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Transforming Australia to a sustainable energy economy

What are the key elements that would make a shift to a sustainable economy in Australia acceptable to our society?

By David Holland

It is clear that Australian consumers want the cheapest and most efficient energy sources available. Politics over the last few years has proved that. However, Australians have embraced the idea of renewable energy being the next way to power our society. (Based on a survey of 365 local groups voting unanimously for a 50% renewable energy target by 2030 see Holland (2017))

A change from unsustainable fossil fuel must happen as it is destroying our planet, but to what new energy source. (Holland 2016) For a change there has to be a price signal on carbon to bring new energy sources on line. Currently Australia is mothballing old coal fired power stations without replacements, but if new ones were built would their cost be enough of a price signal to go renewable without a carbon market?

Foran (2009) advocated carbon capture and storage. Holland (2011) rules it out and suggests new sustainable technologies like solar, wind and other renewable technologies?

Foran (2009) suggests biofuels may be an interim answer for vehicles, but Hughes et al (2012) indicates that biofuels are a disrupter to current agricultural practices devoted to foods. Biofuel production may also exacerbate the production of methane, a climate change gas, through increased fertilisers use. (Holland 2016)

Hughes et al (2012) suggests that biofuel produced from algae may be suitable for production on larger scales to partially satisfy fuel demands.

While Hellgardt (2013) exposes another benefit of algae, which is to produce hydrogen from sunlight instead of using a process of splitting the hydrogen atom from water called electrolysis. However, with Australia’s vast opportunities for the production of sustainable energy, this electrolysis process could be employed to produce hydrogen as well. Hydrogen could be used as an energy source for heating and fuel cells etc. (Holland 2011)

Holland (2011 p. 16-20), commenting on Bossel’s paper, advocates that with some research, he believes that hydrogen can be placed in chemical or molecular containers and be transported world wide as energy in the place of coal, thus eliminating coal as a container for energy.

Freight systems could be transformed to run on renewable electricity, saving tonnes of CO2 and eliminating 100’s of trucks on interstate roads. (Holland 2011 p. 15-16: Holland 2015)

The above sustainable energy solutions are clearly possible and acceptable ways to change our economy to a more sustainable economy, but Tim Jackson advocates that infinite growth of the economy is unsustainable. (Stern 2015) Clearly the above measures are to replace unsustainable fossil fuels but there may be a small amount of growth due to market opportunities for energy. There is no economic reason for the Australian energy industry to grow beyond the needs of the Australian consumer accept for the supply to export markets and the commodity that is required in all of the above energy sources is substantially sunlight.

References:

Foran, B. (2009). Powerful choices: transition to a biofuel economy in Australia (pp. iii to xv), Executive Summary, Land and Water Australia, http://library.bsl.org.au/jspui/bitstream/1/1258/1/Powerful_choices.pdf, cited April 2017.

Hellgardt Klaus Dr.(2013), Hydrogen Production – Fully Charged, Interviewed by Mr Llewellyn, youtube, Hydrogen Production | Fully Charged, cited April 2017.

Holland, David (2017 Jan.), Renewable Energy Policy Development in Australia from 2001 to 2017, Habitat Association ,Wordpress, https://habitatassociation.com.au/2017/01/22/renewable-energy-policy-development-in-australia-from-2001-to-2017/, Cites April 2017.

Holland D. (2016 Dec.), What are fossil fuels doing to our planet’s ecology and economic systems, Habitat Centre for Renewable energy, WordPress, https://habitatcenterforrenewableenergy.wordpress.com/2016/12/03/what-are-fossil-fuels-doing-to-our-planetary-systems/, cited April 2017.

Holland D. (2015), Renewable Energy and the Non- Bulk Rail Freight to replace Road Freight, Habitat Centre for Renewable Energy, WordPress, https://habitatcenterforrenewableenergy.wordpress.com/2015/02/17/renewable-energy-and-non-bulk-rail-freight-to-replace-road-frieght/, cited April 2017.

Holland, David (2011), Commentary on Correspondence 2006- 2009, Discussion Paper – Don’t sell Australia Short, https://gallery2020publishing.files.wordpress.com/2011/12/commentary-on-correspondence-for-australias-energy-future-may-2011.pdf, cited April 2017.

 

Hughes, Adam D,Kelly, Maeve S, Black, Kenneth D, Stanley, Michele S, (2012), Biogas from Macroalgae: is it time to revisit the idea?, Biotechnology for Biofuels, BioMed Central, https://biotechnologyforbiofuels.biomedcentral.com/articles/10.1186/1754-6834-5-86, cited April 2017.

Stern, David I. (2015), Prosperity without Growth: Economics for a Finite Planet, Tim Jackson. Earthscan, London (2009), Ecological Economics, Volume 69, Issue 5, 15 March 2010, Pages 1190–1191, http://doi.org.ezproxy.csu.edu.au/10.1016/j.ecolecon.2009.11.026, cited April 2017

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New South Wales Renewable Energy Policy

by David Holland

This work is from a Master of Environmental  Management undertaken in 2016.

Subject Environmental Policy.

Name of Paper:

Analysis of State Policy Formulation and Implementation

Case Study – Energy Efficiency Policy in New South Wales, Australia

This paper is on the development of the New South Wales Energy policy in Australia. Policy is extensive and the paper covers most of the policy.

Follow the link to the paper.

New South Wales Renewable Energy Policy

Renewable Energy Policy Development in Australia from 2001 to 2017

By David Holland

This article has been adapted from assignment work from a Master of Environmental  Management. Subject Environmental Policy.

Under the 1992 United Nations convention on climate change a global strategy was agreed to at the Kyoto meeting in 1997 on combating Climate Change. (European Commission Directorate-General for Research Information and Communication Unit 2003) As a result Australia committed to a series of targets, one of which was a target on renewable energy production. The Howard government agreed to a target of 20% renewable Energy production by 2020. In 2001 the government introduced the Mandatory Renewable Energy Target scheme (MRET). (Kent 2006)

Early on within Australia, very little concern was raised about climate change issues and as a result did not drive the policy agenda for the Australian government. Only after the introduction of the MRET and investment started to flow into this area of renewable energy did the public awareness grow. Even though environmental groups were aware of climate change, it wasn’t until after 2009 when investment became unmanaged and the Gillard government had to split the MRET into two parts, one for small-scale energy systems (Small Renewable Energy Target (SRET)) and one for large-scale projects (Large Renewable Energy Target (LRET)) that public opinions became vocal. (Holland 2010)

This complication in the RET allowed a considerable political attack to be mounted by the Liberal opposition on the mismanagement of the scheme and allowed the media and parliament to build a case for climate change not being real. This started to divert public opinion away from a concerted effort by Australia to reduce carbon omissions.

By the 2013 federal election many Australians believed that climate change was not really occurring in the face of a much quieter scientific community who had the damning data that exposed the facts of not only climate change occurring but that the climate change the world was experiencing was human induced (anthropogenic) and was poised to course damage to the earths biological system.

As indicated above, originally the Australian government was under pressure from the United Nations to participate in the Kyoto protocol, however environmental groups in Australia were agitating for inclusion and action within Australia, but the softening of policy after the 2013 election was as a result of pressure put on the government by big business through impassioned advocates for the case of climate change does not exist and latter that it is not anthropogenic climate change.

As a result, the government in 2015 took the step to reduce the LRET arguing that a reduction from 41,000GwH to 26,000 GwH was an acceptable target by 2020. Parliament finally agreed on a 33,000 GwH target adjustment for large projects.

As a result of these policy changes, renewable energy investment is at risk in 2015 within Australia, while the world trend is for more investment. (Frankfurt School-UNEP Centre/BNEF. 2015) (Uibu, Katri, 2015, ABC News).

This policy change had no direct public support, but was part of a perceived mandate by the people at the 2013 federal election when the Liberal Party gained power. This election was fort over the carbon pollution reduction scheme and putting a price on carbon (Carbon Planet). After the election the new government implemented a new scheme called the carbon emissions reduction scheme, which was regulated by the Clean Energy regulator and funded by the Emissions Reduction Fund.

The real reason the government changed the way a reduction scheme would operate from a carbon market to a emissions regulation system was because businesses were seeing the costs of producing goods rising and households were seeing power prices rising.

The government has kept a lot of the detail of the Carbon Emissions Reduction scheme out of the media and as a result people have no clue as to how much money is being spent on this scheme and even what the resultant emission reductions achieved actually are. Many would be apathetic as to the efficiency of this policy and will only be outraged when they are actually told the cost of the program. (Hannam 2015)

Still there are others that are happy that their wallets are not being hit with high power prices and have no interest in the future expenses that may occur when climate change starts to affect economic circumstances out of the control of the government. (Remeikis 2015)

So the new system has quieted the public outrage of increased power prices, but there is still concern in the environmental lobby that Australia is not doing enough and not sharing enough of the burden to reduce carbon emissions. (Sturmer, Jake 2015)

As mentioned earlier the policy of the RET was introduced by the Howard government in 2001 at 9500GWh. A review in 2003 found that by 2007 the incentive to invest in renewables would decline. As a result Victoria in 2006 started a scheme called the “Victorian Renewable Energy Target”. Due to the need to give more incentive for investment the Gillard government in 2009 increased the target to 45,000 GWh, a 20% renewable mix. Later in 2009 it was found that small renewable energy projects had devalued the price of the Renewable Energy Certificates (REC)s affecting the investment returns for large scale projects. The MRET was split in February 2010 allowing 41,000 GWh for large projects with a cap on the price of a small scale REC of $40 and an allocation of 4000GWh. (Holland 2010 pp.6) (St John 2014)

Pressure on the Liberal government in 2015 by the power companies and an argument that had arisen, and argument that the LRET is impacting the budget, a proposal was put by the Liberal government that the target should be reduced to 26,000GWh by 2020. Since the LRET costs are bourn by the consumer at about 5% of the cost of electricity, it is difficult to understand how this impacts on the budget. Due to Labor Party pressure and the cross benches, parliament only reduced the LRET to 33,000GWh. (Burge 2014)

After the Labor party agreed to the 33,000 Gwh compromise in the parliament for the LRET there was considerable negative sentiment for the decision in the Labor movement. Labor members, who are a cross-section of Australia from all areas both rural and urban, and after a survey of 365 branches across Australia voted, (in most cases unanimously), to increase the target to a massive 50% by 2030, which was well publicised as a policy change by Labor as courageous. (Wade 2015)(Kenny 2015)

As we move from 2016 into 2017, little change seems to be on the horizon to address the impending impacts of climate change into the future, even as we continue to break weather records on a monthly basis which could be the canary that indicates that we are experiencing increasing effects of climate change.

References:

Holland, D.(2011), Renewable energy initiatives budgeted by the Gillard government, Habitat Association, http://habitatassociation.com.au/2011/06/11/renewable-energy-initiatives-budgeted-by-the-gillard-government/

Holland, D.,(2011), Influencing the Australian Federal Government on Renewable Energy Policy, Habitat Association, http://habitatassociation.com.au/2011/12/21/influencing-the-australian-federal-government-on-renewable-energy-policy/

Habitat centre for renewable energy,(2011), The introduction to Renewable Energy production on the Central Coast and Lower Hunter in New South Wales (NSW)https://habitatcenterforrenewableenergy.wordpress.com/2011/10/15/the-introduction-to-renewable-energy-production-on-the-central-coast-and-lower-hunter-and-new-south-walessw/

Anthea, Bill., Mitchell, William, Welters, R., A policy report, a just transition to a renewable energy in the hunter region, Australia, Report commissioned by Green Peace Australia Pacific, Centre for full employment, University of Newcastle, http://e1.newcastle.edu.au/coffee/pubs/reports/2008/CofFEE_Just_Transition/Just_transition_report_June_30_2008.pdf

Long, Stephen, (8th July 2014), Solar experts say Australian renewable energy investment being stifled by Government policy, ABC News, http://www.abc.net.au/news/2014-07-07/renewable-energy-investment-killed-by-government-policy/5575262

Clean Energy Council, Renewable Energy target, (2015), https://www.cleanenergycouncil.org.au/policy-advocacy/renewable-energy-target.html

The Conversation, (July 22, 2015), How much would Labor’s 50% renewable energy policy cost Australian households?, https://www.cleanenergycouncil.org.au/policy-advocacy/renewable-energy-target.html

Climate Council, The Australian Renewable Energy race – Which States are winning or losing, http://www.climatecouncil.org.au/uploads/ee2523dc632c9b01df11ecc6e3dd2184.pdf

Climate Council, about, https://www.climatecouncil.org.au/about-us

Holland, D. (2010) The Renewable Energy Report Card Don’t Sell Australia Short Discussion Paper, Habitat Web site, https://gallery2020publishing.files.wordpress.com/2011/05/the-renewable-energy-report-card-identification-of-renewable-energy-sources-revision.pdf

Wikipedia, Renewable Energy in Australia, Government policy, The Mandatory Renewable Energy Target, https://en.wikipedia.org/wiki/Renewable_energy_in_Australia

European Commission Directorate-General for Research Information and Communication Unit, (2003), Renewable energy technologies and Kyoto Protocol mechanisms, United Nations, Luxembourg: Office for Official Publications of the European Communities, Printed in Belguim, http://www.eurosfaire.prd.fr/sustdev/documents/pdf/Renewable_Energy_kyoto-mechanisms_en.pdf

Kent, A., Mercer, D.(2006), Australia’s mandatory renewable energy target (MRET): an assessment , Journal Energy Policy, Vol. 34, Issue 9, Page 1046-1062, Research repository, RMIT, Publisher Elsevier Science, https://researchbank.rmit.edu.au/view/rmit:8447

Frankfurt School-UNEP Centre/BNEF.( 2015). Global Trends in Renewable Energy Investment 2015, http://www.fs-unep-centre.org (Frankfurt am Main) Copyright © Frankfurt School of Finance & Management gGmbH 2015, http://fs-unep-centre.org/sites/default/files/attachments/key_findings.pdf

Uibu, Katri, (2015), Renewable energy investment: Government ‘sabotages’ thousands of jobs as it ends wind, solar power investment, Australian Solar Council warns , ABC News, http://www.abc.net.au/news/2015-07-13/government-‘sabotages’-thousands-of-solar-energy-sector-jobs/6615778

Carbon Planet, Australia’s Carbon Pollution Reduction Scheme, http://www.carbonplanet.com/CPRS ,

Clean Energy Regulator, About the mechanism, http://www.cleanenergyregulator.gov.au/Infohub/CPM/About-the-mechanism

Sturmer, Jake, (14 Aug 2015), Government’s ‘substantially weaker’ emission reduction targets not enough, Climate Change Authority says, , Reported by, ABC News, http://www.abc.net.au/news/2015-08-14/emission-reduction-targets-not-enough-climate-change-authority/6699034

Wade, Felicity, (May 2015), LEAN response to CFMEU on renewable energy targets, Labor Environmental Activists Network, http://www.lean.net.au/lean_response_to_cfmeu

Hannam, Peter, (Nov 2015), Turnbull climate plan to deliver only one seventh carbon cuts: climate institute, Sydney Morning Herald,  http://www.smh.com.au/federal-politics/political-news/turnbull-climate-plan-to-deliver-only-oneseventh-carbon-cuts-climate-institute-20151110-gkvwx6.html#ixzz42ewVwnai

Remeikis, Amy, Electricity prices likely to drop: LNP, Labor claiming credit, 30th April 2015, Brisbane Times, http://www.brisbanetimes.com.au/queensland/electricity-prices-likely-to-drop-lnp-labor-claiming-credit-20150430-1mwtee.html

Noonan,  Andie , (2015), Paris climate talks: What have world leaders had to say on climate change?, , ABC News, http://www.abc.net.au/news/2015-11-30/world-leaders-on-climate-change-ahead-of-paris-talks/6847992

COAG paper, RENEWABLE ENERGY TARGET SCHEME DESIGN, https://www.coag.gov.au/sites/default/files/Renewable_Energy_Target_Scheme.pdf

St John, Alexander, Dr.(2014), The Renewable Energy Target: a quick guide , Science, Technology, Environment and Resources Section, Australian Parliament, http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1314/QG/RenewableEnergy

Burge, Ben, (19 Sep 2014),The dirty dozen myths of the RET debate , The Australian Business review, http://www.businessspectator.com.au/article/2014/9/19/renewable-energy/dirty-dozen-myths-ret-debate

Renewable Energy Report Card 2010 by David Holland

Executive Summary

The following paper is a designed as a discussion paper on the progress of the uptake of renewable energy in Australia.  The purpose of the paper is to highlight the progress Australia has made under government policy settings up to and including 2010. Under the Renewable Energy Credit scheme (REC) important changes have been made in the variety of renewable energy sources now being used to produce electric power. These are detailed in the paper and include, wind powered generation plants, solar hydro energy plant to produce steam fed directly into existing power station turbines, solar photovoltaic cells to produce domestic power, wave energy utilization to produce power for desalination plant applications, tidal power to produce grid power in various locations around the continent, thermal or hot rock installations to harness heat energy to produce base load grid electrical power and a cutting edge form of power generation known as convection energy systems. Convection energy is sourced simply but harnessing the power of rising hot air. Some of these convection power plants are designed to be enormous. The paper outlines how at least one United States of America (USA) state has embraced this technology that was first developed in Australia. The paper also introduces a little thought of area of power generation known as micro renewable energy power systems. These are systems that might be called scavenger power system. The paper explores a range of applications that could be implemented to use power that is a byproduct of other applications and processes to generate power; systems similar to water or sewage flowing down conduits or the process of decomposition within a waste dump. These micro generating systems use available resources to generate electricity. The paper touches on a new technology in its infancy where the applications are not fully realized or evaluated. This technology utilized vibration to produce small amounts of electrical energy. At present this technology has only produced one commercially viable product, but even this application of the technology has enormous potential. The paper explains the introduction of RECs, and how the federal government introduced a correction to the scheme to avoid a collapse of the REC trading market. It introduces the New South Wales Feed in Tariff (FIT) scheme. This scheme allows domestic generating power systems to be connected to the main grid enabling this power to be bought by the grid power supplier. This renewable power is then sold on to other power uses. This seems to be a good idea, but when it comes to larger non-domestic producers like local councils the power companies disallow these systems to be connected into the grid through the FIT scheme. The paper finally shows some inequity in this type of policy, highlighting that with a more flexible approach to organizations like local councils, opportunities of collaboration between the power companies and councils could better utilize unused power available in scavenger power systems when power demands are higher than the supply from renewable sources. This means that at these times of high demand, power companies will need to source electrical energy from conventional sources such as coal fired power stations, diesel generators or gas turbine plants connected to the grid.

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Commentary on Australia’s Future for Renewable Energy

Executive Summary

This is a discussion paper about renewable energy and how Australia is placed to act on reforms to improve the uptake of renewable energy. The paper also comments on a series of letters sent to Federal Government Members and Ministers from 2006 to 2010.

The commentaries on the letters add additional information not given in these letters to the federal government. This additional information has been added with a contemporary nature relating to the year 2010.

This discussion paper has within its appendix list the actual letters sent to the federal government. In addition it has the two replies from two federal departments received from the final letter written in 2009. These letters are from the Minister for Resources and Energy and the Department of Infrastructure, Transport.

These replies outline some interesting plans for the direction of the then Rudd government and actions containing exciting programs underway. The commentary on the letter from the Minister for Resources and Energy analyses information presented in the letter that explain the government’s promoting of the ‘hydrogen economy’, and the continuation of research into carbon abatement programs. Some interesting results are emerging from this program that may be environmentally friendlier than the simple carbon capture and storage concept.

The commentary on the reply from the office of the Department of Infrastructure, Transport, makes two important points. Firstly the government is continuing the planning for coal extraction by providing additional rail infrastructure for the coal mining industry. Secondly, though the introduction of Infrastructure Australia a range of much-needed infrastructure within Australia can be planned, This will ensure proper investment in future infrastructure provided consideration is given to issues surrounding the impacts of climate change and peak oil. These should include best practice planning for the use of renewable fuels and renewable energy.

The commentaries on the letters are detailed, adding to the information contained in the letters. When reading these commentaries the original letters should be referenced to get a better picture of how the subject has evolved over the 2 to 3 year period between the letters and the commentary.

Some of the subjects canvassed by the letters include; ‘the future of fuel cell technologies’, ‘the hydrogen economy’, ‘using hydrogen as an energy carrier’, ‘the efficiencies of heavy freight rail’ and that a move towards higher levels of public transport use will help reduce carbon emissions and reduce government spending on high cost infrastructure such as roads.

The letters cover, as does the commentary, the issue of a carbon trading system or carbon tax. It outlines in brief the need for some market based system to line up with world’s carbon trading systems or programs that provide ways to give disincentives for producing greenhouse gases by manufacturing enterprises. These enterprises utilize the ‘public good’ resources such as a balanced gaseous air mix in our atmosphere and clean seas that still have a capacity to absorb carbon dioxide. However many industrial and transport processes are impacting on the percentage of CO2 in the atmosphere which is tending to cause changes to other economic systems reliant on stable weather patterns. These economic systems such as food production and other systems including natural systems rely on stable climate and weather patterns. When these systems are impacted the world’s population and general economy can be drastically affected. High levels of CO2 impact the very wellbeing of human life on earth and any compensation by manufacturing and industry is meaningless. However, these externalities explained above are considerable and morally they should somehow be accounted for in the manufacturing process. With these externalities accounted for by an artificial but morally sound price signal, it then may be that a cheaper and more economically sound (assuming the pure economics of a level playing field) process may be found that is better for the manufacturer. This is where a price on carbon helps to artificially price the damage these externalities are causing and attempts to give industry some impetus to find more carbon neutral forms of energy production.

One of the most important areas the commentary covers is that of a future change in energy sources from a fossil fuel driven economy to a renewable energy economy.

This move must be accompanied by a government planned response to supporting infrastructure. It is one thing to drive a renewable energy industry and connect it to an existing grid, but another to plan for and encourage infrastructure development by private industry to build plant in areas away from the grid.

Similarly, an organized plan is need for the infrastructure needed to support a move away from fossil fuels in the automotive industry. Without government initiatives and proper planning to a standardized type of automotive support infrastructure, private investment will continue to identify a move towards renewable automotive fuels too risky.

With no standards for a supply route for a renewable energy fuel, private industry will find it a mammoth task to provide both a vehicle to run on a particular renewable energy source as well as provide the infrastructure, this with the high possibility that the whole new type of renewable energy system, including the vehicle and infrastructure, will not be embraced by the public due to its initial costs or lack of convenience etc.

The paper makes no apologies for being prescriptive. Although many of the concepts in the paper have been thought through by government experts, there is always the danger that assumptions can be made about the detail of what is being explained in a paper. So the avoid this some level of detail in some of the concepts and processes are present in the document.

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Gallery

Influencing the Australian Government on Renewable Energy Policy

By David Holland

 

During the year 2006 the local federal member for Dobell NSW sent a letter to his constituents asking them to write to him outlining any issues that concern them.  Not to be deterred by never taking up such an opportunity before, I wrote back to the member detailing some of my concerns regarding the direction of policy, then currently being followed by the Howard government, and outlined some of the opportunities useful for Australia to follow in efforts to reduce carbon dioxide emission and create a more sustainable way to produce energy for domestic, industrial and automotive uses within Australia.

The member was a liberal party MP and impressed enough with the letter to pass it on to the then Minster for the Environment, however no letter was forthcoming from that the Minister in reply to the local member.

Not to be deterred in those troublesome times of ‘Work Choices’, a policy by the Howard government to reorganize the Australian workforce, a policy that was soon to topple that government, I wrote to the shadow minister for the environment, the Hon. Peter Garret, who responded to my letter.

Then on the eve of the 2007 election, a repackaged letter adding a considerable amount of new information was sent directly to the opposition leader, who was soon to sweep into power as the Prime Minister, The Hon. Kevin Rudd.

Due to the amount of work this new Labor PM was about to do, I was not expecting any response in the near future, however I was confident that this letter was at least read, if not influential on the new government’s policy direction.

During the next 12 months from November 2007, I noticed that policy was set in the right direction for renewable energy to become a major player in Australian Energy production, but somehow real on the ground actions and expenditures were not supporting the policy move towards renewable energy. The global financial crisis had caused a lot of money that I had hoped to be used to support the move to cleaner energy, to be spent on a range of other projects. Some quite important infrastructure projects, and other projects related to energy consumption that would have limited value in the long term towards any real change to Australia’s mix of energy sources.

As a result, in 2009, I sent another, completely new letter to Prime Minister Rudd, encouraging action towards real change to Australia’s energy mix, this time high lighting transport applications for sustainable fuels and modifications to infrastructure to support change.

After the change to the Prime Minister ship in 2009, I resolved to refocus my effort by giving a full and detailed update on all the letters sent the government, and outline the level of achievement Australia had made up until 2010 as a way of demonstrating, the change already underway caused by the government’s policy settings.

The articles are referenced below:

Following these two articles being sent to Prime Minister Gillard, I received two letters from the government. The first was from the office of Prime Minister Gillard, the detail of which is available on the following link.

The second letter was from the Department of Resources, Energy and Tourism. The article below was written around the contents of the letter from the Department, which outlines the direction of the actions expected by the Gillard government in the near future to encourage the implementation of renewable energy uptake within the Australian industry.

Reply Letter from the Office of the Hon. Martin Ferguson AM MP, Minister for Resources and Energy 20 Jul 2011

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Aside

The Gillard Government’s Renewable Energy policy enacted

By David Holland

Introduction

It is pleasing to see that the Gillard Federal Government supports the sustainable production of energy and is introducing activities to support the development of sustainable renewable energy production within Australia.

This article is based on the latest letter from the Australian government.  This letter is from the office of the Minister for Resources and Energy, The Hon. Martin Ferguson AM MP introducing a range of initiative that will flesh out the Gillard Government sustainable/renewable production of energy for Australia’s future.

On the 10th of July 2011 the government announced its Clean Energy Future Package. This package was designed to allow a smooth transition to a market based carbon trading system. This is to be done by establishing a market price on carbon emissions as a starting point before the transition to the market based carbon trading system when both the Australian and the world’s renewable energy industry and carbon abatement industries mature.

This price will initially be in the form of a levy or tax which will provide a range of offsets to individual Australian residents to compensate for the increases in energy costs likely to be passed on by large energy producers though this artificial price correction. This price correction is designed to protect the integrity of the ‘public good’. (ie. The public good in this case is defined as levels of carbon dioxide concentrations in the atmosphere that do not cause global climate change)

This carbon price levied by the government, which has been described as a tax, attempts to introduce a financial signal to industries that contribute to dangerous climate change through the emission of carbon dioxide into the atmosphere. By imposing this price on the emissions, the government attempts to reduce the long term impact carbon polluting industries will have on the existing quality of life of a large part of humanity, although unless global action is taken unilaterally, any effort by Australia will not impact on the global climate change process. However, Australia, among some other countries leading the way to reduce climate change, may embolden yet more countries to take more decisive action to combat climate change.

The government suggests the carbon price will see Australia’s 500 largest emitters of the carbon dioxide gas pay for their carbon emissions. Some of these large emitters will attempt to reduce the cost of paying this emissions price to the government by improving their production of energy methods. This will progressively start industries to produce more of their energy from renewable sources. Others who cannot change there emissions mix, may be able to offset the cost of emitting the carbon dioxide by having a financial interest in the development of renewable energy projects or invest in abatement programs designed to reduce carbon dioxide levels in the atmosphere.

As part of the budgetary package, the Gillard government is committed to record levels of funding to support the development and commercialization of renewable energy technologies.

Up to $3.2 billion in funding will be administered by the federal government’s Australian Renewable Energy Agency (ARENA). This body will take over three existing bodies (currently administering $1.5 billion).

These were:

The Australian Solar Institute was a mechanism by which funding applicants can get funding for research on specified criteria. With this Institute, solar was the main focus of any successful research funding. However, under the new ARENA a much wider focus for applying for research funding is expected, covering all renewable energy types.

The Department of Resources, Energy and Tourism had a wide portfolio. By including Tourism in the department, the funding for renewable energy projects were diluted giving a certain amount of funding to tourism development and thereby as a consequence away from developing new renewable energy sources. ARENA will become a more transparent funding pool for projects related to renewable energy development.

In addition, mining was part of the administrative responsibility of the Department of Resources, Energy and Tourism. By considering both resources and energy, this department was able to consider energy security. This link between energy systems development and mineral resources is a particularly important link in any transition from fossil fuel resources and fossil fuel driven energy utilization to renewable resource development and sustainable energy delivery systems.

The Australian Centre for Renewable Energy (ACRE) is a funding source for renewable energy initiatives.  Previously with a budget of $690 million dollars, it is now planned to administer a budgeted of $5 billion. However, soon all of the effort focused in this organization will be refocused into ARENA. ARENA will have a much wider scope than ACRE, as it will incorporate the responsibilities of the other two organizations, the Australian Solar Institute and the Department of Resources and Energy.

The new organization of ARENA will also have an additional $1.7 billion of unallocated funds to invest into renewable energy projects.

Potentially, with the introduction of the carbon price, electricity generators in some cases could find it difficult to adapt to clean energy production. This is due to the higher costs of producing non-clean energy in a high carbon dioxide producing asset like a power station. Such owners of these assets may find it difficult to gain finance to invest in clean energy due to the devaluation of their asset and the lower profit levels expected under a carbon price.

Ref: Australian Energy market Commission – Advice on the impact of the introduction of a price on carbon emissions on the energy sector if no financial assistance is provided to highly emissions intensive generators

To help rectify this situation, funding has been set aside for a range of asset owners to help private industry to invest in renewable energy solutions, low emission technologies and energy efficient technologies. The Gillard government has provided the commercially oriented Clean Energy Finance Corporation (CEFC) to be responsible for providing up to $10 billion of revolving funding to support Australian business interests in becoming more efficient and ultimately finding an energy production pathway to renewable energy utilization.

The CEFC is commissioned to play a role of unlocking private investment for both the implementation of efficient energy technologies and the production of energy from renewable energy systems by private industry.

To get a better insight into the importance and strategic value of the CEFC the following article explains its value.

Use the hyperlink below to access this article.

Is the Clean Energy Finance Corporation the best way to get clean energy?

Published: 24 October 2011, 6.37am AEST

The above article rightly suggests that just a carbon price alone will not generate enough ability for the Australian energy economy to transform from a carbon-based economy to a sustainably renewable one.

The CEFC will become a way for presently uneconomic aspects of the energy industry to enter the existing market mechanism of the Renewable Energy Target (RET). This market mechanism, recently redirected by the Gillard Government in February 2011, will be the main investment incentive for new renewable energy development using the renewable energy credit (REC) initiative. The RET helps bring on line a security of the renewable asset by putting a value on the energy to be generated by the new renewable asset over and above the sale price of the energy.

Another way to gain renewable energy income for asset owners would be to design a state or federal grid feeding system similar to the one in place in New South Wales. This Feed in Tariff (FiT) system, as suggested in the above article, could be used more widely throughout Australia. However the generosity of returns currently available in the NSW scheme, now heavily underpinned by a NSW State government subsidy, may need to be re-evaluated.

The RET will be the underpinning Federal Government scheme to achieve the renewable energy target of 20% renewable energy production by 2020 throughout Australia. This program is planned to continue until the year 2030 when it is expected that the carbon price will be robust enough to allow Australia to finally enter the world market for carbon abatement.

However, it is encouraging to see some smaller states in Australia already approaching and overtaking this 20% benchmark for the RET. (ref.  Australia’s Renewable Energy Report Card 2010)

Until ARENA is established with up to $5 billion of funding available to it, ACRE will continue to be the central point of contact for assistance for companies looking to invest in renewable energy applications within Australia.

ACRE is continuing to operate powerfully, producing a Strategic Development Guide on 5th April 2011. In keeping with its vision of:

National energy markets delivering competitively priced renewable energy sourced from a diverse range of technologies.

And its mission:

To deliver programs and provide relevant policy advice to move promising renewable energy technologies, products and services through their innovation cycles to commercial competitiveness nationally and internationally for the benefit of Australia.

ACRE is involved in development, demonstration and the initial stages of deployment of renewable energy applications within Australia.

Announcement of a 2011 Energy White Paper

The Government is expected to produce an updated Energy White Paper for 2011. It is expected to be available in 2011 or 2012 to be finalized in 2012. This White Paper will set out a policy framework to maintain energy security and prosperity during a transition to a more sustainable fuel mix and a renewable energy future. The paper’s target is to ensure that Australia has a competitive, secure, efficient and sustainable energy sector in place. It is expected that the white paper will announce this transition to renewable fuels, giving a time frame for the transition up to the year 2030.

An overview of the policy priorities and the process needed to accomplish the above target was outlined during the year by Martin Hoffman, the Deputy Secretary Department of Resources, Energy and Tourism.

Ref.: Energy White Paper Presentation by Martin Hoffman

Supporting this presentation is a document that outlines some of the processes the government intends to initiate through the white paper.

Ref.: Enhancing Australia’s Economic Prosperity

The letter from the Minister’s office states that the Energy White Paper will be based on a full strategic review of the energy sector, identifying emerging trends and needs.

A submission on the previous Energy White Paper in 2004 outlines the deficiencies of this paper, highlighting the need to move more progressively into the future by identifying Australia’s great opportunities in moving towards a renewable energy mix for the future.

Ref.: Renewable Fuels Australia (RFA) submission to the Energy White Paper (2004)

The 2011 white paper is expected to identify the growing renewable energy sector as a major trend towards future energy development. As a result of this trend towards renewable energy utilization both within Australia and in the world, the paper is expected to lay a policy framework to plan more effectively for a sustainable and renewable energy future within Australia.

Related papers:

Energy in Australia, Department of Resources,  Energy and Tourism

Securing a clean energy future

Energy Security Fund, AEMC 7th July 2011

Energy Security Fund, AEMO 5th July 2011

Australian solar institute, A Strategic research initiative, call for comment final

Reply from Minister for Resources, Energy and Tourism Office