A former head of the public service says power prices would be lower under an emissions trading scheme.

“Whatever else you do, Renewable Energy Target, or anything else, they can be no cheaper than putting an explicit price on carbon,” outgoing head of the Department of Prime Minister and Cabinet Martin Parkinson has told reporters.

“The difference is where's the cost in an emissions trading scheme (ETS)? The cost is quite visible. It's there, it's the price of the permit.

“In the case of the Renewable Energy Target or any other intervention, then often that price is hidden from the view of the consumer. But ultimately the consumer's paying because it's built into the price of power.

‘At the moment what we've got is a lot of burden falling on energy prices.

“If we had an ETS it would have smeared that cost across all parts of the economy.”

Dr Parkinson was first asked to look at an emissions trading scheme towards the end of the Howard government in 2007.

“When I think back to where we were in 2007, when we first started thinking about this for Prime Minister Howard, we had in mind technology falling in price terms over the period ahead,” he said.

“What's actually happened is that [the price of] technology has fallen, but it has fallen dramatically more quickly, dramatically more sharply than anybody anticipated at the time.

“The point of a price mechanism is that's how you actually accelerate the uptake of the technology.

“We could have achieved what we were trying to achieve — we could have done it in a way that was cheaper.

“Now, there is a price. It can either be explicit or implicit. And at the moment it's implicit, and where do you see that price? You see it in the price of electricity and gas.

“And until we have a sensible set of policies that can be sustained in the long run, then we will have prices above what we need to have.”