$10bn reasons for a clean, happy response

Age
11 July 2011, Page: 3

CLEAN energy groups have heralded a $10 billion boost to renewables under the carbon price deal as a "once in a generation" opportunity to transform Australia's electricity sector. The significant investment in renewables was a major goal of the Greens and rural independents during negotiations on a carbon price, but the government has also ensured at least part of the new money will go to "clean energy" projects as well, such as hybrids between renewables and fossil fuels and energy efficiency.

Under the deal, $10 billion over five years will be given to a new clean energy finance corporation, which the government will set up, but which an independent board of directors will run. The clean energy corporation will make loans or take equity shares in projects that cannot find money from private lenders such as banks. Any returns the corporation makes through supporting a clean energy project will be reinvested. In a compromise between Labor and the Greens, the corporation's revenue will be split into two streams.

The first will fund only renewable energy projects, such as wind, solar and geothermal, while the second will make money available for hybrids. The corporation will also invest in energy efficiency projects and manufacturing businesses that make components of clean energy technologies, such as wind turbine blades or solar cells. But the corporation will not invest in carbon capture and storage projects, including "clean coal".

The clean energy corporation will be joined by a new independent agency to direct and manage $3.2 billion in existing government grants for renewables and biofuels, including the large scale solar flagships program. Known as ARENA, the agency will also get future funds through dividends paid by the clean energy corporation and a potential share of revenue from the carbon price via any reduction in compensation for trade exposed industries after 2014 15.

Clean Energy Council director of strategy Kane Thornton said the renewable measures were once in a generation, and "the new initiatives announced today will give us what we need to deliver action on carbon pollution and transition Australia to a clean energy future". The extra money for renewables came as environmentalists were buoyed by a surprise $946 million over six years for measures to protect Australia's biodiversity such as replanting trees and plants, and tackling feral animals.

The biodiversity fund is also expected to get some future carbon price revenue from any reduction in industry compensation. Australian Conservation Foundation head Don Henry commended the renewable energy and biodiversity spending, adding that the overall carbon price deal was not perfect but essential. Under the carbon deal, a further $429 million will be spent over six years to fund measures to help farmers reduce emissions on their land, store more carbon in soil, and other rural research and development.

Farmers will be excluded from directly paying the carbon price, but will be able to sell carbon offset permits to major companies created through measures such as reforestation that can be counted towards Australia's emissions reduction target under international rules. National Farmers Federation chief executive Matt Linnegar welcomed the $400 million program for farming carbon programs and research, but said the carbon tax would still hit his members hard and the federation remained opposed to it.