Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Hansard source

To tackle climate change, the simple fact of the matter is that we need to cut carbon pollution in our economy. As our economy grows we have to ensure that pollution does not grow with it. The fact of the matter is that a carbon price through a market mechanism is the most cost-effective way of cutting pollution in our economy. A carbon price will cut pollution, it will drive investment in clean energy and it will provide business certainty for investment, especially in the energy sector.

This week the Australian Industry Group released an important report about energy prices. The report echoes the government’s view that a carbon price is needed in our economy. The AIG report is in fact clear that energy prices have already risen significantly and that they are set to rise further with or without a carbon price; but, importantly, the report emphasises that a carbon price could, in fact, help reduce the impact of future electricity price rises. The report makes clear that electricity price rises are occurring because of the tens of billions of dollars of investment that are necessary in our electricity distribution infrastructure. In fact, on that point the Australian Energy Market Operator has estimated that we will need up to $120 billion of investment over the next 20 years in our electricity network.

The AIG report makes clear that without the certainty delivered by a carbon price we are going to see higher electricity prices due to poor investments being made. To answer some of the interjections from the other side, I will quote from the report. It says in the section attributed to the CEO of the Australian Industry Group:

… while much concern has focussed on carbon pricing, energy prices are going up significantly with or without it. Some of those cost drivers could be reduced by a well-designed carbon price. This could eliminate the policy uncertainty that is damaging investment in new electricity generation …

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