Delayed Carbon Policy Certainty and Electricity Prices in Australia: A Concise Summary of Subsequent Research

Authors


  • Tim Nelson is the Head of Economic Policy, Paul Simshauser is the Chief Economist, Fiona Orton is the Manager of Greenhouse and Energy Reporting and Simon Kelley is the Manager of Energy Policy and Regulation at AGL Energy Ltd. Any errors or omissions remain entirely the responsibility of the authors.

Tim Nelson, Level 22, 101 Miller Street, North Sydney, NSW 2060, Australia. Email: tanelson@agl.com.au

Abstract

In this brief update on analysing the economic costs associated with carbon policy uncertainty, we outline the public policy processes commenced by the Commonwealth Government following the publication of Nelson et al. (2010). We also summarise the research completed by other economists testing the hypothesis that there are material economic costs associated with ongoing carbon policy uncertainty. Independent studies by Frontier Economics (2010), Deloitte (2011) and Sinclair Knight Merz (2011) all conclude that climate change policy uncertainty will result in sub-optimal capital investment within the electricity sector. In turn, this sub-optimal investment will manifest itself in unnecessary increases in electricity prices.

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