Rudd government plans for a 20 per cent mandatory renewable energy target by 2020 could push up power costs by at least 6 per cent more than the same emissions reductions achieved through carbon trading.
New economic analysis commissioned by the gas industry is understood to warn that combining an aggressive renewable energy target with emissions trading could be significantly less efficient than relying on simpler market mechanisms.
The Australian Petroleum Production and Exploration Association commissioned economists Charles River and Associates last year to explore the various effects of mandating renewable energy promised during last year’s election campaign.
The analysis has not yet been released but is understood to estimate a 20 per cent mandatory renewable energy target would cost the economy $1.5 billion by 2020 and drive the installation of more than 10,000 wind turbines over the next decade.
Under a mandatory renewable target, most new energy investment would go into renewable technologies at the expense of expanding otherlower-emission energy sources such as gas, which has about half the emissions of coal-fired power and is cheaper than wind energy.
Renewable energy currently accounts for about 10 per cent of total national electricity supply in Australia.
By Matthew Warren
4 February 2008
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