Adaptation to carbon-tax-induced changes in energy demand in rural and regional Australia

Due to the significant roles of energy supply and demand, this project purports to uncover the optimal response of the energy sector to changes in energy demand in rural and regional Australia during the economic transformation induced by the carbon tax. Specifically, this aim will be achieved through the following two sub-aims: (1) to determine the impact of the carbon tax on energy cost and energy demand in rural and regional Australia. (2) to assess the optimal response of energy supplies and the environmental and economic implications for rural and regional households.

In achieving the objectives above, this project will address three important issues in Australia.

  1. Sustainable development. The production and consumption of energy goods produces a large amount of carbon emissions, which will have a catastrophic impact on the environment and on the economy. Environmental deterioration may threaten economic growth, productivity, wealth, human health and even lives. By comparing the environmental and economic effects of each energy sector response, this project will find the trade off between environment protection and economic growth and, thus, make sure that energy supply is environment-friendly and economically viable.
  2. The future of energy sectors in a low carbon economy. The future of the energy sectors largely depends on their responses to the carbon tax. Using the production data in AGL and survey data on energy demand, we can suggest an optimal response for the energy sector and for society.  We can indicate how the energy sectors can adapt to the new situation of a low carbon economy and make a positive contribution not only to the shareholders and the Australian economy, but also to environment and the society.
  3. The vulnerability of rural and regional communities.  Generally speaking, rural and regional households are far more vulnerable than unban households. These communities have, however, made a significant contribution to national economy by providing agricultural goods to Australians and for exportation. They also have considerable potential to improve the environment by supplying renewable energy. Using energy as an example, this project will show how much  rural and regional communities are disadvantaged and how they can contribute to sustainable environmental economic development, and thus shed light on how the energy sectors and the government can act to support rural and regional communities.

Due for completion in 2016 

Funded by: Australian Research Council

Partners: Mahinda Siriwardana, UNE Business School, University of New England; Paul Simshauser, Professor, Chief Economist & Group Head of Corporate Affairs, AGL Energy Ltd; Tim Nelson, Head of Economics, Policy and Sustainability, AGL Energy Ltd.

Contact: Xianming (Sam) Meng