On 28 May The Climate Institute released the report Making the Switch - Australian Clean Energy Policies, detailing MMA’s results.

The objective was to address one of the key questions posed by the Prime Ministerial Task Group on Emissions Trading: What other policies would most effectively complement a possible future emissions trading system?

The report gives a quantitative answer to the question. It calculates that the additional resource costs (e.g. fuel, capital costs, operating costs) needed to cut greenhouse emissions from electricity by 80 per cent by 2050 would be halved, if emissions trading were complemented by energy efficiency measures and a renewable energy target.

This result will be counter-intuitive for a number of policy makers with a classical economics background who logically conclude that the cheapest policy would be the one that is open to the broadest range of abatement options and where selection is solely based on price. However the work by MMA incorporates more sophisticated assumptions that better reflect the imperfect realities of the electricity market and technology development. These realities are that:

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- Consumers tend to make purchasing decisions about energy using equipment on the basis of purchase price without due regard to operating costs, therefore missing cost-effective opportunities for better energy efficiency; and - The importance of learning by experience for electricity generation technologies.

The report builds on the Stern Review’s sound theoretical framework to provide quantitative evidence on why Australia is best served by a combination of emissions trading, energy efficiency and renewable energy deployment policies such as feed-in tariffs and market-based renewable energy targets.