Submission to the Productivity Commission on Investing in cheaper, cleaner energy and the net zero transformation

The Justice and Equity Centre submitted to the Productivity Commission’s inquiry into investing in cheaper, cleaner energy and the net zero transformation.

We agreed with the Commission’s aim of reducing the per unit cost of carbon emission abatement and argued that increasing energy efficiency, along with electrification, more flexible demand, and optimised distributed energy resources (DER) are necessary steps towards this end. We support the framing of this task as a productivity reform. We submitted our Roadmap for efficient and electric homes as a guide to what achieving increased energy performance in the housing sector would entail for all levels of government.

We also argued that the Productivity Commission should take up the issue of the National Energy Market (NEM) wholesale spot market economic – or price – inefficiency as a productivity issue. While traditionally we have accepted price inefficiency as a necessary cost of inducing energy suppliers to enter and remain in the market, as this task (incentivising energy investment) is moved elsewhere via the introduction of underwriting and de-risking devices, the inefficiencies of the spot market increasingly appear simply as windfall profit for energy suppliers. This is an unnecessary cost borne by consumers, a risk to overall social licence for the energy transition, and a drag on productivity for the Australian economy as a whole.