Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

asked the Minister representing the Treasurer, upon notice, on 18 August 2011:

With reference to the Treasury Carbon Tax modelling report, Strong growth, low pollution: Modelling a carbon price:

Given Treasury has released additional domestic electricity sector modelling reports by consultants, to supplement the Strong growth, low pollution: Modelling a carbon price, and press coverage of these reports suggests that they show that regions such as the Latrobe Valley will not be adversely affected by the carbon tax/emission trading scheme, with power generation capacity in the region actually increasing.

(1) Is this correct over the period out to 2020, rather than just out to 2050; if so, does it take into account the Government’s announced plan to spend some unspecified billions of dollars to shut down 2000 MW of brown coal power generation capacity by 2020.

(2) More generally, how reliable does Treasury regard the modelling of these sorts of regional level claims to be.

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

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

Section 5.4.3 of the Government’s Strong growth, low pollution: modelling a carbon price report contains detailed projections of the electricity generation sector, including generation capacity in the Latrobe Valley/Gippsland region over time.

The modelling shows that the Latrobe Valley remains an important energy exporting region, even as existing coal plant is retired. The Latrobe Valley has significant transmission and distribution networks, making it ideal for investment in new and cleaner energy sources.

The Government’s planned closure of 2000 MW of very highly emission-intensive power generation capacity was not specifically modelled. However, the modelling does include retirements that are projected to occur as a result of carbon pricing.

SKM MMA and ROAM both modelled the electricity sector at the generator level and included region specific assumptions about the cost and performance of new generators. As such, the regional results of the electricity sector modelling are considered reliable, subject to the inherent uncertainties involved in these types of modelling exercises.