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Rejected carbon plan would cut "billions" from power costs

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Premier Jay Weatherill’s push for the states to go alone on a carbon pricing plan has garnered limited political support, but he is taking comfort from an expert report that suggests that an emissions intensity trading scheme would shave billions from the nation’s electricity costs.

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Weatherill sparked a furious exchange with Prime Minister Malcolm Turnbull yesterday, when he suggested the states could fill a national leadership vacuum on energy policy by adopting their own emissions intensity scheme – an idea swiftly killed off by the PM this week after his energy minister Josh Frydenberg suggested it was under consideration.

Reports today in Fairfax Media suggest Turnbull’s move might have cost business and consumers billions of dollars.

Analysis in an Australian Electricity Market Commission report finds that an emissions intensity scheme would cut $15 billion from electricity bills over a decade. The analysis finds such a scheme is less costly than other options, including doing nothing.

The modelling by Danny Price of Frontier Economics found costs would be between $3.4 billion and $15 billion lower over the decade to 2030, depending on the detail of the scheme adopted.

Weatherill seized on the reports today as he prepared to go into battle with Turnbull at today’s Council of Australian Government meeting, which will receive a preliminary report from Chief Scientist Alan Finkel on the national energy market.

Finkel, who was set the task after South Australia’s September state-wide blackout, which a survey has found cost SA business $367 million, is set to report that Australia won’t meet its 2030 carbon pollution reduction target under existing policies.

It also gives implicit endorsement to an emissions intensity trading scheme for the electricity industry to help manage the transition to lower-emissions energy sources.

Weatherill said today that such a scheme was backed by “every expert” and, once, by Turnbull, as the best way to reduce electricity costs.

“CSIRO have modelled this as being a $216 per annum per household price reduction across the nation, and you could imagine it would be even higher in South Australia…,” he told radio FIVEaa.

“So on any view of it I’m actually here arguing for lower electricity bills. People that are talking about something else, or talking about doing nothing – which is where the Prime Minister and Steven Marshall are – are actually arguing for higher electricity bills.

“The way you … reduce prices is to get more supply in. The way you get supply in is to give people the policy certainty so they can invest in new generation capacity. It’s pretty basic.”

Earlier, he warned that Turnbull’s job could be on the line.

“It would be a great irony if he was to lose his job for a second time being on the opposite side of the debate,” he said, referring to Turnbull being replaced as Liberal leader over his support for Labor’s emissions trading scheme in 2009.

However, Turnbull hit back, declaring Weatherill was in “no position to lecture us”.

“He presides over the least stable, the least secure electricity system which is also the most expensive in Australia.”

Turnbull sidestepped questions about Finkel’s advice, insisting security, affordability and meeting the Paris targets were the three goals Australia needed to achieve in a manner that kept downward pressure on electricity prices.

State Liberal leader Steven Marshall told Weatherill to drop his “dangerous” support for a “carbon tax”.

“Jay Weatherill’s ideological obsession with taxing electricity will drive investment and jobs out of South Australia and into the arms of our competitors on the eastern seaboard,” he said.

“For Jay Weatherill to use the national stage provided by COAG to preach for a state-based carbon tax that no other political leader in the country supports is an act of economic vandalism.”

Victorian Premier Daniel Andrews said climate and energy policy at the national level was a mess.

“The Turnbull government don’t quite seem to know what to do.”

He said he was prepared to listen to Weatherill’s ideas about the states going it alone.

“We have got no intention to go down this path, but I am more than happy to listen and have an important discussion about it,’ he said.

NSW Premier Mike Baird, Queensland Premier Annastacia Palaszczuk and West Australian Premier Colin Barnett believe a national approach was needed rather than states going their own way.

Barnett said it was “absolutely incredible” there were energy shortages in Australia when it had the richest and most abundant energy resources of any country in the world.

“You need to invest in cleaner technology and Australia should be using its gas resources,” Barnett said.

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