POWER prices are soaring and primary industries are turning to solutions.
Fossil fuels, renewable energy and carbon will lead discussions at the Australasian Agricultural and Resource Economics Society’s annual conference, which begins in Adelaide today.
University of Melbourne Professorial Research Fellow in Economics Ross Garnaut will deliver the keynote address, titled ‘making Australia the energy superpower of the low carbon world economy’.
With private innovation and comprehensive energy sector reform, Australia can harness its wealth in renewables to regain global competitiveness, Mr Garnaut said.
“Globalisation of domestic coal and gas prices, huge appreciation of the real exchange rate through the resources boom, and flaws in domestic policy and regulation have lifted energy costs above international norms.
“Turning natural advantage in renewable energy into comparative advantage in energy intensive industry, requires unwinding the regulatory errors of the past two decades.”
On Monday the McKell Institute, a progressive research group, released a report on the economic impact of regulations controlling Australia’s booming gas exports.
It said poor policy is pushing domestic and industrial power prices to new heights.
Households pay much more than they would if wholesale gas prices reflected what the Australian Competition and Consumer Commission calculate would occur in a “well-functioning and competitive market” and primary producers are under similar price pressure.
“Both household and business consumers have suffered the consequences of years of policy inertia, inconsistency and a lack of forward thinking by energy policy makers,” the report said
The McKell Institute pointed said unchecked LNG exports from east coast gasfields has supercharged prices the domestic market.
The report said NSW domestic consumers pay $151 above what they would in a competitive market and forecast that price to rise to $434 by 2019, under current policy settings.
Queenslanders pay $175 more than they should, rising to $312 more and Victorians would see their $134 premium rise to $254 above the price of a properly functioning market.
The Society’s conference begins with several sessions focused on energy, convened by University of South Australia head of the School of Commerce Professor Lin Crase on renewables focusing on how to improve regulation, and new business opportunities.
“It seems odd that the blackouts in SA were attributed by some to the failure of renewables whilst no similar criticisms came when Victoria recently blacked out. Solutions based on fact rather than blame need to be found,” Mr Crase said.
University of Cologne and University of Maryland Economics Professor Peter Cramton will discuss the challenges of regulating the energy markets renewable supplies increase.
Electricity markets are designed to provide reliable electricity at least cost to consumers. The best market designs satisfy the twin goals of short-run efficiency: making the best use of existing resources, and long-run efficiency promoting efficient investment in new resources,” Mr Cramton said.
“There are important differences in electricity markets around the world, reflecting different economic and political settings, and Australia can learn from these experiences.”
University of Maryland Economics Professor Maureen Cropper will argue efficient climate policy demands putting a dollar figure on the social impacts of greenhouse gas emissions.
“To induce countries to cooperate in international agreements to reduce carbon emissions, it is important to quantify the damages that they are likely to experience if atmospheric concentrations of greenhouse gas increase,” Ms Cropper said.
Australasian Agricultural and Resource Economics Society president Professor Quentin Grafton will call for a reset to the Murray Darling Basin Plan in his presidential address, arguing a full audit of expenditure and outcomes, as well as a new independent scientific oversight committee was needed.
“The Australian public has poured billions of dollars into the Basin for irrigation infrastructure, but the Basin remains in a poor state,” Mr Grafton said.
“The diversion of funds for environmental recovery into irrigation upgrade is deplorable and poor public policy. For example, buying water from willing sellers is two and half times cheaper than building questionable engineering works.”
The conference concludes on Friday. Other topics of discussion include the impact on Australian producers from the rise of global retail discounters, the future of beer, climate change and the impact on migration, food tourism and changing international trade relations and the impact on global farm policy.
The story Australia can be energy superpower of low carbon world: Garnaut first appeared on Farm Online.