Open letter from business leaders, academics, economists and investors calls for more ambitious reduction targets
Australian state and federal energy ministers have been urged to set a more ambitious emissions reduction target in any potential national energy guarantee in an open letter signed by prominent pro-renewables business leaders, academics, economists and investors.
The letter comes ahead of a Commonwealth Heads of Government (Coag) energy council meeting on Friday, in which the energy ministers will meet to discuss the federal government’s proposed national energy guarantee and consider commissioning further work on the proposal.
After the Coalition party room refused to back the Finkel report’s recommended clean energy target, Coag’s energy security board wrote directly to the energy minister, Josh Frydenberg, with a new climate and energy policy it called the national energy guarantee (Neg).
It proposes to set both an emissions target and a “reliability” target for the national electricity market.
The letter outlining the policy did not suggest targets but the government has indicated it would set it at 26% below 2005 levels, which is on the lower end of what Australia has committed to reduce its economy-wide emissions by.
The advice did say that the emissions target would set in place a “trajectory towards the Paris agreement undertakings, as relevant for the electricity sector”.
Many commentators have pointed out that if Australia’s entire economy was to reduce its emissions by 26-28% below 2005 levels, then the electricity sector would need to reduce its emissions by significantly more than that.
Reiterating the point, the letter, which was organised by the Australia Institute, says: “All existing economic research suggests the cost of reducing greenhouse gas emissions are lower in the electricity sector in Australia than they are in most other sectors.”
It continues: “In other sectors, the technologies are not as mature and the opportunities for cheap abatement are more limited.”
The letter says that in order to restore investor confidence in the electricity sector, the emissions target must be “well above” the 26% proposed by the Turnbull government.
“We urge you to ensure the Neg’s emissions guarantee is consistent with Australia’s long-term interests,” it concludes.
It is signed by a few dozen academics, economists and business leaders, many of whom commonly call for policies that would help tackle climate change.
The list includes the economist Hugh Saddler, from the Australian National University, Simon Sheikh, the managing director of Future Super, and Simon Holmes à Court, a business leader, investor and adviser to the energy transition hub at Melbourne University.
Australia’s electricity sector contributes about a third of Australia’s entire greenhouse gas emissions.
Research by ClimateWorks has shown that the electricity sector needs to cut emissions by between 45% and 60% below 2005 levels by 2030 in order for the whole economy to meet its 26-28% target. The government’s own Climate Change Authority made a similar recommendation.
The executive director of the Australia Institute, Ben Oquist, said: “The coming together of such a respected group across these fields represents a broad agreement that a 26% target for energy is unacceptable.
“Regardless of the merits of the proposed Neg design, the proposed target makes the scheme unworkable as it will not deliver investor certainty but instead lead to higher prices and less reliability.”
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