Carbon Pricing and Australia’s Electricity Markets

Carbon Pricing and Australia’s Electricity Markets Report

Report for the Australian Treasury, July 2011

  • Author(s): Department of Treasury,
  • Published: 2011

Abstract: The Federal Treasury has engaged SKM MMA, part of the Sinclair Knight Merz Group, to undertake an assessment of the cost and benefits to the electricity market of a national carbon pricing mechanism. The analysis has been directed towards providing insights into the economic costs and benefits to the electricity sector, where cost is defined in terms of a reduction in the productivity of resource use in the sector and benefit is defined in terms of abatement of greenhouse gas emissions. Distributional impacts, such as changes to customer costs, are also examined. In this report we describe the impacts of the carbon pricing mechanism on the electricity and fuel markets. Section 2 outlines the methodology employed to estimate the impacts. Section 3 summarises the key assumptions used in the modelling, and it also contains a description of the five scenarios and nine sensitivities modelled and an explanation of various other policy measures independent of carbon pricing which are relevant to the exercise. Sections 4 and 5 present and discuss the key results of the analysis, including: – Impact on costs of generation – Impact on generation mix – Impact on electricity prices Section 6 presents the results of the nine sensitivity studies also undertaken.

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Department of Treasury,, 2011, Carbon Pricing and Australia’s Electricity Markets, Report, viewed 25 July 2024, https://www.nintione.com.au/?p=5128.

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