The “bills down” claim flatters itself with aggregation. Electrification may lower total energy costs in theory, but for many households the transition means dearer electricity, persistent fuel spending, and inflation that feels anything but transitory.
The Promise and the Pitch
The Grattan Institute’s new report, Bills Down, Emissions Down: A Practical Path to Net-Zero Electricity, offers a hopeful vision: cheaper energy and a cleaner grid. It is careful, data-driven, and refreshingly upbeat – a welcome change from the fatalism that so often clouds climate policy. Optimism has a role to play. It sustains public confidence and reminds us that decarbonisation need not mean economic pain.
But optimism also invites measured consideration. Policy built only on best-case assumptions courts disappointment, and Bills Down, Emissions Down relies on a long chain of them. Each link is defensible; the whole chain must hold. Grattan’s analysis deserves both respect and scrutiny – respect for its clarity, and scrutiny for the fragility of the conditions on which it depends.
The report defines “energy” broadly – electricity, petrol, and gas combined – and that aggregation does much of the work. It assumes households rapidly electrify cars and heating, collapsing petrol and gas use. In practice, the transition will unfold over decades. Many families – especially low-income ones – will still fill a petrol tank and pay a quarterly gas bill. Total “energy” spending may fall in the model, and will for some households, but not for all. A saving that depends on technologies many have yet to adopt feels hypothetical, while rising electricity tariffs remain immediate and visible. Aggregate savings on paper rarely offset the inflationary pressure of higher electricity prices in the short term – and that’s the horizon voters notice.
Jacobs’ modelling, on which Grattan relies, projects that the average household’s combined energy spend will fall from around \$5,800 today to roughly \$3,000 by 2050 under a strong carbon constraint. Extending the Safeguard Mechanism to the electricity sector (a baseline-and-credit scheme where all generators face declining emissions-intensity baselines from 2030; below-baseline generators earn tradeable credits and above-baseline must buy them; costs pass through wholesale prices) is presented as the low-cost lever: emissions plunge, the carbon price climbs, and yet household budgets hardly notice. It is an elegant story – coherent, hopeful, and frictionless. The difficulty lies in how perfectly it must unfold.
Extending the Safeguard Mechanism in this way would, in practice, amount to a new carbon price by another name – a declining emissions cap on coal and gas plants, with credits traded across the system. Australia has been here before. Between 2007 and 2013, electricity prices almost doubled, driven largely by over-investment in networks and reliability standards, but the carbon price of that era became the political scapegoat. Consumption barely rose in that period, yet the symbolism of “a tax on electricity” proved impossible to sustain. Price-based mechanisms can work in theory, but in practice they resemble taxes – visible, immediate, and electorally fragile. They impose costs now and deliver benefits later, and later rarely survives a three-year election cycle. That experience still shadows the debate.
Where the Optimism Lives
Jacobs’ scenarios assume a renewable build rate of around twelve gigawatts a year, on-time delivery of every major transmission line, a 60–70 per cent fall in battery costs, and a steady supply of cheap carbon offsets. They assume almost universal household electrification and a stable policy environment stretching unbroken to 2050. Each of these assumptions is plausible; together they form a heroic expectation.
A modest deviation at any link – a delay in transmission, a slower cost decline, a rise in borrowing costs, or a single change of government direction – would disturb the model’s smooth trajectory. Models describe what could happen under ideal conditions; real systems are rarely ideal.
Even if the averages hold, the distribution will not. The transition is already dividing Australians into two energy classes. Detached homeowners with rooftop solar, batteries, and EVs are becoming self-sufficient micro-generators. Renters and apartment dwellers, lacking both roof access and capital, remain fully dependent on the grid.
Because network and environmental charges are recovered per kilowatt-hour, as solar households draw less power those fixed costs are spread over fewer customers. The result is a quiet redistribution: the “haves” enjoy cheaper self-supplied electricity while the “have-nots” fund the poles, wires, and firming capacity that keep the system stable.
In a world where Australia’s housing shortage demands higher density living, this divide will deepen. Densification concentrates more people in apartments and townhouses without access to rooftop solar or private batteries. As the detached homes of the outer suburbs evolve into self-sufficient energy islands, urban renters will remain tethered to the grid, bearing a disproportionate share of network and firming costs. Housing policy and energy policy, long treated as separate domains, are now colliding: the form of the city shapes who can afford to decarbonise.
By the 2030s this cross-subsidy could exceed several hundred dollars per household each year unless tariffs evolve. A clean grid can still become an unequal one.
Fragilities of Institutions and Politics
Beyond the engineering, the institutional machinery must perform flawlessly. The National Electricity Market is not a single entity but a federation of AEMO, AER, AEMC, state governments, network operators and financiers such as Rewiring the Nation. Coordinating this ecosystem at the speed Grattan envisages will test Australia’s administrative capacity as much as its technology. Transmission projects like HumeLink and Marinus Link already show how social-licence disputes and cost blowouts can erode savings. The modelling assumes these challenges vanish. They will not.
Politics compounds the fragility. The energy transition runs for twenty-five years; elections come every three. Policy continuity is the rarest commodity in Australian energy. Investors can price technology risk, but not political reversal. Australia’s experience – the carbon-price repeal in 2014, repeated reviews of the Renewable Energy Target, and a decade of policy paralysis – lingers in the memory of financiers. Extending the Safeguard Mechanism to generators would require rare bipartisan resolve. History offers little comfort on that score.
Resilience is another under-priced variable. Models smooth volatility; grids fail at the edges. Multi-day wind droughts, continent-wide heatwaves, bushfires cutting transmission, or cyberattacks on inverter networks are all low-probability, high-impact events. Reliability is never free. The Spanish blackout earlier this year was a reminder that renewable systems still depend on inertia, redundancy and dispatchable reserves – all of which cost money.
Timing also matters. Grattan’s charts show a graceful decline in energy costs to 2050, but the real-world curve will be uneven. The next decade brings overlapping expenses: coal retirements, transmission build-outs, and new firming contracts. Those costs arrive before the savings. If households hear that power will become cheaper yet experience the opposite, trust in the transition will erode. The most dangerous phase of reform is the period between pain and gain.
Dependence and Distribution
A further vulnerability lies beyond Australia’s borders. Something like four-fifths of the world’s solar cells, batteries, and inverter components are manufactured in China, which also refines most of the world’s lithium and graphite. Europe’s solar industry learned the hard way how quickly domestic capability can collapse when global competition turns to dependence. A trade shock or export restriction could ripple through Australian project costs within months. Domestic manufacturing efforts are worthwhile but cannot substitute for China’s scale in the short term.
These structural and geopolitical dependencies intersect with the distributional ones at home. A transition that works economically but fails politically will falter. Tariff reform is needed so that fixed network costs are shared fairly. Rental and strata reform could allow apartment dwellers to access community solar and shared batteries. Public and social housing should be first in line for electrification, not last. Energy inequality easily becomes policy fragility: when the benefits accrue to those with capital while others face rising costs, social consent frays. Maintaining that consent is now a question of governance, not goodwill.
In a curious way, Grattan’s report is itself an acknowledgement of failure. Its argument rests on the idea that, without a new carbon price – however softly described – Australia will not reach net zero by 2050. That is not a celebration of success; it is an admission that the current patchwork of subsidies and targets is insufficient. The proposed solution, though elegant on paper, adds ballast to the very problem it diagnoses: it reintroduces the politics of carbon pricing under another name. The mechanism may be sound, but the politics remain brittle.
Conclusion: Hope, Realism, and Responsibility
None of this undermines Grattan’s contribution. The report performs a vital service by showing that deep decarbonisation can be achieved without economic collapse and that coherent, credible policy beats scattershot subsidies. But its scenario should be read as a benchmark for success, not a forecast. It depends on technology, politics, and institutions behaving in concert – an alignment that is achievable, but fragile.
The path to a net-zero grid will not be linear. The cheapest system on paper may not be the most resilient in practice, and progress will depend as much on social trust and institutional endurance as on engineering. Optimism remains warranted, provided it is disciplined by realism.
Australia can build a cleaner, more affordable energy system, but only by confronting the trade-offs as honestly as the opportunities. Grattan’s report is right to highlight the promise; measured consideration reminds us of the price, the pathway, and the possibility of disappointment – unless policymakers confront those fragilities early.
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