Green Light: $75M Climate Scheme

Australian
Friday 31/10/2008 Page: 11

A GOVERNMENT grants program to help small and medium-size manufacturers improve their environmental performance is now under way, with applications for the first round of funding being considered. The $75 million program, Re-Tooling for Climate Change, being administered by AusIndustry, will provide grants of between $10,000 and $500,000, up to a maximum of one third of the cost of each project. An eligible applicant must be a non-tax exempt manufacturing company, with an annual group turnover of less than $100 million in each of the three financial years before the year of application lodgment, and must be able to fund the costs of the project not met by the grant.

Successful applicants for the first round of applications should be notified before the end of the year. Applications for the second round will be invited early in the first half of 2009. About $11 million is available for payments in the first year of the program, and about $22 million in the second year. So far, AusIndustry is happy with the process. "We have conducted a series of seminars over the past two months, and worked closely with industry associations," says Bronwyn Williams, AusIndustry program manager.

"The program has attracted a lot of interest, and we expect that the pace of applications will really pick up in the second round. We believe that a lot of companies are carefully doing their homework to put together the best possible application, and that's an approach we support." Examples of eligible projects include: investing in co-generation power plants that capture waste energy and rise it to generate electricity for production; stormwater capture and improving water recycling for reuse in manufacturing; improving insulation and recovering waste heat to improve process efficiency; and process re-engineering involving the adoption of energy efficient manufacturing tools.

The commissioning of energy audits is not covered, although Williams notes that the key points of any audits or consultant studies can be provided in support of a grant application. "We are looking for projects that support the long-term sustainability of Australian manufacturing," she says.

"To get a grant, a project can't just be about replacing a piece of worn-out equipment with something that offers marginally better performance. It has to be more than routine business, and show a commitment to reduce the environmental footprint of the manufacturing operation over the long tern." Applications will be considered by Innovation Australia, which will assess and rate the merit of applications.

Innovation Australia will consider the impact of an applicant's project on its operational efficiency or carbon emissions, as well as any wider industry impact. The nature of the supporting evidence required as part of the application will depend on the size of the grant sought. Successful applicants will need to enter into a grant agreement to receive funding, and report on progress. The nature of the supporting evidence required as part of the application will depend on the size of the grant sought. Successful applicants will need to enter into a grant agreement to receive funding, and report on progress. In the seminars and discussions to date, we have seen a great deal of interest in environmental issues from the business community," says Williams.

This program will, I think, provide an additional incentive for turning interest into action." The four year Re-tooling for Climate Change program is one component of the Clean Business Australia initiative. Other programs are the Climate Ready program (grants of $75 million over four _years), supporting the development and commercialisation of technologies that provide solutions for climate change, and the Green Building Fund ($90 million over four years) that will help building owners to improve the energy efficiency of existing commercial office buildings.

Applications for grants roust be made using the form provided by AusIndustry available through the site www.ausindustry. gov.au (click on "AusIndustry products' and follow the links to Retooling for Climate Change). Further information can be obtained through the AusIndustry Hotline on 13 28 46 or by email at hotline@ausindustry.gov.au

Responsible investment ‘mainstream by 2015’ – report

www.environmental-finance.com
London, 30 October:

Responsible investment will account for between 15-20% of global assets under management (AUM) by 2015, and generate revenues of around $50 billion, according to a report by Robeco and Booz & Company. The market is set to grow by 25% per annum over the coming years, rising from 7% of AUM in 2007 – but margins are set to tighten as the investment niche becomes 'mainstream', the report predicts.

"Responsible investment is becoming more and more significant in the investment world, with raised social awareness and improved performance factors, as well as the fact that pension funds and other institutional investors are increasingly required to disclose their policies and positions," said Charles Teschner, a partner at Booz & Company, a US-based management consultancy.

Responsible Investing: A Paradigm Shift identifies several drivers likely to accelerate uptake of responsible investing, including increasing awareness of environmental issues by companies, legislation favouring socially responsible investment, and innovations in environmental technology.

The report predicts that the trend "will significantly reshape the asset management landscape over the next few years", noting that many larger fund managers have yet to pursue opportunities in responsible investment. "By 2015, niche players are likely to be taken over by global players or grow themselves to become sizeable specialists."

The mainstreaming of responsible investment will see margins tighten, the report says. It suggests that premiums that asset managers can charge for running environmental and social engagement strategies will shrink from 3 basis points (bps) in 2007 to zero, while negative screening margins will drop from 15 bps to 5 bps. The integration of environmental and social investment research will command a premium of 3 bps, down from 10 bps.

Market growth is forecast to be particularly rapid in Asia – there, responsible investment AUM are predicted to grow more than 150% per annum, from a low base of just 2% of AUM in 2007. In the US, where responsible investment already accounts for 10% of assets, the report forecasts 17% annual growth.

George Möller, CEO of Dutch asset manager Robeco said: "There is a paradigm shift in the market. As the responsible investment market continues to grow, Robeco's increasing adoption of responsible investment throughout its fund portfolio reflects our view of the significance of this shift and will position us for a major change in the investment industry landscape over the next few years."

International climate talks are ‘on track’ – Harlan Watson

www.carbon-financeonline.com
29 October, 2008

Discussions on a new global agreement to tackle climate change should be completed in time to meet an end-2009 deadline, according to the US's chief climate change negotiator. In an exclusive interview with Carbon Finance last week, Ambassador Harlan Watson said the crisis in the global economy is "clearly not helpful" to negotiations, as it has pushed the climate issue down the political agenda and governments will have less money available. But he said there was still considerable interest at the highest political levels in addressing climate change.

Watson will lead the US negotiating team at the UN's climate change conference in Poznan, Poland, in December. This meeting will feed into a series of tough negotiations that will culminate in Copenhagen, Denmark, in December 2009, where a successor agreement to the Kyoto Protocol needs to be agreed in order to give national governments two years to ratify it, before Kyoto expires in 2012.

"It's considered by many observers that progress is slow, but it's the normal course of things. If you look back on the history of Kyoto, that was a two-year-plus process. Everything will undoubtedly come together at the end," Watson said. Poznan will see parties "delving for the first time into the shared vision" that came out of last year's talks in Bali, Watson said, and continuing to discuss the four building blocks of the new agreement: adaptation, mitigation, technology and finance. "We are going to be presented at Poznan with a compilation of ideas and proposals that have been received to date. Those will be further elaborated in Poznan," Watson said. He expected a draft negotiating text to be developed between Poznan and the first meeting of 2009.

Watson said it was too early to agree targets for reducing emissions and that the US would not make any international commitment until a domestic target has been established. But he expected the new president, whether John McCain or Barack Obama, to initiate domestic legislation involving carbon markets, once they take office on 20 January 2009. "I would expect the new administration to embrace a cap-and-trade system. So it is just going to be a matter of how long it will take to get through Congress," he said.

Problems in the global economy have raised concerns about progress on tackling climate change, Watson said. "The economy is going to be the focus of the new president and the world leaders for the foreseeable future. Quite frankly, the economy has buried everything. But there's still considerable interest in climate change, and energy security, which is closely aligned with climate change."

However, stretched by billion-dollar bank bail-outs, "there's general agreement that governments are going to be facing budget restrictions and the idea that governments are going to be able to come up with great sums of money [to address climate change] is not going to happen." Watson suggested that carbon markets might help fill that gap by encouraging the private sector to invest. "Most of the funding is going to have to come from the private sector in any event," he added.

Green-collar army recruits for the solar boom

Sydney Morning Herald
Friday 31/10/2008 Page: 9

LEAH CALLON-BUTLER gave up a career in fashion last year to become a solar panel saleswoman, joining a surge towards green jobs predicted by the Federal Government. Modelling done by Treasury on the cost of climate change found there would be an explosion in "green-collar" work with the introduction of an emissions trading scheme, with renewable power industries like solar and wind expected to be 30 times their current size by the middle of the century.

Ms Callon-Butler, a sales executive with the Sydney solar hot-water company Endless Solar, intends to stick around for the expected boom. The company has installed 5000 rooftop solar hot water systems in five years, using technology developed at the University of New South Wales, and it is looking for more staff.

"Renewable energy is not something I knew a lot about before I started, but you do get really passionate about it," said Ms Callon-Butler. who will complete an undergraduate communications degree next week. "I'm not exactly sure how things will change for me when I finish the degree, but I definitely want to stay in the sustainability industry."

By 2050, Treasury predicts, renewable energy could make up as much as half the energy mix in Australia, replacing the current reliance on coal. "Renewable technologies will become increasingly competitive, and production methods will switch to less emission-intensive technologies and processes," the Treasury report said. More jobs will be created by demand for cleaner cars, and Treasury estimates one in four people will be driving a hybrid or plug-in electric car by 2050.

The Clean Energy Council said the Treasury modelling showed immediate public and private investment in renewable power would pay off. "The smarter and more dynamic we are right now, the more options we will have in terms of deploying technologies commercially five years down the track in 2012 and 2013." said a spokesman, Matthew Warren. Unions and environment groups called on the Federal Government to pave the way for a green jobs boom.

Half a million new jobs could be created in renewable sectors of the economy by 2030, said a report yesterday by the ACTU and the Australian Conservation Foundation. The ACTU president, Sharan Burrow, said: "The report shows Australia must act swiftly to make the most of its natural advantages or our economy will be left behind. We can't afford to miss the boat."

Big Arnie unveils ray of sunshine

Herald Sun
Thursday 30/10/2008 Page: 78

WHAT began to take shape in a Sydney back yard about four years ago culminated in a commissioning ceremony for a solar thermal plant in California this week by Governor Arnold Schwarzenegger. The plant was built by Australian solar company Ausra, using cutting edge technology developed by Sydney University Professor David Mills. It will power 3500 homes in the central California town of Kimberlina. Professor Mills started Ausra in 2002 as Solar Heat and Power when he proposed a solar thermal plant to power the generators for the giant coal-fired Liddell Power Station in the Hunter Valley.

With the technology proven, Liddell became the first - and for now the only - hybrid solar/coal power station in the world, according to Ausra's Melbourne-based CEO and president Bob Matthews. Professor Mills then took his company to California where it attracted the two top venture capitalists in the world and morphed into Ausra Inc, leading to this week's ceremony with Governor Schwarzenegger. "This week was significant for two reasons," Mr Matthews said. "The first is that this is the first solar thermal plant built in California in the past 20 years. The second is that while solar thermal technology has been around since the early 1980s, ours is the next generation. It is more cost effective, more feasible.

"Solar thermal has been a bit of a sleeper. For whatever reason it didn't get a guernsey back in the oil shock of the 1980s, but industry now realises that it has the capacity to be highly scaleable, it can produce thousands of megawatts of power, rather than just hundreds. "It has the capacity to power cities. Our technology is the one. It's the 'here and now technology', as the governor said." solar thermal differs from photovoltaic solar panels, which convert light from the sun into electricity and are often seen mounted on home rooftops.

With Ausra's solar thermal technology, fields of mirrors focus the sun's heat on tubes of water to produce steam that drives turbines, generating clean, reliable electricity and steam for industrial use. The Kimberlina project continues Governor Schwarzenegger's pursuit of renewable power for California. "This next generation solar energy plant is evidence that reliable, renewable and pollution-free technology is here to stay, and it will lead to more homes and businesses powered by sunshine," he said. "It will also generate new jobs as California continues to pioneer clean-tech industry."

$1 a day to save planet

Australian
Friday 31/10/2008 Page: 1

THE Rudd Government has moved to ease fears about the impact of its emissions trading scheme, releasing Treasury modelling showing the scheme is affordable, with households paying up to $7 a week more for electricity and gas and no industries forced offshore.

Long-awaited Treasury modelling released yesterday assumes a modest cut in Australian emissions of between 5 and 15 per cent by 2020, and critically that next year's UN summit in Copenhagen succeeds in reaching a climate change agreement under which developed countries immediately begin to reduce their emissions and developing countries join in the global effort over time.

But industry groups and the federal Opposition expressed immediate concerns that the modelling did not reveal the costs of Australia pressing ahead with a domestic carbon price in the event the world does not reach such an agreement. The modelling finds the carbon price would start at between $23 and $32 a tonne in 2010, depending on the emission reduction target, rising to between $115 and $158 in 2050, and that the trading scheme would cut average annual growth by 0.1 per cent.

Wayne Swan described the imposition on growth as "a whisker". The Government has been facing increasing calls from the Coalition and some affected industries to delay the planned 2010 introduction of the emissions trading scheme until 2012, amid concerns about the impact of the global financial crisis. But the benign forecasts contained in the Treasury modelling were seized on by the Government yesterday to bolster its arguments for proceeding as planned in 2010.

The modelling forecasts that electricity prices will rise by between 17 and 24 per cent and gas prices by between 11 and 15 per cent, but points out that these increases would have a modest impact on household budgets, with electricity bills rising by between $4 and $5 a week and gas bills by $2 a week. Real disposable income grows by 1 per cent a year, under the model, rather than the 1.2 per cent that could be expected if there were no ETS.

Petrol prices would not rise for the first three years because the Government has promised to offset the cost with an excise cut. And it has pledged compensation to help low-income households with their power bills. The Government used the modelling to argue that it was economically responsible to press ahead with emissions trading in 2010, despite the immediate effects of the global economic slowdown.

"What this modelling absolutely shows is there is a way ahead which is both pro-growth and pro-jobs," the Treasurer said. "The Australian economy will continue strong growth while reducing emissions. The earlier Australia acts, the cheaper the cost of action, and many of Australia's industries will become more, not less, competitive. .

It is the case at the moment there are substantial challenges out there in the short term. What we are on about here is the long-term health, wealth, prosperity and sustainability of the Australian nation." But Malcolm Turnbull criticised the modelling because it did not take into account a scenario where Australia engages in an emissions trading scheme and cuts its emissions significantly but the rest of the world does not follow suit." And the Minerals Council of Australia had similar concerns.

"Treasury has modelled the world as we'd like it to be, not how it is. It would be great if developed countries signed on in 2010, if China acted in 2015 and India in 2020. If our global leadership achieves that result they'll be handing out Nobel Peace Prizes. But that is not likely to be the reality," said MCA chief executive Mr Mitch Hooke.

The modelling outlines dramatic global economic changes. But it says this will be because of the long-term impacts of the cost on carbon and not because of short-term decisions by individual industries to move offshore. Fears of such "carbon leakage" are unfounded, it says. The modelling finds that industries such as coal and iron and steel will maintain or even increase their global market share. Industries such as forestry thrive in the new carbon constrained world but aluminium and petrol refining lose global market share. aluminium output in 2050 will be at least 45 per cent below what would be expected in a carbon costless world and 7 per cent below current production levels.

Conservation groups said the modelling showed relatively small differences between the costs of the scenarios to cut emissions by 5 or 15 per cent in 2020 and the Garnaut report's most ambitious scenario of cutting emissions by 25 per cent, and urged the Government to opt for the tougher emissions reduction targets for the sake of the environment.

Only one of the four scenarios modelled by Treasury the one that looks at a 25 per cent cut in emissions by 2020 would give our natural icons like the Great Barrier Reef any chance of survival," said ACF executive director Don Henry. The Treasury modelling confirms that a 25 per cent cut by 2020 is affordable and achievable." The modelling assumes that developed countries reach an agreement to make "comparable efforts" to cut their emissions from 2010, that "high-income" developing countries, including China, agree to cuts from 2015, middle-income developing nations such as India by 2020 and low-income countries by 2025.

$150b `savings' in early green action

West Australian
Thursday 30/10/2008 Page: 4

Australia would save the equivalent of $150 billion by acting early to reduce its greenhouse gas emissions, long-awaited Treasury modelling of the Rudd Government's planned emissions trading scheme will reveal today. And it asserts that despite the looming carbon price, emissions intensive, trade-exposed industries such as coal mining are likely to become more competitive and increase their share of global trade.

Treasurer Wayne Swan will claim the 12-month Treasury modelling - the most complex done in Australia of any economic measure - showed an ETS was a "pro-growth, pro- competitiveness strategy" that would be affordable to families and pensioners. "The modelling proves that the longer we delay, the more expensive responding to climate change will become," Mr Swan will say in a speech, details of which were released yesterday. "Delay could encourage buildup of emissions-intensive capital stock that will later become a significant liability.

"The modelling suggests that, by 2050, GDP costs for economies that act early are 15 per cent lower than countries that wait for the world to act together. The message is clear: Acting early is an economic imperative." But the assumptions underlying the Treasury modelling have come under attack, even before its formal release.

Research by Concept Economics for the Minerals Council of Australia argues assumptions used by Treasury in areas such as the cost for power stations to reduce emissions, base metal prices and carbon capture and storage expenses were seriously underestimated. The ETS is scheduled to begin in 2010 but the Federal Opposition is calling for it to be delayed until 2011 at the earliest so that the international response can be taken into account. The Government is expected to support a slow start to the ETS, with the price of carbon kept at a fixed price of $20 a tonne for the first two years at least.

Eco action an earner

Courier Mail
Thursday 30/10/2008 Page: 23

NATIONS that move early to combat climate change will receive a 15 per cent discount on their carbon reduction costs, new modelling reveals. A long-awaited study from the federal Treasury to be released today shows that acting swiftly on global warming could be a big money spinner. In a major speech today in Brisbane, Treasurer Wayne Swan will seize on the new study to argue Australia must be a climate change leader. "The message is clear: acting early is an economic imperative," Mr Swan will say in his speech.

"The modelling suggests that, by 2050, GDP costs for economies that act early are 15 per cent lower than countries that wait for the world to act together." The modelling is great ammunition for the Federal Government as it pushes for a 2010 start for an emissions trading scheme while the Opposition wants it delayed.

The 2010 start date has come under increasing fire with the economic crisis. The Treasury modelling argues that countries that hold off miss out on lucrative global investment in low emissions technology. Mr Swan will also offer a lifeline to the Queensland coal industry, saying an emissions scheme is not necessarily bad news. "Some of Australia's emissions-intensive trade exposed sectors, such as coal, are likely to become more competitive, and increase their share of global trade," he says.

The Treasurer will also ramp up his language against global capitalism, saying the market has failed by not putting a price on carbon. "The consequence is dangerous climate change, which threatens to slow economic growth and imperil our way of life," he says. It comes as Climate Minister Penny Wong will today announce Queensland's Griffith University will spearhead new research on how climate change will affect water resources, human health, emergency services, infrastructure and biodiversity.

Senator Wong said the $10 million four-year project would foster critical research into the effects of climate change. "Taking action now to reduce the future impact of climate change on our communities, environment and industries is a critical pillar of our strategy," she said.

Bilateral ties will help push on climate

Australian
Thursday 30/10/2008 Page: 6

AUSTRALIA can play a key role in climate talks between China and the US and in using its strong bilateral ties with developing nations to help push for a global greenhouse reduction regime. International climate change heavyweight Yvo de Boer warned that "unless the relationship between the US and China on climate is worked out, then the broader picture, a global deal, will be that much harder".

"The dialogue taking place between China, the US and Australia can play a key bridging role," the executive secretary of the UN Framework Convention on Climate Change said. Climate experts and representatives from each nation's government and private sectors met in Washington last month at a conference organised by the Global Foundation citizens group to discuss international energy security and climate change.

Mr de Boer told the foundation's Australia Unlimited 2008 Roundtable in Melbourne via video link from New York yesterday that last month's meeting had resulted in progress in cooperation between the big powers before the international climate summit in Copenhagen next year. A delegate at the Washington meeting, World Business Council on Sustainable Development president Bjorn Stigson, told the conference yesterday climate change was a national security issue for the US and China.

"If we don't solve the challenges of climate change, there is the risk of instability in societies," Mr Stigson said. "The markets won't be enough to meet the challenge of global warming we need market mechanisms and good regulation." Mr de Boer said the international community was "overjoyed" when Kevin Rudd ratified the Kyoto Protocol after winning office in November last year. "Australia's new commitment to climate change and its geographic position can see it play a bridging role between developed and developing countries," Mr de Boer said.

Early carbon trading backed by report

Adelaide Advertiser
Thursday 30/10/2008 Page: 10

THE Rudd Government today will fire another broadside at unregulated capitalism, blaming market failures for the scourge of global warming. Just days after Prime Minister Kevin Rudd railed against "extreme capitalism," and excessive greed for causing the U.S.-led financial crisis, the Treasurer, Wayne Swan, this morning will use a speech to argue for decisive government action to turn around the climate change problem. "The market has failed to price the impact of carbon on our economy," he will tell a Brisbane conference, according to speech notes obtained by The Advertiser.

"The consequence is dangerous climate change which threatens to slow economic growth and imperil our way of life." The speech comes before the official release of a Treasury report later today modelling the economic impacts of an emissions trading scheme. Mr Swan will say the economic case for early action is strongly supported by that modelling. "New evidence which has just come in, suggests we are heading in the right direction," the notes say.

The Rudd Government has stuck doggedly to its promised July, 2010, introduction date despite intense pressure from the Opposition to delay its implementation because of the global economic downturn. Mr Swan believes growth can be protected. "With efficient emissions pricing, Australia can reduce the emissions intensity of GDP rather than actual GDP.

The modelling suggests that by 2050, GDP costs for economies that act early are 15 per cent lower than countries that wait for the world to act together. "The message is clear: acting early is an economic imperative. The assertions proved by the modelling all point to one conclusion: the carbon pollution reduction scheme is a pro-growth, pro competitiveness strategy for the Australian economy."

Jobs boom in the wind

Herald Sun
Wednesday 29/10/2008 Page: 23

EFFECTS of the economic downturn could be offset by more than 200,000 new jobs in solar, wind and geothermal energy in coming decades. Treasury modelling of the potential growth in alternative emissions technology due out soon suggests there will be growth of 2900 per cent (around 30 times what it is today) by 2050. This estimate is based on government taking action to increase renewable energy as an alternative to coal.

Even if the Government takes no action, the Treasury says the sector will grow 17 times its current size by 2050. Based on current estimates of around 10,000 jobs in the green energy sector, a 3000 per cent growth rate should equate to hundreds of thousands of new jobs, according to government analysis.

The Rudd Government has pledged to deliver 20 per cent of Australia's energy consumption in renewables by 2020 - a goal that will require massive investment in alternative energy sources. The Government is also banking on the emergence of carbon capture-and-storage technology to permit continuing use of abundant coal. The modelling came as the Opposition increased the pressure on the Rudd Government to delay its carbon emissions scheme in the light of the global economic crisis.

Shadow industry minister Eric Abetz said: At a time when businesses are struggling to stay afloat, when many have empty order books ... Labor's blind push to implement the emissions trading scheme by 2010 is economic madness." Senator Abetz said the push for a carbon emissions scheme was also without any reference to the economic crisis. "In its headlong rash to implement an emissions trading scheme in the face of the worst economic conditions for decades, Labor will further tax Australian industry," he said.

AGL bonanza from Queensland Gas takeover

Sydney Morning Herald
Wednesday 29/10/2008 Page: 20

AGL ENERGY is set to pocket a windfall from BG Group's takeover of Queensland Gas, giving it the chance to firm up its gas supplies or pounce on other energy assets. AGL said it would sell its 22 per cent stake in Queensland Gas for $5.75 a share after buying at $1.60 a share in March last year, unless a higher offer emerges. Proceeds from the sale would be $1.18 billion, taking AGL's net debt to $700 million. The sale also gives AGL the option to buy a significant acreage in the Walloons area that Queensland Gas snapped up in its takeover of Sunshine Gas.

Under the clause, AGL would acquire Sunshine's two biggest assets - the Lacerta fields and a stake of 15 per cent in the Polaris exploration project - for $856 million. Deloitte valued the fields at $500 million to $650 million in an independent valuation of Sunshine Gas last month. AGL also has the option to buy QGC's Condamine gasfired power plant, expected to be completed in 2014.

The sale comes as the market waits for the results of AGL's sale of its 3.4 per cent stake in the PNG LNG project, expected to fetch about $900 million. With the extra cash in hand, possible targets could also include NSW electricity assets and parts of the troubled energy business Babcock and Brown Power. "We will conduct a thorough assessment of not only the assets potentially available under the BG Group deal but also other opportunities available in the gas and electricity markets," AGL's managing director, Michael Fraser, said in a statement.

Increasing direct ownership of gas reserves is a longstanding goal for the company: it buys gas from third parties to supply its retail business. An analyst at UBS, David Leitch, said he doubted AGL would want to buy all of Babcock and Brown Power because this would not serve AGL's goal of building an integrated generation-retail business.

"They'll look at all of those things, and do the one that makes the most sense," Mr Leitch said. "But certainly one of the things that does make a lot of sense is to get some more upstream gas." Andrew Preston, an investment manager at the AGL shareholder Aberdeen Asset Management, said more acreage would keep a lid on rising gas costs. "They've had equity ownership in QGC for some time now, but the potential to convert that into actual reserves is attractive for them," he said. "It secures that upstream source of reserves for them at reasonable prices." AGL shares gained 98c, or 7.3 per cent, to close at $14.38.

Carbon polluters cry wolf Treasury

Sydney Morning Herald
Wednesday 29/10/2008 Page: 1

THE federal Treasury has disputed claims that many of the nation's biggest polluting industries would be forced to move offshore because of price rises caused by the Government's proposed emissions trading scheme. It is understood that Treasury modelling to be released this week concludes that the assistance measures proposed in the July green paper to help the big polluters adapt to an emissions trading scheme would be sufficient to keep them competitive.

Even the most extreme option facing the Government - a cut to emissions by 25 per cent by 2020, resulting in a carbon price of $60 a tonne - would not be severe enough "to induce industry relocation". The findings are made explicit in the Treasury report and will be controversial, given big industry has been critical of the structure of the proposed scheme as it was outlined in the green paper.

Two weeks ago, Exxon-MobilExxon-Mobil warned petrol refining would cease in Australia as the carbon price rose from $20 to $50 a tonne. The company's head of refining in Australia and New Zealand, Glenn Henson, told a meeting of Coalition MPs and senators that Australian fuel would be supplied from refineries in Asia where there would be no emissions trading scheme.

In August, the Business Council of Australia released a study of 14 industries. Based on a carbon price of $40 and the compensation scheme as outlined in the green paper, the study concluded three industries would have to shut immediately, four would suffer a loss of earnings of between 32 per cent and 63 per cent, and the other seven would have to slash costs to remain viable. "Many potential investments will not take place," it said.

But the Treasury modelling challenges these types of claims, saying so-called emissions intensive, trade-exposed industries are not expected to relocate offshore under the ETS. The modelling shows that under the compensation - in which industries are given between 60 per cent and 90 per cent free emissions trading permits, depending on how much they pollute - the pollution from their rivals in countries where there is no ETS will not increase. This is because the carbon price in Australia would not send any local firms offshore.

The modelling also concludes the assistance would reduce the impact of the additional costs a full-blown ETS would have on the firms' bottom line. It does acknowledge there would be some slowing in growth due to climate change but this would be significantly more gradual than without the assistance and could reflect a more general decline in global demand. Industries such as LNG, which will receive no assistance because they are "clean", would not be adversely affected despite their own claims to the contrary. If they did not qualify for assistance, by implication they would not need it.

The Treasury modelling will reinforce resolve within the Rudd Government to have an emissions trading scheme running in 2010. Despite the global financial crisis adding to the concerns of business, Mr Rudd and his ministers have argued that it is no reason to put off the ETS. However, it is now more than likely that the scheme will be gentle when it starts, to avoid hurting business and consumers. Big business supports a scheme but does not want it in full force until the world's major polluters join in. The Opposition Leader, Malcolm Turnbull, urged the Government again yesterday to wait at least until 2011.

Green-power profit

Daily Telegraph
Wednesday 29/10/2008 Page: 20

A CARBON emissions market will force a massive overhaul of power stations and create thousands of jobs as Australia develops renewable power sources. A confidential Treasury analysis reveals the renewable energy industry in 2050 could be 30 times bigger than it is today. And it would be more than 17 times bigger in 2020 than it would were no action taken to address climate change.

Treasury expects investment in wind energy to be the most significant area of expansion in development of non-fossil fuel energy. The findings are part of Treasury modelling of an emissions trading scheme. The report highlights the possible consequences of new restrictions on carbon pollution. They include higher petrol and electricity expenses for households and the loss of jobs in some energy intensive industries.

`Nothing to fear in emissions trading'

Canberra Times
Wednesday 29/10/2008 Page: 4

Australians have been told they have nothing to fear from emissions trading from one place that knows first-hand: Europe. The European Union has had emissions trading since 2005. A senior EU official on a fact finding visit to Australia, Simon Marr, said the scheme worked well. "There's no reason to be afraid of it, certainly not," Dr Marr said. He gave the thumbs tip to Australia's draft plan for emissions trading, due to start in 2010. "I think you're going along the right path," the senior policy officer with the European Commission's environment division said. Australia's draft plan was "very robust", he said.

Dr Marr dismissed critics who want emissions trading delayed because of the financial crisis, telling them they should look for another planet on which to live. "There is no alternative to tackling climate change ... we don't have time to lose." Dr Marr said the challenge for Australia was to choose a strong target for reducing emissions by 2020, and to avoid those mistakes made by the EU.

Australia should not give out too many free carbon permits, should insist on accurate data on greenhouse emissions, and must ensure operators complied with the scheme. The European scheme was widely criticised in the early years because too many carbon permits were given out for free, causing the price to crash, resulting in a limited impact on greenhouse emissions. The scheme has since been recast.

Dr Marr said in some respects the draft Australian scheme was better than Europe's. He noted Australia planned to give out fewer carbon permits gratis, a move he praised. Dr Marr was also impressed that Australia would use some of the revenue from emissions trading to compensate lower-income households, which Europe does not do. But Australia should spend more of the revenue on tackling climate change and energy efficiency.

Dr Marr said in practice, what emissions trading meant to EU residents was higher electricity bills. He said there had been no backlash because people understood environmental issues and wanted Europe to take the lead on climate change. Since arriving in Australia he had read some "quite embarrassing" comments in the media from people who did not want to take action on climate change.

Go green for jobs bonanza

Adelaide Advertiser
Wednesday 29/10/2008 Page: 3

EMPLOYMENT in the green energy sector is set to sky-rocket, confidential Treasury modelling to be released by the Federal Government shows. The modelling, which sets out the Commonwealth Treasury's best assessments of the impact on the economy of climate change, and a planned emissions trading scheme, suggests a virtual bonanza of jobs will occur in the renewable/clean energy sector. That growth could be as high as 2900 per cent suggesting that as many as 300,000 green jobs could be created over the next 40 years.

The Advertiser has learned the spectacular growth of the alternative energy sector is predicted assuming continuation of the 20 per cent mandatory renewable energy target, and the economic incentives inherent in the emissions trading scheme. It finds the alternative energy sector is, expected to grow by 1735 per cent by 2050. That jumps out to a massive 2900 per cent growth in output once the emissions trading scheme and other green policies are factored in. The long-awaited Treasury data should strengthen the Government's commitment to stick to its timetable for introduction of the emissions trading scheme by 2010 even though the Opposition says that is too soon.

News of the modelling comes less than a week before the U.S. election where both candidates, Barack Obama, and John McCain, are promising greener policies. Democratic Party chairman Howard Dean yesterday told Sky News the economic downturn was no reason to delay cutting emissions. "The world is in trouble, our industrialised jobs are in trouble, and having a renewable energy source which would reduce the carbon footprint would be a great way of stimulating the economy," he said.

The Government plans to release the modelling soon for public consultation before settling on its carbon emissions targets in December. It is the last crucial piece in the Rudd Government's climate change puzzle ahead of that determination. Treasury believes the carbon price, will act as a strong price signal to consumers and to investors swinging the balance towards currently more expensive alternative energy sources.

Geothermal gains ground at dead centre of the energy debate

Courier Mail
Monday 27/10/2008 Page: 30

THE knock on John Osborne's door is the sound of worldwide hopes for a clean, reliable alternative to polluting power plants starting to turn into reality. Brisbane company GeoDynamics is working toward harnessing deep underground heat sources to build a network of enhanced geothermal system (EGS) power plants (see box) on the largest scale ever seen. Its project location couldn't be more remote: in the Cooper Basin, across Queensland's most southwestern border, where three deserts meet.

But its plans are high on the radar of governments, scientists and investors in the US, Europe and Asia, all looking for the holy grail: clean sources of electricity, given scientific advice that the developed nations must cut green-house gas emissions by 80-90 per cent by 2050 to give a reasonable chance of avoiding catastrophic rises in temperature and sea levels.

Barclays Capital says investors should think seriously about putting policies to combat climate change and growing energy scarcity "at the centre" of their investment decisions. UBS analysts in London say they don't expect a global economic downturn will derail governments' climate change policy developments, though how they are implemented may change.

UBS says moves in China, Japan, Europe, the US, Canada and Australia toward adopting or expanding emissions trading means that "we expect what happens or does not happen in the area of globally co-ordinated climate change policy (at a key meeting in Copenhagen late next year) will be much less important than what is already happening on the ground".

A Lowy Institute poll last month showed the Australian public's top concerns when thinking of the next 10 years are increased water scarcity, climate change and then terrorism. The Murray Darling river system, the source of much of Australia's food supply, is now in crisis due to a drought that has the "fingerprints" of climate change "all over it", says Wendy Craik, who heads the government- appointed management agency of the river network.

The challenge of curbing carbon emissions is rapidly growing worse. Data from Global Carbon Project last month showed that global output of carbon dioxide the most prevalent of planet warming greenhouse gases has grown four times as fast since 2000 as during the prior decade. John Osborne is now part of a hoped-for energy "revolution" to find environmentally friendly alternatives to burning coal and gas. He is one of 12 permanent residents of Innamincka, the desert-hugged South Australian town about 8km from GeoDynamics' small 1-MW EGS pilot plant due to be launched early next year.

Mr Osborne and other townsfolk will say goodbye to collective monthly diesel generator bills of about $15,000 and hello to free, continuous, baseload power from the GeoDynamics plant. "In fact, I've just had the power subcontractor crews at the door to start arrangements for linking up, so we know it's definitely moving ahead. We are joining the experiment," Mr Osborne says. The EGS process is technically proven already. There are EGS plants in Germany and France but they are tiny the largest is about 3.5MW compared with the scale GeoDynamics is on course for.

GeoDynamics chief scientist and executive director Doone Wyborn, pictured, says the company is on course for an early 2009 launch of the 1MW demonstration plant to provide free power to Innamincka as proof EGS works. It will soon after make a final investment decision on the go-ahead for a 50MW plant and thereafter aims to start a massive expansion involving a total of 90 wells tapping heat from Australia's hot granite heart. It is looking at potentially up to 10,000MW of generating capacity enough to run New South Wales on a high consumption day.

Would other EGS plants need to be up and running in order to provide mainstream investors with the confidence to plough billions into EGS plants? "No, we can do it," Dr Wyborn says. "I'm hopeful others are able to get plants up and running. But we've got the best place in the world to do it. "When we can show EGS can be done economically, other projects will follow in slightly less favourable conditions. Some of those will be in Australia and some in other countries in the US, Europe and Asia. "Scaling up is the critical thing.

We're trying to show we can build a 50MW plant every 2km in every direction for 1000sq km. When does that show it's commercially viable? I think we can say that after our first 50MW power plant is up and running in 2012, we will be able to show it is economically viable on a large scale." The addition of the costs of carbon capture and storage for both coal and gas-fired plants and the costs of nuclear waste makes EGS plants the cheapest long-term baseload-capable energy source around, according to GeoDynamics' calculations.

The company is in "constant" talks with government on building connecting infrastructure to Adelaide and to Brisbane, given the Cooper Basin is about 500km from the existing national electricity grid. But Dr Wyborn says there are still longterm savings of "billions" when costs are calculated per-head of those densely populated cities.

The eyes of the world are on Australia's EGS industry. In the US, lawsuits brought on environmental grounds have blocked scores of proposed new coalfired power plants. The US federal energy department is now close to releasing $43 million in funding specifically to boost the development of EGS plants. An R&D alliance has also just been formed of US, Icelandic and Australian government energy department officials, companies and scientists to ramp up EGS development.

University of Queensland geothermal Energy Centre director Professor Hal Gurgenci said once that funding is released, likely after the November 4 presidential election, US interest in EGS technology is likely to "come with a vengeance". Australian geothermal Energy Association chief executive Susan Jeanes says it underlines how Australia is a world leader in new geothermal technology. "How to fracture granite layers to produce underground reservoirs for power sources is where we do lead the world," Ms Jeanes says.

But she says that while GeoDynamics has succeeded in securing powerful private investors such as Origin Energy and Tata Steel, other Australian developers will face problems in sourcing funds due to the financial crisis. While Australian EGS developers have lined up to show that when the climate change problem knocks, there is someone there to answer, Ms Jeanes says the industry's development could be stalled if government policy doesn't help now.

"If the Government doesn't introduce the emissions trading scheme, hurry up and get its renewable energy legislation through, hurry up and get its renewable energy fund guidelines out and the money available it's going to set back the course of our industry by decades," Ms Jeanes says.

Hydro blames big dry for $58m loss

Hobart Mercury
Tuesday 28/10/2008 Page: 7

Hydro Tasmania has blamed poor rainfall for a massive $58 million operating loss for the past financial year - only months after the State Government injected $270 million into its ailing energy business. The Hydro said keeping the lights on in Tasmania had cost it an extra $120 million. The Tasmanian government business had bought extra power, including 2264 gigawatt hours imported over the Basslink undersea cable from coalfired power stations interstate.

Tasmania exported 236GWh of the 7158 GWh hydro storages were able to generate. Hydro chairman David Crean said it was a tough year. "The last three years has been the driest three years on record," he said. "This has impacted on Hydro's cash flow." After operating expenses, the company was left with a net cash flow of $24.9 million. Because of new accounting standards, Hydro assets increased in value, which means the company made $158.9 million in profits after tax.

The State Government's $270 million injection meant the company was able to reduce its debt from $1.141 billion to $878 million. "It would have been some $200 million less if we had average rainfall over the last two years," he said. "This demonstrates in a very stark manner the importance of average rainfall to the finances of Hydro Tasmania." Dr Crean said the company was potentially in a strong position because it was the country's largest renewable energy business.

Chief executive Vince Hawksworth said Tasmania was forced to import 20 per cent of Tasmania's power demand last year. He said the low storage situation had restricted Hydro's ability to export to Victoria. To maintain Tasmania's supply, he said the business continued to import power at a significantly higher cost than it could sell to major industrial customers under existing longterm contracts. Mr Hawksworth said the impact of this was major lost revenue to Hydro and pressure on the future price of power.

Opposition energy spokesman Peter Gutwein said the State Government must help Tasmanians become more energy efficient. He said a reduction in demand would reduce Hydro's dependence on importing dirty, expensive energy from coal-fired power stations. "If we become energy efficient now, Tasmania will be better placed to potentially export clean hydro power to the mainland at a premium when storage levels finally improve," he said.

Powered by rubbish tip

Daily Telegraph
Tuesday 28/10/2008 Page: 9

A Sydney rubbish dump is powering 6000 houses by recycling potent greenhouse gases. The Eastern Creek Waste and Recycling Centre at Sydney's west, the biggest waste-to-energy project to come online this decade, was yesterday given a 20 per cent boost when a new engine was installed. Recycling industry leader WSN Environmental Solutions captures methane created during the breakdown of household waste in the landfill and burns it to make electricity.

The by-product is still carbon dioxide, but methane is 21 times more potent as a greenhouse gas so the process is beneficial in the fight against climate change. "This project prevents methane escaping into the atmosphere and generates renewable energy so it provides a twofold benefit," WSN Environmental Solutions CEO Ken Kanofski said yesterday.

State wind energy project on hold

Adelaide Advertiser
Monday 27/10/2008 Page: 4

THE STATE Government's green credentials are being queried after MPs were told a mini wind turbine rollout has "collapsed". The $331,000 project followed Premier Mike Rann's announcement in 2006 to install turbines on his and four other prominent Adelaide office buildings, as part of a commitment to renewable energy. At the time, Mr Rann said the turbines would be monitored for 12 months, but the Government has told The Advertiser that it does not know how much electricity is being generated from the project.

It says the data will be available once a new version of the machines are in place. Last week's Public Works Committee hearing was shown drawings of the Victor Harbor High School upgrade, complete with a mini wind turbine. However, Department of Education infrastructure director John Chadwick told the committee the turbines would not be installed on new capital works programs across the state because they were not available. "I understand ... a government contract has not come through," he said.

Opposition Education spokesman David Pisoni said the "plans across the whole of Government had collapsed" because a contract had failed to come through. Measurement Engineering Australia, the company that supplied the monitoring equipment on the five government buildings, describes the turbines as "window dressing" because of the turbulent airflow in urban environments. "There is no great wind on the Adelaide plain anyway," engineering director Andrew Skinner said.

The Opposition says the Scottish-invented SWIFT mini turbines, which are supposed to be able to supply up to half of a household's electricity requirements, have not lived up to expectations. "A foolhardy Premier rushed into buying the mini turbines without testing the claims of the product's inventors," Opposition Leader Martin Hamilton-Smith said. A spokesman for Mr Rann said the Government's wind energy policy wasn't simply about mini wind turbines on top of city buildings. "When the Rann Government came to power, there were no wind farms in SA," he said. "The state is now home to 53 per cent of the nation's wind energy."