An independent report released today has found that ditching the carbon price in Australia will hit investment in the renewable energy sector—and almost certainly lead to an increase in electricity prices.
Bret Harper, the Director of Research at advisory firm RepuTex which was commissioned by the World Wildlife Fund to write the report, says that without proper investment in renewable energy—made possible by a carbon price—wholesale electricity prices could rise by between five and ten per cent by 2020.
And while the findings of today’s Renewable Energy and the Carbon Price report appear to be counter intuitive, Mr Harper says the potential price hikes are already common knowledge among government and business.
‘Renewable energy, when it’s put onto the system, tends to cut household electricity bills, not push them up,’ he told RN Breakfast.
‘It represents a very low-cost form of energy that displaces other fossil fuel generators which have very high fuel costs.’
Currently, renewables account for 13 per cent of the Australian energy market, with federal renewable energy targets aiming for 25 per cent of all electricity to be renewable by 2020.
Modelling in today's report shows with the carbon price in place, the federal renewable target is likely to be met. However, scrapping the carbon price would likely see only 14 per cent of Australia's electricity generated from renewables by 2020.
The government and the Climate Change Authority came to the same conclusion when the Renewable Energy Target Review was conducted last year. The review suggested that if carbon pricing was removed or sent to zero, the 2020 renewable energy target would not only be threatened, but may not be met.
One of the central promises of the Coalition under Tony Abbott has been to ‘axe the carbon tax’ to ease pressure on power prices. Mr Harper says that a carbon price of zero would in fact have unintended consequences for the Coalition.