How Australia’s transition to renewable energy is actually progressing

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Dr Marjan Nazifi, a lecturer in the Department of Economics at Macquarie Business School, studies carbon pricing mechanisms and the role played by renewables in decreasing emission intensity in the power sector. Here she looks at the remarkable transition under way in the Australian electricity sector.The state of playAustralia has introduced various policies to increase the cost of fossil fuel-generated electricity and to improve price competitiveness in the more expensive, low-carbon technologies, says Nazifi. These include the Renewable Energy Target scheme (launched in 1999 and amended several times since), a Carbon Pricing Mechanism (2012-2014), Direct Action (launched 2014), and the Emission Reduction Fund more recently. Fuel for thought: Analyses suggest wind and solar will soon be cheaper than coal, even without imposing a tax on carbon.Despite these policies, recent studies indicate there is still a place for coal, at least economically. This is largely due to its ‘sunk capital costs’ – meaning the cost of establishing generators has already been met – and its dispatchability. But Nazifi believes the balance could be shifting.“According to studies conducted in 2018 and 2019 by CSIRO, AEMO (the Australian Energy Market Operator) and clean energy research firm BloombergNEF, it seems that existing coal-fired plants are still competitive …

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