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Title: An analysis of Australia's large scale renewable energy target: Restoring market confidence
Contributor(s): Nelson, Timothy (author); Nelson, James (author); Ariyaratnam, Jude (author); Camroux, Simon (author)
Publication Date: 2013
Open Access: Yes
DOI: 10.1016/j.enpol.2013.07.096Open Access Link
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Abstract: In 2001, Australia introduced legislation requiring investment in new renewable electricity generating capacity. The legislation was significantly expanded in 2009 to give effect to a 20% Renewable Energy Target (RET). Importantly, the policy was introduced with bipartisan support and is consistent with global policy trends. In this article, we examine the history of the policy and establish that the 'stop/start' nature of renewable policy development has resulted in investors withholding new capital until greater certainty is provided. We utilise the methodology from Simshauser and Nelson (2012) to examine whether capital market efficiency losses would occur under certain policy scenarios. The results show that electricity costs would increase by between $51 million and $119 million if the large-scale RET is abandoned even after accounting for avoided renewable costs. Our conclusions are clear: we find that policymakers should be guided by a high level public policy principle in relation to large-scale renewable energy policy: constant review is not reform.
Publication Type: Journal Article
Grant Details: ARC/120200192
Source of Publication: Energy Policy, v.62, p. 386-400
Publisher: Elsevier Ltd
Place of Publication: United Kingdom
ISSN: 1873-6777
Field of Research (FOR): 140209 Industry Economics and Industrial Organisation
140205 Environment and Resource Economics
140214 Public Economics- Publically Provided Goods
Socio-Economic Outcome Codes: 910211 Supply and Demand
910205 Industry Policy
910204 Industry Costs and Structure
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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