The government’s carbon price package could help Australia achieve a greater than expected reduction in greenhouse gas emission by 2020 if successfully implemented, according to research from ClimateWorks Australia.
ClimateWorks Australia’s analysis of the govermnent’s proposed package shows it could reduce 133m tonnes of carbon emissions by 2020, more than double Treasury’s modelling of domestic abatement through the carbon price alone, said ClimateWorks Australia Executive Director, Anna Skarbek.
The reduction in carbon pollution stem from the introduction of a carbon price and the combined impact of all of the complementary measures in the package including the Carbon Farming Initiative, the Clean Energy Finance Corporation and the proposed National Energy Savings Initiative for energy efficiency, Skarbek said.
“Treasury modelling indicated that the carbon price alone would produce domestic abatement of 58 million tonnes by 2020,” she said. “However ClimateWorks research shows that abatement within Australia increases to 133m tonnes when all measures in the package are considered.
Climateworks points to a list of potential abatements associated with major programs in the proposed legislation. For example, the Carbon Farming Initiative could potentially abate 39m tons of carbon emissions, while the National Energy Savings Initiative could abate 12m tons of carbon emissions.
“These domestic abatement opportunities take Australia 83% of the way to achieving its 5% emissions reduction target by 2020,” Skarbek said. “The abatement opportunities within Australia are in addition to internationally-sourced abatement and provide solid evidence for the independent Climate Change Authority to recommend increasing Australia’s 2020 pollution cap above 5%.”
The ClimateWorks report examines financial and non-financial barriers to reducing carbon emissions through energy efficiency, land use and cleaner power. Some of the barriers include profitability – i.e., if there is a net cost associated with reducing emissions; capital constraints that push emissions reduction projects down the list of priorities; information gaps and lack of access to information on emission reduction opportunities; and market structure/supply – whether the structure of a given market enhances or prevents capturing opportunities. The paper names the split incentives nature of the real estate market between the owner and the tenant as one example of how structure puts up a barrier.
“[T]here are also non-financial barriers to reducing emissions which include access to capital, information and market structure,” Skarbek said. “These are not addressed by the carbon price but can be removed as a result of complementary measures in the package. “For example, the package also provides financial support in the form of grants, loans, equity investments or loan guarantees that will overcome some of the shortage of capital facing investors.”
While ClimateWorks’ research suggests that optimal implementation of the carbon price package could result in greater-than-expected reductions in emissions, delaying its implementation would result in lost opportunities or more expenses to catch up.. ClimateWorks’ previous research has found that delaying action on climate change to 2015 would increase the cost for business and households by AU$5.5bn to reach Australia’s 5 per cent reduction target in 2020.
ClimateWorks Australia is an independent non-profit organisation formed through a partnership between The Myer Foundation and Monash University and has international links with the US-based ClimateWorks Foundation. ClimateWorks Australia’s mission is to facilitate substantial emissions reductions in the next five years in Australia by working with government, business, industry groups and the community via a collaborative action based approach.