Prepare for an expensive energy future

Effectively a non-revenue raising tax on consumers, the 'renewables levy' will require power firms to make big investments in alternative energy. This will neuter the efforts of Rudd or Abbott to reduce power costs via carbon changes.

Currently all the debate is focused on the cost of carbon tax and emission trading schemes. In three years time a much higher renewables cost will start to hit our major power users – what I call a renewable energy levy which for consumers will effectively be yet another tax. Our politicians on both sides are trying to reduce carbon charges and infrastructure costs to help power users but they have forgotten the renewables levy/tax so the politicians' efforts are set to be neutered. And that renewables levy/tax will be much bigger than the current carbon tax, although it will only apply to between one fifth and a quarter of expected power demand. Nevertheless, it will still hit what is left of our major power-using industries plus consumers and moves Australia further away from being a low cost power nation at a time when both sides of politics are coming to grips with implications of the end of the mineral investment boom. There is no point in the politicians reducing or eliminating the carbon charges and leaving the renewables levy in place.

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