Australia: WWF Warns Australia On Emissions Tax System
15 August 2013
Posted by: Author: Mary Swire
Author: Mary Swire
Were the new Australian Government to scrap the Carbon Pricing Mechanism (CPM), the country would fail to meet renewable energy targets, the WWF has said.
A report, compiled for WWF-Australia by research firm RepuTex, claims that even a low price supports the development of renewable energy alternatives. According to Climate Change Manager Kellie Caught, putting a price on pollution offers a long-term signal to investors "to favor the build-up of low polluting energy like wind and solar," and helps to "reduce the cost of building new renewables, particularly the cost to customers."
Australia's Carbon Pricing Mechanism (CPM) kicked in in July, 2012. It requires large carbon emitters to purchase a AUD24.15 (USD22.02) permit for each tonne of pollution they release into the atmosphere. Shortly before the Government went into "caretaker" mode in anticipation for the September 7 general election, Prime Minister Kevin Rudd announced that he would axe the CPM in favor of an Emissions Trading Scheme (ETS) from next year. His Liberal opponent Tony Abbott has said that if he were in charge, he would get rid of both the CPM and the ETS.
WWF-Australia says that if the carbon tax was repealed, the cost of large-scale renewable energy credits (LGC) would spike close to the penalty price for not purchasing a credit, which currently stands at AUD85 per MWh. At this point, LGC prices would be capped, and building renewable assets would become uneconomical. In turn, investment in renewal energy would slow, with retailers choosing to pay the penalty price instead of buying LGCs at AUD80-plus.
It is also alleged that investment in additional onshore wind energy could drop to such an extent that Australia would face a capacity shortfall. In this scenario, by 2020, only 14 percent of the country's energy would come from renewables, well below the current target of 20 percent.
Commenting on the election campaign, Caught said that the WWF is urging all parties "to include a price and limit on pollution, like an ETS, as part of their climate change policies and commit to stronger pollution reduction targets."