Electricity sector needs investors

JULIA Gillard has attacked claims that pricing carbon will increase electricity charges, arguing under-investment in the sector is contributing to higher costs and the only way to attract the necessary investment is to put a price on carbon.
The Prime Minister’s comments in question time came as 258 major international investors representing $US15 trillion ($15.1 trillion) in funds made a call overnight for governments to take action to spur private investment into low-carbon technologies.

The move came as they sought to increase pressure on the international community before the Cancun climate change summit in Mexico, which begins this month.

Ms Gillard, speaking in question time, said under-investment in the electricity sector was contributing to price rises and cited comments by opposition resources spokesman Ian Macfarlane that electricity prices would double in five to seven years no matter who was in government to back her case.

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The move was an attempt to inoculate the government from opposition attacks that the emissions trading scheme was a “great big new tax” and that pricing carbon would automatically and directly lead to electricity price rises.

It follows Monday’s decision to ask the Productivity Commission to examine effective carbon prices in other countries as part of the Prime Minister’s attempt to dismantle the Coalition’s anti-carbon pricing campaign.

“So the policy question that genuinely confronts us is that, as we need to see investment in electricity, we know that investment is now being held up because of current uncertainty,” Ms Gillard said.

“Long-term investment is not going to be made until we answer the question about pricing carbon.”

The competitiveness of energy that was generated from gas and from renewable energy sources such as solar needed to be improved to make them a greater part of the energy mix.

The international investors, from North America, Europe, Asia, Australia, Latin America and Brazil — which include financial giants Allianz and HSBC Global Asset Management — warned that consistent and sustained government policy was needed to drive private-sector investment in low-carbon technology.

“Trillions of dollars of investment are required over the coming decades. Current investment falls well short of what is needed,” the statement said.

Private investment was needed to close the investment gap.

“Private investment will only flow at the scale and pace necessary if it is supported by clear, credible and long-term policy frameworks that shift the risk-reward balance in favour of less carbon-intensive investment,” the statement said.

Nathan Fabian, chief executive of the Investor Group on Climate Change, which represents about $600 billion of Australian assets, said Australia stood to reap a significant investment windfall from implementing sustainable policies on climate change.

Asian investment interests were looking for places to invest in renewable technologies but uncertainty was causing projects to be put on hold.