UPDATE: Could LGCs deliver least cost external abatement for state policy design?

As states continue to work with industry towards achieving net zero GHG emissions targets, policymakers have sought to understand the cost and opportunity to reduce emissions across different sectors of the economy, helping to inform the design of specific policy measures to unlock identified emissions reductions.

While direct emissions abatement is a key part of policy design and planning, the cost and availability of external abatement – in the form of emissions offsets – is equally critical to ensure that industry can reduce emissions at least cost. How emissions offsets are deployed by state policymakers – and the future price and availability of eligible offsets – is therefore critical for decision makers in minimising the cost of policy.

In this update, we analyse the availability of different offset sources in Australia. Specifically, we examine how the development of an expanded pool of domestic offsets – including electricity sector offsets such as Large-scale Generation Certificates (LGCs) – may reduce the marginal cost of external abatement for industry.

In doing so, the use of LGCs for their emissions reduction value has the potential to significantly reduce the cost impact of state emissions reduction frameworks, while establishing a floor price for LGCs, incentivising new investment to support state renewable energy targets.

Restricted Access

This is a subscriber report. Please login to access this content.

Not a subscriber?

To learn more about our research services for the Australian energy and emissions markets, click the button below, or email our subscriptions team.

Sign up for regular insights

LATEST UPDATES

  • UPDATE: Short- and long-term ACCU spot price impacts of COVID-19

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    International carbon prices have tumbled amid fears that a COVID-19 induced economic downturn will curb […]

    Analyst Alerts, Research Insights | March 26th, 2020
  • ALERT: COVID-19 service continuity and client support information

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    Dear Subscriber, As the COVID-19 situation evolves, we will continue to provide our regular research […]

    Research Insights, Service Alerts | March 24th, 2020
  • ALERT: Inclusion of AEMO “Step Change” scenario in Australian Electricity Outlook (AEO) service

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    Dear Subscriber, Following the release of AEMO’s draft 2020 Integrated System Plan, the Alternative Case […]

    Research Insights, Service Alerts | March 13th, 2020
  • WEBINAR: The Australian Carbon Price and Net-Zero Emissions – Where to next?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    As pressure builds for Australia to develop a more ambitious long-term emissions target ahead of […]

    Research Insights, Webinars | February 25th, 2020
  • OUTLOOK: Long-term carbon price, supply and demand outlook (Q3 FY19-20)

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Safeguard Mechanism covers greenhouse gas emissions from Australia’s largest emitting facilities, extending to 450 […]

    Outlook, Research Insights | February 11th, 2020
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone