We can tackle energy affordability and reduce carbon emissions at the same time, but Energy Intensive Trade Exposed Industries (EITEs) must be included: New Modelling 

18 September 2018

Tuesday September 18, 2018

New modelling released by ACOSS and the Brotherhood of St Laurence (BSL) finds that an emission reduction policy could drive more rapid emissions reductions in the electricity sector and put downward pressure on energy prices, with the right policy settings.

Released by ACOSS and the Brotherhood of St Laurence (BSL), the report Tackling Climate Change and Energy Affordability for Low-income Households draws on modelling of an emissions reduction mechanism (a NEG, EIS or CET) to examine the impacts different emissions reduction targets, and the exclusion of Energy Intensive Trade Exposed (EITEs), would have on residential retail electricity prices and carbon emissions.

The findings show that with a more ambitious emissions reduction target you get more ‘bang for your buck’. A 45% emissions reduction target produces double the emissions reduction, and roughly the same impact in lowering electricity bills,as no or low emissions target.

ACOSS CEO Dr Cassandra Goldie said: “The idea that we need to choose between cheaper energy prices and limiting global warming is misleading and short-sighted, and does a huge disservice to our community, especially to people on low incomes.

“People on low incomes are the most vulnerable to both escalating electricity prices and the effects of global warming. We must tackle both. Both are a social justice issue.

“Our research shows that with the right settings, an emissions reduction scheme, be it the NEG (National Energy Guarantee), EIS (Emissions Reduction Target) or a CET (Clean Energy Target), could drive more rapid emissions reductions in the electricity sector and contribute to more affordable energy bills.

“While the NEG looks unlikely to be implemented soon, our findings are applicable to other potential emission reduction policies, such as an EIS or a CET.

“Under any mechanism for emissions reduction, however, it is unfair to exclude EITIs from the scheme. Our modelling shows that excluding Energy Intensive Trade Exposed Industries would result in less savings to households, many of whom are also struggling with energy bills and going without food, heating and cooling, and other basic essentials. EITEs must be included.”

ACOSS and the BSL are calling for an effective emissions reductions mechanism to be adopted to help tackle climate change and to put downward pressure on electricity prices. Separately, we need additional measures to relieve energy stress for people on low incomes, including an increase to Newstart and related allowance and mandating energy efficiency standards in rental properties.

Brotherhood of St Laurence Senior Manager Energy, Equity and Climate Change Damian Sullivan, said: “In our work we are regularly confronted by people who are suffering the impact of high energy prices. Too many people are going without heating in the winter and living in unhealthily cold homes, just so they can afford to pay their energy bills. That’s simply not good enough.

“Policy certainty on climate and energy policy will help put downward pressure on prices and provide much needed relief for those struggling with high bills.

“This modelling clearly shows that ambitious emissions reductions policy can improve energy affordability.

“Additional policies along the lines recommend by the ACCC and an increase in Newstart will also be important to relieve energy stress for low-income households.

“We can have affordable energy and reduce our emissions.”

Download report

Contact: ACOSS 0419 626 155



No discernible difference between business as usual (BAU) and 26% emissions reductions

The modelling finds there is no difference between BAU and the 26% scenario on residential retail price or emissions reductions until 2029. The modelling assumes, based on the most likely scenario, that the RET, the VRET and the QRET will deliver the generation and emissions reductions until 2028 and then the National Energy Guarantee will drive investment in cleaner energy in 2029 and 2030.

Energy prices will fall with new investment in clean energy

Savings in 2030 from today’s residential retail prices vary by state. However if we take the residential retail price for 2030 for each of the four states and create an average, the modelling finds (including EITES):

  • under the business as usual (BAU) scenario, an average saving of 18.5%
  • under the 26% scenario (low), an average saving of 20.8%
  • under the 45% scenario (medium), an average saving of 18.3%
  • under the 65% scenario (high), an average saving of 15.0%.

Emissions reductions double and almost triple under more ambitious targets

The modelling forecasts substantial differences in the emissions reductions achieved between 2018 and 2030 in the National Energy Market (NEM) + Western Australian Wholesale Electricity Market (WEM) under each emissions reduction scenario:

  • under the BAU scenario, emissions are reduced by 32 Mt
  • under the 26% scenario (low), emissions are reduced by 33 Mt
  • under the 45% scenario (medium), emissions are reduced by 66 Mt
  • under the 65% scenario (high), emissions are reduced by 89 Mt

Excluding EITEs hurts households

The modelling found that excluding EITEs from the ‘emissions guarantee’ results in an increase in residential retail price, which worsens each year as higher emissions reductions are achieved. Residential retail prices will still be lower than today’s prices, but the savings will not be as great. Households will not get the full benefit of the savings.

Download report at: http://bit.ly/2xp3WCb