Band-aid response won't help transition to low emission economy

21 January 2010

A proposal by the Australian Greens for a fixed two-year carbon price provides no confidence for investment in the energy supply sector, does nothing to enable a smooth transition to a low emissions economy and will inevitably lead to higher energy prices, according to Australia’s stationary energy sector.

"What the Greens propose is a band-aid response that provides no basis for industry to invest in long-term, multi-billion dollar assets," said Energy Supply Association of Australia Chief Executive Officer Brad Page.

"What is needed is investor confidence to facilitate major new, long-lived energy infrastructure assets and technology as part of a smooth transition to a low emission economy.

"A smooth transition to a low emission economy will in large part require the progressive retirement of emissive generation plants, to be replaced by zero and low emission energy. This is not a two-year process," Mr Page said.

Mr Page said he doubts whether the two-year, fixed carbon price proposal would result in any substantive change in emissions levels over such a short timeframe.

"Short-term 'fixes' to long-term problems are likely to exacerbate the level of investor uncertainty for the energy supply sector when they are based on a wing-and-a-prayer promise that a new long-term greenhouse policy will emerge after the interim period concludes," Mr Page said.

"If the answer to the question of 'what comes after the tax' is 'don’t know', then the answer in terms of business investment in new low emission technology is going to be 'not now'."  

The Energy Supply Association of Australia has consistently advocated for a well-designed, economy-wide emissions trading scheme to be put in place sooner rather than later, and has previously outlined just four key issues which need to be addressed for the proposed Carbon Pollution Reduction Scheme to receive its support. 

"It is important that a stable, equitable and long-lived greenhouse gas emissions policy is put in place to secure investor confidence in the energy sector to deliver much-needed investment, both now and in the long term," said Mr Page. 

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Media contact: Melissa Baldwin  03 9670 0188 or 0418 697 626

The Energy Supply Association of Australia seeks to positively influence government policy decisions to ensure that Australia enjoys the benefits of a safe, secure, reliable, sustainable and competitively priced electricity and natural gas supply.

esaa's 40-plus member businesses have more than $120 billion in assets and infrastructure investment plans worth over $49 billion over the next five years. The Association is fuel and technology neutral and member businesses have investments across a wide range of fossil fuel and renewable generation technologies.