The costs of addressing or mitigating climate change will be substantial but that cost pales into insignificance relative to the cost of inaction. Australia’s Federal Budget cannot afford to pay polluters to achieve the required emissions reductions.
It is only by reducing emissions through caps, or by putting a price on emissions that we can deliver our share towards solving this global problem. Our least well off global citizens will suffer the most if insufficient action is taken. The most well off economies, whose wealth has in large part originated from decades of carbon emissions, must make meaningful commitments for the benefit of all.
The carbon reduction commitment that Australia is taking to the Paris climate change talks is an encouraging step. But it requires effective and stable policies to achieve these commitments. The Renewable Energy Target is by far our most successful policy for reducing carbon emissions. Since a mandatory target was first introduced
in 2001, this policy has driven the start of the modernisation of our electricity industry, adding over 5,000 MW of clean renewable energy generation to our electricity system.
By placing downward pressure on wholesale electricity prices it has so far had an overall downward effect on retail prices, despite the cost of the LGCs. It has had no cost to the Commnowealth budget. The RET’s relative success as a carbon emissions reduction policy is also in part due to it being one of our few effective policies in this area. For this reason, and relative to other nations, it gets a disproportionate amount of media attention.
Vested interests in highly polluting generation platforms of the past, whose own industry appears to escape scrutiny on political, health or environmental grounds, have been incentivised to see the RET fail. As large and well‐known companies they have leveraged media attention to conflate and confuse the real drivers of electricity price increases in order to influence consumer sentiment.
Off the back of this attention, partisan positions and personal preferences are espoused to win political points, when the vast majority of Australians are yearning for unity on such important policies.
Whatever the mix of carbon emission reduction policies that Australia adopts to achieve its 2015 commitments, the costs for our economy and consumers will be lessened with unwavering and united political support.
Investor confidence is a fragile thing. It is in our own interest, our nation’s interest and our global interest that those who influence investor confidence stop undermining it in their own short‐term self‐interest, and instead work hard to earn it back.
Miles George is managing director of Infigen Energy. This is an excerpt from his managing director’s report in the company’s annual report released on Tuesday.