Productivity Commission calls for changes to incentives to reduce emissions
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The news: The Productivity Commission is recommending a suite of changes to environmental laws and emissions reduction incentives to help ensure Australia reaches its clean energy targets.
Among the recommendations is for a shift to market-based incentives in the electricity sector replacing the Renewable Energy Target and the Capacity Investment Scheme.
"Governments should fill policy gaps, remove overlaps and ensure incentives are neutral towards which technologies can achieve reductions, and in which states and territories," the PC said.
The context: The suggestions have been made by the PC in a new interim report, the second of five to be released ahead of the government's Economic Reform Roundtable.
These are draft recommendations, with submissions open ahead of a final report.
In order to reduce the cost of meeting emissions targets, the Commission also wants the Safeguard Mechanism threshold lowered, which would be determined as part of a scheduled review in 2026-27, and the introduction of an emissions-reduction incentive for heavy vehicles. It also wants governments to prioritise broad-based market settings in the electricity sector beyond 2030 to create national incentives for lowest-cost clean energy regardless of the technology or jurisdiction.
To speed up approvals for infrastructure, the PC is recommending broad reform of national environment laws including national standards and more efficient offsetting arrangements. It wants a specialist “strike team” and a new Coordinator-General for priority projects and the energy transition to be considered in approval decisions.
To address barriers to private investment, it is recommending a climate risk information database be created to cover climate hards, the development of a national climate resilience rating system for housing, actions to improve housing resilience and giving the Climate Change Authority the responsibility for tracking adaptation policy.
What they said: "With the right policy settings, we can limit the costs of decarbonising and speed up our approvals to unlock the opportunities of lower cost, more abundant clean energy. We can also boost our resilience to the effects of climate change and minimise their human and economic costs," said Productivity Commission Commissioner Barry Sterland.
"Enduring, broad-based market mechanisms are the best way to reduce carbon emissions. More consistent and comprehensive incentives are key to reaching net zero at lowest cost," Sterland said.
Commissioner Stokie said overdue reforms to the EPBC Act would speed up approvals and better protect the environment.
“We need to build a large amount of clean energy infrastructure to meet climate targets and ensure reliable and affordable energy supply. But our sluggish and uncertain approval processes are not up to the task,” Stokie said.
“Getting to yes or no quicker on priority projects would meaningfully speed up the clean energy transition.”
The source: Productivity Commission Investing in cheaper, cleaner energy and the net zero transformation interim report
