Analysis of Australia's Clean Energy Plan published
- 19 July 2011
The document is designed to give an overview of the main elements of the package, as well as a brief analysis of the scheme.
Prime Minister Julia Gillard announced the details of the Australian Government’s Clean Energy Plan, on Sunday July 10. The wide ranging package contains policies in four key areas: carbon pricing, renewable energy, energy efficiency and land use, with the first two areas the most substantial parts of the plan.
If it passes parliament later this year, the scheme, which includes an initial carbon price of $AU23 per ton CO2e, will end a policy log jam spanning almost a decade. The scheme is due to take effect from July 2012.
Below are a few of The Climate Group’s key takeaways from the plan:
- The initial price of $23 a ton is a good balance between a strong starting point and one that is politically feasible
- Businesses now have the detail they need to look at the costs and opportunities that this presents. Once it is passed, it will deliver long overdue certainty and confidence to the market, unlocking crucial investment. The transition from a fixed price to a market based price is “hard wired” into the scheme and an initial price collar and ceiling will provide a buffer against price fluctuations
- The complementary measures and funding contained alongside the price on carbon will encourage the growth of innovative, green technologies and jobs
- Julia Gillard still has a tough battle to convince the Australian public that this package is a good idea. The government has not sold the idea well so far, reflected by the fact that 58% were opposed to a carbon tax, with 14% unsure just prior to the announcement. The change in language from the government from talking about a carbon tax to a clean energy future is a good start
- The fixed price may lead to more abatement than the treasury modeling predicts. Previous emissions trading schemes in New South Wales and around the world have achieved higher reductions for lower cost than predicted at the outset. Treasury modeling also doesn’t include the extra impact that the negotiated closure of power stations in the scheme will have
Caroline Bayliss, The Climate Group Australia Director says: “This Clean Energy Plan has the potential to break almost a decade of policy paralysis in Australia on climate change. Once passed the scheme will send a long term signal that emitting carbon now comes at a price. The government has the numbers in both houses to pass the scheme later this year but will have to hold its nerve amidst some bad poll numbers in the short term. A lot of work will need to be done to convince a currently skeptical public.”