New modelling has found that for Australia to keep its pledge to cut its greenhouse gas emissions significantly by 2030, a five-fold increase in the share of renewable energy in its energy mix by then is the cheapest way to meet this goal under a clean energy target.

The Meeting our Paris Commitment report by The Australian Institute said that there are two ways that Australia can meet its Paris Agreement emissions target, with the most effective and cheapest way for the country to fulfil the climate promise is to ensure that at least 66% of its energy comes from renewable sources by 2030.

To reach this target, Australian can take the "least-cost path" of scaling up renewable energy use significantly by 2030, or drag its feet and later adopt costly solutions to reduce emissions in sectors such as agriculture, transport and building, which is the first major research from the Institute's Climate & Energy Program. 

The report singled out the electricity sector for two reasons. First, it accounts for about 35% of Australia's greenhouse gas emissions, presenting a major opportunity for emissions.

Second, renewable energy presents a readily available and cost-effective option to reduce electricity-related emissions, and there are no similarly affordable options for sectors such as agriculture, construction and manufacturing.

Because it is the proverbial "low hanging fruit" for Australia to cut its emissions in accordance with its Paris commitments, the electricity sector must reduce emissions by between 40% and 55% compared to 2005 levels by 2030, the report recommended. To do so, it must scale up the share of renewables in its energy mix to between 66% and 75% - it currently stands at 13.6%.

"While there are emissions reductions that can be made in all sectors of the economy, electricity generation is an area where the technology to make major emissions cuts is cheaper, and is here now," said Ben Oquist, director of research at The Australian Institute. 

"The government has been consistent in its commitments to Australia's international emissions targets. It remains to be seen if we choose to meet those Paris commitments the easy way, or the hard way." 

Rod Campbell, the report's author and director of research at The Australia Institute, said that fluctuations in climate policy over the past decade have created uncertainty, undermining the ability of investors to judge the economic viability of alternative energy investments. 

"The Australian government has various measures in place to reduce greenhouse gas emissions including minimum energy efficiency standards, renewable energy targets at a state level, and a large-scale renewable energy target, which provides incentives for the establishment and growth of wind, solar and other renewable energy sources," Campbell said.

"But despite the existence of these policies, additional measures are likely to be required to meet the 2030 targets. 

"The government is also up against an escalating crisis in the electricity sector, characterised by skyrocketing prices - due to the high cost of natural gas, the closure of old coal plants, and a lack of investment in renewables - and a spate of blackouts in South Australia last summer.

"While the ruling coalition government has blamed South Australia's high rate of renewable energy use for these blackouts, subsequent inquiries have debunked this claim." 

Last year, the government commissioned an independent review of the electricity system to address the sector's various challenges and find solutions to its emissions reduction challenges, but it has failed to agree on the adoption of a Clean Energy Target (CET), which was a key recommendation of the outcome document.

Under the CET, any company that can produce electricity below a certain threshold of emissions intensity would be given an incentive to enter the market, regardless of whether it is wind, natural gas, or coal and carbon capture-powered. 

These companies would receive certificates for the electricity they produce, and electricity retailers would have to purchase these certificates to prove low-emissions electricity adoption.

"Though the CET is still under debate, The Australia Institute's report aims to help set targets for the sector," Campbell adds.

The report also reminds readers that under almost any scenario modelled on "reasonable" carbon abatement targets, the vast bulk of Australia's electricity generation mix is renewable from the mid-2020s on, while coal-fired generation is phased out in the early 2030s. Indeed, coal fares the best under the CET. 

"The overall message from the Jacobs modelling for the CCA is clear - a CET-like policy is likely to bring in the largest share of renewables. This would come particularly at the expense of gas, with coal-fired generation also lasting longest under a CET," the report states.