Households to save under Clean Energy Target, but questions loom for Turnbull over Paris

The electricity sector would reduce its emissions by only about 28 per cent under the Finkel proposal, far less than the two-thirds reduction by 2030 proposed by a Climate Change Authority report from last August, but Mr Frydenberg dismissed suggestions Australia would not meet its Paris target as a result.

"We have a good record of meeting our international targets . . . I point out that Dr Finkel, in his report, does issue a note of caution about adopting targets for the electricity sector beyond 28 per cent because of the ramifications it may have for energy security and affordability."

The Climate Institute, however, said a 28 per cent emissions reductions by the electricity sector wasn't enough because "reducing emissions in electricity is much easier than reducing emissions from agriculture" and other industries.

Under a CET, 42 per cent of electricity would come from renewable energy sources by 2030 - versus 35 per cent under business-as-usual - while the report said there should be "no penalty for high emissions" sources, just incentives to drive investment in renewables.

Dr Alan Finkel said a CET was not the same as a carbon price, but it was a market-based mechanism that sent a price signal to investors.

Under a CET, low emissions generators would receive certificates, or partial certificates, for generating power from cleaner sources and these would be traded.

The Chief Scientist modelled a low emissions targets close to 0.6 tonnes of carbon per megawatt hour for the electricity sector under the CET to send a price signal to the sector.

As debate over climate policy enters a new phase, new ReachTEL polling commissioned by the Australian Institute showed about three-quarters of Australians in the seats of four key cabinet ministers - Mr Frydenberg, Julie Bishop, Christopher Pyne and Greg Hunt - backed a strong clean energy target and a majority said they would back Australia moving towards 100 per cent renewable energy by 2030.

"A well-designed CET could be the breakthrough which finally integrates climate and energy policy. But a badly designed scheme could lock Australia into expensive, high emissions infrastructure," executive director Ben Oquist said.

The Finkel report also highlighted a warning from the Australian Energy Market Operator that next summer, both Victoria and South Australia could face electricity supply interruptions following the closure of the Hazelwood coal-fired power station.

In future, it said, power generators should have to give three years' notice before closing down. It suggested the Turnbull government's climate policy review, due at the end of the year, should set a 2050 emissions reduction target.

The report compared the effectiveness of a CET, and an emissions intensity scheme (EIS), and the status quo policy settings.

Under the scenarios examined, both a CET and EIS would deliver cheaper power prices for households and consumers than "business-as-usual".

A CET would see more electricity generated by brown coal than under an EIS scenario, which is why prices are slightly cheaper, but slightly more renewable power generated.

The report predicts that under all scenarios, the use of coal power will decline significantly to 2050.

New wind and solar generators will have to supply reliable power - meaning they would have to also build a battery, have pumped hydro storage or gas-fired power alongside, which could force up the cost of renewables.

The report calls for a new "Energy Security Board" to monitor the electricity system. .

The Business Council said the report offered the best chance to end federal politics climate wars. Energy Networks Australia said the review was the "last, best hope that Australian energy customers have for a secure, reliable and affordable energy transition".

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