However, according to the Australia's Treasury department, the use of renewable energy can be costly and not always the best option for the environment or the economy.
"Current renewable energy technology entails environmental costs; and renewable energy may not be the most cost-effective way to reduce air pollution and greenhouse gas emissions," Treasury said in its spring report.
Treasury researchers said obtaining energy from a broad range of resources - including renewable - in a "non-prescriptive" manner was the best way to achieve good economic and environmental outcomes. It added there was also room for policies that impose the full cost of energy consumption, including environmental costs, on users.
As for reducing Australia's dependency on energy imports by increasing reliance on domestically sourced renewable energy, Treasury said is not always efficient because sometimes it is cheaper to import some forms of energy than produce it at home.
"If domestic renewable energy, or other domestic energy resources, costs more to produce than imported energy, then policies to promote its use would impact on the competitiveness of Australian business and reduce real household disposable income," Treasury said.
Treasury added that renewable energy is not always environmentally benign as not all renewable fuels provide more greenhouse gas benefits then petrol or diesel. "Renewable fuels can also have mixed effects on air quality," the department said.
