Renewable Energy Target next step to White Paper

Clean Energy Council
17 December 2008

Following a more detailed review of the federal government's carbon pollution reduction scheme (CPRS) white paper, the Clean Energy Council has prepared the following summary on key aspects relating to the urgent development and deployment of renewable energy and energy efficiency measures. 


The industry is encouraged by the government's move to maintain momentum by starting the scheme in 2010 and highlighting the importance of stabilising greenhouse gas concentrations at around 450ppm CO2-e. 
However, the shallow initial targets and the anticipated low carbon prices will not drive the significant transformations needed in the Australian energy sector. This approach can only be justified if the government moves immediately to deploy a suite of complementary measures to drive multi-billion dollar investment in clean energy technologies and drive energy efficiency in homes and businesses.

Carbon Price

Australia's emissions trading scheme will get going in 2010 with the white paper assuming a starting price of around $25 per tonne. The price of emissions is set to be capped at $40 per tonne escalating at 5% real per annum. This rate is too low on its own to trigger investment in large scale renewables. Allowing importing of emissions credits means the eventual carbon price is likely to be driven by international rather than Australian activity.


Renewable Energy Target (RET)
The white paper signalled progress for the design and implementation of the expanded renewable energy target, reiterating the introduction of a 20 per cent by 2020 goal. Draft RET legislation is due for release later today.


This will release more than $20 billion of new investment, help drive immediate cuts in emissions and may help cushion the cost of transition to a low-carbon economy. The white paper states that legislative and regulatory amendments to implement the design of the Renewable Energy Target are expected to be in place by July 2009, with revised targets commencing from 2010. 


The Clean Energy Council is concerned that the proposed RET will be phased out between 2020 and 2030. Modelling undertaken for the Council indicates that to ensure the success of the RET in achieving 45,000GWh of new renewable generation in 2020, the target and the penalty price need to be maintained until 2030.

Climate Change Action Fund (CCAF)

The white paper announced a new measure, the CCAF, to assist smaller businesses and community groups invest in cleaner technologies and energy efficiency measures. These companies and groups will otherwise not benefit from compensation measures highlighted in the paper.


The Clean Energy Council welcomes measures like these to encourage the deployment of low emissions technologies like bioenergy, geothermal, wind, oceanic, solar as well as energy efficiency. The CCAF is scheduled to commence in the second half of 2009, ahead of the start of emissions trading. The early deployment of this fund will help smaller businesses and community groups to prepare for the start of the CPRS in 2010.


Principles to guide the implementation of complementary measures
Importantly the white paper has, for the first time, outlined a set of principles by which all complementary measures will be developed. This will serve as a useful guide for future discussion relating to emission reductions. The principles focus on delivering against specific market failures, and must ensure efficiency, effectiveness, equity and administrative simplicity.


Renewable Energy Fund
As revealed by Prime Minister Rudd on Sunday, the Renewable Energy Fund announced in the May budget will be brought forward to be spent over the next 18 months rather than the original five year timeframe. This fund includes $15m for second generation biofuels and $50m specifically for geothermal drilling.

The remainder of the fund will go towards large scale demonstration projects that will deliver technology from the laboratory straight to homes and businesses, helping to prove a project's viability on a technical and economic basis. Under the fund, the private sector must contribute at least $2 for every $1 provided by the government. The fund will be launched in the New Year with the release of guidelines for applicants and a call for a first round of applications. This investment is expected to provide great impetus for the early development of geothermal, solar thermal, bioenergy and ocean generation projects.


What Next?
The government has outlined a comprehensive work program on the development and deployment of complementary measures to deploy clean energy technologies and drive energy efficiency. These include:

• draft Renewable Energy Target (RET) legislation due out today

• RET legislative and regulatory amendments in place by mid 2009 and starting in 2010

• development of a national energy efficiency strategy in early 2009

• deployment of the Renewable Energy Fund in early 2009, and

• release of the draft Climate Change Action Fund (CCAF) in February 2009 ahead of the program launch in mid to late 2009. 


It's imperative that the implementation of these complementary measures are simple, efficient and effective so as not to compromise the accelerated development or deployment of any technology or measure. The only way this planned soft start to Australia's emissions trading scheme will work is by enabling rapid, large scale investment towards renewable energy and energy efficiency measures that reduce emissions immediately. 

The Clean Energy Council will continue to work closely with all levels of government to ensure these initiatives are realised and Australia's energy future remains secure.