WHAT IS A LOW EMISSIONS TARGET?
A technology-neutral way of making sure part of Australia's electricity comes from cleaner sources. It's similar to the existing renewable energy target, which requires power companies generate or buy a proportion of electricity from renewable sources. The companies have to surrender certificates of proof to the government and the increased demand for renewables creates incentives to build more.
A low emissions target could either set a percentage target for low emissions generation or a desired level of emissions intensity per unit of electricity generated.
WHAT KIND OF GENERATORS WILL BE SUPPORTED?
It depends on what level of carbon pollution is deemed "low emissions". At the moment, the average emissions across Australia's national electricity market is 820 kilograms per megawatt hour - quite high by international standards. There's speculation it could be set at 600-700kg/MWh. A 600kg/MWh level would rule out all fossil fuels but the most efficient gas plants and those with carbon capture and storage. A 700kg/MWh level could allow all forms of gas generation and possibly the newest technology coal power using top quality coal.
In 2007, John Howard proposed a 200kg/MWh level which would have ruled out all fossil fuel generators that didn't use carbon capture and storage.
WHAT ISSUES DO THE SCHEME POSE?
The Australian Energy Market Commission and Climate Change Authority says one potential problem is a LET would not directly discourage high-emissions generators to close. They also say there's potential in the short term for it to encourage new generation surplus to demand. But a well-designed scheme should progressively lower the electricity market's emissions to help Australia meet its Paris Agreement targets and be able to adjust if goals are not being met or change.
HOW IS IT LIKELY TO BE RECEIVED?
While a low-emissions target is widely viewed as a second or third-best option but still a decent compromise given the Turnbull government has ruled out pricing carbon or an emissions intensity scheme. Labor has offered to take a bipartisan approach as long as its kept in the loop. The one thing industry and the energy sector fears would be investing only for incentives to be removed after the next election.
However the Minerals Council of Australia has complained a low emissions target would effectively rule out existing coal-fired power which it says is currently cheaper than renewables. Despite this, most power companies that now operate coal generators are looking to close them over coming decades.
