That was one of the conclusions of an energy forum hosted by the ACF last month, which brought together representatives of energy companies, superannuation funds, financial services companies, and investors.
The aim of the forum was to discuss the implications for Australia's energy mix if global warming is limited to two degrees Celsius.
“Participants in the forum agreed that if coal remains Australia’s dominant source of power our nation cannot responsibly play its role in meeting the international commitment to keep global warming below two degrees Celsius,” ACF economist Matthew Rose said.
“The forum concluded that shutting down coal-fired power stations was essential if Australia is to play its part, but without a federal government plan to manage the transition, the changes will be highly disruptive."
The ACF has released a discussion paper following the forum, which noted hurdles that would prevent a smooth transition for Australia's electricity sector, including:
- A lack of policy frameworks and certainty;
- The cost of permanently closing coal fired power stations;
- Rehabilitation costs for the associated coal mines; and
- The impact on communities, especially in the Latrobe and Hunter valleys.
“A clear message coming out of this forum was that the federal government needs to become much more involved in the discussion around energy transition,” Rose said.
“Without leadership from the federal government, the inevitable transition will be highly disruptive, employment will suffer and Australia will not reap the benefits of new industries that are rapidly developing across the world.”
The ACF also made a number of recommendation to ease the transition:
- Governments should establish an Energy Transition Advisory Group made up of representatives from federal and state governments, the energy sector, investors, environment groups, community groups, and unions. This group should commission research and provide advice to the Council of Australia Government’s Energy Council on the best way to change the electricity sector so Australia is able to meet its international climate change commitments;
- By mid-2016, the federal government should develop a plan and policy suite to transition Australia's energy to net zero emissions by 2050;
- The federal government should provide certainty to investors and the renewable energy sector by removing the investment and risk restrictions placed on the Clean Energy Finance Corporation and by reversing its position to abolish both the CEFC and the Australian Renewable Energy Agency; and
- The Prime Minister, Environment Minister and Energy Minister should instruct an independent panel to conduct and inquiry into the physical infrastructure and market structures of the National Electricity Market to ensure it is prepared for increased decentralised renewable generation.
