Report says Coalition carbon tax policy doesn’t add up

According to modelling by research group RepuTex, scrapping the carbon tax without implementing other industry changes would put a stop to investment in Australia’s renewable energy sector.

According to modelling by research group RepuTex, scrapping the carbon tax without implementing other industry changes would put a stop to investment in Australia’s renewable energy sector.

As SMH reports, if the Coalition wins the next election it plans to cut the carbon tax and retain the renewable energy target (RET).

RepuTex's associate director of research, Bret Harper says that the existence of the carbon tax is what makes renewable energy a viable investment option.

Without the tax $23 per tonne carbon price and the renewable energy certificate of about $32 per megawatt-hour, renewable energy is just not a realistic investment option.

“The carbon price is linked to the renewable energy target. For those who support the RET but not the carbon price, there's a gap in the logic there,” Harper said.

Harper says that, given that the federal government has left the RET at 41,000 gigawatt-hours of electricity each year from 2020, between 2014 and 2020 the nation will need to increase its renewable energy capacity by about three times as much as it has in the past ten years.

So, if a future coalition government were to repeal the carbon tax it would also need to substantially increase the value of the renewable energy certificate to meet this ambitious RET. But as it stands, Coalition policy is to repeal the tax but leave other market conditions unchanged.

“The existing scheme has a penalty price, which is effectively a price cap. If you remove the support of the carbon price but you don't adjust the cap, then you will not see the renewable projects being built,” Harper said.

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