other opti0ns: RET, LET ....
The Climate Change Authority has also modelled a range of other policy options to achieve Australia’s 2030 Paris commitment and to achieve near zero emissions by 2050. A carbon price and EIS apart, other policy options include:
- An extended renewable energy target (RET)
- A low emissions target (with wider eligibility than the renewable energy target)
- A renewable energy feed in tariffs with contracts for the difference (reverse auctions for renewable energy similar to the Australian Capital Territory’s approach for reaching its 100% target)
- Regulated coal closures, and
- Absolute emissions baselines.
A low emissions target (LET) operates in a similar way to the Renewable Energy Target (RET)[1]. It would require that more electricity be supplied from low emissions sources, including (depending on its design) renewables, carbon capture and storage and highly efficient gas. The Climate Change Authority recommended that the Turnbull government should adopt a LET to help Australia reduce its carbon emissions and meet its Paris climate targets, arguing that an LET “could support a wide range of generation technologies including gas and carbon capture and storage” However, at the time of writing, the Energy Market Regulator says it has not yet analysed how a low emission target (LET) compared to an Emissions Intensity Scheme (EIS) would impact on the electricity market, including on prices and system security.
Australia's Renewable Energy Target (RET), which has been operating since 2001, is a Federal Government policy designed to ensure that at least 33,000 Gigawatt-hour (GWh) (reduced from 41,000 GWh in 2015) of Australia's electricity comes from renewable sources by 2020[2]. In other words, the termination date signals the fact that it is only a temporary arrangement, not intended to be permanent.
The Clean Energy Regulator administers two schemes under the Renewable Energy Target[3]:
- The Large-scale Renewable Energy Target, which encourages investment in renewable power stations to achieve 33,000 gigawatt hours of additional renewable electricity generation by 2020, which it does per medium of renewable energy power stations, such as wind and solar farms, or hydro-electric power stations. It does this through the creation of large-scale generation certificates; and
- The Small-scale Renewable Energy Scheme, which supports small-scale installations like household solar panels and solar hot water systems.
The Large-scale Renewable Energy Target is designed to deliver the majority of the 2020 target. The target for large-scale generation of 33,000 GWh in 2020 will double the amount of large-scale renewable energy being delivered by the scheme compared to current levels and means that about 23.5 per cent of Australia’s electricity generation in 2020 will be from renewable sources. In Early September 2019, the Clean Energy Regulator announced that the pledged 33,000 gigawatt hours of additional energy by 2020 had already been met ahead of schedule after the approval of four large wind and solar power stations a combined capacity of 406 megawatts. The Clean Energy chair, David Parker said that Australia was attracting more than double the per-capita clean energy investment of countries like France, Germany and the United Kingdom.
The Climate Change Authority’s modelling found that reverse auctions for renewable energy, which drive investment in new renewable energy, result in the lowest costs for all electricity consumers. This is also the second cheapest model overall (following a carbon price) for meeting Australia’s emissions reduction commitments. The modelling results reflect that new renewable energy power sources, such as wind and solar, are now cheaper than new gas or coal[4]. Importantly, these power sources avoid the investment risks inherent in new fossil fuelled generation.
The good news is that a range of renewable energy and storage technologies can provide power on demand to complement variable renewables at times of low wind or sunshine. These include hydro, pumped storage, solar thermal, large and small scale battery storage, smart grids and demand management. Significantly, the Labor Party has said that it would abandon the renewable energy target (RET) after 2020 because renewables accounted for the majority of new investment in electricity generation in the last decade and an emissions intensity scheme will be sufficient to reach the goal of 50% renewable energy by 2030[5]
In 2017, the Federal Coalition government also advocated a “direct action” emissions reduction scheme, involving allocations to companies for planting trees or stopping vegetation being cleared. However the cost of utilising this avenue was estimated at $29 billion to be paid from the emissions reduction fund which then had in its kitty only some $300 million, but the government said it also had other measures to cut emissions, including a plan to boost national energy efficiency, steps to phase down hydrocarbons and the 2020 renewable energy target[6].
[1] James Massola, Heath Aston, “Report urges adoption of new low emissions target”, SMH, 3-4 June 2017, 9.
[2] See the Clean Energy Council’s website on the Renewable Energy Target at https://www.cleanenergycouncil.org.au/policy-advocacy/renewable-energy-target.html
[3] http://www.cleanenergyregulator.gov.au/RET/About-the-Renewable-Energy-Target/How-the-scheme-works and http://www.cleanenergyregulator.gov.au/RET/About-the-Renewable-Energy-Target/How-the-scheme-works/Large-scale-Renewable-Energy-Target
[4] See http://www.smh.com.au/business/energy/solar-power-will-kill-coal-faster-than-you-think-20170615-gws83v.html
[5] https://www.theguardian.com/australia-news/2017/apr/02/labor-to-drop-renewable-energy-target-in-favour-of-eis
[6] Adam Morton, “Direct action plan would cost $23b if used to meet Paris targets”, SMH, 23 May 2017, 8.
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