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ALP renewable energy proposal requires careful scrutiny: AI Group

22 July, 2015

According to Australian Industry Group Chief Executive Innes Willox, the ALP's proposal for a 50 per cent renewable energy goal is clearly ambitious, but needs careful assessment.

"There is no question that Australia needs greater certainty than is currently the case over the direction of energy and climate change policy beyond 2020. By provoking discussion the ALP proposal will help to develop policies that will achieve this objective.

"However, this objective must be fully evaluated against rigorous criteria and widely consulted on before it goes beyond the proposal stage. In particular, any approach to reducing greenhouse emissions should be examined against the fundamental criterion that emissions reduction goals are achieved at least cost.

"Imposing higher costs than necessary would be wasteful and would detract from the economy's ability to grow and provide the well-paid jobs of the future which are needed if we are to continue to lift domestic living standards.

"On the face of it, the selection of a 2030 goal of 50 per cent renewable energy is unlikely to pass the least-cost test. While renewables show great promise, additional subsidies may well be likely and meeting the goal would require the early retirement of a great deal of existing generation capacity.

"This would be complex and would increase electricity prices. Meanwhile, Australia has many options to reduce its emissions, both from other generation technologies, energy efficiency, the land sector, industry, and international abatement. The clear risk is that such a big bet on renewable energy options would lock in substantially higher costs than necessary.

"Another consideration is the strong likelihood that any post-2020 national emissions commitment will need additional emissions reduction policies beyond a 50 per cent domestic renewable energy goal.

"The interactions between such policies have been complex and counterintuitive in the past and would need to be weighed in any assessment of a future 50 per cent goal," Willox said.

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