Ahead of the release of the Australian government’s post-2020 emissions reduction target, in this Analyst Update we review our earlier Marginal Abatement Cost (MAC) analysis of emissions reduction opportunities across the Australian economy, exploring the implications for the setting of Australia’s post-2020 target and the design of policy to meet our forthcoming target.
Analysis indicates that Australia’s post-2020 emissions reduction opportunities are highly constrained by current policy, with potential for only an 11 per cent reduction in emissions across the Australian economy by 2025 should government policy – the Emissions Reduction Fund and Safeguard Mechanism – remain as designed.
This would create a shortfall to any post-2020 target, suggesting amendments will need to be made to strengthen the government’s Direct Action Plan.
RepuTex Marginal Abatement Cost (MAC) curve
Click Graph For More Detail. Source: RepuTex Carbon Analytics
RepuTex MAC analysis examines the emissions reduction potential of the Australian economy, analysing 88 separate opportunities to reduce emissions across six key sectors – power, forestry, industry, buildings, agriculture and transport – identifying activities to reduce emissions, the cost of action, and the ability of policy to unlock barriers to implementing these activities.
Rather than reflect the “physical maximum” abatement potential of each measure, RepuTex analyses “realistic” emissions reduction potential, taking into account economic and policy constraints such as the L-RET, the removal of carbon pricing, and the implementation of the ERF and Safeguard Mechanism.
Our Marginal Abatement Cost (MAC) analysis is available to our Carbon Market Analytics subscribers, including breakdowns of cost and abatement volume across all 88 activities to 2020 and 2030.
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