Saturday, 14 May 2011

Council outlines roles for new body

2 May 2011, Page: 8

THE peak clean energy group has taken up calls for an independent body similar to the Reserve Bank to be launched with next year's carbon tax. In a discussion paper released today, the Clean Energy Council outlines possible roles for the proposed agency including administering an emissions trading scheme and setting targets, allocating revenue from the carbon tax and issuing loans to fund green investments.

The body, which would operate at arm's length from the federal government, would constantly review projects and cut off funds to those that fail to prove themselves. Speaking ahead of this week's green energy conference in Melbourne, CEC chief executive Matthew Warren said borrowing from future carbon revenue to support green developments would enable quicker transition to low emissions technology.

"It seems insane that you would simply spend the money as it comes in the door, if the hardest part of the transformation is in the first five to 10 years", he said. "If you borrow against the future income stream and spend it now, then you will presumably make it much easier for businesses and households to cope with the scheme so you don't have to keep paying compensation".

The Clean Energy Council is an industry association representing renewable energy companies. Government adviser Ross Garnaut has previously recommended creating a carbon bank to administer carbon reduction measures, while outgoing RBA board member and economist Warwick McKibbin has suggested it set and adjust emissions targets.

Mr Warren said it would be challenging for an independent body to set the carbon price. Britain plans to establish a green investment bank next year to spur investment in low emissions technology. Coordinated funding would make it easier to monitor different projects and pull their funding if necessary. "You've got to keep delivering in order to keep getting funded. There's competition between the sectors but equally there's accountability so we don't get the feeling we're just doing stuff because the money was allocated".

Mr Warren said projects deemed too risky by traditional lenders needed an influx of capital now, pointing to geothermal and ocean wave energy as areas where public funding should step in. "The funds at the cutting edge of the most risky private investments, their basic view is we need to get our money back plus something in five years or we're not going to do it", he said. "The geothermal industry or the ocean industry aren't going to give you a payback in five years. It doesn't mean it's bad technology, it's just going to need some help".