APIA was responding to calls from Professor Ross Garnaut, the Federal Government’s emissions trading adviser, for the market to determine the best and least expensive means of greenhouse gas reduction over a 40-year period.

Chief executive Cheryl Cartwright said when taken in combination, an inappropriate MRET level and emissions trading scheme could increase carbon emissions even though it was encouraging investment in clean energy.

“A high MRET target will force up the price of energy production so high that the non-renewable energy production costs will need to be reduced as much as possible – hence a focus on coal-fired energy,” she said.

“If the price of carbon in an emissions trading system working in conjunction with MRET is too low, rather than encouraging reduction of carbon emissions, the MRET policy could see an increase in investment in high emission coal-fired power generation, rather than investment in the ‘transitional’ fuel of natural gas.”

Cartwright argued that the MRET was an example of the Government ‘picking winners.’

“It is a scheme that benefits the currently most developed green technology, regardless of the potential of other more innovative and efficient solutions,” she said.

“Rather than picking winners, the Government should encourage renewable energy development without ignoring the benefits of moving to natural gas in our transition to, eventually, fully renewable power sources.”

Cartwright called on Professor Garnaut to also focus on the impact a MRET would have on the market’s ability to reduce emissions.