Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

The Treasurer has provided the following answer to the honourable senator's question:

The combustion marginal abatement cost (MAC) curve parameters used in the Treasury modelling for the Government's Strong growth, low pollution (SGLP) report were revised from those used in previous Treasury carbon price modelling. The revised parameters reflect updated information on the technological options available to industry to reduce their emissions arising from the use of various fuels in their production processes. It is important to note that these parameters do not apply to the use of these fuels in the electricity generation sector or from the provision of transport as these sectors are modelled through detailed sector specific modelling of technological options.

The changes in the parameters taken as a whole imply that for a given carbon price there could be a smaller reduction in emissions than under the CPRS modelling. In order for firms to access the abatement opportunities represented by the MAC curves they must incur a resource cost. As a result, the MAC curve parameter values have little impact on individual industry output growth rates. The change in parameters slightly changes the overall economic cost of achieving any given emission reduction target through changing the degree to which abatement is sourced within Australia or overseas.