September 11, 2013

Australia’s Energy Policy Leaves Renewable Industry Wondering

The Coalition's commitment to scrapping the carbon price may be clear cut but little else is when it comes to renewable energy policy and action on climate change.

The precise details of the "direct action" plan to pay polluters to cut emissions and meet the bipartisan target of reducing greenhouse gas output by 5 per cent from 2000 levels by 2020 won't be known until at least 100 days after the new government is formed and a period of public consulting ends.

The Coalition's policy on resources and energy, released on Thursday in the shadow of the wider budget costings announcements, also left industry – particularly clean technology – equally in the dark.

The policy made no reference to the renewable energy target, the central driver for large-scale wind and other renewable energy investments. “That one's quite surprising,” said Jack Curtis, vice-president of First Solar, a US solar photovoltaics company that plans to invest hundreds of millions of dollars in Australia.

Opposition climate spokesman Greg Hunt said the Coalition's policy was to review the RET next year: “We have stated our support for the RET on numerous occasions both before the campaign and during it.”

The Clean Energy Council hopes the Coalition's support for the RET to deliver 41,000 gigawatt-hours of electricity from renewable sources by 2020 will survive that review.

 Industry 'paralysis'

Mr Curtis said new investments had been halted by the continuing uncertainty. “Right now, there's just paralysis in the industry,” he said. “In the absence of any certainty around what's going to happen, nobody does anything.”

For the wind industry, there was a pledge to “resolve community concerns over wind farms”, including establishing “real-time monitoring of wind farm noise emissions”.

While flagged late last year by opposition energy spokesman Ian Macfarlane, the prospect of wind farm monitoring beyond existing compliance requirements worries some in the wind industry now that it is clearly Coalition policy.

“On the one hand, the Coalition advocates very strongly for a one-stop shop for environmental assessments," said one senior executive. “However, they are proposing to add a new 'second shop' for federal wind farm noise monitoring and compliance regulations when these are clearly the sole responsibility of state governments. It is not a very consistent policy.”

Lane Crockett, general manager of Pacific Hydro which has $1 billion invested in Australian wind and hydro power, said new offtake agreements and financing by commercial banks had all but dried up as investors and bankers await clarity on the RET.

Only projects backed by the Clean Energy Finance Corporation - which the Coalition has vowed to scrap - are making any progress, Mr Crockett said.


The Coalition's 10-page energy policy omitted any reference to carbon emissions other than a line about how cleaner liquefied natural gas might be used as an alternative to diesel for interstate trucking.

Earlier this week, Opposition leader Tony Abbott conceded that the funds allocated for Direct Action may not be enough to ensure the 5 per cent carbon emissions target would be achieved. The Direct Action funding, along with funding for solar and other energy programs, has been cut even before the Coalition takes office, as is widely expected at Saturday's elections.

Pacific Hydro's Mr Crockett said the Coalition's plans for a new Energy White Paper if elected may assist the clean energy industry if national electricity rules are aligned with the renewable energy target. "The national electricity legislation doesn't have an objective to reduce emissions," he said.

Carbon emissions from the power sector have been falling, with the carbon price partly responsible in addition to sliding electricity demand.

Annual emissions from the National Electricity Market serving eastern states and South Australia were down 7.4 million tonnes in the year to August, compared with the 12 months to June 2012 just prior to the start of the carbon tax.

That's equivalent to a drop of 4.3 per cent, according to Hugh Saddler, principal consultant with Pitt & Sherry.

Fossil fall-out?

With renewable energy's share of power generation doubling for the NEM over the past five years, the incoming government is likely to face the prospect of some of the coal-fired generators reducing capacity.
In the year to August, brown- and black coal-fired power plants supplied 74.5 per cent of the power to the NEM, while renewables totalled 13.2 per cent, Dr Saddler said.

August, though, saw wind energy records shredded. Renewables surged to a record 17.6 per cent of the NEM, with coal-fired power shrinking to 71 per cent - probably its lowest share in decades, according to Pitt & Sherry data.

First Solar's Mr Curtis said any new energy capacity is likely to be renewables for the rest of the decade. Pacific Hydro's Mr Crockett, however, said some reduction in the coal sector is inevitable - provided emission reductions remain a target for the next government.

“You don’t get a transition to clean energy systems without retiring old fossil-fuel generators,” Mr Crockett said.

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