on whether the policy would work, but has repeatedly expressed its confidence the target would be reached, partly because emissions from areas such as manufacturing have been declining due to other factors.

The UN has cast doubt on whether Direct Action would meet the emissions target, stating in November that Australia was one of just four countries on course to miss 2020 emissions reduction goals.

But the CCA said it was too early to completely write off the ERF, given that it had yet to start purchasing carbon abatement and that the “safeguards” mechanism – which would ensure emissions did not rise elsewhere in the economy – had yet to be finalised.

Complementary action, such as the purchasing of international carbon permits and a “robust” RET, could also help Australia meet its 5% goal, although the target itself was “inadequate” and should be increased, according to a previous CCA review.

The CCA’s report raised the concern that emissions abatement purchased through the fund would occur anyway and recommended the government consider an “additionality” test that would ensure emissions were cut beyond business-as-usual levels.

The authority’s RET review recommended the target not be altered, although the timescale to achieve it should be deferred by “up to three years”.

The government held a review of the RET earlier this year, headed by the businessman Dick Warburton, rather than rely on the CCA’s advice. The Warburton review recommended the RET be either scaled back or abolished.

Under the existing RET, 41,000 gigawatt hours of Australia’s electricity must come from clean sources, such as solar and wind, by 2020. The government is attempting to cap this target at a “real 20%”, which the renewables industry has said would involve a substantial cut to jobs and investment in the sector.

Labor, which has previously walked away from talks with the Coalition on the future of the RET, is seeking to re-establish contact on the issue. Labor and the Greens oppose any major cut to the RET.

The CCA’s report said that while the level of the large-scale RET target, which covers large solar and wind farms, should remain, pushing the timeframe beyond 2020 would help the target be reached due to the huge uncertainty in the sector that has seen investment drop 70% in just the past year.

The RET is projected to reduce Australia’s emissions by 58m tonnes between 2015 and 2020, and “by much larger amounts in later periods”, the CCA report stated. It has been of “modest” cost to industry and energy consumers, it added.

“The RET arrangements are not perfect but, in the authority’s view, they are effective in reducing emissions (at reasonable cost) in the centrally important electricity sector,” the report said. “Given the absence of effective alternative measures bearing upon this sector, the authority does not favour any significant scaling back of the 2020 LRET target of 41,000 GWh.”

The chief executive of the Climate Institute, John Connor, said: “The CCA report notes that the emissions intensity of Australia’s electricity sector is higher than that of China and the rest of the OECD and that renewable energy will play a major role in cleaning up our power sector.

“The Climate Institute calls on the government to step back from plans to dramatically reduce the RET and for both the government and the ALP to provide bipartisan support for renewable energy in Australia in recognition of the need to urgently decarbonise our energy sector.”

The chairman of the CCA, Bernie Fraser, said there was neither a broad community consensus on the risk of climate change nor a “well-stocked toolbox” to reduce emissions.

“The earlier broad political consensus has ruptured in recent years, and no early repair is in prospect,” he said. “And the toolbox is feeling less weighty, with the removal of the carbon pricing mechanism, an unproven ERF, and an uncertain outlook for the RET.”

The Coalition attempted to scrap the CCA but a deal struck with the Palmer United party meant its survival until 2016, in return for PUP Senate votes to implement the ERF.

The CCA will now review the effectiveness of emissions trading, as well as what Australia’s emissions reductions target should be beyond 2020. Countries’ post-2020 goals will be submitted early next year ahead of crunch climate talks in Paris.

The chief executive of the CCA, Anthea Harris, told Guardian Australia it had been a “strange year” for the government agency.

“We have got a job to do now and we will be making recommendations in the broader public interest,” she said. Asked if she expected the government to take on board the CCA’s work, she said: “We’ll wait and see.”

Harris said there was “huge uncertainty” over the future of the RET and the effectiveness of the ERF.

Mark Butler, Labor’s environment spokesman, said: “All of the experts agree that Tony Abbott’s relentless reversal on action to tackle climate change is ideology that flies in the face of facts, logic and economic responsibility.”

A spokeswoman for Greg Hunt, the environment minister, said the government would carefully consider the reports and will respond in due course.

“We are committed to reforming the RET and will continue to seek bipartisan support for a RET that achieves a real 20% share of renewable in Australia’s energy mix by 2020,” she said. “The door remains open to Labor to recommence negotiations.



“The government welcomes the authority’s assessment that the Emissions Reduction Fund streamlines existing arrangements and expands coverage to allow crediting of emissions reductions across the economy.

“The government is making strong progress implementing its ERF, with preparations for the first auction well underway, and nearly 20 new draft ERF methods released to expand emissions reduction opportunities for business across the economy.”

