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Carbon pricing scheme won't work on its own: think tank
16/07/2012 - The federal government should combat continuing uncertainty over its carbon price by locking in 20-year contracts for the provision of low-emissions electricity, a Melbourne-based think tank says. Julian Drape
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The Grattan Institute believes Labor's pollution price is "inherently uncertain" because it relies on the decisions of governments. The coalition, for instance, has vowed to axe the carbon tax.
In its latest report, Building the Bridge, the institute also argues technologies that could generate large amounts of clean energy are still expensive and high-risk.
"For both these reasons, investment in low-emission technologies is, and will remain, critically inadequate," the report states.
"Governments must address these market failures beyond putting a price on carbon."
The think tank says if Australia is to reduce emissions by 80 per cent by 2050 the government should enter long-term contracts with developers to buy electricity "at a price that makes low-emissions technology viable".
The report suggests developers of low-emissions electricity bid for contracts at auctions to be held every six months over the next 10 years.
"Developers can invest knowing the contracts will be honoured irrespective of government policy on the carbon price," it states.
Winning developers would be paid a guaranteed carbon price and a premium above the average wholesale market price.
Initially the focus would be on solar photovoltaic (PV), solar thermal, wind power and carbon capture and storage.
The institute estimates over its 30-year life span the scheme would cost $4 billion and produce five per cent of Australia's electricity.
Report author Tony Wood says over time the government would put more money into technologies whose costs were coming down fast "and less on the ones which are falling behind".
"You are using the market information about what's actually happening to help determine how much support goes where," Wood told reporters.
"So ultimately if there is a winner it's backed but in the meantime options are kept open."
To ensure companies meet their end of the bargain they'd be required to pay a "project bond".
Agreement for project finance would also be required at the time of bidding, "meaning that bankers will perform the necessary due diligence" rather than the government.
Wood said the coalition's direct action policy effectively created a "shadow carbon price" so the institute's scheme would still work if Tony Abbott became prime minister.
The report examines other approaches that have been used to drive deployment of low-emissions technology but finds them wanting.
The Renewable Energy Target hasn't driven diversity or price reduction, Wood said.
Feed-in tariffs are "too expensive" partly because governments attempt to set the price.
Capital grants schemes have been riddled with problems mainly because it takes too long to negotiate the contracts.
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Bill Koutalianos | 16/07/2012 08:40 1
It's an understatement that the Coalition's "Direct action" policy will result in a "shadow carbon price". It may come as a surprise to many voters that in exchange for Abbott's 'early bird' repeal of the carbon tax, we may very well end up an ETS in return. We didn't give anyone a mandate for a carbon tax or ETS last time, but the polls suggest we will inadvertently do so next time. "Direct action" embodies a potential future ETS. Voters are so incensed with getting rid of Gillard that they are about to overlook the details of "Direct action" and shoot themselves in the foot by providing a mandate for a shadow ETS. Meanwhile the Grattan Institute are suggesting alternative procurement models and longer term commitments to continue driving up national debt and pushing up everyone's electricity prices through further investments in renewables. Instead of acknowledging the damage done thus far, the task of this think tank is to apparently continue living in denying about renewables. It's a shame they can't divert a moment of their time to the failed climate models and discredited UN IPCC climate science, on which the carbon pricing and renewables industries are based.
Toscamaster | 17/07/2012 14:29 2
Well done Bill Koutalianos for highlighting how “with Abbott's ‘early bird’ repeal of the carbon tax, we may very well end up with an ETS in return” The Liberal Party needs to come clean and tell us the whole truth about its Climate Change policies. The Libs have promised to get rid of the carbon tax. That's good. However their Direct Action policy and lock-step agreement with Labor on the ridiculous RET (20 percent renewables by 2020) are based on the same corrupt and fraudulent climate science that Labor is using to justify its carbon tax. At the end of a 75 minute meeting in April last year, documented evidence of the corruption of climate science was enthusiastically accepted by Greg Hunt. Since then Mr Hunt has been asked five times to identify any errors in the evidence. Five times he has failed to do so. Mr Pyne needs to take Mr Hunt aside and ask him: - “Hey Greg, what errors have you found in that evidence you accepted on 27 April 2011?” If no errors have been found by Mr Hunt and his advisors will the Liberal Party please come clean before the election and drop its Direct Action policy and commitments to the RET and a potential ETS? The election will hinge on voters’ objections to Labor’s carbon tax and dishonest politicians. Just imagine how infuriated we will be if, after the election, we realise that we did well to dispatch a Labor Government to political oblivion only to find that we now have to deal out the same punishment to the Liberal Party for being dishonest with us on the same issue. What could be worse for a Coalition Government? Will the Nats get the Libs to confess their ill-gotten ways before it’s too late? Failing to do that would be a political faux pas of the first order.
Geoff Thomas | 18/07/2012 13:47 3
Both the above posts are basing all their arguments on a claim that climate science is "failed", quite a ridiculous and foolish claim at that. As more and more research is being done, facts bearing out predictions and measured global warming actually occurring, - and this is happening all over the world, to claim it is "failed " smacks of wishful thinking by hard core climate deniers. No doubt the big corporations and conservative rich folk who don't want any change in the status quo want to believe as you do, but it is not sensible behaviour, the reality is that the climate is changing, the average temperature is rising, sooner or later that is going to impact on our lives or our children's lives and even worse our grandchildrens' lives may be a misery because of this wishful thinking without thought of the long term consequences. On a basic risk management model, even though you personally may question some element or other, the consequences of doing nothing are too dire to just dismiss this issue. On the issue of Mandate, Bill, I doubt anyone could argue that Kevin Rudd did not have a mandate to bring in a carbon tax or something like that, it was only because he didn't that many became disillusioned with him so Julia was elected, a matter which sits poorly with the arrogant attitudes too many men have towards women. Interestingly recent research in America found that male politicians always made their careers first, only women, - some women, would sacrifice their career as a politician for an ideal.
dave d | 23/07/2012 13:12 4
Oooh please Geoff- this woman Ju-liar -is a lying, scheming, backstabber, and willing to sell Australia out to anyone that is willing to stand still long enough to listen to her rubbish -Pleeeeease don't put her up there as a modern day Joan of Arc - martyr sacrificing for the good of humanity - Ju-liar is out there for one person and one person only and we all know who that person is !!!
Geoff Thomas | 23/07/2012 14:57 5
Hi Dave, Julia is neither a Jew, (and so what if she was?) nor any more a liar than John Howard when he promised no GST before he was elected then brought in GST, (interestingly he handed out some generous sops to the Greens to get it through the Senate). Politicians are generally speaking all inveterate self servers, Tony is happy to damage Australia if only he might get in now before time proves him wrong. You may not be aware that other politicians are generally tarred with the same political animal brush, actually Julia comes out somewhat better than most. I like Kevin Rudd but he is gutless, at least Julia tries to put her beliefs into action. One should also be aware that Politicians only have so much power, Rupert Murdoch has more, the Banks have much more, neither of those have the morals of a gutter rat.
dave d | 23/07/2012 15:27 6
Geoff, They say that people get what they deserve and I guess you deserve Ju-liar Poor poor deluded boy !!
Geoff Thomas | 23/07/2012 15:46 7
It is also said that you need to insult people when you have run out of truth, certainly seems to be the case with your comment. Pity you couldn't answer with a more reasoned argument, perhaps thought a bit more deeply.
dave d | 23/07/2012 16:32 8
It is also said that you need to insult people when you have run out of truth, "Politicians only have so much power, Rupert Murdoch has more, the Banks have much more, neither of those have the morals of a gutter rat" sounds like insults to me !!
Geoff Thomas | 23/07/2012 17:34 9
No Dave, unfortunately it is not an insult, but the actual truth, - as you would know with Rupert from the phone tapping scandal, and the Banks with the global financial near collapse, - "derivatives" Ha! and just now LIBOR, - 4 years to bring the bastards to book, a paltry few millions in fines and not even a recorded conviction. The worst of all that is there is now a culture of greed, dishonesty and shameless thieving within the world banking system, - sure there are also good people there, perhaps you saw Peter Doyles reso from the IMF, 20 years and ashamed to have ever got involved. It is too easy to pick on Julia, the louts have knocked the old man down and are all kicking him, but you need to work a bit, read around, follow stuff up on the Internet, try and see what is really going on, try and gather as much info as you can before you slip into judgement mode. Remember, hitting your knee can provoke the knee jerk reaction, it doesn't even have time to get to your brain, knee jerk reactions do not make for good democracy, clear thinking, can, however.
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