Emissions fund `just hot air'

Australian
Thursday 26/10/2006, Page: 23

THERE were fresh calls yesterday for the federal Government to develop a national carbon trading system as the longawaited rollout of its $500 million low-emission fund drew criticism from the renewable energy industry for not doing enough to encourage the take-up of clean technologies.

At the launch of the first project awards under the fund in Melbourne, federal Resources Minister Ian Macfarlane warned that a carbon tax or carbon trading would "cripple" industry.

But Victorian Premier Steve Bracks sought to upstage his federal colleague, claiming that Victoria's Mandatory Renewable Energy Target had been key to a $420 million large-scale solar power plant project in Victoria.

"It has gone to Victoria because the market-based signals we have here allow for competitive prices to be taken through the VRET (Victorian Renewable Energy Target) system," Mr Bracks said.

The system requires power companies by 2010 to source 10 per cent of their power from renewable sources or face fines, and is contrary to the federal Government's decision not to extend a similar federal system it has had in place since 2001, but was deemed too costly to extend.

While Treasurer Peter Costello rejected suggestions that the solar power plant would have been unviable without VRET, the company behind the project said it had been an important factor.

"We would have had to have rethought it (without VRET)," said Dave Holland, managing director of Melbourne-based private company Solar Systems which is building the plant.

Solar Systems has won a $75 million grant under the federal Government's Low Emission Technology Demonstration Fund, which has been matched by the state Government.

Mr Holland said he believed a global carbon trading system was inevitable. but he backed the federal Government's strategy to foster new technology through the fund ahead of participating in any global system rather than adopting carbon trading unilaterally, as Europe has.

Mr Macfarlane said: "The aim of the exercise is to get the technology first otherwise all we will do is cripple industry." Once the technology was in place, he said there were various mechanisms for ensuring its uptake, including carbon trading, although he stressed Carbon trading wasn't on the Government's agenda.

But alternative energy advocates, the Business Council for Sustainable Energy, said proven low emission technologies were already in place, such as wind power, biomass and solar, but needed a carbon price signal to make them viable against cheap coal and encourage their further development.

It isn't sufficient to be putting funds into commercialising technology; you need a market mechanism to encourage their deployment," BCSE executive director Ric Brazzale told The Australian.

The way to develop renewable energy is to get people into production and then you learn from day to day and you build local industry and skills." He said power-intensive Australian industries that were vulnerable to overseas competition could be protected from the full cost of carbon trading by issuing them with extra emission permits or through tax breaks.