'Technology not taxes': A viable Australian path to net zero emissions?. (June 2022) - Geroe, Steven
Abstract: In the absence of a price on carbon and a renewable energy target supported by emissions credit trading, the Australian Government is relying on financial support for early-stage technologies to reduce emissions: the 'technology not taxes' 'principle'. Recent studies of global implementation indicate that pricing carbon is the most economically efficient way to achieve economy-wide emissions reductions. Nonetheless, financial support for early-stage technology can be a useful complementary or 'second best' approach. Australia's Technology Investment Roadmap and Net Zero Plan could be strengthened by detailed emissions plans on a sectoral basis, supported by interim targets set in legislation. Projected fossil fuel exports in coming decades in the Net Zero Plan are consistent with the Australian Government's 'gas led' Covid 19 economic recovery strategy. This underpins reliance on carbon capture and storage (CCS), despite cost and technical barriers that have led to minimal development compared to renewable energy. In the absence of interim emissions targets, Australia risks locking in fossil fuel developments on the basis of uncertain future CCS capacity. A Net Zero Plan focused primarily on scale-up of renewable energy and its use to produce hydrogen, reflecting several influential reports, state government initiatives and private sector mega projects, would have better prospects for achieving net zero emissions. Highlights: Australia is excessively reliant on financial support for early-stage technology. Leveraging private investment is effectively catalysing early-stage technology. Renewable hydrogen has good cost reduction/scale-up potential in Australia. Sectoral emissions plans with interim targets set in legislation are needed. A carbon price would more likely reduce economy-wide emissions.