According to Michael Brear, the cost of achieving a net zero energy transition for the domestic market in Australia is estimated to be between $500 and $800 billion. This figure represents the additional cost incurred when moving from no abatement target to a net zero target.
In a submission to the Select Committee on Energy Planning and Regulation in Australia, University of Melbourne Professor Michael Brear outlined the total costs of the renewable energy transition. The modeling suggests that it would cost Australia around $5 trillion (US$3.32 trillion) to achieve a net zero energy transition for the domestic market alone.
Brear’s estimates indicate that transitioning the domestic market without efforts to reduce emissions would cost $4.3 trillion in 2020 dollars. This cost could increase to over $5 trillion if net-zero targets were included in the transition.
The additional costs for decarbonizing the domestic market come from investments in various capital-intensive assets across all sectors, including renewables, transmission and distribution networks, energy storage, natural gas-fired generation, as well as different end-use appliances and electric vehicles.
Furthermore, Brear highlighted that the additional cost for decarbonizing the export market would be even more substantial. Transitioning the export energy market without abatement targets would cost around $2.6 trillion, but this figure could rise to between $4.1 and $6.1 trillion for net zero scenarios.
Nationals Senator Matt Canavan raised concerns about the significant costs associated with the energy transition. He pointed out that the additional $500-$800 billion needed for decarbonizing the domestic market would translate to an extra cost of $20,000-$30,000 per Australian.
Ultimately, Brear suggested that the cost of transitioning the export market should be covered by long-term contracts with export partners, rather than burdening Australians with the expense. The scale of Australia’s export energy system will depend on who is willing to pay for the country’s energy.
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