Juli Tomaras, Law
and Bills Digest
The renewable energy sector seeks sufficiently stable policy settings to ensure the necessary investment to meet Australia’s emissions reduction target.
Renewable energy has an important role to play in
cutting carbon pollution and meeting Australia’s emissions reduction target (26–28 per cent below 2005 levels by 2030), given that the energy sector accounts for both the largest
proportion and biggest growth of greenhouse gas emissions created by people.
Renewable Energy Target
Energy Target (RET) aims to reduce emissions from the electricity
sector, and the Turnbull Government has stated that it aims to achieve a
minimum of 20 per cent of energy from electricity coming from renewable sources
by 2020. Currently, the commitment is for renewable energy to supply 33,000 gigawatt hours (over 23.5 per cent)
of Australia’s electricity by 2020. Minister Frydenberg has locked in the 23.5
per cent renewable energy target by 2020, in what has been described as a
‘marked change from the avowedly pro-coal rhetoric of the Abbott government.’
The RET is made up of two schemes: the Large-scale Renewable Energy Target, and the Small-scale Renewable Energy Scheme. The
Large-scale RET financially supports the creation and expansion of renewable
energy power stations (for example, solar or wind) while the Small-scale RES creates
a financial incentive for individuals and small businesses to install eligible
small-scale renewable energy sources such as residential solar panels. The
Large-scale RET is expected to create the majority of the renewable energy
needed by 2020.
However, concern has been raised by some commentators
that the Coalition Government has no renewables target
beyond 2020. And Australia’s carbon dioxide emissions from electricity are on the
rise, mainly due to a rise in black coal consumption after several years
of falling or flat demand due to commencement and expansion of Liquid Natural Gas
(LNG) exports from Queensland. Furthermore, concern has been expressed about the lack
of clear, stable and sufficient long-term policy settings required to provide incentive and ensure the necessary investment
in the large-scale renewable energy sector. It is notable that, between mid-2013
to 2015, there was negligible investment in the large-scale
renewable energy sector in Australia. It is too early to see whether
initiatives announced since then will address these concerns.
Renewable energy policy
Since gaining power in 2013, the Coalition Government
has sought to make adjustments to policy and action in the renewable energy
In response to the 2014 Warburton Review and the Climate Change Authority RET Review,
in June 2015 the then Abbott Government legislated to
reduce the renewable energy target by 20 per cent from 41,000 GWh per year to
33,000 GWh by 2020. Meeting this lower target was estimated by the Clean Energy Council in mid-2015
to require approximately 6,000 MW of additional renewable generation capacity
Energy Finance Corporation (CEFC) co-finances and invests, directly
and indirectly in renewable energy and energy efficiency projects. ‘The
CEFC focuses on projects and technologies at the later stages of development
which have a positive expected rate of return and have the capacity to service
and repay capital.’ However, they also engage with ‘earlier stage projects
which have significant support’ and an appropriate risk profile. The CEFC’s 2014–15 annual report shows clean energy
investment in Australia was $3.171 million in that financial year—falling 31
per cent from $4,596 million on the previous financial year under the Labor Government.
Prime Minister Turnbull shelved the plan by former
Prime Minister Abbott to abolish the Clean Energy Finance Corporation and
the Australian Renewable Energy Agency (ARENA). ARENA
works to reduce emissions in the electricity sector by providing grants to
projects in the research and development phase that would improve the
affordability and increase the supply of renewable energy in Australia. In a
joint statement with former Environment Minister Hunt, Prime Minister Turnbull
announced new plans
to retain and reinvigorate the CEFC and ARENA as part of a commitment to
supporting jobs and innovation through investment in clean and renewable
This development and shift in position follows the
issue of a new investment mandate to the CEFC in December 2015 by former
Environment Minister Hunt and Minister Cormann. The mandate directed the CEFC
to focus its attention on emerging and innovative technologies, energy
efficiency and clean energy technologies. This was a change to, and a tempering
of, a draft mandate put to the CEFC in June 2015 by the then Treasurer Joe
Hockey and Minister Cormann that would have largely precluded further
investments in wind and small-scale and changed the mix in favour of large-scale
solar. The emphasis was, instead, to be on investment in new and emerging technologies and not in
established, mature technologies with existing access to mainstream finance.
In early 2016, the CEFC announced that it would be
providing $9.1 million to the University of Melbourne to
fund renewable energy and energy efficiency projects at the University.
Ramping up solar
Concern had been raised that where ‘Australia
falls behind in the global solar rankings, is in the large scale sector.’ It had also been reported that ‘Australia still sources more of its power from fossil fuels
than other comparable countries in the world and we’re not even in the top 10
for wind and [large scale] solar capacity.’ In September 2015, the CEFC and
ARENA stated that they were targeting an additional 300 MW of large scale solar
new funding programs.
In April 2016 Ministers Hunt and Porter announced
that the Turnbull Government would provide $3.3 million funding to support the
Alkimos Beach residential storage trial from 2016-2020, which combines
community-scale battery energy storage and solar. The media release also noted
that Australia has the ‘highest per capita rate of household solar in the
world’. Minister Hunt has previously stated that the Government was investing
in emerging battery storage technologies and had plans to accelerate
the deployment of battery storage in Australian households.
Minister Hunt has also said he wants Australia to become number 1 in the deployment
of battery storage.
Clean Energy Innovation Fund
In March 2016 Prime Minister Turnbull and Environment
Minister Hunt announced the creation of a new Clean Energy Innovation Fund (CEIF)
which will be allocated $100 million annually for ten years and funded out of
the CEFC’s $1 billion allocation. This coincided with what some commentators
described as a corresponding defunding of ARENA. The CEIF will be jointly
managed by the CEFC and ARENA. The CEIF will provide loans to businesses rather
than grants, and will ‘support emerging technologies which make the leap from
demonstration to commercial deployment.’ The CEIF’s focus will be on projects
such as ‘large-scale solar with storage, offshore energy, biofuels and smart
grids.’ The announcement of this initiative would also seem to align with
Australia’s Paris commitment to invest ‘new money’ in clean energy innovation.
Low Emissions Technology Roadmap
In May 2016, Minister Frydenberg announced that the Government
was commissioning the CSIRO to develop a ‘technology neutral’ Low Emissions Technology Roadmap that will highlight areas of potential growth in Australia’s clean
technology sector and map the development of new emissions reduction
technologies. However, there was no detail about what this may involve; whether
there will be ongoing funding to support these technologies, and if they will
be developed in time to meet Australia’s 2030 emissions reduction target. Also
necessary for an investment in these technologies is a consideration of the
relative price of coal, which is falling.
State and territory renewable energy
Also of significance in the renewable energy sector
are the actions and initiatives of state and territory governments. State and
territory governments have announced their own targets to support the renewable
In June 2016, the Victorian Government announced
‘ambitious renewable energy targets to create thousands of new jobs and cut the
state’s greenhouse gas emissions.’ The Victorian Renewable Energy Target (VRET) will commit the state to generating 25 per cent of its
electricity from renewable energy by 2020, and 40 per cent by 2025. It is expected that VRET will be based on a similar mechanism to the scheme
used in the Australian Capital Territory, which has managed to avoid the
uncertainty that has affected the renewables industry in recent years.
In 2014, South Australia announced a target of sourcing 50
per cent its electricity from renewable energy by 2025, although it is already
above 40 per cent at present and this policy is dependent on federal policies.
In 2015, Queensland committed to generating 50 per cent of
its energy from renewable sources by 2030 and to ensure that one million of its
homes had rooftop solar by 2020.
These commitments translate to a considerable
expansion of the future supply of electricity from renewable sources.
Clean Energy Council, Power Shift: A blueprint for a 21st century energy system
, April 2016.
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