Market-based policy for climate still the way to go

A major independent review of climate policy options has confirmed that national market-based policy mechanisms remain the most efficient way to greenhouse emissions in the electricity sector, the energy industry said today.

Yesterday, the Federal Government’s Climate Change Authority handed down its Special Review into climate policy and report into the most effective and efficient emissions reductions policy framework for the electricity sector.

Australian Energy Council (AEC) chief executive Matthew Warren said the new report confirmed that, after a decade of climate policy review, and with a range of schemes and programs operating both in Australia and internationally, market-based policy measures were still the cheapest way of reducing greenhouse emissions.

“Ten years ago John Howard established a task group to look at how Australia might implement a market-based mechanism – an emissions trading scheme – to reduce greenhouse emissions,” he said.

“Today a broader and more detailed analysis is returning to the same conclusion. National market-based mechanisms are unequalled at discovering the cheapest and most efficient way of reducing greenhouse gas emissions in the electricity sector.

“Properly applied they are better than targets, or regulation, or other schemes. What the new report does reveal is that we can utilise the transformative power of markets without imposing unnecessary costs on consumers.”

Further work will need to be carried out by the government and the industry to determine the detailed design of such a mechanism, according to the AEC.

“The magnitude of transformation of the energy sector and the time required to achieve it should not be underestimated. This report provides a useful starting place for a national conversation about reforming climate and energy policy,” Mr Warren said.