A report for the Federal government by the former head of the NSW Cabinet Office, Roger Wilkins, has found that government rebates, such as the $8,000 for households installing solar panels, are among the most inefficient ways of tackling climate change.

The report found the solar panel rebates cost more than $400 for each tonne of carbon dioxide emissions abated, much higher than any feasible market price on carbon emissions.

The report argues that emissions trading will remove the rationale for programs such as this – including rebates for solar photovoltaic and hot water systems to grants for the use of renewable energy in remote areas and subsidies for research on clean coal technologies – by putting a market price on emissions of greenhouse gases.

Instead of rebates, it argues that climate change programs should focus on areas of market failure, such as helping commercialise low-emissions technologies in the first place, rather than on boosting their take-up by consumers once they are commercially available. It canvasses a venture capital approach to investing government funds on developing clean energy technologies modelled on Britain’s Carbon Trust.