The BCA said the Fisher report raised legitimate questions about the finer details of the carbon reduction policies, including whether international credits could be used, carry-over credits from the Kyoto agreement as well as what sectors will be targeted under Labor’s scheme.
The Fisher report found wholesale electricity prices would increase more under Labor’s plans and hit key sectors such as electricity, thermal coal, non-ferrous mining and chemicals as well as rubber and plastic industries.
The carbon reduction policies are set to become one of the key points of difference between Labor and the Coalition in the May election.
The Fisher report found the economic impact of Labor’s 45 per cent emissions reduction policy could cost 336,000 jobs and an 8 per cent drop in wages under a worst-case scenario.
Under the Fisher modelling, the shadow carbon price under a future Shorten government by 2030 could be as low as $97 a tonne or as high as $626 a tonne.
For the Coalition, the shadow carbon price ranges from $73 per tonne and $263 a tonne.
Minerals Council of Australia chief executive Tania Constable said governments needed to minimise the costs of meeting Australia’s emissions reduction target, whether it was 26 to 28 per cent or 45 per cent, including through the use of international offsets and carry-over credits from Kyoto.
“That is why a measured response is critical to reducing greenhouse gas emissions in a way which does not damage the economy, destroy jobs and hurt Australian businesses and families,” she said.
Australian Industry Group chief executive Innes Willox said economic modelling has never been very good at predicting specific outcomes, but climate policy did come with a cost.
“Ai Group recognises that under any future government our national emissions targets will have to keep deepening over time to achieve our widely share objective – a successful global effort to mitigate the risks of climate change, together with continued and increased prosperity,” he said.
“These targets should be pursued through policies that maintain our trade competitiveness and help industry thrive through a successful transition.”
But climate policy experts such as Frank Jotzo, from the Crawford School of Public Policy at the Australian National University, said the Fisher report findings were riddled with assumptions that were not clearly spelled out in the report.
“They depict an economy that is extremely inflexible and where clean technologies come at wildly higher costs than reality,” Professor Jotzo said.
“One could have run a model like this 20 years ago, before the great progress made in renewables and energy efficiency, and would have been criticised for overly high-cost assumptions. Today, such assumptions are merely absurd.”
Former Clean Energy Finance Corporation chief executive Oliver Yates, who is running as an independent candidate in the Melbourne seat of Kooyong at the next federal election, also took fire at the Fisher report saying it deliberately inflated the costs of taking action on climate change.
“The report assumes that uncontrolled climate change has no cost,” he said.
“Fear-mongering about the cost of acting on climate change, that ignore the costs of not acting, and restricting renewables to 50 per cent by 2030 is designed to produce analysis supporting the government policy.”