Victoria turns to green power

The Australian Financial Review, Page: 5
Monday, 22 May 2006

Plans by the Victorian government to source 10 per cent of its electricity from renewable sources within four years will have little effect on the state's energy-intensive industries or on retail prices, a new report says. The study by the Business Council for Sustainable Energy, whose members include AGL and BP, said power prices would rise 1.3 per cent, an increase of $1 a month for the average household. Victoria generates 95 per cent of its electricity from coal and is the highest polluting state in the developed world, on a per megawatt basis, environmental critics say.

The business council's executive officer, Ric Brazzale, said the price rise was barely a "blip" at a time when energy-intensive industries were highly profitable. "If ever there was a time to move away from coal it's now," he said. The Victorian scheme aims to drive more than $ 1 billion of investment into the renewable industry and is a direct response to the federal government's refusal to extend its Mandatory Renewable Energy Target. The federal government introduced a 2 per cent renewable energy target in 2001 but it was watered down after lobbying by industrial users fearful that higher electricity prices would make them uncompetitive.

"Our study shows that this is not the case," said Mr Brazzale. "Victoria can move away from coal with little cost to the economy. "This is supported by an earlier report from the Allen Consulting Group and CSIRO, which found that Australia could move to a 60 per cent cut in emissions by 2050 without significant reductions in economic growth. Legislation setting the 10 per cent target is expected before the Victorian parliament within months and comes after South Australia set a 15 per cent renewable energy target. This follows China setting a 15 per cent target by 2020 and nearly half the US states, including California, imposing mandatory targets.

The Australian Bureau of Agriculture and Resource Economics estimates Victoria's greenhouse emissions will rise 30 per cent by 2030 unless the state moves away from coal-fired power generation. The Victorian plan would provide sufficient energy to power 400,000 households. The green power is likely to attract a subsidy of between $35 and $40 per megawatt hour, making it competitive with coal.