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Govt 'must act' to reduce cost of low-emission technologies

7th Feb 2012

The government needs to play its part in reducing carbon emissions by driving down the cost of low-emission technologies such as solar panels, a new report has suggested.

No easy choices: which way to Australia's energy future? has been compiled by the Grattan Institute and indicates that electricity needs to be produced at a reasonable price.

This is one of the ways in which the country can help meet its carbon emission targets and ensure the security of its electricity supply, the study indicated.

Tony Wood, the Grattan Institute's energy program director, explained that governments have had to introduce new policies that will help support the carbon pricing scheme.

"Carbon pricing will help to make low-emission technologies competitive, but in the long run it is not nearly enough," he commented.

The institute has pinpointed seven technologies that are capable of generating electricity with near-zero emissions and that have the potential for large-scale deployment over the next four decades.

These are wind, solar power, concentrating solar thermal, geothermal, carbon capture and storage, bioenergy and nuclear power.

However, there are still a number of obstacles standing in the way of these technologies reaching their potential, mainly because they cannot be delivered at an acceptable cost to the public.

"How governments should step in is an acute intellectual and policy challenge. Yet Australia's move to a low-carbon future will be too expensive unless they do," commented Mr Wood.

Responding to the report, Beyond Zero Emissions has pointed out a number of flaws in its conclusions, saying that they could potentially mislead consumers.

One of its main criticisms is that solar electricity was being directly compared to fossil fuel electricity, which are not available in the same market conditions.

Solar energy is currently competing in the retail market, while fossil fuel energy is available through wholesale.

Matthew Wright, executive director of the organisation, said: "We do not expect a suburban Woolworths to compete with food prices at the Footscray Wholesale Fruit and Veg market.

"Yet this is what the Grattan Institute has done by ignoring the differences between the wholesale and retail electricity markets."

Over the past two years, a significant cost reduction has been seen in the price of rooftop solar panels, Mr Wright emphasised, which marks a stark contrast to the considerable rise in gas prices.

He also criticised the report for suggesting that feed-in tariffs will distort the market and be less effective than a carbon pricing strategy in driving the uptake of renewables.

Posted by Mike Peacock


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