The Rudd Government’s pre election promise to achieve 20 percent renewable energy production by 2020 is standing firm. This is despite the Productivity Commission and the Government’s climate change advisor, Professor Ross Garnaut saying that with an effective emissions trading scheme there’s no need for the target. Releasing an options paper on the renewable energy target, Climate Change Minister Penny Wong said that it provided support for the Australian Emissions Trading Scheme and that, “it will encourage industry, both as buyers of electricity and also generators, to invest in renewable energy.”

Proposed approaches
Two possible approaches to expanding the Government’s Renewable Energy Targets are outlined within the options paper. Aimed at reaching the 2020 target at the least cost, the first approach is closely based on the existing Mandatory Renewable Energy Target (MRET) scheme. “It creates a strong investment incentive early in the scheme and encourages the early creation of RECs (Renewable Energy Certificate) that can be used in future years to help minimise RECs prices over the duration of the scheme,” (COAG Working Group On Climate Change and Water, Design Options for the Expanded National Renewable Energy Target Scheme). Worth consideration however, is that under this approach, the banking of excess RECs resulting from early targets, and their use to avoid liability during the latter stages of the scheme, could inhibit the renewable energy generation targets from being reached in later years.

The second, more costly approach limits the time available for creation and banking of credits, thus requiring greater industry development to achieve the 2020 goal. “This approach seeks to encourage a smoother investment profile to help bring forward new technologies in the latter part of the scheme” (Design Options Paper).

Support for the target
Despite the sentiments of Professor Ross Garnaut and the Productivity Commission there is support for the renewable energy targets with the Clean Energy Council welcoming the Government’s continued commitment  Don Henry, Executive Director of the Australian Conservation Foundation, believes that Australia could go one step further saying, “a renewable energy target of 25%, coupled with energy efficiency measures, could actually save Australian households around $84 each year on their electricity bills... (and) reduce our annual greenhouse emissions by 69 million tonnes – almost as much as the emissions from all road transport in Australia.” Elsewhere, with the European Union setting a 2020 target similar to Australia’s, many countries have committed to targets far more ambitious than 20 percent by 2020, as detailed in the table below.

Outlined in the options paper are the Government’s commitments to the renewable energy target:

• ensure the equivalent of at least 20 percent of Australia’s electricity supply—approximately 60,000 gigawatt-hours (GWh)—is generated from renewable sources by 2020
• increase the MRET to 45,000 GWh to ensure that together with the approximately 15,000 GWh of existing renewable capacity, Australia reaches the 20 percent target by 2020
• bring both the national MRET and existing state-based targets into a single national scheme
• count only renewable energy towards the target and keep the same eligibility criteria as in the current MRET scheme
• phase out the RET between 2020 and 2030 as emissions trading matures and prices become sufficient to ensure a RET is no longer required
• retain the eligibility of all renewable energy projects that have been approved under existing state-based schemes

The ‘COAG Working Group On Climate Change and Water, Design Options for the Expanded National Renewable Energy Target Scheme’ paper can be viewed at http://www.greenhouse.gov.au/renewabletarget/consultation/pubs/ret-designoptions.pdf.
Public comment on the content of the paper is invited until July 30, submissions can be made at mailto:ret@climatechange.gov.au.

References

• ‘COAG Working Group On Climate Change and Water, Design Options for the Expanded National Renewable Energy Target Scheme’
• http://www.greenhouse.gov.au/ renewabletarget/consultation/pubs/ret-designoptions.pdf
• ‘The future’s bright – a boost in renewable energy is a boost for the Australian economy,’ Australian Conservation Foundation, April 2007
  Hammer, C. ‘Rudd locks in green power plan,’ The Age, July 3, 2008
• Tingle, L. ‘Renewable energy plan flagged,’ The Australian Financial Review, July 3, 2008
• ‘Renewable energy still planned,’ The Australian, July 2, 2008-07-03
• http://cleanenergycouncil.org.au/news/showarticle.php?id=131
• http://www.euractiv.com/en/energy/eu-renewable-energy-policy/article-117536