Edition No. 17, December 5, 2008
'Econocrats' behind RET delay
Climate Institute CEO John Conner has blamed "econocrats
in Canberra" pressuring the Rudd govt for COAG's decision to put off
agreement on a national renewable energy target until next year. COAG's
decision puts in doubt the Fed Govt's timetable to introduce its promised
expanded national renewable energy target (RET)
scheme that would replace the current mandatory renewable energy target (MRET).
A discussion paper
on RET design options released in July said the govt intended to have the
amended MRET legislation "in place by mid-2009". The plan was for COAG's renewable energy sub-group to develop a final design by Sept for
consideration by COAG in Oct. Last weekend's meeting communiqué
said COAG had "noted progress" on the RET. It would "consider the
final design of the scheme at its first meeting in 2009".
Conner told Carbon Extra he was "absolutely" concerned
over the delay. The RET was "a critical plank of the Fed Govt's
policy" on climate change and was needed to "deploy low-emission energy
technologies", he said. "We're deeply anxious. This is A-grade
jittering. We want to see this happen as soon as possible." Canberra
econocrats, like the "Productivity Commission and others reject the
notion the RET will build Aust know-how and fast-track innovation" in
renewable energy. They see the RET as a cost because the retail price for
electricity would rise under an RET. But their analysis did not account for
the fall in wholesale electricity prices that would occur under a RET, he
said, pointing to the Business Council of Aust's (BCA) submission
to the Fed Govt on the CPRS for support. The Productivity Commission
and the BCA in their submissions to govt have strongly opposed an RET being
introduced. But BCA's analysis showed wholesale electricity prices would
decline under an RET, partly explained by renewable energy having lower
marginal costs than other forms of generation. That was because renewables
did not have ongoing annual fuel costs and, "once accelerated renewable
energy capital is in the mix, the day-to-day operating expenses will
drop", Conner said. Cheaper electricity would come onto the spot market
and Aust innovation in renewable energy would be accelerated, he said. That
was a key dispute in the argument, he said. "Econocrats are exceptionally
cautious, saying there won't be Aust innovation," he said. Conner
called on the Fed Govt to "stand up to those pouring sand into this
policy engine." "We know there are states keen to get on with the
job," he said. Tas Premier David Bartlett said on Tues he wanted to see a
RET scheme "up and running as soon as possible" because it "would
unleash hundreds of millions of dollars in investment in renewable energy
schemes in Tas".
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Renewable tariff principles 'vague'
The ACT Govt has been sidelined by COAG in its discussions
on renewable energy feed-in tariffs, at least according to national principles
for FITs adopted by COAG. The ACT set the benchmark for FITs this year when
it adopted a gross meter tariff that would apply to all type of renewable
energy systems of any size. But the COAG principles say only "residential
and small business consumers with small renewables ... have the right to
export energy to the electricity grid" and be paid for it. By referring
only to energy "exported" to the grid, the principles dodge the key
question of whether the tariffs should be based on net metering, where
generators are paid for the excess power they export in the grid, or gross
metering where all renewable energy generation is paid for regardless of
how much is exported to the grid. Brad Shone, from the Alternative
Technology Association (ATA), told Carbon Extra he was "holding out the
vague hope" the language used "doesn't mean a net tariff ... because
technically it doesn't preclude gross metering". He said the FIT
principles were disappointing because they were vague, contained no
timeframes and left most decisions up to the states, rather than promoting a
national FIT scheme as the ATA had advocated. COAG's communiqué
said the principles would promote consistency between the states, "consistent with the [Rudd] govt's election commitment to a nationally
consistent approach to feed-in tariffs". The new WA Govt has promised a
similar tariff to the ACT's, but Vic, SA and Qld have adopted net
metering FITs restricted to small systems. NSW has yet to decide on an FIT
but has said it will not wait for a national scheme. COAG deferred
agreement on a national energy efficiency strategy and "proposed single
overarching framework for accelerating energy efficiency reforms" till
early 2009.
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Bind more to GHG cuts Aust tells UN
An
overhaul is needed in how binding national GHG reduction targets are
determined under the UN climate convention to give emission intensive
nations such as Aust credit for their higher economic impact, the Aust govt
has told the UNFCCC. It would ensure more advanced economies made
commitments, the govt said. In a series of submissions ahead of the climate
change talks under way in Poland. Aust argued
a new global climate change agreement post-2012 should take into account
the aggregate and marginal economic costs of binding national GHG reduction
targets "Aggregate costs largely depend on the share of energy- and
emission-intensive industries in the economy (as this determines the share
of economic restructuring required). Marginal costs depend on the nature of
emission reduction opportunities in the economy", a Nov submission to the
UNFCCC said.
An
earlier submission
said the list of nations bound by the UN climate convention to cut their
emissions "does not reflect the relative contribution that all economies
could make". Of the 15 largest GHG emitters, only seven - Aust, the US,
the EU, Russian Federation, Japan, Canada and the Ukraine - were bound to
cut their national emissions. Six other major emitters - Brazil, China,
Iran, Korea, Mexico and South Africa - were advanced economies with per
capita GDPs higher than the Ukraine but were not bound by the convention.
India and Indonesia were among the top 15 major emitters but their GDPs
were low. The top 15 emitters, responsible for nearly three-quarters of
global GHG emissions, "will need to act as part of the post-2012 outcome
for any goal to be met", the govt said.
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Climate program principles agreed
COAG
last weekend agreed to principles that will underpin state and territory
climate change programs once the planned carbon pollution reduction scheme
(CPRS) begins. The plethora of state and territory climate programs was the
subject of a review by Roger Wilkins earlier this year, however the Fed
Govt has so far refused to release his report (Carbon
Extra 6). Programs should be tightly targeted to deal with a market
failure "not expected to be adequately addressed by the CPRS or that
impinges on its effectiveness" in cutting emissions, COAG said. Programs
could "manage the impacts of the CPRS on particular sectors of the
economy", eg to deal with inequities the scheme created or regional
development issues. But any state govt intervention should clearly identify
the "non-abatement objective" and establish its program was the best
way to achieve it.
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Researchers want biofuels body
Aust needs to focus on the next generation of biofuels and
acknowledge that existing products, eg biodiesel and ethanol made from food
by-products, are unlikely to be viable without govt subsidies, says a group
representing Aust researchers. The Aust Academy of Technological Sciences
& Engineering (ATSE) wants a
national biofuels institute to co-ordinate the industry's R&D and
commercialisation efforts. In a biofuels in transport report,
ATSE said Aust had modest but realistic prospects in "generation-one"
biofuels where "a young industry is established, based mainly on food
by-products". It said competition for scarce resources, eg water and
agricultural land, meant it was "unlikely a substantial gen-one industry
could further develop in Aust without market-distorting mandates or
subsidies". But in "gen-two" biofuels, "where non-food resources
dominate" (eg, woody plants and specialised algae strains), Aust could
establish "a thriving future industry, based on prolific, lower-value
resources it has in abundance". "ATSE takes a strong view that use of
biofuels to enhance Aust's liquid transport-fuel security must not be at
the expense of food production. It also emphasises that present gen-two
biofuel technologies are not cost-competitive; an expanded R&D effort
is required; and biofuels research is fragmented and poorly co-ordinated
and needs to be better funded." A biofuels institute should be
established similar to the GCCSI (above), national low-emissions coal
initiative and planned Aust Solar Institute. Funding of around $15m over
five years would be needed to set it up, but it would also "attract"
industry support. Qld group Aust Friends of Ethanol (AFE)
rejected ATSE's claim ethanol was not viable without govt support. AFE's Rod Schultz told
Carbon Extra: "First-gen is all we've got and,
while it stacks up [financially], we don't see any point walking away
from it."
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Shell backs Rudd's CCS institute
International petroleum company Shell will become a
founding member of the Global Carbon Capture and Storage Institute (GCCSI)
after signing a memorandum of understanding with the Fed Govt. The company
told its shareholders it was the first business to put its weight behind
the institute, which held its first preparatory meeting in London on Nov
25. PM Kevin Rudd announced Aust would be home to the GCCSI in Sept (Carbon
Extra 7,
6).Shell
executive VP Dr Graeme Sweeney said CCS was "a safe and cost effective
way to capture and store CO2 from coal, oil and natural gas. .He said CCS
was expensive. "In these crucial early years, govt support and leadership
will be vital" to developing and reducing CCS costs.
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