Australia should be spending $2.
5 billion a year on new low-emissions technologies by 2017, a doubling of current expected expenditure, climate change adviser Ross Garnaut says.
In his seventh update of his landmark 2008 review, Prof Garnaut argues there’s a case for “exceptionally large fiscal support for firms that invest in research, development and commercialisation of new low-emissions technologies” over the next decade.
He says pricing carbon will drive innovation but “on its own it will not increase it by enough”.
That’s because the market doesn’t always support research and development adequately because it’s expensive and risky.
The seventh update, released on Wednesday, recommends the government redirect a significant proportion of the money raised from the proposed carbon tax to fund clean energy projects.
Australia’s contribution to an international target of $100 billion each year would be between $2 billion and $3 billion.
Prof Garnaut wants to increase Australia’s expenditure over the next five years to the mid-point figure of $2.5 billion.
That’s double the current expected expenditure and five times the $500 million spent now.
Funding would plateau between 2017 and 2022 before gradually declining.
“Revenue from the carbon price should be used to add to existing commitments,” Prof Garnaut says.
He recommends a new low-emissions innovation council be established to oversee an initial focus on basic research which isn’t technology specific.
The Australian Centre for Renewable Energy would be charged with supporting subsequent demonstration and commercialisation.
The update favours offering support to firms via lump-sum or multi-year grants. But it recommends other mechanisms be examined.
Prof Garnaut suggests Australia faces two main constraints in moving to a clean-energy future.
First, the resources boom is pushing up prices, and, second, the 2008 global financial crisis increased the cost of finance.
On the contentious issue of carbon capture and storage (CCS), the update remains upbeat, noting “studies and trials to date indicate there are no insurmountable technological challenges”.
CCS associated with gas liquefaction alone “could make a substantial contribution to Australia’s mitigation effort”, Prof Garnaut notes.
If geosequestration from gas combustion was added “it would make a decisive contribution”.
The update acknowledges that carbon capture and storage in the electricity generation sector is “more technically challenging and expensive”.
Incorporating the technology in power plants would increase costs by between 40 and 75 per cent.
“Analysts seem more reserved than they were in 2008 about the near-term prospects for carbon capture and storage in the electricity sector,” Prof Garnaut states.
But he adds there’s no need to abandon prospects of storing emissions from coal combustion “where coal is cheap and good geological sites are nearby”.
In good news for solar power, the update says costs for that technology “are expected to fall at a faster rate than previously expected”.
There are also “many signs that the penetration of electric vehicles will be much quicker than predicted” with oil prices forecast to be higher.
In a general warning, however, Prof Garnaut notes that to date government support for innovation in low-emissions technology has suffered from delays and under-expenditure.