Economists believe a clean energy target (CET) should be adopted, despite concerns it is not the best economic design compared to a tax or cap and trade scheme, according to a recent poll.
Australia’s chief scientist Dr Alan Finkel released his review into Australia’s electricity market in June and made 60 recommendations, one of those being a CET.
All 60 recommendations in the review have been supported by the federal government, with the exception of the CET.
Fifty-three influential eonomists participated in the poll, which was conducted jointly by Monash Business School and the Economic Society of Australia (ESA).
The panelists were asked to respond to the following statement regarding the clean energy target:
“The Finkel review has recommended a mandatory certificate scheme that obliges electricity retailers to purchase a certain proportion of the electricity they sell from sources of electricity whose emission intensity is below a defined level. This is preferable to conventional approaches to the pricing of externalities, such as an emission tax or cap and trade scheme.”
Of the panelists, 16 disagreed, four members agreed and five members were uncertain.
ANU Professor Alison Booth said the mandatory certificate scheme is a “second-best alternative” to an emissions tax or a cap and trade scheme, which she believes are “far superior solutions”.
“However, the politics of the situation in Australia are unfortunately currently unfavourable to either the emissions tax or the cap and trade scheme,” she said.
“In this situation, it may well be desirable to have the mandatory certificate scheme rather than the short-sighted situation of no scheme.”
Another panelist, Professor John Quiggin from the University of Queensland, said all of the schemes were “roughly equivalent”.
“The LET has the limitation that it is specific to electricity, but it is a price-based policy,” he told the poll.
“The only thing that matters is finding a proposal that the current government is willing to accept.
“The Finkel proposal seemed like the most promising option in this respect, but it was rejected by the climate science denialists who dominate the government, just like everything else. Nevertheless, it may play a role in the future, as a basis for consensus after the current government is replaced.”