Chief scientist’s green scheme could save households hundreds

UPDATE: Household electricity prices will fall by $90 a year and almost $1000 over the next decade under the Chief Scientist Alan Finkel’s plan for a Clean Energy Target.

Australia’s chief scientist Alan Finkel’s Clean Energy Target should bring down electricity bills by hundreds of dollars.

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HOUSEHOLD electricity prices will fall by $90 a year and almost $1000 over the next decade under the Chief Scientist Alan Finkel’s plan for a Clean Energy Target.

Prime Minister Malcolm Turnbull said there had been too much politics and ideology in the energy debate, and he was focused on delivering energy policy based on economics and engineering.

“I think it has a lot of merit and we’ll look at it very favourably,” he said.

“We’ll be considering the Finkel review with the care and respect which the hard work of the panel warrants.”

Dr Finkel presented his independent Review into the Future Security of the National Electricity Market to state and premier leaders today, outlining his blueprint for an affordable and reliable energy system, with 50 recommendations.

Alan Finkel is onto a winner with his Clean Energy Target which should drive down the cost of gas by rewarding clean energy.

Dr Finkel’s scheme takes the same name as former Prime Minister John Howard’s 2007 renewable and low-emissions energy target — when Mr Turnbull was Environment Minister — in a signal to the Liberal Party that they should get behind a climate change strategy that has already been coalition policy.

The report found that prices under a Clean Energy Target would be lower than an Emissions Intensity Scheme and lower than if no action is taken.

The modelling showed households on average would be around $90 a year better off per year, meaning they would save $900 between 2020, when it would begin, and 2030.

To improve energy reliability and stabilise the system, Dr Finkel has recommended that new wind and solar generators provide storage, which could be batteries or pumped hydro or gas.

There are also key measures in the report to ensure our electricity system is protected from the emerging threat of cyber attacks, which have occurred five times since 2009.

Dr Finkel’s Clean Energy Target is centred around encouraging more investment of renewables, gas and also potentially coal.

HERE’S HOW IT WORKS:

Generators would receive a “certificate” in proportion to the amount of emissions they produced below a certain threshold.

Dr Finkel’s report did not recommend a specific baseline threshold and instead suggested a process be undertaken by the political class to determine what it would be.

This would mean renewables would receive a full certificate, coal with carbon capture and storage would receive three quarters of a certificate and there would be half a certificate for gas.

While the cost of the certificate is passed onto consumers, the consumers will benefit even more from the substantially lower prices that will flow from increased investment in renewables.

The requirements for storage will be highest in those jurisdictions where they already have the most renewables, as they are the most vulnerable, namely South Australia.

Currently, the reliance on gas, which makes up 10 per cent of the market, is pushing up the price of electricity because gas prices have tripled in the past five years.

There has also been policy uncertainty which has prevented investment in renewable technology or in coal fired power stations.

The shortage of gas is forcing up electricity prices to unprecedented levels, but under Dr Finkel’s new Clean Energy Target, energy companies are incentivised to invest in renewable technology, passing on the cost to consumers.

Australian Energy Minister Josh Frydenberg speaks about the review by Australia's Chief Scientist Alan Finkel into the national electricity market. Picture: AAP Image/Lukas Coch

Clean energy will be rewarded, while coal companies won’t be punished under the plan that will shore up supply and meet global emissions targets.

Liberal MP Eric Abetz did not reject Dr Finkel’s review and said there was a lot to consider to ensure Australians had secure and reliable energy.

“While I am pleased that the Review makes a number of positive recommendations in terms of energy security for Australia’s future, some aspects for the review are concerning including the brief dismissal of nuclear energy and the creative assumptions used for ‘business as usual’ modelling,” he said.

Mr Turnbull and his Energy Minister Josh Frydenberg have been in extensive consultations with key political and industry stakeholders on this issue, and several major companies have indicated their early support.

Mr Shorten said yesterday indicated support for a price signal on emissions.

“If Professor Finkel proposes a low emissions target, we are not going to get hung up on the name,” he said.

“What we do say is a low emissions target has to at least have a price on emissions.”