Under the Kyoto Accord, Australia committed itself to a target of an 8% increase in 2010 on greenhouse emitted in 1990. However, one government reports suggests Australia will exceed this target by some 14.6 million tonnes of greenhouse gases.

"We believe the challenge for government and industry is to develop the policy and investment strategies to meet this target at the least cost to the economy," said Origin Energy managing director, Grant King. "We commissioned this report, the first of its kind in Australia to raise the level of analysis and understanding of various strategies that could be implemented to achieve this."

The report - conducted by Melbourne-based energy consultants McLennan Magasanik Associates - is titled 'Incremental Electricity Supply Costs from Additional Renewable and Gas Fired-Generation in Australia' and suggests increasing the MRET to 5% or 10% by 2010 as well as encouraging a higher level of gas-fired generation and co-generation by restricting coal generation to that which is already operating, mothballed or committed.

The study concludes by saying that implementation of these initiatives would not significantly increase domestic power costs and there would be little chance of a negative impact on Australia's international competitiveness.

"Energy production and use are major sources of greenhouse gas," Mr King added. "We believe that major energy producers and consumers must acknowledge that we are now operating in an environment increasingly constrained in its ability to absorb greenhouse gases without unacceptable environmental impacts.

"Unless new policies are introduced to mitigate current emissions growth, emissions from the energy sector will continue to rise steeply for the remainder of this decade and beyond."

In other Origin news, the company said its profit growth might slow by two-thirds this fiscal year because of a smaller rise in gas and power sales.

Origin chairman Kevin McCann said it would "not be reasonable" for investors to expect profit to keep rising at last year's 31% pace.

"The worldwide downturn in economic activity, which also affects Australia, will have an impact on most businesses," he said.

Origin said net income might rise between 10% and 15% in the year ending June. Even so, Origin will increase dividend payouts to about 40% of earnings per share from about 25%.