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Reintroduction of the Carbon Price

Worried economists call for a carbon price, a tax on coal exports, and ‘green tariffs’ to get Australia on the path to net zero

 

Peter Martin, Crawford School of Public Policy, Australian National University

Australia’s top economists have overwhelmingly backed the reintroduction of the carbon price that helped cut Australia’s emissions between 2012 and 2014.

The government concedes that achieving its legislated emissions reduction target of 43% below 2005 levels by 2030 and net zero by 2050 will be difficult. With official forecasts showing Australia falling short, the Economic Society of Australia asked 50 leading Australian economists what should be done to speed things up.

Offered a choice that included nuclear energy, accelerated investment in large-scale batteries, and a rapid phase-out of traditionally fuelled vehicles, 30 of the 50 picked a carbon price of the kind introduced by the Gillard Labor government in 2012 and abolished by the Abbott Coalition government in 2014.

Another five said they supported an economy-wide carbon price, but wouldn’t nominate it in the survey because it would face “significant political hurdles” and would not be “politically feasible”.



The Department of Climate Change told the government in December it was on track to fall short of its 2030 target of a 43% cut on 2005 levels, but that with “additional measures” it could get to 40%.

In October this year, Climate Change and Energy Minister Chris Bowen described the 43% target as “ambitious” and a “difficult task”.

The scheme the economists were asked about was a “cap and trade” scheme, of the type common in much of the world. In these schemes, the government sets a cap on the total number of emission permits produced each year and allows users to trade them with one another to set a price.

A carbon price by another name

The Gillard government’s scheme was initially a fixed charge per tonne of carbon emitted by big polluters. It was set to switch to a cap and trade scheme after three years, but ended up being abolished after two.

In its place, the Abbott government created a “safeguard mechanism” that currently applies only to the 219 biggest polluting facilities in Australia. It requires each to keep emissions below a government-set baseline, and allows them to trade emissions reductions with one another.

The economists were asked about expanding the mechanism to make it mimic an economy-wide carbon price. In response, 42% said they wanted to boost the number of facilities it covered, and 26% wanted to tighten the baselines to push up the price.


Made with Flourish

All but seven of the 50 economists wanted either an economy-wide carbon price or an expanded safeguard mechanism that would act as one.

Independent economist Hugh Sibly said it might well be that nuclear, hydrogen or other sources of energy were the most efficient ways of decarbonising the economy, but it would be impossible to know until Australia started charging for emitting carbon and allowed the market to work out the cheapest way of coping.

Half of those surveyed wanted to expedite the building of new transmission lines to link places where electricity was being produced with places where it would be needed. One-third wanted expedited investment in large battery storage.

Economists including Macquarie University’s Lisa Magnani justified this by saying it was necessary for the government to move in ahead of the private sector to provide the infrastructure the private sector would need in order to decarbonise “within the time left to act seriously”.

No new mines, taxes on exports from existing mines

Many experts surveyed wanted bolder measures than those proposed by the Economic Society of Australia.




Former OECD official Adrian Blundell-Wignall wants metallurgical coal exports taxed.
OECD, CC BY-NC-SA

Former OECD official Adrian Blundell-Wignall said Australia’s coal exports create almost two and a half times the emissions Australians produce domestically.

“What is the point of moving to net zero on the latter while we do nothing on coal exports?” he asked.

His proposal, aired in the Australian Financial Review, is for Australia to tax exports of the metallurgical coal used to make steel, forcing up the price and reducing global demand. Australia has 55% of the market.

If higher prices brought in more tax and resulted in less burning of metallurgical coal, it would be a win-win for Australia and the world.

Mark Cully, a former chief economist at the Australian industry department, said Australia should follow the lead of France, Denmark and Sweden and ban new fossil fuel projects.

The supply restriction would push up the relative price of fossil fuels and encourage a faster global take-up of renewable energy.

Impose green tariffs on dirty imports

Australia should also join the European Union in implementing a green tariff, the so-called Carbon Border Adjustment Mechanism that imposed an emissions tax on imported goods whose emissions were not taxed in the country in which they were produced.

Cully said too much of Australia’s concern was directed to energy, a sector where emissions are genuinely beginning to fall. In other sectors, emissions have plateaued or are even rising, making it “inconceivable that Australia can meet its 43% reduction target by 2030, let alone net zero by 2050, without other high-volume emissions sectors contributing”.

Frank Jotzo, director of the Centre for Climate Economics at the Australian National University, said carbon pricing has to be complemented by targeted measures aimed at industries such as transport, building, agriculture and reforestation.

He said Australia will soon need to back measures that suck carbon dioxide back out of the atmosphere, acknowledging that many emissions will continue and will therefore need to be offset in order to get to net zero.

Critical opportunity, but critical challenge

University of Tasmania economist Joaquin Vespignani said state and federal governments should “invest” in the production of the so-called critical minerals that will be needed for decarbonisation via tax deductions.

Australia has more than 20% of the proven global reserves of minerals such as lithium that are essential for clean energy production and storage.

Michael Knox of Morgans Financial noted the International Agency believed the world would need to ramp up its production of critical minerals to three times its present level by 2030.

Energy investment would need to double, and electricity transmission grids would need to roll out an extra two million kilometres of wire per year.

The Agency described the task as Herculean. Knox said it was far from certain to be achieved.


Individual responses. Click to open:

The Conversation

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.


Responses (200)


 

Garry Barrett

Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Expedite investment in large battery storage


 

Adrian Blundell-Wignall

Expedite the development of nuclear energy | Expedite building new transmission lines to connect renewable energy | Introduce an economy-wide cap and trade carbon price

What Australia exports in coal is almost two and a half times all the emissions we produce within Australia. What is the point of moving to net-zero on the latter while we do nothing on coal exports? Addressing coal via an export tax ? effective on metallurgical coal ? is something we can do now to raise the cost of steelmaking and reduce demand for coal. This would hurt foreign steel mills, not Australian-owned companies. Higher prices and a lower output for this sector is a win-win for us and the global economy. It is indicative of the debate in Australia that this is not even included as an option in the survey.


 

Alison Booth

Expedite the development of alternative fuels such as hydrogen
Expedite building new transmission lines to connect renewable energy | Expedite investment in large battery storage


 

Markus Brueckner

Introduce an economy-wide cap and trade carbon price
Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism


 

Matthew Butlin

Introduce an economy-wide cap and trade carbon price
Expedite building new transmission lines to connect renewable energy
Expedite investment in large battery storage


 

David Byrne

Expedite investment in large battery storage | Expedite building new transmission lines to connect renewable energy | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

Australia's future competitive advantage will be in low-cost renewable energy investments. To push on this frontier, we need the ability to transmit and store our power at scale for domestic and possibly international use. This points to grid-scale battery storage and transmission network investments. To move to net zero, we also need price incentives. Unfortunately, we have a political climate where a cap and trade carbon price (with redistribution of the tax revenue to households) is not likely not feasible, so expanding our existing incentive schemes (such as the safeguard mechanism) represents a more feasible and immediate path on incentives.


 

Lisa Cameron

Expedite building new transmission lines to connect renewable energy
Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

Expanding Australia's carbon price mechanism to most of the economy, alongside the construction of new transmission lines that provide reliable access to renewable power is essential for de-carbonisation to advance at a sufficient rate for Australia to meet net zero in 2050. A price on carbon is an efficient, overarching mechanism via which to provide greater incentives for industry and households to reduce their carbon emissions. A serious carbon price applied to most of the economy will reduce demand for coal and gas-sourced power. New transmission lines are needed to connect renewable energy to the grid and so allow industry and households to substitute renewable energy sources for these old energy sources. This switch of power sources will result in de-carbonisation with minimal impacts on economic growth and living standards.


 

Bruce Chapman

Introduce an economy-wide cap and trade carbon price | Phase out non-electric vehicles | Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism


 

Ken Clements

Introduce an economy-wide cap and trade carbon price | Expedite the development of nuclear energy


 

Deborah Cobb-Clark

Phase out non-electric vehicles | Introduce an economy-wide cap and trade carbon price | Expedite building new transmission lines to connect renewable energy


 

Mark Cully

Expedite the development of alternative fuels such as hydrogen | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Phase out non-electric vehicles

Five of the options are concerned with energy, a sector where emissions are genuinely beginning to fall. In other sectors, they have plateaued or are rising. It is inconceivable that Australia can meet its 43% reduction target by 2030, let alone net zero by 2050, without other high-volume emissions sectors contributing on a near pro-rata basis. Large swathes of transport and agriculture are not directly affected by the safeguard mechanism. A broader safeguard mechanism ??one where the threshold for coverage (currently 100,000 tonnes of carbon dioxide equivalent per year) drops each year as the baseline falls ??would progressively encompass an ever-greater share of Australia's carbon emissions. The share is currently 28%, and needs to be considerably higher to mimic an economy-wide carbon price).A few specific suggestions that fall into an "other, please specify" option: (i) abolish the diesel rebate on fuel excise ? this is a very large implicit subsidy (of the order of $8 billion annually) for mining and agriculture, neither of which need subsidies to be internationally competitive; we could use the budget savings to expedite the development of alternative fuels. (ii) as part of the phase-out of non-electric vehicles, allow the tariff-free importation of second-hand electric vehicles from the UK and Japan. (iii) shift responsibility for emissions reporting to the Australian Bureau of Statistics, to assure the independence and transparency of this data, and thereby improve accountability.Finally, the options set out do not canvass Australia's emissions within the broader international context. Most countries are not on track to meet their Paris commitments. Australia can be a global player here. If most countries were on track, it would no longer be financially viable to be developing new fossil fuel projects, in Australia or elsewhere. Australia should follow the lead of other advanced countries like France, Denmark and Sweden to put a ban on these new projects. This supply restriction would push up the relative price of fossil fuels and encourage a faster global take-up of renewable energy sources. Australia should also join the European Union in implementing a green tariff, the so-called Carbon Border Adjustment Mechanism.


 

Janine Dixon

Introduce an economy-wide cap and trade carbon price | Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

An economy-wide cap and trade price is still the best solution. But the safeguard mechanism is already in place, so changing it is more likely to succeed politically.


 

Brian Dollery

Expedite the development of nuclear energy

Nuclear energy is the best option since it can take advantage of the existing distribution network.


 

Uwe Dulleck

Expedite building new transmission lines to connect renewable energy | Phase out non-electric vehicles | Introduce an economy-wide cap and trade carbon price

I do feel it's the combination of building the necessary infrastructure (in particular getting the grid ready for the transition) and getting prices right to facilitate this transition. Clear indications about where and how the fleet of vehicles can move (close to) zero emissions with again help to make this transition as low-cost as possible.


 

Saul Eslake

Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Introduce an economy-wide cap and trade carbon price | Expedite building new transmission lines to connect renewable energy

As the International Monetary Fund notes in the latest issue of its Fiscal Monitor, "carbon pricing is a necessary component of the policy mix, but it is not sufficient", and "must be complemented by instruments aimed at correcting remaining market failures" ? which (of the options presented) represents (in my opinion) the best choice.


 

ALLAN FELS

Introduce an economy-wide cap and trade carbon price | Expedite building new transmission lines to connect renewable energy


 

Gigi Foster

Take no special action ? net zero will be achieved by 2050 without it

This is a bad question. What if we do not agree with the net zero target? I answered "take no special action" not because I think that "net zero will be achieved by 2050 without it", but because I do not think there is sufficient evidence to justify taking the other actions listed in the energy sector and elsewhere (although I do think that markets will discover in the coming years which of these things is useful, and there may be a role for government in a few areas with large fixed costs, like nuclear energy). On the basic science side, more carbon in the atmosphere does not mechanically translate into higher temperatures, and our anthropocentric models of climate change are extreme simplifications of a highly complex process that we do not fully understand, so making long-range forecasts based on them, and then policy prescriptions based on those forecasts is highly unwise. On the basic economics side, I have not seen a cost-benefit analysis of the "net zero transition" that convinces me that the costs of the interventions being proposed under the "net zero" umbrella are worth the benefits we would receive from implementing them. The net-zero policy proposals are very similar to the covid policies: huge sacrifices are being sold to people as necessary in the short run in order to reap some vague and uncertain future reward, with no logical connection demonstrated in real data (only in computer simulations) between the sacrifice and the supposed good future outcome. Net zero is a religion, not a scientifically defensible policy prescription. Perhaps we will have net zero foolish policies by 2050. We can only hope!


 

John Freebairn

Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

Placing a price on carbon emissions, and with an increasing price path for at least the next 25 years, provides the incentives and rewards for most producers and consumers to change decisions to choose lower-cost less polluting options. The more comprehensive the tax base the more effective the policy. Different producers and consumers facing different decision choices and options have the incentives and information to respond by choosing lower-cost pollution-reducing options. Some of the additional government revenue should be recycled to those on lower incomes via lump sum increases in social security grants and low-level income tax cuts to restore equity.


 

Frank Jotzo

Introduce an economy-wide cap and trade carbon pricE | Expedite building new transmission lines to connect renewable energy

Achieving net zero emissions requires a far broader range of actions than the list of pre-set options here suggests as possibilities. For net zero, policy action is needed in each greenhouse emitting sector, using a range of targeted policy instruments in addition to broad-based carbon pricing where that is feasible administratively and politically. A more complete list would comprise many dozens of actions across electricity supply, electrification and energy efficiency in transport, industry and residential sector, public transport, infrastructure investment, embodied emissions in buildings and infrastructure, technology improvement and product shift in agriculture, reforestation and afforestation, and much more. A full list would also and importantly include targeted measures to support carbon dioxide uptake from the atmosphere, compensating for remaining emissions ("net" zero is what we are aiming for, not zero), as well as measures to help cut Australia's international emissions footprint as an energy exporter by encouraging the shift from coal and gas to zero-emissions fuel exports and exports of 'green' commodities. The net zero sector plans that are being developed by the government offer a chance to take stock of what emissions reduction trajectories may be possible, what actions can and should be taken by industry, households and government, and what policy interventions can best support them. It's to be hoped that this Net Zero Plan process will be extensive in its consideration of options and scenarios, and inclusive in its engagement with industry, civil society and the research sector.


 

Michael Keane

Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price


 

Michael Keating

Expedite building new transmission lines to connect renewable energy | Introduce an economy-wide cap and trade carbon price | Expedite investment in large battery storage

Properly pricing carbon is the most efficient way of reducing emissions. It will encourage the development of alternative sources of energy, and make less demands upon the public purse.


 

Geoffrey Kingston

Introduce an economy-wide cap and trade carbon price

If decarbonisation is the objective, standard economic logic says tax the actual amount of carbon pollution, so as to encourage innovation in pollution-reducing activity.


 

Michael Knox

Expedite the development of nuclear energy

The recently released International Energy Agency roadmap to net zero by 2050 tells us that this task is not just very difficult. It is Herculean. Specifically, the IEA suggests that nuclear energy production needs to be doubled by 2050. Further by 2050, there needs to be installed carbon capture and storage capacity sufficient to remove 1.7 gigatonnes of CO2 from the atmosphere every year. Electricity transmission and distribution grids need to expand by around 2 million kilometres a year each year until 2030 to meet the net zero target. Also, by 2030, there needs to be an increase of critical minerals production by 20 million tonnes per year to 3 times the current level of production. All this requires spending $US4.5 trillion each and every year by 2030. This is not just Hercules as an engineer; this is also Hercules as a tax collector!


 

Guay Lim

Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism| Expedite building new transmission lines to connect renewable energy


 

Elisabetta (Lisa) Magnani

Phase out non-electric vehicles | Expedite building new transmission lines to connect renewable energy | Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism

The climate emergency should be treated as such by any responsible government. The Climate Council has drawn from studies by the Australian Conservation Foundation to emphasize that "in Australia, just 10 companies account for more than half of all the harmful emissions produced under the safeguard mechanism". The diffusion of the use of renewable energy requires investments in all infrastructures, particularly those related to new transmission lines. These investments are pivotal for the success of any fight against climate change within the time left to act seriously. The involvement of the general public through measures that target the phasing out of fossil fuel engines is deemed to be essential to successfully address this emergency. A final word against any proposal to further develop nuclear energy sourcing. Science and engineering studies indicate that renewable energy, particularly from wind and solar sources, are preferable to nuclear energy from a cost-benefit analysis. I would add that national and international debates have strongly discouraged nuclear energy developments on the grounds that the management of nuclear waste is extremely difficult and the risk of nuclear proliferation in our fragile international setting is very high (among other reasons). I would endorse this strong opposition.


 

Leslie Martin

Introduce an economy-wide cap and trade carbon price

The ideal would be to introduce an economy-wide price on carbon, either via a tax or a cap-and-trade mechanism. If there isn?t enough political support for a broad policy, then we should do as much as we can to mirror such a broad policy. The safeguard mechanism is a step in the right direction if extended to as many facilities as possible (i.e. smaller ones), with baselines not based on individual-facility outcomes but rather industry-wide best-practice benchmarks. In electricity, we need to make sure to provide enough financial incentives for grid services, like battery storage, that help balance the volatility of increased penetration of renewables. Relatedly, we need to make sure that producers and consumers face price signals that encourage them to shift production and consumption to times that minimize total social cost, i.e. that includes the cost of associated pollution. In practice, that means that residential solar households should receive higher compensation for electricity generated at peak times, which may lead households purchasing solar for the first time to face their panels west instead of north, and that households with electric vehicles need to face higher prices for charging at high-social-cost times. I don?t have a strong opinion as to whether Australia should build nuclear power plants domestically, but I strongly recommend thinking about Australia?s potential role in safely storing spent nuclear waste from facilities abroad, in order to tilt the balance away from the expansion of coal in countries where storage concerns are what holds nuclear back. When it comes to limiting the global production of greenhouse gases, I can see a role for Australia in attending to the full life cycle of uranium: not just in extraction but also in the subsequent collection and safe storage of spent fuel.


 

Margaret McKenzie

Expedite investment in large battery storage | Phase out non-electric vehicles
Introduce an economy-wide cap and trade carbon price

We need to take advantage at last of Australia?s comparative advantage. The government should undertake a massive green energy and industry push. This should include full support for substitution into renewable energy and a green car industry to replace the old one which never should have been closed down. Get out of coal and gas. That renewables are cheaper will be revealed. This is urgent.


 

Warwick McKibbin

Introduce an economy-wide cap and trade carbon price | Expedite investment in large battery storage | Expedite building new transmission lines to connect renewable energy


 

Flavio Menezes

Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Expedite building new transmission lines to connect renewable energy

Many economists contend that implementing a carbon tax, one that accurately reflects the social cost of carbon emissions, is essential for the transition to net zero. This approach involves raising prices on products and services that produce high carbon emissions, thereby encouraging consumers and businesses to shift their preferences towards less carbon-intensive alternatives. Nevertheless, I have omitted the idea of a carbon tax from my selection for a couple of compelling reasons. Firstly, it faces significant political hurdles, making its implementation highly challenging. Secondly, a carbon tax alone is insufficient to address the multifaceted issue of carbon emissions. When applied on a broad scale, it necessitates complementary measures due to the inherent imperfections and incompleteness of markets, the costs involved in adjusting, and the presence of equity concerns. Consequently, it becomes clear that relying solely on unfettered market forces is not viable. Instead, we must accept a greater role for direct government intervention, recognising that it comes with its own imperfections and inefficiencies. This expanded role encompasses not only financing and underwriting investments but also entails a substantive rethinking of existing market governance and regulatory frameworks for the energy transition. For instance, one significant aspect missing from the list provided above is the integration of consumer resources into the grid. This will be more crucial as rooftop solar becomes even more preponderant and as the adoption of electric vehicles accelerates.


 

Ben Phillips

Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Introduce an economy-wide cap and trade carbon price

Given it's unlikely a carbon price will be introduced anytime soon expanding the safeguard mechanism is the next best approach. Enabling investment in large battery storage and new transmission lines to connect renewable energy is also sensible policy.


 

John Quiggin

Introduce an economy-wide cap and trade carbon price | Phase out non-electric vehicles | Expedite building new transmission lines to connect renewable energy

Cap and trade carbon price is still the best policy, even though Labor and Coalition are opposed. Transmission facilities and the phase-out of internal combustion engines in vehicles are crucial and need policy intervention. Batteries are important but should happen without government intervention. The safeguard mechanism is a lame duck, and nuclear isn't going to happen before 2050.


 

Mala Raghavan

Introduce an economy-wide cap and trade carbon price | Expedite building new transmission lines to connect renewable energy | Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism

Carbon pricing (tax) and investments in renewable energy are two broad priority areas that serve as the foundation for a broader strategy to combat climate change effectively. Australia, with substantial greenhouse gas emissions primarily from electricity generators, must consider specific measures to address this challenge. These measures encompass imposing higher taxes on carbon-emitting entities while simultaneously incentivising businesses to transition to cleaner energy sources. Additionally, promoting energy efficiency is vital through providing financial incentives, rebates, and tax benefits, encouraging the adoption of energy-efficient technologies and practices. However, it is also essential to recognise that the effectiveness of carbon pricing extends beyond national borders. While stricter emission standards and enforcement regulations are crucial for industries, transportation, and energy production, there is a pressing need for global cooperation in implementing carbon pricing mechanisms. A harmonised approach ensures that a disparity in carbon pricing between countries does not create "carbon havens" that corporations can exploit to mask their environmental impact, undermining the decarbonisation efforts.


 

Sue Richardson

Phase out non-electric vehicles | Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

It is clear that the most efficient and effective way to reduce greenhouse gas emissions is to make those who emit them pay a price for the right to emit, and then enable these rights to be traded, in some fashion. But this sensible approach has few friends among policymakers, so the next best option is a much-expanded safeguard mechanism. Ground transport is a major source of emissions and electric vehicles and trucks are becoming steadily more available and at lower cost. Their adoption requires a transport revolution and that in turn warrants active policy support. Australia has so much sun, wind and land that by comparison, nuclear would be too slow and too expensive as a means to reduce emissions.


 

Leonora Risse

Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

The government can play a role in creating incentive mechanisms to steer the economy towards less carbon-intensive production methods, such as by setting an emissions target and a carbon cap-and-trade scheme. This incentive structure then leaves it up to the market, technological invocations and investors to identify what is the lowest-cost route to achieve these lower carbon-intensive outcomes. The safeguard mechanism is a form of incentive structure targeted at the largest polluting companies, although some analysts have noted that this policy needs firmer arrangements for accountability. However, there is also a role for government to invest in necessary economy-wide infrastructure that the market can?t be relied on to provide, such as transmission lines and battery storage capacity, and to promote adaption indirectly such as through regulations (such as a requirement for new developments to build electric vehicle charging stations). As a provider of services, the government can also lead by example in adopting less carbon-intensive approaches in the delivery of public services. What is also missing from this list is investment in supporting employment transitions for the localised workforces and communities most affected by these transitions. For example, it is understandable that regional communities whose identity is based on being a coal mining town will face uncertainty and apprehension about their futures. Supporting displaced workers and businesses to not just ?reskill? and ?pivot?, but to also find a new and authentic sense of job identity and purpose when moving into emerging job opportunities, and to still feel of value to their local community, is an important but often overlooked ?human? aspect of this energy transition and process of structural economic change. People need to see a meaningful role for themselves in this future picture of the Australian economy.


 

Rana Roy

Introduce an economy-wide cap and trade carbon price | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Expedite the development of nuclear energy

If the Commonwealth government and/or state and territory governments wish to lose the next election they face, they could enact, with immediate effect, all manner of ?brave? policies to decarbonise the economy at a faster pace ? using the word ?brave? after the fashion of the late Sir Humphrey Appleby. The problem is that the said policies would be reversed by the incoming governments and the matter would be put on the back burner for a decade. We have been through this movie before ? precisely a decade ago. What the Commonwealth government should do ? and it is the Commonwealth that needs to take the lead ? is to commence immediately the work of preparing ambitious but credible policies, with a track record of success elsewhere in the world, and present these to the electorate with the aim of winning a mandate to proceed accordingly. Of the list above, my preferred options are as follows: 1. Expedite the development of nuclear energy. From my own research, and more especially from my perspective as a member of the Evaluation Council of France?s sovereign green bond programme, reviewing and evaluating a continuing programme of customised research, I am convinced that the development and deployment of nuclear energy is the quantitatively greatest contribution that we could make to a faster pace of decarbonisation. If France today can justly claim to be the greenest country in the European Union, this is primarily due to the contribution of its nuclear energy assets, albeit building on the contribution of its older hydroelectric assets.France?s most recent investments in wind and solar energy contribute to decarbonisation primarily insofar as they permit a greater export of nuclear energy to the rest of the European Union. The Council aims to publish precise and up-to-date evidence on this point early in 2024 and will make the publication available here: https://www.aft.gouv.fr/en/green-oat. In any case, the evidence suggests that, for now and the near future, globally and in Australia, the principal alternatives to fossil fuels, in the total primary energy supply and more narrowly in electricity generation, that are technically deployable and sufficiently scalable are, on the one hand, the modern, clean renewables of nuclear and hydro and, on the other, the primitive, polluting renewables of various types of biomass. See: https://www.iea.org/data-and-statistics/charts/total-primary-energy-supply-by-fuel-1971-and-2019 https://www.energy.gov.au/data/energy-consumption https://www.energy.gov.au/data/renewables. 2. Introduce an economy-wide cap and trade carbon price. For any country that already makes full use of nuclear and hydropower, and for all countries on a continuing basis, the most effective and efficient source of decarbonisation, by far, is an economy-wide carbon tax or an economy-wide cap-and-trade carbon price. In all my published work, I have recommended the former in preference to the latter. But I accept that either of these can be designed to make much the same contribution to decarbonisation (if not necessarily to government revenues, distributional equity, or the general welfare). And by far the best source of evidence on this point is to be found in the OECD environment database. See here: https://data.oecd.org/environment.htm. 3. Expand the safeguard mechanism to cover more facilities, to mimic a broader carbon price. In some respects, this is the most interesting, not to say intriguing, of the options named above. If this option could indeed ?mimic a broader carbon price? to a sufficient extent, and if it were to stand a clearly better chance of securing an electoral mandate than a carbon tax or cap-and-trade carbon price, I would be minded to place my third preference above my second preference. However, I would need to conduct, and/or review and judge, detailed research on this point before I could affirm such a conclusion with sufficient confidence. In any case, I would rank this option above the option of ?increasing the carbon price presently paid by big polluting facilities, via the safeguard mechanism? ? for much the same reasons as I prefer broadening the tax base of the GST to increasing its rate, reasons too obvious to need detailing here.


 

Jeffrey Sheen

Expedite the development of nuclear energy| Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Phase out non-electric vehicles


 

Hugh Sibly

Introduce an economy-wide cap and trade carbon price

It is widely recognised by economists that a market mechanism will be the least-cost method of achieving a given level of carbon emissions. In the short term (when the methods of production are difficult to change) an economy-wide cap and trading system could achieve a given level of emissions at the lowest cost. In the longer term, market mechanisms are also best to determine the technology used for ?clean? electricity provision and delivery. It may be the case that nuclear, hydrogen, or other sources are the most effective methods of satisfying energy demands. An appropriately designed market mechanism would identify and select the least cost technology. As has been often stated, Australia produces a small fraction of global greenhouse gas emissions. Reducing our emissions alone will have a very limited impact on climate change. However, as a nation, Australia could use its considerable research capacity to aid in the development of new, non-polluting energy-generation technologies. If successful, the outcome of such research could assist in developing technologies that would have a more significant impact on reducing climate change.


 

Julie Toth

Expedite building new transmission lines to connect renewable energy | Expedite investment in large battery storage | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price

Achieving net-zero emissions requires immediate action and long-term commitment across all industries and areas of activity. Investing into renewable energy infrastructure, transmission and accessibility, mandating emissions reductions for large emitters, and supporting homeowners and businesses to increase their uptake of renewable electricity will all contribute to Australia?s net zero target. Our built environment ? and especially our housing ? must adjust and adapt to our changing climate. We must build greater resilience to climate volatility and its impact on our buildings and communities. We must also pay greater attention to the carbon emissions inherent in our construction materials and methods and our housing choices. We must encourage net-zero alternatives wherever possible. With 1.2 million additional "well-located" homes planned for the next five years alone, our homes and other buildings must get leaner and greener, as well as more efficient and more affordable.


 

Joaquin Vespignani

Expedite the development of nuclear energy | Expedite investment in large battery storage | Expedite building new transmission lines to connect renewable energy

The biggest impediment to achieving global decarbonization targets is the need for more critical minerals supply for both clean energy production and storage. Australia's most significant contribution to reaching global net zero by 2050 is to increase the extraction and production of critical minerals, as Australia has more than 20% of the global Critical minerals proven reserves. State and federal governments should heavily invest in critical mineral production via tax deductions.


 

Rachel Ong ViforJ

Expedite the development of nuclear energy | Expedite the development of alternative fuels such as hydrogen | Expedite building new transmission lines to connect renewable energy


 

Beth Webster

Increase the carbon price presently paid by big polluting facilities via the safeguard mechanism | Expand the safeguard mechanism to cover more facilities to mimic a broader carbon price | Expedite the development of alternative fuels such as hydrogen

Even a second-best carbon price, such as the safeguard mechanism, will do more for incentives to invest than subsidies. The pull always works better than the push. Hydrogen has the potential to be an alternative fuel for peaking power and base-load power and should be seriously considered. There is consistent evidence that doing nothing will not get us to a containable temperature.