Climate change and energy policy interactions: elements of a robust policy mix

ARC Discovery Project DP1096268 2009-2012

Project outline

This project is funded through an ARC Discovery Grant. The aim of the project is to investigate the nature of policy instrument interactions and the implications of uncertainty for designing climate and energy policy mixes.

Australia faces daunting energy and climate change challenges as it enters an unprecedented era of policy developments, particularly with the introduction of a carbon pricing scheme. In an already crowded policy environment there is a critical need for understanding how these instruments will interact and how to deal with the inherent uncertainties surrounding the various policy options. 

Part of the project investigates the rationales for multiple policy instruments and, in particular, understanding the justification for complementary policies in the presence of a carbon pricing scheme. The later should, in theory, solve the carbon externality market failure, making other instruments redundant and potentially distortionary. Having a more nuanced understanding of the various market and system failures associated with the climate and energy sectors can provide for a more informed debate on questions such as whether we should continue having a renewable energy target.

Such analysis also requires having a better understanding of the manner in which policy instruments can interact, which may be mutually reinforcing or work against one another. A particularly interesting case-study is the possible effect of emissions caps on discouraging voluntary action associated with non-economic motivations such social responsibility.

Climate change and energy policy making must always confront a wide array of scientific and socio-economic uncertainties and a ‘robust’ policy mix is often considered desirable. However, there is less agreement on what robustness means and the implications it has for climate change strategy. Another aim of the project is to review the concept of robustness, examine the tools and frameworks for robust decision-making, and propose a number of strategies for incorporating greater robustness into climate and energy policy.

UNSW Research Project Team:

Dr Regina Betz – Principal Investigator
Assoc Prof Iain MacGill – Co-chief Investigator
Dr Paul Twomey – Research Leader
Dr Rob Passey –  Senior Research Associate
Martin Jones – Researcher Assistant

Publications

Title & place of publication Author Research area Type Links Yearsort descending
Submission on Repealing the Carbon Price Iain MacGill , Jenny Riesz , Regina Betz Emissions trading Submissions 2013
‘The Merit Order Effect of Wind and Photovoltaic Electricity Generation in Germany 2008-2012’ Cludius, J., Hermann, H., Matthes, F.C. Energy Efficiency & Distributed Generation, Large-scale Renewable Energy, Technology Assessments Reports and Working Papers 2013
‘Payments for Closure Should Direct Action include payments for closure of high emission coal-fired power plants?’ Riesz, J. , Noone, B., MacGill, I. Electricity Markets & Restructuring, Emissions trading, Sustainability & general Reports and Working Papers 2013
Frequency Control Ancillary Services - Is Australia a Model Market for Renewable Integration Riesz, J. , MacGill, I. Energy Efficiency & Distributed Generation, Large-scale Renewable Energy, Technology Assessments Conference Papers 2013
100% Renewables in Australia - Will a capacity market be required? Riesz, J. , MacGill, I. Electricity Markets & Restructuring, Large-scale Renewable Energy Conference Papers 2013
'Distributional Effects of the Australian Renewable Energy Target (RET) through Wholesale and Retail Electricity Price Impacts', Energy Policy (forthcoming) Cludius, J., Forrest, S., MacGill, I. Electricity Markets & Restructuring, Large-scale Renewable Energy Journal Papers 2014

Events

Event Presenter Type Research area Location Date
Distributional Effects of the Australian Renewable Energy Target (RET) through Wholesale and Retail Electricity Price Impacts Johanna Cludius, Sam Forrest, Iain MacGill Poster Electricity Markets & Restructuring, Large-scale Renewable Energy 5th World Congress of Environmental and Resource Economics, Istanbul, Turkey Saturday, June 28, 2014
100% Renewables, a feasible option for Australia? Jenny Riesz Seminar Energy Efficiency & Distributed Generation, Large-scale Renewable Energy, Technology Assessments Wind Prospect, Newcastle Monday, November 4, 2013
100% Renewables, a feasible option for Australia? Jenny Riesz Seminar Energy Efficiency & Distributed Generation, Large-scale Renewable Energy, Technology Assessments Epuron Friday, November 1, 2013
100% Renewables, will the electricity market work? Jenny Riesz Seminar Large-scale Renewable Energy, Technology Assessments Berlin Conference on Electricity Economics, Germany Thursday, October 10, 2013
100% Renewable Energy: A feasible option for Australia? Jenny Riesz Public forum Large-scale Renewable Energy Friday, August 16, 2013