Australia’s electricity market is in crisis. Prices soared to unprecedented levels over the summer amidst intense heatwaves and unpredictable weather. During this period they have become almost double what they were under the Labor/Greens carbon price, according to an analysis produced by the University of Melbourne’s Climate and Energy College for the Greens.
Though the carbon tax was abolished in July 2014 with the intention of “ease[ing] cost of living pressures for households”, the new analysis has revealed that electricity prices have instead soared. Nationally, prices have increased from a volume weighted price of $65-67 per MWh under the carbon tax to $134 per MWh over the last summer. On a state-by-state basis only Victoria hasn’t seen a dramatic change, with Queensland and New South Wales being particularly badly affected.
“Electricity is more expensive in coal-fired NSW with state and federal Liberal governments than under the Greens/Labor carbon price,” said the Greens’ spokesperson on climate and energy, MP Adam Bandt. “The prices in coal-dominated QLD are also soaring, helped along by the rising cost of gas.”
After the carbon tax was axed, the government failed to replace it with any definitive plan to meet Australia’s emissions targets. Even now Australia’s climate and energy policies remain unclear, aside from a push towards continued investment in so-called ‘clean coal.’
The Climate and Energy College report comes amidst renewed calls to implement a new carbon tax, with BHP Billiton, the formerly-opposed National Farmers’ Federation, and energy companies like Origin among those backing a price on carbon.
While electricity prices and a lack of investment in new technologies is a concern to many in the industry, there is a growing feeling of urgency about the threat of climate change after a summer of record-breaking heatwaves. The Investor Group on Climate Change is one of those supporting a carbon tax as part of a plan to rapidly “phase out all forms of coal-fired power plants, as well as phasing out other fossil fuels”. More coal-reliant groups like BHP, meanwhile, have called for investment into carbon capture and storage – the technology behind ‘clean coal’. No matter what technology they are backing, most stakeholders agree that some action needs to be taken to combat climate change before it’s too late.
“To drive down prices, we need more renewables, more storage and a national transition plan,” said Bandt on behalf of the Greens. Industry stakeholders in Australia’s struggling electricity market haven’t danced around the fact that the government’s opposition to renewables and unclear policy are presenting major barriers to investment in the sector – and driving up electricity prices at the same time.