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Labor’s policy dance likely means more gas, not renewables

Labor’s embrace of an emissions intensity scheme (EIS) and its decision to dump any specific renewable energy targets will almost certainly mean a significant jump in the amount of gas generation in Australia, and very little new wind and solar.

That, at least, is the assessment by the designers of the scheme that Labor now wants to embrace.

Modelling by the scheme’s designer, Danny Price of Frontier Economics, shows the brutal reality of an EIS as he envisions it for renewables such as wind and solar.

It shows that even if Labor introduced a 50 per cent emissions reduction target for 2030, using the EIS as its principal mechanism would simply result in a boom in new gas-fired generation, and presumably more coal seam gas, and little in the way of new wind and solar plants.

The modelling could not be any clearer, although the graph above could be. (It breaks the options into four scenarios, business as usual on the left, an EIS, a RET and then regulatory action).

Basically, it tells us that an EIS for a 50 per cent cut in emissions will deliver little wind energy (5,000MW over 10 years), no solar, and 17,000MW of gas-fired generation, or at least two new very large gas plants a year.

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