21-10-02 A new energy industry report, conducted by McLennan Magasanik & Associates for one of Australia’s leading energy providers, states that simple changes encouraging the production of wind and gas power would achieve the targeted emission reductions and at far lower costs than previously estimated.

Commissioned by Origin Energy, the report undermines industry claims that curbing emissions will cripple the economy. “It is likely that Australia's relative competitive position will not be adversely affected by new policies that restrict new coal plants and increase renewables by 10 %,” it said.
Origin's manager of public and government affairs, Tony Wood, said the study was intended to lift policy debate above the “unsupported assertions” of environmental groups and “exaggerated” claims of industry groups, particularly the aluminium industry. “We were frustrated and disappointed... there was very little hard-nosed quantitative analysis to support either position,” Mr Wood said.

Recent government projections show Australian emissions in 2010 will be 3 % higher than the government's target of 108 % of 1990 levels. The new report raises pressure on the government to replace its “voluntary” industry measures with higher mandatory renewable energy targets and a moratorium on new coal-powered generators which the report says would eliminate nearly all of the government's projected 14.6 mm ton emissions overflow above its 2010 targets.
The measures would increase electricity costs by $ 2 per MWh, or roughly 3 to 5 % for industry and 1 % for consumers. These costs would decline as the scale of wind-power production increased and would drop further if Australia participated in international carbon trading such as the mechanism for participants in the Kyoto Protocol.

The report found numerous regulatory disincentives to reducing emissions, including a flawed electricity transmission pricing structure. It found deregulation in electricity trading had actually led to Victoria's high-emission brown coal generators displacing cleaner NSW black coal generators and South Australian gas generators.
“Additional policy action could be taken in the short term to curb emissions without significant imposts to the economy overall and the traded goods sector in particular,” the report concluded. “There may even be an advantage to take modest action early to minimize the cost to the economy later.”

The energy sector is the largest, fastest-growing contributor to Australia's greenhouse gas emissions. Victoria and New South Wales get more than 90 % of their electricity from coal-powered generators, yet coal produces about 30 times more greenhouse emissions than gas for a given level of output.