On 4 September 2014, consultancy Pitt & Sherry – who track electricity use and emissions in Australia’s National Electricity Market – announced that Australian carbon emissions and electricity demand have risen in the two months since the government repealed its emissions tax. The emissions growth of the past two months amounts to a 0.8% annual increase in pollution. The country’s emissions from electricity had been decreasing consistently since 2008, a trend that is now reversing.
The repeal of the country’s Renewable Energy Target (RET), which used carbon taxing mechanisms to ensure that 20% of Australia’s electricity is generated from renewable sources by 2020, appears to be the key driving factor behind this trend. The repeal of the carbon tax has triggered a decrease in the proportion of electricity being generated from renewable sources and a corresponding rise in electricity from brown and black coal. Moreover, the lower cost per unit of energy from switching back to coal has led to increased electricity demand thus even higher emissions.
The tax was abolished on the 17 July 2014, claiming that the abolition would lower costs to Australian businesses and households.
Australia was on track to meet this renewable energy target, but now increased electricity demand and carbon emissions are set to continue unless new policy is implemented. Furthermore, this repeal in the emissions tax suggests that it is questionable whether Australia will be able to meet its goal to reduce total emissions by 5 percent compared with 2000 levels by 2020. The Australian government must enact other climate and energy policies if it hopes to reach its carbon reduction commitments. However, at the moment, the only policy approach being considered is effectively a subsidy scheme whereby the government would pay emitters to reduce their pollution. A subsidy should lead to the same emissions outcome as the (now repealed) tax.
However, a number of reports state that the policy would not meet its objective unless considerably more money than the planned AUSD 2.55 billion (USD 2.38 billion) is invested in the scheme. Furthermore, financial viability notwithstanding, it is uncertain that such a policy would be passed by the divided Senate.