This legal update is to provide an overview of the key findings of a significant research paper commissioned by GE and conducted jointly by Norton Rose Group and Vivid Economics.

The report provides new evidence that a transition to a low carbon economy is already underway in many countries, and that the right combination of policies and technologies may allow this to happen in Australia while continuing to build prosperity.

The report, entitled "Protecting Prosperity: lessons from leading low-carbon economies", analyses the clean growth trajectories of a range of OECD economies, the carbon productivity and intensity of the energy and electricity sectors in six key economies over time, and the policies of those economies which are designed to reduce emissions and promote clean growth in the electricity sector.

A key concept in the report is the notion of "carbon productivity" which is becoming an increasingly important metric in the low carbon future. Carbon productivity is the level of GDP per capita produced per unit of emissions. As economies grow over time, their carbon productivity of the economy will be a measure of how clean that growth is. Economies that can grow while reducing their carbon emissions will be best positioned for higher prosperity in a carbon-constrained future.

Figure B within the report shows the carbon productivity trajectories of a range of economies over time (the thin end of each line is 1980 which gradually gets thicker until the line ends in 2007). Effectively, the steeper the incline the more clean the growth in the economy has been.  Some countries have achieved higher rates of clean growth than others.

The report analysed carbon productivity in six major economies -  Australia, UK, China, USA, Germany and Japan. The reporT investigated the changes in energy productivity and efficiency over time  for these six economies and the policies that contributed to their trajectories.

The report makes the following key findings:

  • a transformation is needed in Australia's electricity sector so that more electricity can be efficiently generated with fewer emissions
  • a broad-based, market-driven carbon price is the lowest cost method to reach a given emissions target as seen in the economies with an ETS such as the UK and Germany
  • a well-designed mix of complementary policies are required to achieve additional low-carbon investment goals efficiently. Such policies should be broad based and to the greatest extent market based; such as renewable energy targets, clean energy standards or gas incentive schemes.

Read the executive summary of the report in its entirety.

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