Shielding the big polluters - who pays?

• The Climate Institute

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27 June 2011Australia’s Renewable Energy Target (RET) scheme is beginning to unlock Australia’s world class clean energy resources. Between 2010 and 2030 the RET will increase the share of Australia’s electricity coming from renewable energy to 20 per cent and drive thousands of jobs and investments worth tens of billions of dollars in regional areas.

There has been some criticism of the RET because of the effect it has on household electricity bills. In fact, the impact of the RET on bills is relatively small. For example, in NSW, the RET accounts for around four per cent of household electricity costs, which equates to around $1.20 per week for the average Sydney household.

The RET is also a relatively small factor behind the recent increases in electricity prices. Nationally, the Australian Energy Market Commission estimates that close to half of the total increase in electricity prices over the period 2010-2013 is due to the unprecedented investment in ageing network infrastructure. Close to another 20 per cent of the price rise is due to rising coal and gas prices.

To put this in perspective, these two factors - network infrastructure charges and fuel costs - will add close to $280 a year to the average household’s electricity bills over the period 2010-2013, which is six times the impact of the RET.

There is no doubt that pollution pricing can deliver pollution reductions at relatively low cost and unlocking Australia’s world-class renewable energy resources will not come for free. However, with our power sector the eighth dirtiest on the planet and our low pollution competiveness falling behind other nations we need to look at the bigger picture.