Eco Innovator March 2012
No Easy Energy Choices
"Australia will struggle
to meet its carbon emissions targets and at the same time produce electricity
at a reasonable price unless governments act to reduce the costs of low-emission
technologies," said Grattan Institute's Energy Program Director,
Launching Grattan's report,
No Easy Choices: Which Way to Australia's Energy Future?, Mr Wood said
that while markets must be the primary mechanism by which Australia transforms
its electricity supply, governments have to introduce new policies to
support the carbon pricing scheme.
Grattan's report assesses the
prospects for seven technologies that generate electricity with near-zero
emissions and that have the prospect of deployment at large scale over
the next 40 years. These are wind, solar PV, concentrating solar thermal,
geothermal, carbon capture and storage, bioenergy and nuclear power.
The report finds that all seven
face obstacles to achieve their potential. Any might contribute significantly
to meeting Australia's electricity needs, but there is no guarantee that
any will deliver at a cost acceptable to the public.
"Carbon pricing will help
to make low-emission technologies competitive, but in the long run it
is not nearly enough," said Mr Wood. "There are no quick fixes
or easy choices for Australia's energy future. How governments should
step in is an acute intellectual and policy challenge. Yet Australia's
move to a low-carbon future will be too expensive unless they do."
Mr Wood said that governments
had to steer a course between, on the one hand, inadequate support for
low-emission technologies, and on the other, picking winners or unduly
favouring one technology over another.
They should also avoid grant
tendering and rebate programs, which previous Grattan research has found
to be spectacularly unsuccessful in either developing technologies or
in reducing emissions.
The report lays out the key
decisions governments should take. The Commonwealth should ensure that
the carbon pricing scheme works properly by setting clear, long-term emission
caps, and regularly reviewing the scheme's functioning. Beyond that, all
governments should act to ensure there is a level playing field for all
They should remove the obstacles
that impede technologies such as wind and geothermal from connecting at
large-scale to electricity grids that were built around the needs of very
large fossil-fuel plants.
They should end subsidies to
existing technologies, such as the one announced recently by the New South
Wales government for coal production.
They should also work to reduce
the considerable difficulties low-emission technology projects face in
overcoming market barriers and obtaining finance at an acceptable cost.
"Government support could
include backing for research and development, and sponsoring exploration,
demonstration and early-stage deployment of low emission technologies,"
Mr Wood said.
"However, the good news
is that Australia is blessed with a range of low emission technology options.
For now, it makes sense for government to give them all a chance to thrive."