RETs are the only policy tool left to shift Australia’s electricity sector away from fossil fuels, RepuTex modelling shows

This article is more than 3 years old

This article is more than 3 years old

State-based renewable energy targets are becoming essential drivers of Australia’s carbon reduction framework and, based on current policy settings, will be vital for Australia to meet its 2030 emissions targets, according to a report by the energy consultancy RepuTex.

The finding comes amid attacks on state-based renewable energy targets by the prime minister, Malcolm Turnbull, and his ministers, who have called for them to be scrapped.

According to modelling by RepuTex, since the federal government has excluded the electricity sector from the so-called “safeguard mechanism” and ruled out any sort of carbon trading, state and federal RETs are the only policy tool left to shift the sector away from fossil fuels.

The government has released projections showing that under current policies emissions would continue to rise to 2020 and 2030, leaving no chance for Australia to meet its 2030 targets.

Renewable energy targets in the Australian Capital Territory, Queensland, South Australia and Victoria would have an effect equivalent to that of raising the federal RET to 35% by 2030, from its current target of 23% by 2020, the RepuTex report found.

Combined state and federal RETs would amount to fulfilling 20% of Australia’s 2030 abatement task, it said.

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“In the absence of a federal policy framework, state actions are likely to drive large-scale emissions reductions,” said RepuTex’s executive director, Hugh Grossman. “We would therefore see the states as the dominant driver of the national energy and climate debate.”

Grossman said the reliance on renewable energy targets to achieve the transformation was far from ideal, since it didn’t provide certainty to the market and wouldn’t put downward pressure on prices. “We consider not implementing an emissions intensity scheme a policy failure,” he said.

Next week Turnbull is expected to outline new vehicle emissions standards which, using a best-case-scenario, Reputex estimated could account for 7% of the government’s abatement task by 2030.

Assuming the government doubles its nearly empty emissions reduction fund, and accounting for expected reductions from synthetic greenhouse gases, RepuTex found the government would have left more than 40% of its abatement task unaddressed.

“With an EIS off the table, and no extension of the RET, the government has a limited number of policy levers to meet its 2030 target,” Grossman said.

As a result, a tightening of the last remaining lever, the “safeguard mechanism”, would be needed, the report said. The safeguard mechanism sets emissions caps – or “baselines” – for polluting industries, with the exception of the power sector.

RepuTex found that to fill the abatement gap, the government would need to reduce the baselines by between 1% and 3% each year.

Grossman described meeting those tightened baselines as a “modest task for industry”. “This reinforces the zero-sum nature of Australian climate policy – the exclusion of one policy lever is fine – but losses will need to be balanced elsewhere in the economy,” he said.