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Strong Growth Low Pollution – modelling a carbon price

The Deputy Prime Minister and Treasurer and the Minister for Climate Change and Energy Efficiency released the Strong growth low pollution: modelling a carbon price (SGLP) report on 10 July 2011. An update to the SGLP report was released on 21 September 2011 which revises the policy parameters of the national and sectoral economic modelling in the SGLP report. The update presents two additional scenarios: one that reflects the Clean Energy Future package endorsed by the Multi–Party Committee on Climate Change (MPCCC), with a starting carbon price of $23/t CO2–e instead of the $20/t CO2-e modelled in the SGLP report; and one that also includes additional Government policy measures.

The Treasury modelling has been prepared to inform policy design and public discussion about carbon pricing. Treasury has modelled a range of scenarios which explore different environmental targets and design features of a carbon pricing scheme.  The modelling provides important insights into the economic impacts of carbon pricing at global, national, sectoral and household levels.

The Treasury’s modelling demonstrates that the Australian economy and the global economy both continue to grow strongly at the same time as we cut pollution to reduce the risks of dangerous climate change.

Reports and additional material

Modelling Overview

The overview contains summarises various components of the initiative.

Report

The report was released on 10 July 2011. Updated modelling was released on 21 September 2011.

Supplementary Material

The Strong Growth Low Pollution (SGLP) report is based on an integrated suite of models that ensure a consistent set of projections at a global, national, sectoral and household level. The suite of models ensures sufficient detail in key sectors and provides insights into the likely transformation of the Australian economy under carbon prices. The supplementary material provides further details of the specific sectoral modelling undertaken for the report.

Modelling of the electricity generation sector is important for understanding the effect of carbon pricing on the economy. For this reason two specialist consultants, ROAM Consulting and SKM MMA part of the Sinclair Knight Merz group have provided detailed modelling of the evolution of the Australian electricity generation sector.

The detailed household impact analysis of the carbon pricing contained in the report is based on Treasury estimates from the PRISMOD models. Both ROAM Consulting and SKM MMA also provide estimates of household electricity price impacts using a different methodology. All methodologies produce consistent results, indicating an expected increase in electricity prices of around 10 per cent for household electricity prices with the introduction of the carbon price.

Modelling the impact of a $23 carbon price on household expenditure
This note sets out a more detailed breakdown of Treasury’s modelling of the impact of a carbon price on household expenditure for the Clean Energy Future package announced on 10 July 2011.

Corrigendum – Strong Growth, Low Pollution: modelling a carbon price report
This document outlines small revisions to the household electricity price projections contained in the SGLP report.

Carbon pricing and Australia’s electricity market
Report prepared by SKM MMA (part of the Sinclair Knight Merz Group).

Carbon Pricing and Australia’s Electricity Markets: Additional scenarios
Report prepared by SKM MMA (part of the Sinclair Knight Merz Group).

Projections of Electricity Generation in Australia to 2050
Report prepared by ROAM Consulting.

Additional Projections of Electricity Generation in Australia to 2050
Report prepared by ROAM Consulting.

Road transport sector modelling
Report prepared by the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

Road transport sector modelling: Supplementary report
Report prepared by the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

Abatement potential from reforestation under selected carbon price scenarios
Report prepared by the Australian Bureau of Agricultural and Resource Economics and Science (ABARES).

Indicative estimates of abatement from the Carbon Farming Initiative
Report prepared by the Department of Climate Change and Energy Efficiency (DCCEE).