Australian Senate Passes Renewable Energy Target Bill

Australia’s upper house has passed a climate change bill, effectively mandating a renewables portfolio standard that should establish a 20% contribution to electricity production from renewables by 2020.

The passage of the Rudd government-backed bill through the Senate came just days after parliament had rejected a separate, even more ambitious, climate change bill based on emissions trading. Nonetheless, the bill quadruples the renewable energy target set by the previous government in 2001.

However, the bill passed only after the government reached a deal with the main opposition party to increase government assistance to energy intensive industries, notably aluminum production, and coal mining.

Consequently, the government will provide partial exemptions to all activities that would qualify for the emission-intensive trade-exposed assistance scheme under the Carbon Pollution Reduction Scheme of 90% and 60% of the 9500 gigawatt-hours (GWh) set under the existing Mandatory Renewable Energy Target, depending on the emissions intensity of the activity. The government has also agreed that the transitional arrangements will be subject to the recommendations of a review in 2014.

Commenting on the Renewable Energy Amendment Bill 2009 and the Renewable Energy Amendment Bill 2009, Australia’s minister for Climate Change and Water, Senator Penny Wong, said: “In 10 years time the amount of electricity coming from sources like solar, wind and geothermal will be around the same as all of Australia’s current household electricity use.”

Matthew Warren, chief executive of Australia’s Clean Energy Council welcomed the move, saying: “This is to date the most significant piece of climate change legislation in Australian history. It is the result of bipartisan support within the Parliament and years of hard work by many in the emerging clean energy industry. The RET legislation will be the foundation of clean energy policy in Australia for the next decade. But our job has only just begun. We need to raise more than AUS $20 billion [US $16.8 billion] to finance new clean energy projects over the next decade to help create 28,000 new clean jobs.”

The country’s energy industry also supported the bill, with, for example, AGL Energy Ltd (AGL) chief economist and group head of corporate affairs, Paul Simshauser, saying: “The passage of the legislation provides certainty for industry and will result in a significant increase in investment in renewable projects across the country. AGL hopes that a similarly constructive approach can be adopted by all political parties in relation to emissions trading so that business certainty will be enhanced for all sectors of the economy.”

Similarly, Origin’s executive general manager for Policy and Sustainability, Carl McCamish said the legislation was a great start in providing a cohesive policy framework to position Australia for a lower carbon future, commenting that: “Along with the Carbon Pollution Reduction Scheme (CPRS) and the right support for investment in electricity transmission, the RET scheme will be an important factor in whether companies invest in the infrastructure required to deliver carbon emissions reductions in Australia.”

McCamish added that in order to meet this target, a substantial amount of wind — potentially 6000 MW — will need to be built, driving investments in the vicinity of AUS $12–18 billion [US $10.8–15 billion] over the next decade.

However, McCamish also expressed the view that the legislation should, nevertheless, be seen as a transitional measure. “In the longer term, the CPRS is the lowest cost way to drive investment in cleaner technologies. We encourage all political parties to negotiate a workable agreement to ensure that the CPRS is passed as soon as possible,” he said.

Turning to the currently stalled and far more comprehensive carbon legislation, minister Wong noted that the government now looks forward to the opposition coming to the table on the Carbon Pollution Reduction Scheme. Without the CPRS, Australia’s carbon pollution will continue to rise, Wong said, noting: “Even with the Renewable Energy Target increasing renewable energy by four times, Australia’s emissions will still be 20% higher in 2020 than they were in 2000.”

An amended carbon bill is expected to be resubmitted to the floor later this year.

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