Age
20 Oct 2011, Page: 9
THE world's four major green investment groups representing $20 trillion in funds have hailed Australia's carbon tax as a boon for investors, strongly backing the government's claim that the scheme will deliver economic benefits. The report, commissioned by groups representing 285 pension funds and other institutional investors around the globe, found that Labor's carbon price and financial assistance for green technology "should provide investors with real confidence" in investing in renewable energy in Australia.
It backs recent accusations by some in the energy industry that Opposition Leader Tony Abbott's vows to repeal the carbon tax and the uncertainty this was creating could damage investment. Mr Abbott has faced questions about whether his decision to axe the scheme including the permits electricity generators say they need for "hedging" will expose a future Coalition government to compensation claims and trigger a jump in power prices. Yesterday he said: "We are very confident that we can remove the carbon tax without becoming liable for compensation".
He said it was possible to avoid a compensation liability by understanding the design of the Gillard government's scheme and giving business "fair warning" not to buy forward permits. Permits are current for 12 months, they expire at the end of the financial year and are not tradeable or transferable until 2015. Mr Abbott's comments yesterday suggest the Coalition would not move to shut down the carbon scheme entirely until the end of the relevant financial year, when permits have expired, thereby limiting compensation liability.
Coalition climate spokesman Greg Hunt said the opposition would keep its pledge to scrap the carbon tax and that gave Australian business certainty, "unlike Labor's false promise of no carbon tax at the last election. Business has that certainty and can make decisions based on that commitment".
The new report by British investment expert Rory Sullivan praised Australia's clear carbon reduction targets, its transparent climate policy and the fact that the carbon trading scheme would be clearly linked to international markets. But it noted that one of the major risks was "political risk, in particular that the opposition Liberal Party may unwind elements of the proposals if elected".
Nathan Fabian, chief executive of the Investor Group on Climate Change, one of the four groups that commissioned the report, said: "International investors believe Australia's policy framework is one of the best in the world for investment certainty. Experience shows that when good policies are rolled back, confidence of investors is undermined for several years".
He added: "Investors believe that carbon pricing is the only real, long-term policy solution for Australia". The other three green investor groups involved were Europe's Institutional Investors Group on Climate Change, the US-based Investor Network on Climate Risk and the United Nations Environment Programme Finance Initiative.
Friday, 28 October 2011
Wind farms' noise barrier
Adelaide Advertiser
Thursday 20/10/2011 Page: 69
THE State Government will today unveil its plan to end investor uncertainty for new wind farms and protect residential areas from turbine noise. An interim development plan will be published today confirming councils as the premier planning bodies but introducing a 1 km barrier between new farms and residential areas. Premier Mike Rann said the proposed barrier-which could be removed if both parties agreed-would overcome concerns about turbine noise.
"The industry has been plagued by uncertainty following a court decision to uphold an objection on visual amenity grounds, and the Victorian Government's crackdown on wind power investment", he said. "As more than half of Australia's wind farm investment is in South Australia, we have a national responsibility to take the lead in reforming policy to respect the legitimate interests of both the industry and local communities".
The Government estimates the move will unlock another $1.8 million in infrastructure investment and skew investment away from populated areas. The package will also remove the right of third parties to appeal planning approval granted to wind farms located more than 2 km from country town borders. The changes, which will not affect existing projects, effectively mirror Victorian guidelines, although they allow developments closer to residences without agreement.
A spokesman for AGL Energy-which has the right to develop 164 turbines across three South Australian sites-said the scheme would cement community goodwill by backing local government planning processes. "AGL Energy has always progressed its wind farm applications through the local council planning regime route in order for the local community to fully participate in the development process", he said.
Energy project financier Investec Bank said the clarity provided by the reforms would likely translate into more investment in the sector by cutting risk. "Finding an appropriate balance between the needs of developers and other stakeholders is a critical step in solving the state's future energy demands", state commercial director Mark Headland said.
Thursday 20/10/2011 Page: 69
THE State Government will today unveil its plan to end investor uncertainty for new wind farms and protect residential areas from turbine noise. An interim development plan will be published today confirming councils as the premier planning bodies but introducing a 1 km barrier between new farms and residential areas. Premier Mike Rann said the proposed barrier-which could be removed if both parties agreed-would overcome concerns about turbine noise.
"The industry has been plagued by uncertainty following a court decision to uphold an objection on visual amenity grounds, and the Victorian Government's crackdown on wind power investment", he said. "As more than half of Australia's wind farm investment is in South Australia, we have a national responsibility to take the lead in reforming policy to respect the legitimate interests of both the industry and local communities".
The Government estimates the move will unlock another $1.8 million in infrastructure investment and skew investment away from populated areas. The package will also remove the right of third parties to appeal planning approval granted to wind farms located more than 2 km from country town borders. The changes, which will not affect existing projects, effectively mirror Victorian guidelines, although they allow developments closer to residences without agreement.
A spokesman for AGL Energy-which has the right to develop 164 turbines across three South Australian sites-said the scheme would cement community goodwill by backing local government planning processes. "AGL Energy has always progressed its wind farm applications through the local council planning regime route in order for the local community to fully participate in the development process", he said.
Energy project financier Investec Bank said the clarity provided by the reforms would likely translate into more investment in the sector by cutting risk. "Finding an appropriate balance between the needs of developers and other stakeholders is a critical step in solving the state's future energy demands", state commercial director Mark Headland said.
Wind farm veto simply absurd
Herald Sun
19 Oct 2011, Page: 33
ONE resident alone can bring down a planning application for the development of a wind farm. This absurd corruption of the planning process will kill or severely limit the growth of the renewable energy industry in this state. The claims of health impacts of wind turbines are anecdotal at best. Would the Government support the same veto power for coal mines? There are similar claims of health impacts from that process also. But any ban would hurt the coal and gas companies to which they are beholden.
Rohan Sharp, North Fitzroy
19 Oct 2011, Page: 33
ONE resident alone can bring down a planning application for the development of a wind farm. This absurd corruption of the planning process will kill or severely limit the growth of the renewable energy industry in this state. The claims of health impacts of wind turbines are anecdotal at best. Would the Government support the same veto power for coal mines? There are similar claims of health impacts from that process also. But any ban would hurt the coal and gas companies to which they are beholden.
Rohan Sharp, North Fitzroy
Polluters' interests first
Age
19 Oct 2011, Page: 16
YOU can only be bewildered by a government that gives residents the right of veto over new wind farms within 2 km of their residence, yet potential coalmines like the one proposed for Bacchus Marsh ("Not in our backyard, locals tell upbeat mining company", The Age, 18/10), the coalmine extension at Anglesea or new coal-fired power plants like the proposed HRL plant in the Latrobe Valley are quite OK. All are, or will be, within two km of residents but have no well-funded and well-connected "Landscape Guardians" to lobby against the proposals. So excavating and burning pollutants is not a threat to the landscape.
I had to laugh at the government's comment that it was sympathetic to landowners who did not want to give up their properties for mining operations, but it would not be at the expense of the state's economic interests. Having killed off future economic benefits of wind farms, the government should just concede it is only interested in economic benefits from the polluters.
Chris Owens, Lysterfield
19 Oct 2011, Page: 16
YOU can only be bewildered by a government that gives residents the right of veto over new wind farms within 2 km of their residence, yet potential coalmines like the one proposed for Bacchus Marsh ("Not in our backyard, locals tell upbeat mining company", The Age, 18/10), the coalmine extension at Anglesea or new coal-fired power plants like the proposed HRL plant in the Latrobe Valley are quite OK. All are, or will be, within two km of residents but have no well-funded and well-connected "Landscape Guardians" to lobby against the proposals. So excavating and burning pollutants is not a threat to the landscape.
I had to laugh at the government's comment that it was sympathetic to landowners who did not want to give up their properties for mining operations, but it would not be at the expense of the state's economic interests. Having killed off future economic benefits of wind farms, the government should just concede it is only interested in economic benefits from the polluters.
Chris Owens, Lysterfield
Record points to anti jobs stance
Age
19 Oct 2011, Page: 16
Ted Baillieu would do better to devote a bit more effort to getting Victoria out of the desalination plant's take-or-pay contract than continue his attack on Victoria's low-carbon future. This contract is going to cost Victorians far more than any slashing to the feed-in tariff will ever save.
Mr Baillieu's environmental record since the election bears summarising: slashing of the solar premium feed-in tariff; removal of the standard feed-in tariff in favour of a temporary arrangement; prohibitive restrictions on the installation of wind power generation; abandonment ofthe wind-down program for the dirty Hazelwood power station; effective abandonment of the 20% renewable energy target; and promotion of development of Melbourne's green wedges.
One could be excused for thinking that with the jobs to be lost in the solar industry, Mr Baillieu is actually anti-jobs and has no understanding that the world, like it or not, is heading into a low carbon future. But enough of this concern with the future of our children and the fate of jobs in a fickle state economy; let's get on to the important issues. Yeah, the selection of a safety slogan on number plates.
Robert Brown, Glen Iris
19 Oct 2011, Page: 16
Ted Baillieu would do better to devote a bit more effort to getting Victoria out of the desalination plant's take-or-pay contract than continue his attack on Victoria's low-carbon future. This contract is going to cost Victorians far more than any slashing to the feed-in tariff will ever save.
Mr Baillieu's environmental record since the election bears summarising: slashing of the solar premium feed-in tariff; removal of the standard feed-in tariff in favour of a temporary arrangement; prohibitive restrictions on the installation of wind power generation; abandonment ofthe wind-down program for the dirty Hazelwood power station; effective abandonment of the 20% renewable energy target; and promotion of development of Melbourne's green wedges.
One could be excused for thinking that with the jobs to be lost in the solar industry, Mr Baillieu is actually anti-jobs and has no understanding that the world, like it or not, is heading into a low carbon future. But enough of this concern with the future of our children and the fate of jobs in a fickle state economy; let's get on to the important issues. Yeah, the selection of a safety slogan on number plates.
Robert Brown, Glen Iris
Wednesday, 26 October 2011
Power bills tipped to lift as tax row rolls on - Industry leaders call for certainty
Age
19 Oct 2011, Page: 9
AUSTRALIANS face further electricity price rises and even strains on the grid as the political brawl over the carbon tax fosters uncertainty among power generators and the clean energy sector, experts have warned.
Opposition Leader Tony Abbott came under increased pressure yesterday over his warnings to business against planning for any long-term involvement in a carbon price and his vow to scrap every plank of the carbon tax, including the $10 billion Clean Energy Finance Corporation (CEFC), which would fund green technology. The backlash came as the government was forced to swiftly correct comments from a public servant to a parliamentary hearing that suggested the $10 billion green fund would hit the federal government's budget bottom line a statement the opposition seized on as evidence of a budget black hole.
Experts and some industry leaders said yesterday that the Coalition's fierce rhetoric of recent days and the uncertainty it was creating meant the energy industry could not plan investment and could not hedge against carbon price fluctuations by buying future-dated carbon permits. Clare Savage, interim CEO of the Energy Supply Association of Australia, said that without future-dated permits, energy suppliers could not make longterm contracts with their customers, which would push up prices.
"Any issues with purchasing forward carbon permits will drive up electricity prices unnecessarily", she said. "It is a problem for us, what the opposition is doing. We make 40 or 50-year investments and they're not even giving us five years of information". Nathan Fabian, chief executive of the Investor Group on Climate Change, representing super funds and investment managers with more than $600 billion under management, said: "There are consequences in terms of price impacts in electricity markets. Prices will rise because of uncertainty".
Law firm Baker and McKenzie's global head of climate change Martijn Wilder said: "For a long time, investors have waited for some policy certainty and some real stimulus to grow the renewable energy sector in Australia and the CEFC provides a core part of that stimulus". Infrastructure Australia head Michael Deegan told a Senate hearing that the uncertainty could put strain on parts of Australia's power grid if investment froze up.
For the first time yesterday, the Coalition vowed to scrap the $10 billion green fund as quickly as possible, arguing that green technology investment should come from the private sector and was no place for government. "We think that if the project is economic it should stand up on its own two feet", Mr Abbott said during a visit to Queensland. He described claims he was creating uncertainty as "nonsense on stilts". Opposition spokesman Andrew Robb compared the fund to Tricontinental, the investment bank that collapsed in 1990.
19 Oct 2011, Page: 9
AUSTRALIANS face further electricity price rises and even strains on the grid as the political brawl over the carbon tax fosters uncertainty among power generators and the clean energy sector, experts have warned.
Opposition Leader Tony Abbott came under increased pressure yesterday over his warnings to business against planning for any long-term involvement in a carbon price and his vow to scrap every plank of the carbon tax, including the $10 billion Clean Energy Finance Corporation (CEFC), which would fund green technology. The backlash came as the government was forced to swiftly correct comments from a public servant to a parliamentary hearing that suggested the $10 billion green fund would hit the federal government's budget bottom line a statement the opposition seized on as evidence of a budget black hole.
Experts and some industry leaders said yesterday that the Coalition's fierce rhetoric of recent days and the uncertainty it was creating meant the energy industry could not plan investment and could not hedge against carbon price fluctuations by buying future-dated carbon permits. Clare Savage, interim CEO of the Energy Supply Association of Australia, said that without future-dated permits, energy suppliers could not make longterm contracts with their customers, which would push up prices.
"Any issues with purchasing forward carbon permits will drive up electricity prices unnecessarily", she said. "It is a problem for us, what the opposition is doing. We make 40 or 50-year investments and they're not even giving us five years of information". Nathan Fabian, chief executive of the Investor Group on Climate Change, representing super funds and investment managers with more than $600 billion under management, said: "There are consequences in terms of price impacts in electricity markets. Prices will rise because of uncertainty".
Law firm Baker and McKenzie's global head of climate change Martijn Wilder said: "For a long time, investors have waited for some policy certainty and some real stimulus to grow the renewable energy sector in Australia and the CEFC provides a core part of that stimulus". Infrastructure Australia head Michael Deegan told a Senate hearing that the uncertainty could put strain on parts of Australia's power grid if investment froze up.
For the first time yesterday, the Coalition vowed to scrap the $10 billion green fund as quickly as possible, arguing that green technology investment should come from the private sector and was no place for government. "We think that if the project is economic it should stand up on its own two feet", Mr Abbott said during a visit to Queensland. He described claims he was creating uncertainty as "nonsense on stilts". Opposition spokesman Andrew Robb compared the fund to Tricontinental, the investment bank that collapsed in 1990.
Uncertainty plagues power
Adelaide Advertiser
19 Oct 2011, Page: 17
ELECTRICITY suppliers have criticised the Opposition for creating investment uncertainty in the sector, which could force electricity prices up by as much as 15% in future. The Energy Supply Association of Australia's Clare Savage said Opposition Leader Tony Abbott's plan to scrap the carbon price if elected and his warning to businesses that future carbon permits will be rendered worthless, has created fresh uncertainty for energy suppliers and could lead to higher electricity prices. She said the EASS had commissioned modelling which showed that "even a 5% reduction in electricity 'contracting' could result in a 10% increase for retail prices for households in a single year, and up to 15% increase in retail prices for large users". The carbon pricing scheme will become law next month.
19 Oct 2011, Page: 17
ELECTRICITY suppliers have criticised the Opposition for creating investment uncertainty in the sector, which could force electricity prices up by as much as 15% in future. The Energy Supply Association of Australia's Clare Savage said Opposition Leader Tony Abbott's plan to scrap the carbon price if elected and his warning to businesses that future carbon permits will be rendered worthless, has created fresh uncertainty for energy suppliers and could lead to higher electricity prices. She said the EASS had commissioned modelling which showed that "even a 5% reduction in electricity 'contracting' could result in a 10% increase for retail prices for households in a single year, and up to 15% increase in retail prices for large users". The carbon pricing scheme will become law next month.
Tariff cuts eclipse household solar panel - New limits on feed-in payments
Age
17 Oct 2011, Page: 4
THE Baillieu government has quietly cut access for most households to a second incentive to install new rooftop solar panels. It follows the decision last month to slash the state's "premium" feed-in tariff paid by retailers for rooftop solar from 60¢ to 25¢ a kW for power fed into the grid. Under the changes, the government will also restrict access to the state's "standard" feed-in tariff in place since 2004 for new solar panel systems generating less than five kilowatts, the lion's share of installations.
The standard feed-in tariff requires electricity retailers to pay households and businesses that install renewable-energy systems generating up to 100 kW the same price for energy fed into the grid as they charge for power taken out, which is typically between 20¢ and 24¢ a kW. The changes mean households installing smaller solar systems will now only be able to apply for the "transitional" 250 tariff in place for five years. The standard tariff does not have a cut-off date. Critics of the feed-in tariffs argue that they increase the cost to all electricity consumers as energy retailers bear the main costs.
The changes took the Clean Energy Council by surprise, with policy director Russell Marsh saying the group only learnt about it late on Thursday night when legislation for the 25¢ tariff reached Parliament. That is despite discussions with the Department of Primary Industries over several months about the future of Victoria's feed-in tariffs. A spokeswoman for Energy Minister Michael O'Brien said: "When the transitional feed-in tariff is introduced from 1 January, the standard feed-in tariff will not be available to customers who are eligible for the transitional feed-in tariff. "The rate of 25¢ will be the second-most-generous legislated rate in Australia".
The state government will commission the Victorian Competition and Efficiency Commission to inquire into the design of future feed-in tariffs, with a report expected to be completed in 2012. The opposition's energy spokeswoman, Lily D'Ambrosio, said: "It is becoming more evident that the Baillieu government is forcing the small scale solar power industry to take a long walk over a very short cliff to its possible demise next year". She said the legislation to put in place the new transitional 25¢ tariff also allowed the minister to shut it down any time before the guaranteed five years.
17 Oct 2011, Page: 4
THE Baillieu government has quietly cut access for most households to a second incentive to install new rooftop solar panels. It follows the decision last month to slash the state's "premium" feed-in tariff paid by retailers for rooftop solar from 60¢ to 25¢ a kW for power fed into the grid. Under the changes, the government will also restrict access to the state's "standard" feed-in tariff in place since 2004 for new solar panel systems generating less than five kilowatts, the lion's share of installations.
The standard feed-in tariff requires electricity retailers to pay households and businesses that install renewable-energy systems generating up to 100 kW the same price for energy fed into the grid as they charge for power taken out, which is typically between 20¢ and 24¢ a kW. The changes mean households installing smaller solar systems will now only be able to apply for the "transitional" 250 tariff in place for five years. The standard tariff does not have a cut-off date. Critics of the feed-in tariffs argue that they increase the cost to all electricity consumers as energy retailers bear the main costs.
The changes took the Clean Energy Council by surprise, with policy director Russell Marsh saying the group only learnt about it late on Thursday night when legislation for the 25¢ tariff reached Parliament. That is despite discussions with the Department of Primary Industries over several months about the future of Victoria's feed-in tariffs. A spokeswoman for Energy Minister Michael O'Brien said: "When the transitional feed-in tariff is introduced from 1 January, the standard feed-in tariff will not be available to customers who are eligible for the transitional feed-in tariff. "The rate of 25¢ will be the second-most-generous legislated rate in Australia".
The state government will commission the Victorian Competition and Efficiency Commission to inquire into the design of future feed-in tariffs, with a report expected to be completed in 2012. The opposition's energy spokeswoman, Lily D'Ambrosio, said: "It is becoming more evident that the Baillieu government is forcing the small scale solar power industry to take a long walk over a very short cliff to its possible demise next year". She said the legislation to put in place the new transitional 25¢ tariff also allowed the minister to shut it down any time before the guaranteed five years.
The value of clean energy
Herald Sun
18 Oct 2011, Page: 25
IT is bizarre the coal seam gas industry, with its known threat of polluting groundwater, can go into any property and start mining, whether the owners like it or not. Yet wind farms can be vetoed by anyone within a 2km radius. wind farms provide clean energy, cheaply and efficiently. The Baillieu Government is a friend of the coal industry, but can't see the value in clean energy. Coal and coal seam gas are dirty and damaging. Victoria needs jobs and energy that are clean and have a future, Mr Baillieu, just like you promised.
M. Beavis, Brighton
18 Oct 2011, Page: 25
IT is bizarre the coal seam gas industry, with its known threat of polluting groundwater, can go into any property and start mining, whether the owners like it or not. Yet wind farms can be vetoed by anyone within a 2km radius. wind farms provide clean energy, cheaply and efficiently. The Baillieu Government is a friend of the coal industry, but can't see the value in clean energy. Coal and coal seam gas are dirty and damaging. Victoria needs jobs and energy that are clean and have a future, Mr Baillieu, just like you promised.
M. Beavis, Brighton
Monday, 24 October 2011
Big bills for new traffic lights
Herald Sun
18 Oct 2011, Page: 11
COUNCILS are spending hundreds of thousands of dollars to upgrade traffic lights with energy-efficient globes. Bayside ratepayers are being slugged $195,000 to modernise nine sets of traffic lights by fitting them with light-emitting diode globes. Stonnington Council will spend $70,000 under a VicRoads program to replace incandescent globe traffic signals with LED ones. Whitehorse is also supporting the program, while Port Phillip and Yarra would be interested in taking part.
LED systems are considered more energy efficient and cheaper to maintain than existing incandescent bulb technology, which is being phased out by the Federal Government. But the Federal Government said traffic lights were exempt and it was up to councils to decide whether to upgrade or not. However, Melissa Evans, spokeswoman for federal Climate Change and Energy Efficiency parliamentary secretary Mark Dreyfus, said changing to LED globes would save ratepayers money over time.
The nine sets of signals around New, Bay, Church and Martin streets in Brighton are owned by Bayside Council and maintained by VicRoads at an annual cost of $80,000 to ratepayers. Mayor Alex del Porto defended the "significant" cost of $195,000 to replace the lights. "It is a cost we have to bear", he said. VicRoads regional director metro southeast Duncan Elliot said the organisation had a contract to upgrade globes on about 800 traffic signal sites on state roads. He said LED traffic signals provided much better signal visibility and had a service life of more than 10 years.
18 Oct 2011, Page: 11
COUNCILS are spending hundreds of thousands of dollars to upgrade traffic lights with energy-efficient globes. Bayside ratepayers are being slugged $195,000 to modernise nine sets of traffic lights by fitting them with light-emitting diode globes. Stonnington Council will spend $70,000 under a VicRoads program to replace incandescent globe traffic signals with LED ones. Whitehorse is also supporting the program, while Port Phillip and Yarra would be interested in taking part.LED systems are considered more energy efficient and cheaper to maintain than existing incandescent bulb technology, which is being phased out by the Federal Government. But the Federal Government said traffic lights were exempt and it was up to councils to decide whether to upgrade or not. However, Melissa Evans, spokeswoman for federal Climate Change and Energy Efficiency parliamentary secretary Mark Dreyfus, said changing to LED globes would save ratepayers money over time.
The nine sets of signals around New, Bay, Church and Martin streets in Brighton are owned by Bayside Council and maintained by VicRoads at an annual cost of $80,000 to ratepayers. Mayor Alex del Porto defended the "significant" cost of $195,000 to replace the lights. "It is a cost we have to bear", he said. VicRoads regional director metro southeast Duncan Elliot said the organisation had a contract to upgrade globes on about 800 traffic signal sites on state roads. He said LED traffic signals provided much better signal visibility and had a service life of more than 10 years.
Initial carbon price of little consequence in long run
Sydney Morning Herald
15 Oct 2011, Page: 14
Tax too high", shouts taxpayer. Well, blow me down. But the Business Council president, Graham Bradley, had a valid point this week when he complained Australia's carbon price, starting at $23 a tonne and ratcheting up, was "one of the highest costs of carbon anywhere on the planet". It's true, and the government will be hoping things don't stay that way for long.
Australia's carbon price fixed for three years, then floating from July 1, 2015 was meant to start roughly in line with the international market price. But in June Europe's carbon price fell out of bed, as the euro zone sovereign debt crisis deepened, dropping from its two-year, post-global financial crisis level of about €12 to €14 ($16 to $19) per tonne to roughly €7 to €10 per tonne this week. The stronger our currency, the worse that gap looks.
The price drop shows Europe's emissions trading scheme is working: if the economy weakens, emissions fall, and staying under the scheme's emissions "cap" gets easier and cheaper. No one knows if, when or how Europe will resolve its debt crisis and pull itself back into recovery. It could take awhile. On either side of the Atlantic, we might be looking at a lost decade of low growth, Japanese-style.
Worse, there is little certainty about international climate negotiations and what might follow the Kyoto Protocol when it expires at the end of 2012. The protocol establishes the "clean development mechanism", which itself establishes an international carbon price, by allowing liable parties in the developed world (Europe, mainly, because it is doing the most on climate change) to buy their emissions reduction in developing countries.
One way or another most people, according to Bloomberg New Energy Finance analyst Seb Henbest, expect the clean development mechanism to continue beyond 2012. But at some point a big chunk of demand for credits under the mechanism is going to be withdrawn again, depressing the carbon price because the European Union has put a ceiling on the amount of emissions reduction it can buy internationally: 1.68 Gt between 2008 and 2020.
Other jurisdictions will enter the market Australia from 2015-16, when we float the price and link up with the rest of the world, and China, Japan and South Korea are working on their own emissions trading schemes and this is likely to push the carbon price up. A massive reduction of deforestation in developing countries, or cheap solar, or a myriad of innovative ways to cut emissions could keep the price down. And what about peak oil? With so many countervailing forces and markets that are artificial and relatively immature, it's very hard to predict where the international carbon price will go.
One thing's sure, climate change is going to get worse and emissions reduction trajectories will get only steeper. That will push the carbon price up, inevitably. Henbest is philosophical. "It's not a matter of whether the government has set the starting price too high or too low. The international price moves, they can never get that right. It's always going to be wrong in one direction or the other".
Our starting price is the result of a political negotiation, there is no science behind it. If the price starts too high in the first three years, and drops sharply once it floats, what are the consequences? Deloitte's study for the Business Council warned of the risks to the government's revenue, meaning the scheme might not be budget neutral.
For business, the risk seems less clear. Deloitte included broker forecasts that the international carbon price would range between $22.38 and $34.02 per tonne in 2015-16, by which time our price would be around $29. The council warns the high fixed price means a "hard start" for Australian industry and it wants a lower initial price. But the emissions-intensive, trade-exposed sector is getting compensation via free permits of between 66% and 95%, then tapering off. Other businesses will pass on higher costs mainly dearer gas and electricity with overall consumer prices expected to rise by 0.7% in the first year according to the government's figures. Most households get compensation for that price increase.
This year the Grattan Institute updated its modelling on the impact of a $40 per tonne carbon price on industry and households to account for the rise in our dollar and other input costs as well as higher commodity prices. The analysis assumed no carbon price anywhere else in the world. The answer", Grattan economist Tristan Edis says, "is that the vast majority of Australian industry will see little if any change to their financial viability. In fact some industries, such as steel, will be better off". Next year, he says, "July 1 will roll over and the scheme will start and the vast majority of the country won't even notice. The only people that will notice will be electricity generators".
Climate change adviser Ross Garnaut acknowledges the international price has been below the fixed price of $23 a tonne for several months "after having be en well above it for quite a while". He, too, plays down the impact: "It may be higher or lower when the scheme starts next year. The differential won't be large either way. Any negative differential for Australian trade-exposed industries will largely be offset for the emissions intensive by free permits. Knowledge that any differential is likely to be removed by international trading makes it unlikely that the small remaining differential will be influential in important investment decisions".
Which is one way of saying, tough. Neither the government nor the Greens are open to changing the starting price. A spokesperson for the Greens Deputy Leader, Christine Milne, warned that by 2015-16, if the carbon price was still at rock-bottom prices, we'll be in serious trouble: "We have to have a global price which is thoroughly recovered and on its way to growing substantially by that point in time if we're to avoid the climate crisis that is coming down the line".
paddy.manning@fairfaxmedia.com.au
twitter: @gpaddymanning
15 Oct 2011, Page: 14
Tax too high", shouts taxpayer. Well, blow me down. But the Business Council president, Graham Bradley, had a valid point this week when he complained Australia's carbon price, starting at $23 a tonne and ratcheting up, was "one of the highest costs of carbon anywhere on the planet". It's true, and the government will be hoping things don't stay that way for long.Australia's carbon price fixed for three years, then floating from July 1, 2015 was meant to start roughly in line with the international market price. But in June Europe's carbon price fell out of bed, as the euro zone sovereign debt crisis deepened, dropping from its two-year, post-global financial crisis level of about €12 to €14 ($16 to $19) per tonne to roughly €7 to €10 per tonne this week. The stronger our currency, the worse that gap looks.
The price drop shows Europe's emissions trading scheme is working: if the economy weakens, emissions fall, and staying under the scheme's emissions "cap" gets easier and cheaper. No one knows if, when or how Europe will resolve its debt crisis and pull itself back into recovery. It could take awhile. On either side of the Atlantic, we might be looking at a lost decade of low growth, Japanese-style.
Worse, there is little certainty about international climate negotiations and what might follow the Kyoto Protocol when it expires at the end of 2012. The protocol establishes the "clean development mechanism", which itself establishes an international carbon price, by allowing liable parties in the developed world (Europe, mainly, because it is doing the most on climate change) to buy their emissions reduction in developing countries.
One way or another most people, according to Bloomberg New Energy Finance analyst Seb Henbest, expect the clean development mechanism to continue beyond 2012. But at some point a big chunk of demand for credits under the mechanism is going to be withdrawn again, depressing the carbon price because the European Union has put a ceiling on the amount of emissions reduction it can buy internationally: 1.68 Gt between 2008 and 2020.
Other jurisdictions will enter the market Australia from 2015-16, when we float the price and link up with the rest of the world, and China, Japan and South Korea are working on their own emissions trading schemes and this is likely to push the carbon price up. A massive reduction of deforestation in developing countries, or cheap solar, or a myriad of innovative ways to cut emissions could keep the price down. And what about peak oil? With so many countervailing forces and markets that are artificial and relatively immature, it's very hard to predict where the international carbon price will go.
One thing's sure, climate change is going to get worse and emissions reduction trajectories will get only steeper. That will push the carbon price up, inevitably. Henbest is philosophical. "It's not a matter of whether the government has set the starting price too high or too low. The international price moves, they can never get that right. It's always going to be wrong in one direction or the other".
Our starting price is the result of a political negotiation, there is no science behind it. If the price starts too high in the first three years, and drops sharply once it floats, what are the consequences? Deloitte's study for the Business Council warned of the risks to the government's revenue, meaning the scheme might not be budget neutral.
For business, the risk seems less clear. Deloitte included broker forecasts that the international carbon price would range between $22.38 and $34.02 per tonne in 2015-16, by which time our price would be around $29. The council warns the high fixed price means a "hard start" for Australian industry and it wants a lower initial price. But the emissions-intensive, trade-exposed sector is getting compensation via free permits of between 66% and 95%, then tapering off. Other businesses will pass on higher costs mainly dearer gas and electricity with overall consumer prices expected to rise by 0.7% in the first year according to the government's figures. Most households get compensation for that price increase.
This year the Grattan Institute updated its modelling on the impact of a $40 per tonne carbon price on industry and households to account for the rise in our dollar and other input costs as well as higher commodity prices. The analysis assumed no carbon price anywhere else in the world. The answer", Grattan economist Tristan Edis says, "is that the vast majority of Australian industry will see little if any change to their financial viability. In fact some industries, such as steel, will be better off". Next year, he says, "July 1 will roll over and the scheme will start and the vast majority of the country won't even notice. The only people that will notice will be electricity generators".
Climate change adviser Ross Garnaut acknowledges the international price has been below the fixed price of $23 a tonne for several months "after having be en well above it for quite a while". He, too, plays down the impact: "It may be higher or lower when the scheme starts next year. The differential won't be large either way. Any negative differential for Australian trade-exposed industries will largely be offset for the emissions intensive by free permits. Knowledge that any differential is likely to be removed by international trading makes it unlikely that the small remaining differential will be influential in important investment decisions".
Which is one way of saying, tough. Neither the government nor the Greens are open to changing the starting price. A spokesperson for the Greens Deputy Leader, Christine Milne, warned that by 2015-16, if the carbon price was still at rock-bottom prices, we'll be in serious trouble: "We have to have a global price which is thoroughly recovered and on its way to growing substantially by that point in time if we're to avoid the climate crisis that is coming down the line".
paddy.manning@fairfaxmedia.com.au
twitter: @gpaddymanning
Interest-free appliances
Sydney Morning Herald
17 Oct 2011 Page: 2
PEOPLE on low incomes will be able to buy energy-efficient appliances such as washing machines and fridges with interest-free loans under a $30 million program to cut the carbon footprint of households. More than 50,000 homes will have access to the scheme, which will also send experts to people's homes to assess how they can make their daily lives more energy efficient, the Housing Minister, Jenny Macklin, said yesterday.
Ms Mackin said the Home Energy Saver Scheme will begin next year with loans of "between $900 and $1000" for households to buy new appliances. The opposition climate change spokesman, Greg Hunt, said the Coalition would look at the scheme with an open mind". "But their last energy efficiency program was the pink batts program", he said. The government's home insulation scheme was shut down amid safety fears and evidence of fraud.
17 Oct 2011 Page: 2
PEOPLE on low incomes will be able to buy energy-efficient appliances such as washing machines and fridges with interest-free loans under a $30 million program to cut the carbon footprint of households. More than 50,000 homes will have access to the scheme, which will also send experts to people's homes to assess how they can make their daily lives more energy efficient, the Housing Minister, Jenny Macklin, said yesterday.
Ms Mackin said the Home Energy Saver Scheme will begin next year with loans of "between $900 and $1000" for households to buy new appliances. The opposition climate change spokesman, Greg Hunt, said the Coalition would look at the scheme with an open mind". "But their last energy efficiency program was the pink batts program", he said. The government's home insulation scheme was shut down amid safety fears and evidence of fraud.
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