Carbon market analyst Reputex says the Turnbull government's national energy guarantee can be effective in cutting emissions if designed right.
The government on Tuesday revealed its plan to force energy retailers to meet guarantees on reliability and emissions set by national regulators.
It needs the support of the states and territories, and federal parliament must pass laws putting in place the emissions reduction target - expected to be 26 per cent on 2005 levels by 2030.
Hugh Grossman, executive director for energy and carbon markets with Reputex, said on the face of it the government could secure its dual aim of meeting the Paris target while keeping the lights on.
Mr Grossman said it would be a "de facto price on greenhouse gas emissions" for the electricity sector, especially as it allowed energy companies to buy carbon credit units to meet the emissions guarantee.
However, setting the target at 26 per cent for the power sector alone would not equate to Australia meeting its Paris target, as the sector only makes up about a third of the nation's emissions.
Reputex modelling indicates such a target would reduce national emissions by around 40 metric tonnes in 2030 - an eight per cent cut on 2005 emissions levels.
This would leave a shortfall of 119Mt to meet Australia's 2030 target.
The cumulative reduction from the electricity sector would be about the same as forecast emissions growth from non-electricity sectors over the same period, leaving national emissions flat.
But if the 26 per cent target was applied across all sectors of the economy, modelling indicates the burden to reduce emissions would fall disproportionately on the direct combustion of oil and gas and transport sectors.
"Nonetheless, should the NEG be designed and implemented to succeed, it is likely to be an effective mechanism to define an emissions reductions pathway for the electricity generation sector, while maintaining system reliably," Mr Grossman said.
The government is still working on its plan to cut emissions for the non-energy sector, such as transport, industry and agriculture.
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