Saturday 27 December 2008

Coal-fired generators escape the blacklist

Sydney Morning Herald
Friday 19/12/2008 Page: 3

FEW if any of Australia's 30 coalfired power generators will be shut down by 2020 under the Rudd Government's scheme to reduce greenhouse gases by a target of 5 per cent, according to the findings of its own white paper made public this week.

About $3.9 billion will be handed out to the most polluting generators in the form of free permits to emit greenhouse gases under the scheme announced by the Prince Minister, Kevin Rudd, on Monday. But modelling in the Government's white paper on the carbon pollution reduction scheme shows there will be no significant reductions in carbon pollution from coal-fired power stations by 2020 if the Government sticks to a target of cutting emissions to 5 per cent below 2000 levels.

Using three different models, the white paper finds that under the Rudd plan "emissions do not reduce significantly below the current levels over the first decade of the scheme". The main benefit of the scheme, it says, is to stop the growth of greenhouse emissions from power generators in the future, rather than cutting emissions or shutting down any of the generators.

The modelling finds that "relatively few generators exit the market in their entirety" and one model suggests that none will shut before 2020 as a result of the Government's scheme if the target is 5 per cent. At most only three are likely to go. Releasing the white paper this week, Mr Rudd said if there was a successful international climate agreement next year, Australia would lift its target to a maximum 15 per cent reduction in emissions on 2000 levels. Under this target, about seven generators could shut down.

Hugh Saddler, an emissions expert, said it was difficult to find cuts to Australia's greenhouse gas emissions in the carbon pollution reduction scheme, especially from the energy sector, which accounts for almost 70 per cent of emissions, the bulk of these coming from electricity, followed by transport.

At UN negotiations, European and Chinese leaders have called on developed countries to consider cuts of 25 per cent by 2020, and Mr Rudd is facing a backlash from environment groups. Australians per head of population are among the highest greenhouse gas polluters in the world, Mr Rudd said this week. Each Australian produces about 27.6 tonnes a year.

'The Garnaut report found that Australia's electricity supply had a greenhouse gas emissions load much higher than the average for developed OECD countries, and that among nations producing "clean" electricity we were just ahead of Cuba, Cambodia and Kazakhstan. Our reliance on black and brown coal for three quarters of the electricity supply made us one of the most greenhouse gas-intensive countries in the world, with only North Korea, Estonia, Mongolia, Bosnia and Poland in the same league.

As few emissions cuts are now expected to come from coalfired power stations, the Climate Change Minister, Penny Wong, is promoting the Government's target of getting 20 per cent of the country's power from renewable energy by 2020 as a means of cutting emissions. Draft legislation on that target was made public on Tuesday.

Senator Wong did not dispute that under the Government's plan, few cuts would come from coal-fired power stations. "The carbon pollution reduction scheme is designed to reduce Australia's carbon pollution at the lowest cost to the economy," a spokeswoman said. "The Government places a very high priority on the security of Australia's electricity supply."

Solar no solution

Daily Telegraph
Friday 19/12/2008 Page: 24

ENCOURAGING households to install solar panels won't reduce greenhouse gas emissions by one kilogram, according to a Canberra-based think tank. More solar panels would simply free up extra permits under emissions trading for the cement, aluminum and steel industries to increase their carbon output, The Australia Institute said.

The Federal Government on Wednesday abandoned its unpopular decision to means-test the solar rebate. That means all Australian homes will now qualify for a rebate worth up to $7500. The Australia Institute said if individuals bought less coal-fired electricity, power stations would buy fewer permits. But that just means there would be more available on the market for other industries.

Europeans give nod to a `20 20 20' climate deal

Canberra Times
Friday 19/12/2008 Page: 14

The European parliament approved the EU's climate change package yesterday, removing the last hurdle facing the ambitious plan aimed at reducing 20 per cent of greenhouse gas emissions by 2020. Six texts on the package, already agreed by the 27 European Union member states, were passed by a large majority of the MEPs present. "We have sealed the climate package," European Parliament president Hans-Gert Poettering said after the vote.

The "20-20-20" climate package, which the Europeans hope will serve as a model to other nations, oblige EU nations by 2020 to cut carbon dioxide emissions by 20 per cent by from 1990 levels; to make 20 per cent energy savings; and to bring the use of renewable energy sources tip to 20 per cent of the total. The parliamentary approval came five days after EU heads of state and government worked out a compromise deal on the package at a summit in Brussels.

Within the overall EU targets, each EU nation and industry sector has its own obligations under the package, and last-minute dispensations were given, particularly to Poland and Germany, which were concerned at the effects on industry. German conservatives also complained that the package was too tough on industry and evoked the spectre of "carbon leakage" where jobs would move out of a highly regulated region with no benefit to the European economy or the global environment. But environmental groups complain that the package was so watered down in the attempts to reach a deal that the measures adopted would no longer meet the promised climate change targets.

Greenpeace EU climate and energy policy director Joris den Blanken said, "The parliament has marginalised itself by lacking the courage to make even small changes to the compromises negotiated by the EU summit last Friday. "Europe promised leadership on climate, but so far it has led us up the garden path. The climate package doesn't even take its halfway to where we should be in the fight against climate change." A senior adviser to the World Wildlife Fund, Delia Villagrasa, said, "This is not quite the third Industrial Revolution trumpeted when proposals were presented at the beginning of the year.

"The 20 per cent target sounds nice in words, but is void because EU countries are allowed to accomplish approximately three-quarters of the effort outside EU borders, which translates into European emission reduced by only 4-5 per cent between now and 2020." But Swedish Liberal Democrat MEP Lena Ek hailed the agreement as "a win-win situation". "Finally we have this package. In a period where we have to go through an economic crisis, this package is a win-ruin situation. "The green investments will create jobs and give our industry a lead.

By adopting this set of measures we have confirmed Europe's leadership in tackling global warming." French Environment Minister Jean-Louis Borloo said, "Mission accomplished. We'll see the full benefit if we reach a global deal in Copenhagen." The EU hopes its climate and energy package will serve as a model for the US, China, India and other heavy polluters at international climate change talks to be held in Copenhagen next December. The EU nations say they are prepared to increase their greenhouse gas cuts to 30 per cent if there is a global climate change deal.

While Canberra fiddles, communities are acting on the environment.

Friday 19/12/2008 Page: 19

FEW days ago, I sat at a pizzeria with a group of green-minded citizens and tossed around ideas for a local climate change group. We talked of many things: from encouraging our council to harvest rainwater and buy bulk green power to finding a way to communally recycle organic waste. Several weeks earlier, an acquaintance at my gyro had described how people in her street had formed an environmental group. Council elections were being held at the time and four out five local candidates were running with policies tinged either a deep or a paler shade of green.

Meanwhile, three people I knew had just installed solar panels on their roofs, buying in bulk at a discounted price. Bizarrely, the Federal Government might have hampered such schemes by replacing its household solar panel rebate with a lesser subsidy. The Government's dismal effort on greenhouse gas reduction targets ignores not only the scientific evidence but another striking fact: the community has largely moved on.

People know global warming must be tackled immediately and are grouping in surprising ways to do so. There are said to be about 50 climate change groups in Victoria alone. Most people I have spoken to about climate change have young children and I wasn't surprised to see a photo in The Age this week of kids at a protest in Health and Ageing Minister Nicola Roxon's office.

Parents spend years nurturing fragile, dependent beings, in the hope of building healthy, resilient adults. But what world will these children inhabit when they grow up? One possible answer is given by Tim Flannery in his quarterly essay Now or Never: A Sustainable Future For Australia? After assessing the latest scientific evidence, Flannery concludes: "I think there is now a better than even chance that, despite our best efforts, in the coming two or three decades Earth's climate system will pass the point of no return.

This is most emphatically not a counsel of despair, simply a statement of my assessment of probability." Thankfully, he devotes much of his essay to exploring ways we might head off this scenario if act now. They include embracing geothermal energy; changing farming methods to sequester carbon and build up soil quality; a surcharge on coal exports to expand clean coal research and using electric cars charged by wind energy.

Given that the Government's chief priority seems to be compensating polluters rather than encouraging research and development or changing farming practices, I believe it's up to the community to show Kevin Rudd and Penny Wong that they have misread the mood of the electorate.

Why, for example, did the Government's $4.7 billion "nation-building" package not direct more money to sustainable industries to help revive the economy? And how did it not anticipate a surge in demand for solar panels? Its decision to replace the $8000 rebate with an inferior subsidy to be paid by electricity retailers is another example of how it has misread the community's desire to act.

The rebate appears to have been axed because it was too popular! Less than two months ago, Barack Obama was elected US President amid a wave of hope. I'm sure I was not alone in shedding a tear as I listened to his acceptance speech on November 5. His message was one of sacrifice as well as hope; he spoke of the need for people to overcome their disagreements and work together for the common good. Even in Australia, Obama tapped into a wellspring of passion and idealism. I received phone calls and emails from friends thrilled by his success.

Many seemed to feel newly inspired to stand up for their beliefs and to take a role, however small, in the public life of our nation. Climate change is the issue of our lifetime. Surely, then, we should harness all that idealism and desire for change and tell our Government that we, too, are prepared to make sacrifices if it will show greater leadership on cutting greenhouse emissions. If it falters now, it will leave the next generation a terrible legacy.

Rudd scheme to hit solar households

Friday 19/12/2008 Page: 3

AN APPARENT flaw in the design of the Federal Government's emissions trading scheme means households buying solar energy systems in future might not be helping to reduce Australia's greenhouse gas emissions. A day after Environment Minister Peter Garrett flagged controversial changes in subsidies for solar energy, critics have leapt on what appears to be another Government-created disincentive for Australian households to go solar.

Under the Government climate strategy announced this week, Australia will cut emissions by 5 per cent from 2000 levels by 2020, with the option of a higher target if other countries take strong action. But under the proposed emissions trading scheme, any carbon dioxide reductions achieved by future solar households could simply allow polluting industries to increase emissions by a corresponding amount - without jeopardising Australia's overall target. "When emissions trading comes in, every tonne of carbon dioxide saved by households will simply free up a tonne that can be used by industry," said Richard Denniss, director of the Australia Institute.

"Installing solar hot water heaters, driving smaller cars and turning off the lights will not help the environment one bit," Mr Denniss said. "The only effective way for households to reduce Australia's carbon emissions will be to buy emissions permits and rip them up." Another critic, Voluntary Carbon Markets Association president Ric Brazzale, said voluntary actions by companies and individuals to reduce emissions - including Green Power schemes and buying offsets for emissions on plane flights - now save 6 million tonnes of emissions a year, and involve one in six Australian families.

"Inadequate targets will lead to inadequate emission reductions," Mr Brazzale said. "It is imperative to encourage voluntary action by individuals and business to achieve emissions reductions beyond relatively minor levels." The association is urging the Government to allow carbon savings through "measurable and verified voluntary action" by households or business to extinguish emissions trading permits - as under a scheme now operating in the north-east of the United States. Without this, it warned emissions trading "will effectively decimate the voluntary market in Australia".

In other developments:
  • Mr Garrett has proposed that owners of office space of more than 2000 square metres commission a report giving an energy efficiency rating.
  • Accounting firm KPMG, the Brotherhood of St Lawrence and the Ecos Corporation urged the Government to set up a national energy efficiency program to refit the homes of low-income households.

Friday 26 December 2008

$40m blows in

Friday 19/12/2008 Page: 3

Babcock and Brown has agreed to cut Babcock and Brown Wind Partners loose for a $40 million price, further unravelling its system of providing management to its funds in exchange for a fee. The payment consists of $35 million upfront and $5 million to be paid to Babcock next year. Babcock and Brown Wind is the latest of the satellites to be successfully cut free from the infrastructure fund, which has seen its share price tumble more than 99 per cent in 2008.

Investors were pleased that Babcock and Brown Wind had finally been released from the shackles, its shares soaring 13.6 per cent, or 12t to $1. Babcock's were unchanged at 15.50. Babcock and Brown Wind is in the process of completing six wind farms in the US - taking the number of wind farms it operates to 26 in North America.

Babcock and Brown chief executive Michael Larkin said the wind fund would continue to expand with the "political and economic growth drivers behind wind energy remaining strong". "Babcock and Brown is a world leader in the development and operation of wind energy projects and we remain fully committed to both our operational projects and our significant pipeline of wind developments in North America, Europe and Australia including our offshore wind pipeline," he said.

$20 billion of renewable investment ready to go

Clean Energy Council
17 December 2008

NATIONAL: The Clean Energy Council today welcomed the release of draft legislation outlining the rules for a 20 per cent renewable energy target (RET) by 2020. This has been a fundamental objective of the Council. The Council thanked the government for confirming its 2007 election promise and reaffirming its commitment towards the rapid development and deployment of the nation's renewable energy sector.

The Renewable Energy Target has the potential to unlock more than $20 billion worth of zero emission, clean energy investments and create thousands of new green job opportunities across the nation. "This policy has been a long time coming and we're relieved to see draft legislation tabled sooner rather than later," said Chief Executive Matthew Warren. "It represents an important step towards investors being able to bank new projects which deliver immediate emissions reductions ahead of the gentle ambitions of the carbon pollution reduction scheme."

Mr Warren said the draft RET legislation had introduced a number of novel policy initiatives which have not been discussed with industry. These pose a number of serious concerns about the effectiveness of the proposed legislation and its ability to provide the crucial development pathway and investor certainty for the industry.

"The task at hand now is to clarify these issues and find solutions to ensure that the government delivers on its election promises." "This draft legislation impacts on the future of the entire renewable energy industry. It is critical we get this legislation right to ensure the industry has the confidence to begin investing as soon as possible."

The 20 per cent (45,000GWh) by 2020 renewable energy target goes beyond the existing mandatory renewable energy target (MRET) originally set at 2 per cent (9,500GWh) and which has since resulted in over 6,500 gigawatt hours of new clean energy generated this year. The draft RET legislation is available for public download at

Renewable Energy Target next step to White Paper

Clean Energy Council
17 December 2008

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

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

Carbon Price

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

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

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

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

Climate Change Action Fund (CCAF)

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

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

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

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

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

What Next?
The government has outlined a comprehensive work program on the development and deployment of complementary measures to deploy clean energy technologies and drive energy efficiency. These include:
  • draft Renewable Energy Target (RET) legislation due out today

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

  • development of a national energy efficiency strategy in early 2009

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

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

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

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

Forecast - a new book from Stephan Faris - Author Tour 2009

Stephan Faris, author of Forecast: the consequences of climate change from the Amazon to the Arctic (to be published by Scribe in February) will be touring Australia in February. He will be appearing at the Writers at the Convent Festival in Melbourne (14-15 February), and the Perth Writers Festival (27 Feb – 2 March).

Forecast is a vivid and illuminating portrayal of the surprising ways that climate change will affect the world in the near future — politically, economically, and culturally.

Stephan is available for speaking engagements in Sydney and Brisbane 16-19 February (for 50+ people). If you would be interested in Stephan speaking to your group, please contact me by return email or on 03 9349 5955.

UN climate chief lowers expectations for 2009 deal
10 December, 2008

UN climate change head Yvo de Boer said that talks to reach a new agreement by December next year are unlikely to lead to a "fully elaborated long-term response to climate change", and warned that many details will need to be finalised after the meeting in Copenhagen.

Speaking at a press briefing yesterday on progress with the talks in Poznan, Poland, de Boer cautioned that: "We should be careful not to reach too far and achieve nothing." He added that the Copenhagen talks - viewed as the deadline to finalise a deal which can be ratified before the Kyoto Protocol expires in 2012 - will be "a failure" if there are still no reduction targets agreed, but that subsequent meetings would be needed to bash out final details.

"We do need to have clarity, numbers on the table from developed countries, otherwise the other dominoes won't fall," he added. Developing countries will only engage in the process if industrialised nations adopt reduction commitments and offer the technological support needed by developing economies.

But Stavros Dimas, EU environment commissioner, said: "Time is running out ... we have to have an agreement in Copenhagen." Sigmar Gabriel, environment minister for Germany, said at a separate event that this week is "a defining week for climate talks", with discussions on the EU's climate and energy package reaching a climax at the end of the week. "Politicians love to make long-term forecasts, and it's great to make 2050 targets, but they will be met by our children and grandchildren, so it's important to make intermediate targets," Gabriel added.

De Boer remained optimistic that the outcome of next December's talks would fulfil the goals of the Bali Road Map. But he added that, just as the Kyoto Protocol needed subsequent meetings in the Hague in 2000 and Marrakech in 2001 to forge a 'ratifiable' agreement, so too may a Copenhagen agreement require further elucidation.

"I think he's trying to manage expectations," commented one delegate. "We're unlikely to have an all-singing, all-dancing post-2012 framework at Copenhagen ... people with expectations that we will come out of Copenhagen with it all in place will be disappointed." "There will be time after Copenhagen to do further details, but we do need very strong architecture and [2020] targets in Copenhagen," said Kate Hampton, head of policy at UK-based boutique investment bank Climate Change Capital.

Meanwhile, Brice Lalonde, head of the French delegation, told reporters today that the work programme for the Ad-Hoc Working Group on Long-Term Cooperative Action (AWG-LCA) for 2009 was finalised this morning. "This is probably one of the main achievements for Poznan," he added. The working group - which includes non-Kyoto parties such as the US - is responsible for sketching out a post-2012 framework.

Harlan Watson, lead negotiator for the US, said that solid progress had been made in finalising the work programme for AWG-LCA, which mandates the chair of the group to prepare a draft text, compiling all submissions and noting issues where there are consensus and divergence, for the next meeting in March or April, and then to prepare a negotiating text for June's meeting. The programme will be presented to the plenary, provisionally tomorrow, for a vote.

EU reaches deal on renewables target
Paris, 11 December:

A crucial part of the EU's energy and climate package was wrapped up on Tuesday, with compromise reached between members of the European Parliament and the French EU presidency to boost the use of renewables in Europe. But, as EU leaders gathered in Brussels to hammer out the rest of the climate package, environmentalists said they feared economic concerns could undermine efforts to reform the EU emissions trading scheme.

The renewable energy deal aims to increase the amount of the EU's energy is produced from renewable sources to 20% by 2020. It sets binding targets for all EU member states, which must submit National Action Plans to the European Commission by June 2010 detailing how they will meet them. Negotiators finally gave in to demands from Italy for a review in 2014, but said the review would "not affect the overall 20% target but serve to improve, if necessary, the efficiency of cooperation mechanisms".

These "cooperation mechanisms" will allow EU member states to achieve their national renewable targets through joint projects with other member states. Also, they allow for green power consumed by member states, but produced by new projects in third countries, to count towards EU targets.

The compromise also set a 10% renewables target for the transport sector to be partially reached through renewable electricity for trains and electric cars, as well as through greater use of biofuels. To avoid the potentially negative effects of biofuels, the compromise said that second-generation biofuels, produced from waste, residues, or non-food cellulosic and ligno-cellulosic biomass, would be double-credited towards the 10% target.

To be counted towards the target, biofuels must lead to at least 35% fewer greenhouse gas emissions compared to fossil fuels, stated the compromise, which also asked the Commission to develop a methodology to measure the emissions caused by indirect land-use changes resulting from biofuels production.

Ramon de Miguel, president of European Bioethanol Fuel Association (eBIO), said the legislation would "safeguard the current production capacity that required capital investments of over €5 billion, as well as thousands of jobs ... and set the scene for new investments to further improve the technological profile of European ethanol production".

Christian Kjaer, chief executive of the European Wind Energy Association (EWEA), called the deal "the world's most important energy law". Frauke Thies, Greenpeace EU renewables policy campaigner, said it was a "landmark deal" and gave the EU "eight out of ten" for its efforts.

Green MEP Claude Turmes said the deal was "a source of encouragement at the beginning of the week in which EU leaders will meet to decide on whether the EU keeps it leadership and credibility on climate policies". The compromise must now be formally endorsed by all member states and is expected to be put to a first-reading vote during the Parliament's plenary session in Strasbourg on 15-18 December.

Confusion over renewable energy target

Summaries - Australian Financial Review
Thursday 18/12/2008 Page: 8

Yesterday's announcement of the Federal Government's renewable energy targets has prompted concerns that Prime Minister Kevin Rudd has curtailed his ambitious climate change vision. Clean Energy Council chief executive Matthew Warren said yesterday that while the draft legislation for the renewable energy targets contained some 'novel policy initiatives,' the plan also had 'potentially serious design flaws.'

Critics singled out a proposal to give electricity produced by residential solar panels five times as many renewable energy certificates (RECs) as electricity generated by wind farms and other commercial-scale renewable energy operations. Climate Change Minister Penny Wong said the scheme would deliver Labor's promised 45,000 gigawatt-hours of renewable energy in 2020, but Pacific Hydro chief executive Rob Grant warned the proposal 'may lead to the 20 percent [renewable energy target] not being met.' Australian geothermal Energy Association chief executive Susan Jeanes and National Association of Forest Industries chief executive Allan Hansard also voiced doubts about the benefits of the scheme.

Backflip on solar subsidy scheme

Canberra Times
Thursday 18/12/2008 Page: 1

All households will be eligible for up to $7500 in subsidies to install solar panels when the Federal Government scraps its controversial means tests on the solar rebate. The policy shift means the Government will not have to fund the rebate, with the cost shifted to electricity companies. Small businesses and community groups will qualify for "solar credits" under the plan announced yesterday by Environment Minister Peter Garrett.

"This won't be means tested and I think the critical issue in relation to the solar credit is that it is available to everybody," he said. "It's available to households. It's available to community groups. It's available to businesses. "It allows for around a $7500 solar credit for anybody that wants to install new, small-scale renewable technologies in their homes, their businesses or their communities groups."

Electricity companies will fund the rebate in return for higher credits from the Government under its Renewable Energy Target scheme. The scheme will help Australia achieve its target of drawing 20 per cent of the nation's electricity needs from renewable sources by 2020. In return for passing the rebate burden on to power companies, the Government has promised them five tines as many credits, compared with other renewable power sources, under the scheme.

The Government carne under fire for its budget decision to impose a means test on the rebate, which meant Australians were ineligible for the payment if their household income exceeded $100,000. Mr Garrett said yesterday this was the "absolutely right decision". "At the time of the former Howard government's last budget, applications for solar panel rebates were running at about 30 a week," he said.

"We are now running at about 1000 a week. In other words, the provision of the solar panel rebate means tested is providing the opportunity for Australians who can least afford it to get those solar panels on their roof." This rebate and means test would be phased out after July 1.

Under the new scheme, all households, small business and community groups could apply for the new Solar credit of up to $7500. "[It] will not be means tested," Mr Garrett said. "It applies up to a level of 1.5 kW hours, as distinct from the existing solar panel rebate." Opposition environment spokesman Greg Hunt said it was a "humiliating capitulation" by Mr Garrett, who had launched a farther attack on the affordability of solar panels for ... Australian families who want to do the right thing by the environment".

"If you previously received a rebate, you would have got a total of about $9500," Mr Hunt said. "Now if you're in Melbourne, you'll get $5000 less. So it's another blow to the solar industry. "We've seen a wind-back of the rebate earlier on in the year, BP Solar close up and now we've seen a solar short-change." Mr Garrett said this was "definitely not the case".

Yesterday's draft legislation to meet the Government's election commitment to 20 per cent renewable energy by 2020 comes after this week's announcement that Australia would cut its greenhouse gas emissions by 5 per cent by 2020 to tackle climate change or up to 15 per cent if other countries were on board. Treasurer Wayne Swan said the draft legislation would "turbo-charge renewable energy usage in this country, particularly solar energy".

"It will build upon the incentives in the carbon pollution reduction scheme to build a low-pollution economy with green jobs for the future whilst protecting jobs in our economy," Mr Swan said. But Greens deputy leader Christine Milne said the Government had unveiled a "deeply flawed" proposal.

"After giving big polluters everything they asked for in Monday's white paper, today the Rudd Government is kicking the renewable energy sector while it's down," Senator Milne said. "The renewable energy sector is united behind the need for a price guarantee scheme - known as a feed-in tariff - which has delivered tremendous growth in jobs and investment everywhere it has been introduced around the world."

Government scraps $8000 solar subsidy

Thursday 18/12/2008 Page: 1

THE Rudd Government will scrap its $8000 rebate to households installing rooftop solar energy and instead require electricity retailers to increase their own solar subsidies. In another policy shift, Environment Minister Peter Garrett said yesterday the Government would end its subsidies to household solar energy generation because soaring demand had swollen the cost to the budget. In its May budget, Labor limited the rebate to low and middle-income households earning less than $100,000 a year. From July, it will scrap the rebate for them too because too many of them are claiming it.

In October alone, almost 1000 households were paid to install 1.35 MWs of rooftop power, almost as much as in all of 2005. Industry sources said that while it cost about $12,500 to buy and install a typical 1kW system, bulk schemes organised by local councils had cut the net cost to households to as little as $1500 to $2000, after deducting the $8000 rebate and subsidies of about $1000 from electricity retailers.

The Government will replace the rebate by temporarily requiring retailers to lift the amount they pay households five times over, for systems installed between mid-2009 and mid-2012. The new deal will include high-income households, and is expected to result in a big shift in demand. In Melbourne, on current prices, the temporary hike would lift the subsidy from about $800 to $4000 for a kW system or $6000 for a 1.5kW system. The cost will be added to electricity bills.

From 2012, the payments will shrink rapidly, returning to their old levels by 2015. The Government announced the new rules when unveiling draft legislation for its renewable energy target that requires retailers to buy 20 per cent of their power from renewable energy providers by 2020. Chief executive of Conenergy Australia Rodger Meads welcomed the market-based approach, saying it would free the industry from the whim of Treasury, as was the case when the May budget suddenly changed the rules.

Markus Lambert, of Energy Matters, told The Age people earning under $100,000 in Melbourne would now pay up to $5000 more for a 1.5kw system, squeezing them out of the market. The Opposition and the Greens criticised the scheme. Opposition climate change spokesman Greg Hunt said it was another attack on the affordability of solar panels for households wanting to do right by the environment. Greens senator Christine Milne said by overpaying customers the new rules would overstate the amount of renewable energy actually generated.

Tuesday 23 December 2008

Lid lifted on solar rebate scheme

Adelaide Advertiser
Thursday 18/12/2008 Page: 37

MORE households will qualify for up to $7500 to install solar panels after changes to a Federal Government rebate. The Government yesterday announced it would scrap an unpopular means test, which restricted the rebate to households earning less than $100,000. The means tested rebate was worth up to $8000. Under the new system, to operate from July next year, the rebate will be smaller but everyone - households, businesses and community groups - can access it, regardless of income.

The maximum rebate for an average sized 1.5 kW system will be about $7500. A smaller 1 kW system will attract a rebate of about $5000. Rebate values may fluctuate and will decline from 2012. The Government came under attack from environmentalists, some solar-industry chiefs and the Federal Opposition for introducing the means test in this year's Budget.

It was seen as discouraging some people from going green, and a step backwards for the solar industry. Environment Minister Peter Garrett, in announcing the changes, said people loved solar energy. "Australians want to do their bit to take action on climate change," he said.

High-power compensation

Summaries - Australian Financial Review
Wednesday 17/12/2008 Page: 54

There is no viable argument for compensating the highly polluting members of the power industry that will be adversely affected by the introduction of an emissions trading scheme (ETS) and yet that is precisely what the Rudd government plans to do. The National Generators Forum previously said an ETS would add to investor confidence but now says the regulatory risk will drive investors away. The high-emission coal-fired power stations will be compensated with about $4 billion of taxpayer funds.

Zooming along the green energy highway

Canberra Times
Wednesday 17/12/2008 Page: 1

If Australians are serious about cutting greenhouse emissions, they need to get used to the idea of driving "a little dinky car to work every day," says CSIRO energy research director, Dr John Wright.

Electric cars are smaller and lighter than the average car, and could be the answer to scaling back on transport emissions that currently account for 14% of Australia's greenhouse pollution. But can Australians kick the big car habit? "Electric cars have a bright future, and are going to have a real impact in the next 10 years. They make a lot of sense, even though they won't reduce traffic congestion. I can definitely see a future when electric cars are popular, mass-produced and a lot cheaper than fossil fuel powered cars," he says.

New battery technology invented by CSIRO which can reduce costs by improving the performance of hybrid-electric cars is "really zooming along, and in all our charts mapping future energy scenarios, we can see increased electrification of cars". Wright has been one of Australia's most influential, enthusiastic and tenacious champions of low-emission technologies, steering an astute political course during a period when climate change was not at the top of the Howard government's research agenda.

For the past six years, he has been a key player in consolidating Australia's reputation as a world leader in low-emission technology innovation. A former metallurgist, who helped developed a low emission process for smelting iron ore, Wright took on the role of chief of CSIRO's Energy Transformed national research flagship in 2002, building it "up from scratch" to a $55 million research effort. It now spans 13 CSIRO divisions and involves 18 universities as research partners.

Under his leadership, the flagship has pioneered world-first solar array technology and distributed energy systems. It developed the CSIRO UltraBattery, now being manufactured in the United States to power a new generation of hybrid vehicles. The flagship also designed a hybrid Holden, the Ecommodore, which used 50% less fuel than a full-sized family car and reduced exhaust fumes by 90%.

"We've done some interesting things, but there's so much more to do," he says. At the end of this month, Wright is leaving CSIRO to take a year's sabbatical, with no plans other than to renovate his house and travel overseas. But he definitely won't be retiring. "Too much is happening with new energy technologies, and I want to part of that," he says. In Australia, or overseas? Who knows? I never plan any thing.

Nothing I've done so far in my life has been planned, and I suspect that what I do next won't be planned either." He's an optimist - a self confessed "dreadful nerd who read physics and chemistry books for fun as a kid" - and he's confident the battle against climate change can be won.

All the costings show it's cheaper to mitigate than adapt to climate change, so why wouldn't we go down that path? "I think we'll see a mix of technologies capable of bringing greenhouse emissions down. It has to happen, we have no alternative, so we just have to get on with it. There are always problems with new technologies, but there are always novel ways to solve those problems."

Talking to Wright about the possibility of brave new technologies to curb the world's escalating energy emissions is a welcome antidote to the usual litany of greenhouse blues. Take his views on electric cars, for example. We already have a pretty good advantage in that the electricity distribution network is already there, so you can plug in your car at home. It's not that hard to set up a recharging station, but the talk is that soon you won't need to plug in the car.

It should be possible to build big induction loops in the ground, and they'll automatically charge your car when you park over the top of them. Range is a big problem, of course. I couldn't drive from Newcastle to Sydney and back again on one charge - it would be hard to drive even one way on one charge - and charging still takes quite a long time, but there are lots of ways to overcome those problems."

He has a similar optimism about future uptake of solar energy and the development of a "smart grid" that can effortlessly integrate a two-way flow of power. "Solar is fascinating and frustrating. The usual mantra is "why don't we throw out all the coal and go solar". It's so easy to say "go solar" but there are complications, particularly when you're using big solar fields to generate power.

Some of the solar fields in Spain have a big central tower and a vast array of mirrors, some of which are up to 2km away from that central target. All that distance reduce efficiency enormously." The CSIRO energy team at Newcastle has designed the most densely packed solar array in the world", with mirrors grouped around multiple towers. The big, single tower arrays require hundreds of costly, precision designed mirrors that must be focused to pin-point accuracy.

With multiple towers, you don't have the same problems with efficiency decreasing over distance, so we can make the mirrors quite cheaply from sheets of steel and mirrors stuck down with epoxy. You can turn out mirrors as cheap as chips, which keeps the costs down." His long-term vision is to have "big solar systems, with multiple towers producing power instantaneously," with some of those acting as heat storage systems.

They can be used to generate power at night or to shift peaks in power demand. That's the sort of thing that has to be done with solar to overcome some of the problems of intermittency, and if we can do that, we'll really be making big strides forward with solar.

"But - and there's always a but with these things - as soon as you start to introduce energy storage, you start to increase the size of the solar fields. That costs more money, so you're chasing your tail, but we can work something out." Two months ago, Wright was awarded one of CSIRO's highest honours - a lifetime achievement award for increasing the profile and impact of energy research in Australia. In his acceptance speech, he said he had wanted the flagship's Newcastle Headquarters "to make a splash in the energy scene," and to be an iconic energy facility that would showcase energy innovation in Australia.

"We've got wind turbines, we've got photovoltaics, we've got a very spectacular solar centre set up here, and it's going to achieve all the ambitions that we want in energy." It's been a long and interesting journey for a kid from Clovelly, who used to do all sorts of mad chemistry experiments" in a tin shed in the backyard.

"I used to do all sorts of horrible things, blowing things up, I almost gassed myself with chlorine at one stage." It's important to keep the excitement in science, he says. Ask him about solar towers and you can hear that excitement is still there. "These things are like solar furnaces, they can generate temperatures above 1000 degrees. It's great to see a solar tower in full cry. You've got to use these great big dark glasses to look at it, and there's the most fantastic white ghostly glow. It's amazing."

Sun shines on CBD Energy

Summaries - Australian Financial Review
Wednesday 17/12/2008 Page: 44

CBD Energy, run by Impulse Airlines founder Gerry McGowan, is making its name as far away from the central business district as it can get. As well as a project on King Island in Bass Strait it has now won a contract to erect wind turbines on New Zealand's remote Chatham Islands, 800 km east of the South Island.

Obama pledges shift on climate

Hobart Mercury
Wednesday 17/12/2008 Page: 16

US President-elect Barack Obama has named an environmental and energy team that he said signalled his determination to tackle global warming quickly and develop alternative forms of energy. He vowed to "move beyond our oil addiction and create a new hybrid economy". Obama selected Nobel Prizewinning physicist Steven Chu as energy secretary and Carol Browner, a confidante of former vice-president Al Gore to lead a White House council on energy and climate.

Chu, a Chinese-American, is the director of the Lawrence Berkeley National Laboratory in California and is a leading advocate of reducing greenhouse gases by developing new energy sources. He shared the Nobel Prize for physics in 1997. Obama made it clear he planned to take energy policy in a sharply different direction from President George W.

Bush, promising aggressive moves to tackle global warming and support research into other energy sources such as wind, solar and biofuels. "America must develop new forms of energy and new ways of using it," he said. The dangers of being too heavily dependent on foreign oil "are eclipsed only by the long-terns threat of climate change which. unless we act, will lead to drought and famine abroad, devastating weather patterns and terrible storms on our shores, and disappearance of our coastline at home", he said.

Obama rejected the notion that economic development and environmental protection could not go hand in hand. "We can spark the dynamism of our economy through a long-term investment in renewable energy that will give life to new businesses and industries with good jobs that pay well and can't be outsourced," he said.

Plan benefits powerhouses

Courier Mail
Wednesday 17/12/2008 Page: 86

AUSTRALIA'S two biggest power retailers, AGL Energy and Origin Energy, should benefit from the design of the carbon trading system, JPMorgan Chase said yesterday. The limited effect the system will have on coal-fired generators should help limit swings in wholesale electricity markets, supporting the two companies' retail businesses.

The Federal Government this week set a target to cut greenhouse gas emissions by between 5% and 15% by 2020, depending on whether an international agreement is reached. It will provide $3.9 billion of free permits to coal-fired power generators over five years to compensate them for the added expense of introducing a cost on carbon.

Greens give tick to US energy chief

Courier Mail
Wednesday 17/12/2008 Page: 25

THE Australian Greens were yesterday buoyed by US President-elect Barack Obama's appointment of a renowned energy efficiency expert. Mr Obama vowed a new dawn for US leadership to combat climate change after revealing Nobel Prize-winning physicist Steven Chu as his energy secretary. The Rudd Government on Monday released its mid-term targets to reduce greenhouse gas emissions and urged the rest of the world, particularly the US and China, to do its share.

Australian Greens deputy leader Christine Milne said Mr Obama's appointment would help ensure the US moved quickly on climate change. "Dr Chu is an inspired choice who will drive the transformation in the American economy that the Rudd Government completely failed to deliver (on Monday)," Senator Milne said.

"Dr Chu is ... opposed to nuclear energy and deeply sceptical of coal's ability to clean up its act." As energy secretary, Dr Chu will lead Mr Obama's ambitious agenda to generate 2.5 million new jobs through green and new technologies aimed at making the US more energy efficient and less reliant on foreign oil. "We've seen Washington launch policy after policy, yet our dependence on foreign oil has only grown, even as the world's resources are disappearing," Mr Obama said.

Scheme too kind by half to emitters: Think-tank

Canberra Times
Wednesday 17/12/2008 Page: 7

The Rudd Government's carbon trading scheme has boosted support for high-emission industries by 50% over levels outlined in its previous draft scheme, a climate policy research group says. The Climate Institute Australia, an independent Sydney-based climate policy think-tank, says the Government's final version of the scheme has increased assistance to polluters by $4.1 billion while "more than halving" energy efficiency requirements. "This is corporate welfare without the corporate clean-up," the institute's chief executive, John Connor, said.

An analysis of the Government's emissions trading scheme revealed free permits and support for high emitters amounted to $4.24 billion in 2010, rising to $8.61 billion in 2015 and $12.25 billion in 2020. Mr Connor said this scale of assistance "dwarfed" the estimated investment of $5.2 million a year needed to fund energy efficiency measures and clean energy infrastructure and help achieve a 25% cut in greenhouse emissions by 2020.

The Government has set midterm targets of a 5% to 15% cut in emissions by 2020. The white paper argues that this translates to a higher per capita cut in emissions than the EU target of a 20% cut by 2020.

Mr Connor said, "Economic studies have shown that a comprehensive energy efficiency package would generate up to 40,000 jobs and save almost $2 a day on household energy [bills]. There are also major savings in the residential, commercial and manufacturing sectors - possibly tip to 73%, 70% and 46% respectively." Federal Climate Change and Water Minister Penny Wong has defended the Government's new industry assistance arrangements, saying "no polluter, no firm gets a free ride".

The Government's white paper makes eight significant changes to the assistance program for high emission industries as outlined in its previous draft green paper. These include extending the 60% threshold for assistance to industries with lower levels of emissions intensity. This will open up assistance - including free permits and tax breaks - to more than 40 industries.

Aluminium smelting, cement, lime, silicon, iron and steel manufacturing and petroleum refining are among the high-emissions industries qualifying for assistance. New additions are pulp and paper, plastics, chemicals and glass manufacturing. Senator Wong said, "We have put in place assistance for Australian firms who are exposed on world markets and who bear significant costs under the scheme.

"But no one gets a free ride; they all have to contribute; they all have to pay a price to some proportion for the pollution they put into the atmosphere, for the first time. They haven't had to do that before." When the scheme begins in 2010, emissions-intensive industries will be allocated 25% of carbon permits, a proportion that could rise to 45% by 2020.

The white paper says, "In contrast, in the green paper it was expected that assistance to [emissions-intensive industries] would commence, and remain, at equivalent to around 30% of the total permit pool."

Households pay as big polluters cash in on climate change

Wednesday 17/12/2008 Page: 13

IF YOU accept the scientific evidence that there will be dangerous climate change in our lifetime unless we drastically reduce greenhouse gas emissions, you will have good reason to introduce an emissions trading scheme. And it would beggar belief that you would then ignore the scientific recommendations about how much action to take. The Federal Government's pursuit of a 5% emissions reduction target is like a patient with a deadly infection agreeing that they need to take antibiotics - but insisting they take only one-fifth of the recommended dose.

The scientific evidence is clear - unless the developed world agrees to reduce emissions by at least 25% by 2020, the possibility of avoiding dangerous climate change is about as likely as a return by John Howard to the Liberal leadership. That said, it is hard to believe that the result would have been much different even if it had been the former prime minister making yesterday's speech.

The industry assistance package proposed by Kevin Rudd is one of the most generous in Australian history; it should be known as the carbon polluters' rescue scheme. The combination of very weak targets and very large compensation to polluters raises the question of whether it has all been worth the effort. Details of the scheme have finally been released after more than 12 months of suspense, but what a disappointment it is.

The dirtiest brown coal-fired plants will receive the biggest slice of the $4 billion of help to coal-fired power stations, and 90% of the permits required by "emission intensive" activities, such as aluminium smelting, will be provided free. Also, the agriculture industry, which is responsible for about 16% of Australia's emissions, will be excluded from the scheme until at least 2015.

The arguments for all this assistance to polluters are as weak as Rudd's targets. We are told that our "trade-exposed" businesses will leave the country if we don't give them billions of dollars worth of permits, yet when the Australian dollar sailed up to 95 US cents early this year, there was no sign of them packing their bags. It seems that if the cost of energy rises, they are quite vulnerable, but if the dollar rises they are somehow immune.

The other argument is that they didn't see this coming and that it is unfair to the coal-fired power stations whose assets are worth less in a carbon constrained world. Apparently all those highly paid executives haven't read the papers for the past decade and did not notice that Australia committed to reducing greenhouse gas emissions at the Rio Earth Summit back in 1992.

Over the past decade there have been countless fights over the development of new coalfired power stations and the refurbishment of existing brown coal plants. The owners of those plants were free to risk their shareholders' money on a bet that there would never be a carbon price - the idea that taxpayers should bail their out for getting it wrong is beyond comprehension.

It is interesting that there is silence from those who usually criticise the provision of public money to industries such as the car industry or the textile industry. It seems that when the Government's objective is to protect shareholders rather than protect jobs, the ideological concern with industry assistance is less strident.

Finally, the scheme is inequitable. Not only does it shirk Australia's responsibilities to the rest of the world by concocting some new measure based on per capita emissions, it contains an unexpected sting in the tail for those households and small businesses that want to "do their bit" to save the planet. If it goes ahead as planned, it will mean that no matter how great the efforts that Australian households make to reduce their own emissions, the only effect will be to free up emissions for the big polluters to use.

That is, unless the Senate succeeds in amending these plans, Australia will be locking itself into a 5% emissions reduction on 2000 levels until 2020. Any efforts by households to reduce emissions below that target, such as riding bikes to work and having shorter showers, will be futile. As the household sector uses less petrol and coal, the big polluters will have more permits available to them to increase their pollution.

There is, however, some consolation for householders who are keen to keep trying to reduce their emissions: the harder we try to save energy, the lower the demand for permits will be. The unlikely consequence of household and community efforts to "do their bit" will, therefore, be a reduction in the price of permits bought by the big polluters.

The scientists say we need to act quickly and the Treasury modelling says the costs of doing so would be trivial. The big polluters remain unconvinced. Sometimes patients must be forced to take their medicine, even if they would rather just keep on spreading their sickness around.

Dr Richard Denniss is the executive director of The Australia Institute.

Monday 22 December 2008

Renewable energy boom set to go up in smoke

Sydney Morning Herald
Tuesday 16/12/2008 Page: 5

UNTIL yesterday the so-called "green revolution" was ready to roll, but the renewable energy industry doubts the Government's white paper will allow it to get out of first gear. The fear is that since carbon permits are limited to $25 a tonne, and many are being given away, the emissions trading scheme will simply add a little lead to the saddlebags of heavy polluters without giving enough incentive for investors to switch to emissions-free technology.

"There's no doubt the white paper is actually undermining the potential for green-collar jobs in Australia," Mark Diesendorf, the deputy director of the Institute of Environmental Studies at the University of New South Wales, said. "We've put up a message that says to investors 'stay away' "We have a huge raft of proposals for large wind farms, for baseload solar plants, we have huge potential for jobs in the energy efficiency sector, but that potential needs the right policy settings from government so businesses can start to make investments."

Among many reports produced in recent months, a study by the ACTU and the Australian Conservation Foundation found that 500,000 jobs could be created in renewable sectors of the economy by 2030. But the soft start to emissions trading, together with the modest ambitions for carbon cuts, is unlikely to create a jobs boom. "A soft start only works if it is backed with aggressive investment signals in energy efficiency and clean technology," said Matthew Warren, the chief executive of the Clean Energy Council.

The council is a peak body which aims to represent the interests of renewable energy as well as those of some polluting industries. "These [signals would] deliver the biggest emissions cuts in the first years and prepare the Australian economy for the changes to follow. "The white paper suggests the Government understands this relationship, but it hasn't yet delivered on it."

The white paper would be more likely to maintain the status quo than wean Australia off coal-fired power, said lain MacGill, the director of the Centre for Energy and Environmental Markets at the University of New South Wales. "The real winners today are clearly large emitters who appear to have successfully persuaded the Government to propose weak 2020 targets and provide them with billions of dollars of subsidies beyond even those proposed in the green paper," Dr MacGill said.

LNG a winner but coal, airlines lose

Tuesday 16/12/2008 Page: 6

THE liquefied natural gas sector has won key concessions from Kevin Rudd in his white paper, but coalmines and airlines have lost their battle for a place in his compensation scheme. Canberra has also dug deep for an extra $750 million over five years to help the coal industry adjust to its reforms, on top of the $1.4 billion to support energy efficiency measures flagged in The Australian yesterday. The climate change plan responds to pressure from the LNG sector, which had been angered by its earlier omission from the list of industries and energy sources up for compensation in the Government's green paper.

The Government listed LNG production as one of an estimated 40 industries likely to be issued free carbon permits, and ranked natural gas alongside electricity in the formulas to be used to decide permit allocations. Australian Petroleum Production and Exploration Association chief executive Belinda Robertson said yesterday that the Government had taken "positive and responsible steps" to acknowledge the status of the country's natural gas resources as a cleaner energy source than coal".

"There is no doubt the cost to the LNG industry, as outlined in the white paper, is less than it would have been under the green paper," she said. One of the sector's biggest players, Chevron Australia, had earlier warned that the green paper proposals would added hundreds of millions of dollars to the costs of its Gorgon, Wheatstone and North West Shelf projects. The Government yesterday sought to pacify business by dramatically expanding the number entitled to free permits and allowing that assistance to rise over time.

The changes mean about 45% of permits by 2020 will be issued free to big greenhouse polluters that compete internationally, compared with about 30% under the green paper proposal. And they will be asked for smaller annual gains in greenhouse gas efficiency in%age terms than the rest of the economy. Australian Conservation Foundation executive director Don Henry warned that the Government was funding a new era of "pollution protectionism".

Australian Coal Association executive director Ralph Hillman said that coal, as the country's largest single export, clearly should have fallen into the preferential "emissions intensive trade exposed" category. It would provide certainty and transparency for future investment in the industry," he said. Mr Rudd promised up to $750 million from a new Climate Change Action Fund to help coalmines cut their methane emissions and adapt to the new carbon pricing regime. But Mr Hillman said that while the pledge went some way towards recognising the plight of coalminers, the scheme would still threaten the industry if overseas competitors escaped similar carbon imposts.

Domestic airlines warned of potential price hikes and loss of competitiveness, after their bid to secure compensation from the Government failed. Road transport has the promise of excise relief to cushion higher fuel prices, but aviation does not. Qantas chief executive Alan Joyce said Australian aviation and tourism would be "trade exposed" if international airlines and destinations were not subject to carbon pricing regimes. "International destinations could become more competitive as the price of domestic fares and holiday packages increases," Mr Joyce said.

$6bn fund to compensate households

Tuesday 16/12/2008 Page: 7

HOUSEHOLDS facing increases in the cost of living because of the emissions trading scheme will be compensated with $6 billion worth of tax breaks and up-front payments. The compensation package, targeted mainly at low to middle income earners, will offset an estimated 1.1% increase to the cost of living that was revealed in details of the Federal Government's emissions trading scheme yesterday. The 1.1% increase includes a $4-a-week increase in electricity and a $2 increase in gas and petrol.

Those on income support and in low-income households will get the largest compensation, and in most cases will receive a net increase to their income above the costs from a carbon trading market. Social service groups welcomed the package, saying it ensured marginal people in society would not be disadvantaged by the emission scheme.

Damian Sullivan, manager of equity and climate change at the Brotherhood of St Lawrence, said the package addressed equity concerns. "The direct financial assistance is very good, it is a very comprehensive package and we support that," he said. "We are also supportive of the tax and transfer model that has been used." But Mr Sullivan called for the wholesale funding of a retrofitting program, such as insulation and water tanks, for low-income households to mitigate the costs of an emissions trading scheme and climate change itself.

Claire Martin, chief executive of the Australian Council of Social Services, said while ACOSS was disappointed with the Government's 5 to 15% 2020 target, it also welcomed an increase in payments for those on income support, and supported a "substantial retrofitting program'. The $6 billion will be taken from money gained by auctioning of carbon permits. The compensation package will be implemented in the 2010-11 federal budget and tax benefits and payments will be tied to the price of carbon.

Compensation to Australian households will be delivered through an increase in one or more of the Family Tax Benefits A & B, the Low Income Tax Offset, and the Dependency Tax Offset. Aged and disability pensioners, carers, and people on income support will get an immediate 2.5% increase, or $382 for singles and $320 for each person in a couple. Youth Allowance, Newstart and Austudy payments will be increased up to $307 a week.

Some coal-fired plants will fold by 2020: assessors

Tuesday 16/12/2008 Page: 6

SOME Victorian brown coal power generators could be shut down by 2020 under the Federal Government's planned emissions trading scheme, according to modelling detailed in the white paper. In determining the impact of the carbon pollution reduction scheme on coal-fired generators. the Rudd Government commissioned McLennan Magasanik Associates, ACIL Tasman and ROAM Consulting to provide separate assessments of 5% and 15% cuts in emissions on generators.

The ACIL Tasman analysis provides the bleakest view for Australia's 30 major coal-fired generators, in the Latrobe Valley and across Australia, suggesting a 15% cut would lead three brown coal and four black coal generators to "retire in their entirety" by 2020. With a minimum cut of 5%, ACIL Tasman says two brown coal and one black coal generator would fold as a result of the scheme.

McLennan's results point to one fewer generator by 2020, while ROAM Consulting says no generators will shut down due to the carbon pollution reduction scheme by 2020. The Government's white paper outlines plans to provide $3.9 billion in permits to help the coal-fired generators over the first five years. But those that pull through are set to experience a sharp decline in power generation.

McLennan predicts that three brown coal and six black coal generators will lose more than a quarter of their generation volume over the first decade of the scheme if Australia cuts emissions by 5%. Only one additional brown coal generator would reach that 25% threshold if a cut of 15% were achieved.

The white paper does not name the affected generators. Victoria has four major brown coal power plants in the Latrobe Valley - Hazelwood, Yallourn power station, Loy Yang A and Loy Yang B - providing more than 90% of the state's power. You don't have to be Einstein to work out that Victoria is the state which will be most affected if that modelling is correct," a senior energy source told The Age.

National Generators Forum executive director John Boshier said the generators felt the Government's compensation package was inadequate. "The NGF has always advocated a smooth transition to a low-carbon economy. To that end, the NGF is pleased that the Federal Government has recognised the need for transitional assistance ... However, the quantum of assistance is insufficient to deliver the outcomes the Government is seeking." Victorian Energy Minister Peter Batchelor said he would consult the state's brown-coal generators to see if the proposed scheme delivered a viable, secure long-term supply.

Kate Shea, spokeswoman for TRUEnergy, which operates Yallourn power station. said the future of the power station was unclear. "It's impossible to be definitive about the impact of the CPRS white paper on Yallourn power station past 2015 because of the lack of clarity surrounding the emissions targets," she said. "However, we don't expect Yallourn power station to be operating in its current form from 2020 onwards and have already been assessing technology options to continue operating the power station with a lower emissions profile."

Carbon plan a test for energy retailers

Monday 15/12/2008 Page: 1

power linesAUSTRALIA'S big three energy retailers say today's white paper must put an end to investment uncertainty surrounding the sector or risk companies chasing better opportunities offshore. AGL Energy, Origin Energy and TRUEnergy are three of the companies that will be most affected by the final detail of the carbon pollution reduction scheme. TRUEnergy's managing director, Richard McIndoe, said Australia would be a test case for an emissions trading scheme. If the Government aimed for deep cuts amid dire economic conditions, it could set back the worldwide challenge to reduce global warming.

"If we get it right and we preserve existing investments and incentivise new investments in new low-emission technology, then it's an opportunity for other governments to follow on. If we get it wrong and investment falls away, it will be a fantastic excuse for other sceptics to say, 'Well, look what happened in Australia'," he told BusinessDay.

Mr Mclndoe said if the costs of the scheme fell too heavily on his business, he would head overseas for investment opportunities. "If we have a massive financial impairment on our assets, then quite frankly we, like other international investors and lenders, will probably look elsewhere." He said the global financial crisis and the weakened Australian dollar made it more important for the Federal Government to quickly introduce its mandatory renewable energy target scheme, which requires that 20 per cent of the electricity supply comes from renewable energy sources by 2020.

AGL managing director Michael Fraser said the energy sector should not be exempt from the carbon pollution reduction scheme but should also not be forced out of business by overly ambitious targets. He said regulators needed to allow retailers to pass through the full cost of the scheme to send a price signal to consumers who could then cut their energy use.

Origin Energy's executive general manager of corporate development, Carl McCamish, said Origin Energy had been preparing for the trading scheme and supported measures to increase the development of renewable energy. Energy retailers and generators must be willing to be part of the scheme, but Government must get the detail right to avoid companies investing elsewhere, he said.

5%Cautious Rudd blinks on greenhouse action Environment groups and industry lash out at emissions trading plan

Tuesday 16/12/2008 Page: 1

CARBON polluters have won big concessions and the economy will bear only modest costs under an emissions trading scheme designed by the Federal Government to win the backing of the Senate. In a plan denounced by environmentalists and criticised by industry, Australia will cut its emissions unilaterally by 5% from 2000 levels by 2020.

The Government has promised to go to 15% if other major emitters play ball in next year's international climate negotiations. A coalition of more than 60 environment and community groups attacked the plan as "simply unacceptable", saying that if it were adopted globally it would "guarantee the loss of the Great Barrier Reef and the Kakadu National Park wetlands". The Greens and the Climate Institute Australia also lashed out, while business reaction varied from fearful to muted.

With the Government looking first to the Coalition to try to get its scheme through the Senate, the Opposition is keeping its options open, commissioning its own economic analysis. On Treasury estimates, households will face an average $4-a-week rise in electricity costs and a $2 increase in gas and other household fuel, with the scheme adding 1.1% to the cost of living and slicing only one-tenth of 1% off the economy's annual growth.

The Government will raise $11.5 billion a year from selling carbon permits to emitters, but promises to return $6 billion of that in compensation to households, $2 billion to motorists and the rest to businesses. Welfare recipients and other low-income earners will get full compensation or more. About 2.9 million low-income households have been promised at least 20% more than the scheme would cost them. About 97% of middle income Households - defined to include families earning up to $160,000 - will receive some direct cash assistance, but high income earners will have to pay the full cost. Motorists will be protected for three years by equivalent cuts in fuel tax.

Prime Minister Kevin Rudd launched the plan in a speech disrupted by three protesting environmentalists. As the Prime Minister ploughed on, ignoring the drama, Greens leader Bob Brown told one of the women: "You're a real Australian." Mr Rudd said climate change "is an inconvenient truth and a truth that we can no longer conveniently ignore". He rejected the argument that the Government had sold out by not embracing a 25% cut by 2020 - in effect writing off the chance of a comprehensive international agreement in Copenhagen next year.

In the unlikely event of such a deal, Australia would adjust its cuts beyond 2020 to accommodate the 25% goal. "Australia, in the negotiations, will be ambitious and working hard to bring about a maximalist agreement," he said, leaving open the possibility he will go to the Copenhagen conference. Mr Rudd said the Government had "listened closely" to the concerns of business and improved the scheme since the green paper earlier this year.

The total level of assistance to emissions-intensive trade exposed industries has been massively increased. Petrol refining and liquid natural gas are among 40 industries now expected to qualify for free permits covering most or almost all of their output. The Government will offer almost $4 billion over five years to compensate the owners of coal-fired power stations for the loss of their asset value, recognising that some - particularly in the Latrobe Valley- could be forced to shut down early. The unconditional target to reduce total emissions by 5% would represent a cut of 27% per head between 2000 and 2020, and a 34% cut from 1990.

Legislation for the scheme will be put up next year for a July 2010 start. Seeking to put the pressure on the Opposition Leader, Mr Rudd said it was "time for the real Malcolm Turnbull to stand up. Is it the Malcolm Turnbull who was supposed to be gungho about this 12 months ago or is it the Malcolm Turnbull of today seeking some short-term political advantage?" The Opposition declined to take a stand yesterday. "We will approach this with an open mind on targets and on start dates," said Coalition climate change spokesman Andrew Robb.

But he said the Opposition would examine the plan "very critically", looking at whether Australian jobs would be at risk. The Opposition has argued that an emissions trading scheme should not start before 2011 and probably by 2012. Its review will be conducted by the Centre for International Economics, and its executive director, David Pearce, an economist who has worked on climate change issues.

Business was ambivalent at best, negative at worst. While the Business Council acknowledged that "the Government has taken into consideration many of our concerns", the Australian Chamber of Commerce and Industry was unequivocal. "Introducing the scheme unilaterally and at a time when our economy is trying to stare down a global economic recession is too high a risk," said the chamber's chief executive, Peter Anderson.

The Greens were even more hostile. Senator Brown called the 5% target "a global embarrassment and a recipe for global catastrophe ... It is exactly where John Howard would have placed Australia in 2009." Environment groups were incredulous. Climate Institute Australia chief executive John Connor said the Government had "buckled to the short-term interests of selfish business voices", leaving itself with a "credibility deficit" with voters. Victorian Environment Minister Gavin Jennings offered rare support, saying the plan had the potential to "kick-start green investments for Victoria".