The proposal to expand the government’s renewable energy target is occurring at a time of a sudden and severe downturn in the global economy.
This has brought significant uncertainty about Australia’s short-term economic outlook, with likely flow-on concerns, for example due to the terms of trade impact over the medium term.
The BCA has previously highlighted that the proposed expanded renewable energy target fails to meet the tests the government has prescribed for the introduction of policies that are complementary to the Carbon Pollution Reduction Scheme (CPRS).
In particular, the proposed expansion of the renewable energy target is occurring without the evidence of market failure, and does not ensure least-cost emission reduction. An expanded renewable energy target is also likely to lead to higher-cost emissions abatement.
Given the expanded renewable energy target does not meet the criteria for a policy that is complementary to the CPRS and will lead to additional costs to achieve emissions reduction, it would be appropriate for the government to reconsider the policy objective it wishes to achieve and whether there are other more appropriate policy tools to bring forward both renewable and low-emissions technologies without undermining the CPRS.
Those policies could include targeted research, development and deployment initiatives to address specific challenges in technology development.