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A new report out today says that the Coalition’s promise to end carbon pricing in Australia would lead to higher wholesale energy prices. The report’s author told RN Breakfast that the policy would be a blow to renewable energy and household power bills, as James Bourne reports.

An independent report released today has found that ditching the carbon price in Australia will hit investment in the renewable energy sector—and almost certainly lead to an increase in electricity prices.

Bret Harper, the Director of Research at advisory firm RepuTex which was commissioned by the World Wildlife Fund to write the report, says that without proper investment in renewable energy—made possible by a carbon price—wholesale electricity prices could rise by between five and ten per cent by 2020.

And while the findings of today’s Renewable Energy and the Carbon Price report appear to be counter intuitive, Mr Harper says the potential price hikes are already common knowledge among government and business.

‘Renewable energy, when it’s put onto the system, tends to cut household electricity bills, not push them up,’ he told RN Breakfast.

‘It represents a very low-cost form of energy that displaces other fossil fuel generators which have very high fuel costs.’

Currently, renewables account for 13 per cent of the Australian energy market, with federal renewable energy targets aiming for 25 per cent of all electricity to be renewable by 2020.

Modelling in today's report shows with the carbon price in place, the federal renewable target is likely to be met. However, scrapping the carbon price would likely see only 14 per cent of Australia's electricity generated from renewables by 2020.

The government and the Climate Change Authority came to the same conclusion when the Renewable Energy Target Review was conducted last year. The review suggested that if carbon pricing was removed or sent to zero, the 2020 renewable energy target would not only be threatened, but may not be met.

One of the central promises of the Coalition under Tony Abbott has been to ‘axe the carbon tax’ to ease pressure on power prices. Mr Harper says that a carbon price of zero would in fact have unintended consequences for the Coalition.

‘That’s a misconception I think [because] the carbon tax makes up a very small component of retail electricity prices,’ he said.

‘But that component is returned through the building of renewable energy.'

‘It’s important to get the word out that simply getting rid of the carbon tax may have many of these unintended consequences in terms of the renewable energy target.’

The RepuTex report says that if the 2020 renewable energy target is not met, less competition in the energy market will see electricity prices at the mercy of rising coal, oil and gas prices—and fossil fuel generators will be able to sell the power that they have for more.

The report also found that reversing a carbon pricing scheme would deliver uncertainty to an industry that has already adapted to the change.

‘Not pricing carbon, which has largely been accounted for by all of the major players in the electricity and oil and gas sectors, would be hugely disruptive,’ he said.

‘For the renewable energy developers they’re very uncertain about the future and that’s why they’re not investing in big projects right now.'

‘On the other hand you have major coal fired power plants that are very eagerly trying to get rid of as much of the target as they can so that they can generate more electricity and more profits.’

Harper pointed to South Australia as an example of renewable energy investment pushing down the price of power. The state currently has more wind power generators in operation than any other territory in the country, with renewable energy accounting for over 20 per cent of their electricity supply. The Australian Energy Regulator (AER) recently reported that wind generation is moderating wholesale electricity prices in South Australia.

‘The states with renewable energy benefit from lower energy costs when enough renewables are put onto the system. [In South Australia] we have seen that contributing to a lowering of electricity prices,’ he said.

The report, ‘Renewable Energy and the Carbon Price’, was commissioned by the World Wildlife Fund. RepuTex is an independent research and consultancy firm that specialises in the management of carbon risk for energy providers.