Cost focus returns to green plan

The Weekend Australian, Page: 11
Saturday, 29 July 2006

THE widening gap in the approaches of the federal and state governments to delivering a greener energy future threatens to be counter-productive and expensive. The Victorian Government's commitment that by 2010 about 10 per cent of its electricity consumption will be from renewable sources runs counter to the federal Government's decision not to increase the national mandatory renewable target (MRET). MRET, introduced in 2001, requires the sourcing of 9500 gigawatt hours of extra renewable electricity a year by 2010 through to 2020.One reason for the federal Government's decision not to expand MRET is that it feared it represented a longterm subsidy to windpower, which would lead to higher electricity prices.

The Victorian Government has no such qualms and is committed to having up to 1000 megawatts of wind energy installed in environmentally acceptable locations by the end of this year, a plan somewhat stymied by party politics and the concern of federal Environment Minister Ian Campbell for the fate of the orangebellied parrot. But something is missing in the debate: if renewable energy is the future why aren't we all adopting it?Access Economics argues that the assumed increase in windpower in the Victorian electricity system, and associated electricity prices, is projected to impose economic costs in the Victorian economy equivalent to $108 million in 2010.Access made the point that to achieve the best result for emissions reduction on a national basis a number of approaches to abatement would have to be adopted, not just establishing mandatory targets. But according to the Business Council for Sustainable Energy, VRET will cost the average household about $1 a month and will be offset by cost reductions, while the overall impact on business costs is estimated to be less than 0.1 per cent.

The renewable energy debate is again becoming fast and furious, but this time it is the states making the running in the absence of a clear national policy to encourage alternatives to using fossil fuels.