Kudos to Warren McLaren, Sydney for writing this great article for treehugger.com
They say “a week is a long time in politics.” And this was my first thought when Matthew asked me, a month ago, to consider a round-up of business and politics events from Australia.
It may be a large sunburnt land blessed with many natural assets, but the so called Lucky Country might be using up some of its nine lives, if recent events are anything to go by. Some of the worst weather since records began suggest the climate is a changing. And not just atmospherically, politically as well. Not only are international icons like the Great Barrier Reef at risk via climate change, so are one of the oldestindigenous peoples on the planet. So what should a country, which can claim the dubious distinction of being the world’s highest emitters of carbon dioxide per capita, do to improve it’s environmental footprint? We peek at a smattering of the issues below.
Renewable Energy Feed-In Tariffs
Photo: Peak Energy
Australia has a bit of reputation for being world class innovators, but lousy entrepreneurs. We can problem solve with great flair, but we’re not particular brilliant at bringing products to market, oftentimes selling the new technology to someone else to commercialise. This has been our experience with solar. As a staffer at one of our leading photovoltaic research universities recently told me, “We make engineers, we don’t make solar panels.”
So Australia has the technology. In many cases we invented it. We certainly have the sun. But we have just lacked the political and commercial will to forge this country into the solar dynamo it should be. One of Australia’s leading suppliers of renewable energy, Energy Matters, put its bluntly. Germany, “ … while having half the sunshine of Australia, have 200 times the solar production capacity of our country …” And they put this down to Germany having a generous feed-in tariff program.
A feed-in tariff is where the owner of a a grid connected renewable energy system, like solar, is paid a premium (usually greater than the retail price of electricity) for the energy they feed into the grid (that their electricity utility can on-sell to other users.) There are two basic types of tariffs, net and gross. Net is only paid for any energy supplied to the grid that is greater than what was used. For example, if the system generated 12 units of power, but also drew down on the grid for 10 units, then the tariff would only be paid for the 2 units that were in surplus. With a Gross Feed-In Tariff (FIT) the premium is paid for the full 12 units.
Australia has no national feed-in tariff, with some of the states only just implementing their own disparate versions in the past couple of years. At the time of writing, the Australian Capital Territory (ACT) had the most generous solar program. In this our tiniest self governing region, they offer, to those of their 340,000 residents who have grid-connected photovoltaic systems, just over 50 cents AUD (38c USD) per kilowatt hour, for up to 10kw of solar capacity. This is roughly four times the retail price of electricity, depending on the plan an ACT customer is on. The program went live for residential solar systems in March 2009.
However, according to the recently announced Western Australian budget, the ACT has been trumped by a more generous feed-in tariff of 60 cents AUD (45c USD) per kilowatt hour. This high premium will only be open to those customers who also sign up for 100% GreenPower for the energy they purchase. With these rates it has been calculated by the WA Sustainable Energy Association that a solar system could be paid off in nine years. (Most solar panels are designed to function for 20-25 years.) The most populous Australian state of New South Wales (NSW) is currently deliberating on what form of feed-in tariff it will legislate. A result is expected by June 2009. The rest of country has a mish mash of tariff, but there remains a push for a national gross feed-in tariff of 80c /kWh.
Solar Power Adoption
Photo: PV-Tech
The feed-in tariff argument has recently reached prominence, due the success that Germany and Spain have had in rolling out photovoltaic systems. But it has not been the only influencing factoring in the slow adoption of solar technologies in Australia. Being a long way from anywhere has meant panels have been expensive to import. And with a relatively small population, (only 57% that of California!) sparsely spread around the country, they have tricky to produce locally, given high wages and small economies of scale. BP Solar, the only on-shore producer of PV panels announced in December 2008 they would close their Sydney plant to concentrate on production out of Asia.
In the face of such pricing pressures, various Australian federal and state governments have, over the years, rolled out different rebates for solar panel purchases. Initially these were to assist people in remote areas, but more recently with utilities embracing grid-connect systems, rebates for photovoltaics became more pervasive. In general the federal government will pay $8,000 towards the cost of 1 kW residential solar installations. In the 2008 budget the government announced the $8,000 rebate would ‘means tested’ and only available to those households with a combined income of less than $100,000. This sent a tremor of fear through the Australian solar industry. However, they need not have worried as, inexplicably, installation applications increased in such demand that rebate processing times about doubled.
It may have been that the political debate over the changes alerted more people to the fact that rebates were available, or maybe the announcement raised concerns that the rebate was being reviewed and interested parties needed to get in quick while it was still on offer. If the latter, then their instincts were spot on, for change was coming. For as of 30 June 2009 the $8,000 is gone, replaced by a new Solar Credits scheme.
Under this new process, there is no direct cash rebate, but tradable renewable energy credits (RECs) will allocated on a sliding scale of points, depending of the carbon reduction efficiency of the installed system. RECs are already in place for the likes of solar hot water rebates, but with the new Solar Credits program their value will beartificially increased five fold.
This process has drawn flak from many quarters. Some believe it means polluters, like coal-fired power stations, buying the exchangable credits on the market, will be purchasing much cheaper credits to allow them to continue their carbon dioxide emissions,negating the efforts of the homeowner to reduce CO2 output . In pure economic terms, the RECs will not, in many instances, reward the residential householder as much as the current lump sum $8,000 rebate.
Couple these rebate changes, with the aforementioned move to gross feed-in tariffs and with the newly emerging business model of communities, co-ops and businesses bulk buying panels and inverters to bring the price down even further, and you have a mad rush of residential solar installations.
Renewable Energy Targets
Photo: Wind in the Bush
All of which goes to help the government inch closer (sounds better than ‘centimetre closer’) to their stated aim of 20% renewable energy by 2020. Back in April of this year the federal and state governments under the umbrella of the Council of Australian Governments’ (COAG) agreed to expand the existing Mandatory Renewable Energy Target (MRET) to this goal. In reality this means that nationally Australia will strive for a legislated target of 45,000 gigawatt-hours by 2020. More than four times larger than the present MRET.
This won’t just come from solar, but also the likes of wind, biomass and geothermal (aka “hot rocks”). But on the solar side of things, the government of Kevin Rudd, just this weekend past detailed one the ways the federal government will be contributing to this target.
It plans under its Clean Energy Initiative to build four solar plants, which in aggregate will amount to “largest solar energy project in the world.” As the Australian newspaper understands the Solar Flagships proposal, there will be almost $1.4 billion AUD invested in two solar thermal, and two solar photovoltaic stations with a combined output of 1000MW coming on stream by 2015.
Other government initiatives like Solar Schools and Solar Cities will also contribute towards the national MRET. As will wind power, although rolling out wind farms tends to more problematic when the NIMBY (not in my back yard) element comes into play.
Geothermal energy holds great promise as water is flushed into deep holes in the earth’s crust, to be heated by hot rocks and returning to the surface as steam, to drive turbines. Although feasible to the point it is said it could provide for all of Australia’s energy needs, it is currently experiencing some technical teething issues. But not everyone will need to make a contribution, like the big polluters, known as ”emissions-intensive, trade-exposed industry”, who’ll be largely exempt.
In the federal Budget just announced last week the government said they would invest $465 million to establish Renewables Australia to support this sort of leading edge research and make it commercial.
Emission Trading Scheme (ETS)
Photo: AAP / Dean Lewins from the ABC
However Australian governments aren’t having the good news stories all flow their way.
The federal Rudd Government have come under concentrated attack from green groups, and particularly the national Greens poltical party, for their 2009 budget announcement, that they’ll be funding so called ‘clean coal’ to the turn of $2.4 billion AUD, most of which will be directed a Carbon Capture and Storage Flagships program. That’s $0.4 billion more than the Solar Flagships program.
And the Victorian government has been chastised for its feed-in tariff, which will be a net system, not gross and be eligible for only up to 3.2 kW energy systems (the ACT’s is 10 kW) and will be a credit on their electricity bill, not a payment.
On the much bigger picture is the federal government’s emission trading scheme, or as they prefer to call it, the Carbon Pollution Reduction Scheme. Many believe that the Labor party was successful at the 2007 election, in part because they promised to sign the Kyoto Protocol and actually do something about climate change, unlike the previous government.
Professor Ross Garnaut, was employed to inform the Australian government on the economic impact of global warming to the country. Part of his recommendations included the establishment of an Emissions Trading Scheme (ETS). (The US has been talking around a similar idea, but using the terminology ‘cap and trade.’ In short, enterprises who want increase their emissions beyond an allowance (or cap), set by the government need to buy (trade) credits from businesses who emit less greenhouse gases.
Anyhow. acting on the Garnaut report, the government developed their version of an ETS. But up until recently they have had no joy getting anyone to like it. Malcolm Turnbull, the leader of the federal opposition party, the Liberal/National Coalition was right when he said, “It’s literally completely friendless.” Environmentalists and The Greens felt it was wishy washy, because it only strove to reduce emissions by 5% and gave a heap of ‘get out of jail’ free cards to the big emitters. The influential mining industry (Australia is the world’s largest exporter or coal) obviously are not keen on any legislation that impedes business opportunities. It was so universally disliked that it did not pass through the parliament. It didn’t look like anything was going to be place by the election promised date of 2010.
Then at the start of May 2009 the government reneged, coming out with a revised plan. They were now moving it back to 2011 and implementing a raft of compromises, like a new low price for carbon — $10 a tonne — and yet more free permits for large polluting industries. Yet these changes enabled them to drop their bombshell (the Prime Minister, Kevin Rudd, had repeatedly stated that “It would be reckless and irresponsible for our economy and for our environment,” to delay the introduction of an emissions trading scheme), supported on the day, by the Business Council of Australia, the Australian Industry Group, the Australian Chamber of Commerce and Industry, and mainstream enviro groups like the Australian Conservation Foundation, the Climate Institute and the World Wildlife Fund.
One of the concessions was that Australia would move to a 25% Greenhouse Gas reduction by by 2020. Which on the surface sounded great. But devil is always in the detail. This cut would only occur if a comprehensive global agreement on emissions reduction can be signed in Copenhagen in December 2009. Of course, the Greens are incensed at what they see as ‘smoke and mirrors.’ But the government wants some sort of scheme passed by parliament, so it can attend the United Nations Climate Change Conference in Copenhagen with at least something in its pocket, as a bargaining chip.
And There’s More?
Photo: Warren McLaren / INOV8
With all this talk of emissions trading and solar programs one could be forgiven in thinking there weren’t other environment issues stalking the corridors of Australian political office. Let’s briefly touch on just a few.
As previously noted here the state governments couldn’t agree on national campaign to rid shops and waterways of the dreaded plastic shopping bag, so South Australia went it alone. (As they many years ago, being the only state to have Container Deposit Legislation, placing a redeemable deposit on all beverage containers.)
The food bowl of Australia is the catchment of two major river, the so-called Murray-Darling basin; it is, as Reuters points out, “as large as France and Germany combined, accounts for 41 percent of Australia’s agriculture and provides A$21 billion ($13.54 billion) worth of farm exports to Asia and the Middle East. Around 70 percent of irrigated agriculture comes from the basin. And whether due to the worst drought in over a century, or the early onset of climate change the region is under some pretty severe stress.
“The drought has already wiped more than A$20 billion from the $1 trillion economy since 2002. It is the worst in 117 years of record-keeping, with 80 percent of eucalyptus trees already dead or stressed in the Murray-Darling region.”
It’s not just ecosystems at imminent risk of devastation. If the current dry conditions continue, as they are forecast to, then the South Australian capital of Adelaide may run out of water within two years. Other states have offered to sent drinking water for the city of over 1 million people, but they too draw upon the Murray river, which only has 18% of its capacity at the moment. The federal government has given the The Murray-Darling Basin Authority (MDBA) $50 million to buy back some of the seven billion litres of water from water licence holders along the catchment, who are willing to sell.
The devastating bushfires in the state of Victoria, which claimed around 170 lives and 2,000 homes, are another aspect of Australia’s dry climate. There are claims that not enough fuel reduction burns were undertaken preceding the fires, though the bush and forest is the reason many of the people live in those locations in the first place. Others believe that with the ongoing drought, there are not enough safe days in the year to undertake the scale of reduction burns needed. A Royal Commission is presently underway to determine the factors that contributed to the most deadly natural disaster in Australian history.
Before the Commission convened and on behalf of more than 13,000 firefighters and support staff, the National Secretary of United Firefighters Union of Australia sent an open letter to the Australian Prime Minister and Victorian Premie. It said, in part:
“Something is going on. As we battle blazes here in Victoria, firefighters are busy rescuing people from floods in Queensland. Without a massive turnaround in policies, aside from the tragic loss of life and property, we will be asking firefighters to put themselves at an unacceptable risk. Firefighters know that it is better to prevent an emergency than to have to rescue people from it, and we urge state and federal governments to follow scientific advice and keep firefighters and the community safe by halving the country’s greenhouse gas emissions by 2020.”
And how about this one: The ABC reports that “Tasmania’s Department of Environment, Parks, Heritage and the Arts will be shut down to help cover a looming budget black hole.”
But there is some good news. A massive amount of environmental rebates available from state and national government to help householders, landlords, schools and community groups. These cover ceiling insulation; rainwater tanks (with added incentives if these are connected up to washing machines and flushing toilets); solar hot water systems; energy and water efficient washing machines; compost bins; drip water gardening systems; grey water systems, green loans, and more.
And we have to stop there. For next week there’ll be a whole new set of challenges and opportunities confronting our elected representatives.
