Business and interest groups that called for carbon tax to be dumped three years ago now urge panel to recommend market mechanism to price emissions

This article is more than 3 years old

This article is more than 3 years old

The Liberal New South Wales government, major energy users, manufacturers and businesses including BHP Billiton have urged the Finkel review of the electricity market to consider a price on carbon or a market mechanism.

The submissions, released on Friday, add further pressure on the review to recommend a market mechanism to price greenhouse gas emissions, such as an emissions intensity scheme, despite the fact the Turnbull government has ruled out a carbon price or EIS.

A string of peak bodies have already called for market mechanisms, including the National Farmers Federation, the Investor Group on Climate Change and the Business Council of Australia, which explicitly called for an EIS.

Three years ago some of the same groups urged the parliament to get out of the way so that Tony Abbott could repeal the Gillard government’s “carbon tax”.

In its Finkel submission, Australian Industry (AI) group, representing manufacturers and other industries, supported a carbon market mechanism, saying the electricity system urgently needed a clear, efficient and durable climate policy to underpin new investment.



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“A well-designed technology neutral market mechanism would be best; options include an emissions intensity scheme, as well as clean energy targets or carbon pricing schemes,” the submission says. “Any of these would need careful consultative design and broad political support to work.”

But AI warned that the review should not get derailed by the type of emissions reduction mechanism, because renewables were already becoming more competitive, but rather focus on modernising the electricity system.



“Our energy system is not currently set up to digest high levels of renewables, and even a well-designed emissions price signal will not of itself overcome any of the barriers to doing so,” the submission says.

BHP Billiton submitted the review should be guided by the need for energy security, technology neutrality and “open and transparent markets”.



It called for the “broadest possible” range of energy technologies, including renewables, “efficient coal and gas”, as well as consideration of abatement technologies such as carbon capture and storage.

It said the simplest way to achieve a mix of electricity generation technologies and to meet climate goals “is to put a price on carbon emissions for the electricity system and to require technologies to offer a secure product to the market”.

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In its submission, the NSW government urged consideration of “the need for a mechanism that provides market signals and framing for orderly generation transition and ensures an appropriately diversified energy mix”.

“These measures should be predictable and long-term so as to underpin investment confidence.”

It said the market should allow for a mix of technologies, including allowing new technologies “a level playing field”.

However, financial incentives should be considered where they “will encourage the optimal mix of energy services in a flexible, responsive and least cost manner”.

It called for “stability” and noted the South Australian experience suggested “there is still some way to go before we manage the impacts and maximise the benefits of variable renewables”.

The submission made no reference to ultra-super critical coal power plants, which the federal government is considering subsidising, instead noting the role for gas to support renewables and provide baseload power.

The Australian Chamber of Commerce and Industry (ACCI) called for state-based renewable energy targets to be abolished, saying states should not act unilaterally faster or further on emissions reduction targets than the commonwealth’s commitments under international agreements.

Its submission said business “does not have time for ideological positions” on energy policy, and the review should consider reforms that were “technology neutral,” including a consideration of “clean coal”, carbon capture, nuclear, battery storage, gas, and solar, wind, wave, and hydro power.

The Victorian government called for “clear market signals” for the evolving electricity sector to accommodate more renewable energy.

Origin energy submitted that market mechanisms had a “crucial role”. It noted the Finkel review’s preliminary report, which provided support for an emissions intensity scheme, and endorsed its analysis.

Origin noted that the safeguards mechanism in the Coalition’s Direct Action policy could be developed into an EIS, which had the “major advantage” of providing a marginal pricing signal while minimising the impact on electricity prices.

It called for a price signal for synchronous energy to ensure the stability of the system, and said gas, hydro and coal would be needed “for some time”.

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Energy Networks Australia called for “a stable carbon policy, including a trading scheme for generator emissions”.

The Major Energy Users Inc submitted that Australia should introduce a carbon price, such as an EIS, and ditch the renewable energy target.

“There should be no need for both a price on carbon and a RET.

“With a firm bipartisan approach fully implemented, industrial consumers ... can make their decisions on how to implement their own approaches to addressing the costs of electricity (and gas) over the long term.”

General Electric submitted that an EIS for the electricity sector “warrants further consideration” in the medium and long-term, cautioning the government against ruling it out. General Electric and Hydro Tasmania recommended that the renewable energy target be retained.

The Energy Users Association of Australia called for “a price on carbon that recognises the position of energy intensive trade exposed industries”.

It called for a technology-neutral approach, including removing subsidies for renewable energy when such technologies were mature and “no subsidies for new coal fired power stations”.

The NSW Minerals Council complained that Finkel’s preliminary report did not contain mention of ultra-super critical high-efficiency coal power.

It said so-called clean coal should be part of Australia’s energy mix, despite accepting that no particular technology should be subsidised or incentivised.

The chairman of the review panel, Dr Alan Finkel, Australia’s chief scientist, thanked the 360 contributors and said the panel was on track to deliver the report in the middle of the year.

“The breadth and depth of these submissions is a mark of the community’s determination to help shape the future of our electricity sector,” Finkel said. “It is also reflective of the message the Review Panel has received from the outset: a nation like Australia can and must rise to the challenges we face.”