Our ETS Future 'Will Not Come Cheaply

AUSTRALIA will be unable to produce affordable baseload power supplies while meeting its emissions targets under present policy, new research has found.

A study by Melbourne's Grattan Institute, to be published today, warns that while carbon pricing will help make low-emissions technologies competitive, it will not be enough without big structural and policy changes.

Tony Wood, the institute's energy program director, says governments face "an acute intellectual and policy challenge" steering a course between inadequate support for low-emissions technologies or unduly favouring one technology over another. He cautions "Australia's move to a low-carbon future will be too expensive unless they do."

The Grattan research stresses markets as the primary mechanism by which Australia can reduce its emissions, but it says markets cannot work properly unless governments optimise regulatory and policy frameworks.

The study also warns against letting ideology limit the scope for manoeuvre by preventing serious evaluation of carbon capture and storage and nuclear energy. "A range of technologies available today can generate electricity at or below 0.2 tonnes of carbon dioxide per megawatt-hour and have significant scale-up projection," the Grattan research finds.

"Yet none currently represents more than 2 per cent of Australia's electricity supply and

their future technical and economic potential is shrouded in uncertainty."

The report finds further refinement of the underlying technologies of low-emission energy options will be the most important tool for their future development and commercialisation.

It reminds governments of their roles overseeing the development of new transmission networks and pipelines, resource maps, market frameworks, regulations and engineering skills.

The Grattan researchers urge the commonwealth to ensure the carbon pricing scheme works properly by setting long-term emission caps and call on all governments to act to ensure there is a level playing field for all power-generating technologies.

The report's authors urge the removal of obstacles that impede technologies such as wind and geothermal from connecting at large-scale to electricity grids built around the needs of very large fossil-fuel plants.

Carbon Price Announcement on Sunday

AUSTRALIANS will learn how the proposed carbon tax will hit their back pockets when the federal government unveils its policy on pricing pollution on Sunday.

The announcement comes 136 days after Labor, the Australian Greens and two independent MPs first formed the Multi-Party Climate Change Committee (MPCCC) to investigate carbon pricing.

"This weekend the Gillard Government plans to announce a price on pollution as the central element of a comprehensive policy to tackle climate change, cut pollution and drive the transformation of the Australian economy to a clean energy future," Prime Minister Julia Gillard said in a statement on Monday.

"After hearing a report on the discussions of the Multi-Party Climate Change Committee, Cabinet agreed tonight that sufficient progress had been made to allow an announcement date to be set for Sunday 10 July 2011."

Ms Gillard said talks between MPCCC members during recent weeks had been fruitful.

The committee comprises Ms Gillard, Treasurer Wayne Swan, Climate Change Minister Greg Combet, Greens senators Bob Brown and Christine Milne, and independents Tony Windsor and Rob Oakeshott.

"While there will be additional discussions with the MPCCC this week, followed by further Cabinet consideration, it is expected that the remaining details will be finalised in these discussions ahead of Sunday's announcement," Ms Gillard said.

The scheme will start with a fixed price on carbon emissions on July 1, 2012, followed by an emissions trading scheme with a flexible price and an emissions target starting three years later.

The news comes after Ms Gillard revealed on Sunday that the carbon tax would not be placed on fuel for cars and light industrial vehicles.

The prime minister said Mr Windsor had been influential in that development, which blunts Opposition Leader Tony Abbott's argument that a carbon tax would increase petrol prices for motorists.

But Mr Abbott and other coalition MPs questioned the government in parliament on whether trucks, buses and boats would be exempt from the carbon tax, and how long the exemption would exist.

The impending announcement of the carbon policy was a great relief, Ms Milne said.

"Now at least we are in a position to be able to go out there and deliver on what we said we'd deliver at the time we signed the agreement with the Prime Minister Julia Gillard, saying we would have a multi-party climate committee, that it would deliver a carbon price mechanism and that the emissions trading scheme would begin on July 1, 2012," Ms Milne said.

But the Greens senator would not reveal any details about the carbon price.

Ms Gillard said last week nine out of 10 households would receive tax cuts or rises in benefits, and the three million lowest paid households would be over-compensated for increases in their cost of living due to the carbon tax.

Opposition Environment spokesman Greg Hunt said the government's announcement of its carbon price policy at the start of the five week winter break from parliament was a "cynical move".

"It is deliberately running away from the parliament and it is deliberately running away from scrutiny," he told AAP.

Mr Hunt said the government would not give the full impact on the costs of living up to 2020 on Sunday.

"The only thing that matters is the full impact on electricity prices, gas prices, on grocery prices, on general cost of living between now and 2020 because each year, every year the carbon tax is going to go up and up and up."

Commenting before Ms Gillard's announcement, Mr Abbott said a coalition government would finance its $10.5 billion carbon emission reduction scheme from Budget savings and not from an imposed tax.

READ ON