Low-emission technology 'needs support'

Once Labor's carbon tax kicks in governments will need to decide how to best provide extra support for low-emissions technologies, including nuclear energy and carbon capture and storage (CCS), a Melbourne-based think tank says.

The Grattan Institute has studied the potential of wind, solar, geothermal, bio-energy, nuclear and CCS to generate near-zero emissions power.

Its report, No Easy Choices, to be released on Monday, says that given the lack of any "sure bets" Australia should keep all options on the table.

That includes perhaps the most controversial technologies, nuclear and CCS, Grattan energy program director Tony Wood told AAP.

Both may be needed if Australia is to meet its target of reducing greenhouse gas emissions by 80 per cent by 2050.

"If you ignore those two that's very risky because it's very difficult to believe that renewables can get there without prices going through the roof," Mr Wood said.

He argues that while Australia might be better off waiting for other countries to develop cheaper and better nuclear plants, it has a very strong interest in developing CCS.

"So much of our power comes from coal and if we can't keep producing electricity from coal our power (cost) goes up more than anybody else's," Mr Wood said.

"Also we export so much of our coal and ... if the rest of the world doesn't want our coal then we're in trouble."

The report argues that wind and solar PV may be commercially viable if carbon pollution prices rise to foreseeable levels over the next 20 years.

But it states that those technologies can never provide more than 50 per cent of Australia's electricity needs without massive advances in storage technologies.

Geothermal, which has huge potential in Australia, is "highly uncertain" when it comes to reliability and costs because it's still in the exploration stage.

The report acknowledges that nuclear and CCS are unlikely to be demonstrated in Australia anytime soon "unless government takes on most of the material risk of the project".

Mr Wood says the carbon tax and subsequent emission trading scheme (ETS) must be the primary mechanism by which Australia reduces its emissions but he argues the market on its own won't make low-emissions technologies competitive.

That's especially true if stringent pollution caps aren't in place, he said.

"If we don't start to address the issue of additional costs of those technologies that are important in the future they won't be there," Mr Wood said.

"Then it will become very expensive."

The Gillard government, at the behest of the Greens, is establishing a $10 billion Clean Energy Finance Corporation which will leverage private sector financing for renewable energy and clean technology projects.

But the Grattan Institute report says more needs to be done aside from support for research and development.

It advocates scrapping all existing subsidies for fossil fuels and technology-specific programs such as solar feed-in tariffs.

Further, it calls on governments to expand exploration and mapping of solar and geographical resources to aid in the development of solar thermal and geothermal energy and the location of suitable sites for carbon storage.

Finally, the think tank's report stresses the need for a complete overhaul of Australia's distribution network.

"Existing transmission networks and network regulation are designed around the assumption that almost all electricity generators will be large plants close to existing centres of generation," it states.

Current cost structures mean wind, solar and geothermal plants in remote locations are unviable simply because they can't connect to the grid.

Mr Wood suggests existing generators and retailers should foot the bill for new hubs to be built with low-emissions suppliers only paying a share of the cost once they're up and running.

"New regulatory frameworks are required that ensure long-run cost-efficient trade-offs," the report concludes.