1. Australia must regain its advantage as a low cost energy producer

Low cost, reliable energy has been a critical element of the international competitiveness of Australian industry and the living standards of households for several decades. The central role of low cost reliable coal in electricity generation has been the primary contributor to this competitive edge.

But this advantage has been lost, with electricity prices now amongst the highest in the developed world, substantially due to ill-judged policy interventions. High energy costs represent a substantial buden on Australian households and industry, including the mining sector which accounted for 13.5 per cent of final energy consumption in 2011-12.1

These policy mistakes should be reversed including by:

  • Urgent repeal of the carbon tax, which should lead to an immediate 9 per cent decrease in energy costs.2
  • The phasing out of the Renewable Energy Target, which represents a $20 to $30 billion subsidy to the renewable sector by 2030, with the cost borne by industrial users and households.3

The Government should also recognise that costly efforts to change the energy mix ignore the substantial gains in low emissions technologies from traditional energy sources. Australia does not have to choose between coal and a low emissions future.

The roadmap to a low emissions coal future is increasingly clear. New technology coal plants, including ultra-supercritical coal plants, are achieving CO2 emissions reductions of 30 to 40 per cent compared with the existing fleet of mostly subcritical plants.4 Substantial progress is also being made in the development and deployment of carbon capture and storage (CCS) around the world and should remain a central element of Australia’s medium term energy vision. CCS offers potential for a baseload low emissions solution that is competitive with intermittent renewable generation. The coal industry remains committed to a continuing partnership with Government aimed at the deployment of CCS technologies in Australia as part of its contribution to economic growth, energy security and sustainable development.

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