Chapter 3 - Key Issues
The Federal Government’s Energy White Paper ... fails to account
for the true costs of conventional energy generation. The Paper does not regard
key aspects of Australia’s
national interest including achieving a diverse energy mix, use of indigenous
renewable sources, energy security and deep cuts to our greenhouse gas
emissions by 2050.[88]
3.1
As with most issues which involve the sometimes
competing aims of industry and the environment, opinion on the EWP has been
strongly divided. The Coal Association,[89]
the National Farmers Federation,[90] and
the Energy Supply Association of Australia[91]
commended the EWP on its release, seeing the economic benefits for their
industries and for the future of Australia's
fossil fuel resources. The Business Council of Australia was supportive of the
EWP on the basis that it 'would go a long way towards delivering long-term
energy security and competitive energy costs for Australia'.[92]
3.2
Professor Bob
Carter, Professor of Geology at James
Cook University,
expressed strong support for the EWP as
' excellent decisions with strong economic and environmental benefits', and
dismissed criticisms:
... other public reaction has consisted of shrill criticism. The
criticism rests partly on naked self-interest, and partly on an utterly
inadequate understanding of the realities of climate change science and of the
art of government for the welfare of all.[93]
3.3
However, numerous other industry bodies and most
environmental groups were less supportive of the EWP, seeing the Government's energy
policy as another opportunity lost in the development of alternate energy
sources and in Australia's
global obligation to reduce greenhouse gas emissions.
3.4
Professor Ian
Lowe, Emeritus Professor of Science,
Technology and Society at Griffith University,
was equally forceful in his criticism:
The Howard Government's Energy White Paper is a disaster. It
does almost nothing to address our urgent energy priorities... Australia's
pressing energy issues are a secure supply of transport fuels and reducing greenhouse
gas emissions. The White Paper provides no policies to deal with those
problems....Instead of providing what the Business Council called "a secure
energy future", the Howard Government is lurching backwards into the
future with its eyes on the past. History will see this Energy White Paper as a
tragic missed opportunity.[94]
Overview of submissions to the inquiry
3.5
The Committee received submissions from the Department
of Transport and Regional Services (DoTARS), the Department of Environment and
Heritage (DEH) and the Australian Greenhouse Office (AGO). These agencies
focussed on issues that relate specifically to changes in fuels, changes to
excise arrangements, the reduction of urban pollution from diesel vehicles,
environmental impact assessments, marine planning, greenhouse aspects of the
EWP (to identify opportunities to reduce greenhouse gas emissions) and
renewable energy initiatives.
3.6
However, other submissions, particularly those received
in the current parliament, focused on greenhouse gases and renewable energy as
key issues that they considered were not adequately addressed by the EWP.
3.7
This chapter discusses the key issues that emerged
during this inquiry:
-
the impact of renewable energy incentives,
including the MRET;
-
greenhouse gas emission reductions, including
geosequestration and the proposed reduction of fuel excise;
-
energy efficiencies, including reduction of
energy consumption and carbon trading schemes; and
-
research and investment, with particular
reference to the Kyoto agreement and research and development.
3.8
The Committee notes that the aim of the Energy Task
Force that developed the EWP was to 'assess aspects of energy policy and bring
together an integrated, national, long-term approach'.[95] The Department of Environment and
Heritage submission continues:
The primary focus of the process was to ensure that Australia
has a sound energy policy footing rather than to develop a new measures
package.[96]
3.9
DEH submitted that:
Greenhouse measures are a strong component of the Energy White
Paper, and, reflecting the long-term nature of the challenge, focus primarily
on reducing the cost of meeting future greenhouse constraints by both promoting
low-emissions technology and extending support for renewable energy.[97]
3.10
The EWP, however, was reviewed with some dismay and
concern by most submitters, especially those who see the Government's future energy
proposals as a blueprint to capitalise on the conventional energy resources of
coal and oil at the expense of raising greenhouse gas emissions beyond agreed
acceptable levels.
3.11
The Business Council for Sustainable Energy (BCSE)
stated that:
... this Energy White Paper signifies that the Federal Government
is looking towards carbon capture and storage from coal fired power as the
magic pill on greenhouse emissions.[98]
3.12
Greenpeace pointed out that:
... the Government’s strategy for reducing greenhouse emissions in
the stationary energy sector is dependent on geosequestration proving its
viability.[99]
3.13
Furthermore, the EWP is viewed by many as a policy
without any clearly defined objectives or pathways by which to reach them.
Greenpeace argued:
... a roadmap needs to be developed which sets out how [the agreed
emissions] target will be achieved.[100]
3.14
Generally most of the submitters concerned about the
EWP claimed that it does little to ensure that Australia's energy industry will
be able to reduce the emissions of greenhouse gases by 2020, or indeed, by
2010. They argued that the escalating emissions of greenhouse gases across the
world need addressing immediately if the effects of global warming are to be
minimized.
3.15
According to the BCSE, the longer the delay in starting
the process to reduce emissions, the greater the financial and social costs
will be[101] when international
pressure ultimately forces Australia
to act.[102] Renewable Energy
Generators Australia Ltd (REGA) warned that these costs will start to escalate
once investment incentives for renewable energies are lost, soon after 2007.[103]
Impact of renewable energy resources
MRET: "The cost of a cappuccino every three months"[104]
3.16
The EWP, as discussed in chapter 2, states that the
MRET will remain fixed to the year 2020 at 9,500GWh of additional renewable
energy generation above the 1997 levels.[105]
The EWP rejected the Tambling Report's recommendation that the target be
increased to 20,000 GWh by 2020 and beyond:
This target, while providing a subsidised growth path for
renewable energy, would impose significant economic costs through higher
electricity prices. The Review estimated that implementing its recommendations
would double the current projected cumulative economic cost of MRET to over $5
billion by 2020 in net present value terms. The Australian Government does not
believe these costs can be justified.[106]
3.17
The Prime Minister defended the Government's decision
not to expand the MRET:
Expanding MRET would impose substantial new costs on the economy
and would benefit too few technologies. A better path is to directly promote
the development and demonstration of a broader range of low emission
technologies and tackle the impediments to the uptake of renewable energy.[107]
3.18
This approach received adverse comment when the EWP was
released, and was seen as having significant negative economic, social,
environment and health impacts on Australia.
For example, the Clean Energy Crisis Meeting Group argued:
The failure to increase the [MRET], the only measure that drives
industry growth for the renewable energy industry, defies international trends,
is out of step with community expectations and signals the end of growth for
the clean energy industry in Australia.[108]
3.19
Several submissions disagreed with the Government's
assessment of the cost of increasing the MRET after 2010. For example, the ACF
stated that:
... most studies, except those commissioned by the mining and coal
industry and those quoted by the Federal government, indicate only small costs
for increasing renewable energy targets. For example McLennan Magasanik
Associates forecast that costs due to an increase in target size in 2010 are
projected to be some $180 million per annum with a 5% renewable target. In addition,
as the size of the renewable energy industry increases, the costs of renewable
energy decrease significantly.[109]
3.20
Hydro Tasmania
also disagrees with the Government's assessment, arguing:
The 2003 Charles River Associates Report found that a 5% MRET
target would have no change on GDP or employment. The Government’s commissioned
McLennan Magasanik Associates 2003 Report found that a 5% target would result
in an increase in GDP of [only] 0.08%.[110]
3.21
Hydro Tasmania
also analysed the cost of the increased MRET proposed in the Tambling Report,
and concluded that:
... [it] will result in residential electricity price increases of
only 0.5% per year above the current target costs... It is estimated that there
would be approximately a $5 increase per quarter on the average household
electricity bill representing an increase of just over 3% per annum (not 27% as
claimed by Senator Abetz).[111]
3.22
The Committee notes the results of the study
commissioned by REGA and conducted by Charles River Associates to assess the
industry and economy-wide impacts of different levels of MRET:
The study found that electricity prices would rise 1% under a 5%
MRET (relative to the current MRET) and 2.1% under a 10% MRET. These percentage
increases are small relative to those seen in the wholesale contract market for
electricity over recent years.[112]
3.23
The BCSE suggested a series of initiatives designed to
achieve significant reductions in emissions, one of which states:
[By] increasing the level of the MRET so that renewable energy’s
share of electricity generation actually increases, (rather than declining as
it will do under current policy), [t]he BCSE estimates that, based on a pass
through of $40/MWh, a target of a real 5% increase in renewables’ market share
by 2010 would only result in a $1.53MWh increase in the price of electricity.
For the average household electricity bill this would work out to little more
than the cost of a cappuccino every three months.[113]
3.24
A number of submissions argue strongly that the MRET
must be increased immediately in order that the momentum of investment in
renewable energies is maintained beyond 2007; without MRET support investment
in renewable industries will rapidly stall. REGA warns that the industry:
... is now looking to overseas markets, as it expects that
investment in new domestic projects will either slow down dramatically or cease
once the MRET's incentives expire over the next two years.[114]
3.25
On the other hand, the submission from a couple in Victoria
applauded the Government's retention of the current MRET, claiming that wind
energy should not be encouraged, given the environmental and social damage the
industry has done in their neighbourhood.[115]
3.26
The Committee notes that the EWP fails to heed the
advice from its own review panel on renewable energies to increase the MRET in
the decade 2010 to 2020.
Greenhouse gas emission reductions
3.27
The Committee notes that more than one organisation
expresses concerns that the EWP cannot deliver reductions in greenhouse
emissions required to prevent climate change. Greenpeace, for example, referred
to Australia's Chief
Scientist Dr Robin Batterham
calling for a reduction of 50–75% in greenhouse gas emissions by the year 2050,[116] and argued:
It appears likely that net greenhouse emissions will continue to
increase under the measures in the energy white paper. They will certainly not
put us on a pathway to delivering the deep cuts in greenhouse emissions
necessary to protect Australia
from climate change.[117]
Geosequestration: the 'magic pill' on greenhouse emissions?
... the BCSE is concerned that this Energy
White Paper signifies that the Federal Government is looking towards carbon
capture and storage from coal fired power as the magic pill on greenhouse
emissions.[118]
3.28
The Committee notes that most submissions saw problems in
the Government's principal reliance on the capture of greenhouse gases from
coal-fired generators for reducing CO2 emissions. Greenpeace argued that
geosequestration cannot be applied to current power stations and that
furthermore, there appears to be no certainty that future coal-burning power
generators can be built to capture greenhouse gas emissions, let alone
transport and store the gases cheaply and safely.[119]
The EWP itself refers to 'significant challenges':
... in separating carbon during electricity generation processes,
combining carbon dioxide capture and storage in an electricity generation
context, ensuring long-term storage and meeting competitive requirements for
reliability and cost. Demonstrating the commercial applicability of these technologies
is likely to be expensive and take at least 10 years.[120]
3.29
The BCSE also argued that geosequestration will be
costly, and warned:
To be placing all our eggs in this particular basket seems to be
an incredibly risky gamble.[121]
3.30
Greenpeace was similarly concerned about the risk of
relying on geosequestration to reduce greenhouse gas emissions:
... the Government’s dependence on geosequestration is a high risk
strategy given the significant risk that it could fail to achieve one or more
of technical, commercial or environmental viability and does not follow a
prudent risk management approach, which would employ a suite of abatement
measures.[122]
3.31
Similarly, AusWEA submitted:
The EWP’s focus on fossil-generation is accompanied by the
belief in the future of carbon capture and sequestration technologies to abate
these CO2e emissions. However, these
technologies are unproven in the context of stationary energy generation, and
their costs widely disputed. They are also not expected to be developed and
available for implementation until the middle of the next decade – by which
time Australia’s
levels of greenhouse emissions will be significantly higher. Conversely, the
immediate role that commercially available renewables can play in the overall
reduction of greenhouse gases is being denied through the exclusion of a future
for this industry.[123]
3.32
The Committee was told that there is not a single
operational coal-fired power plant in the world, even at pilot level, that
sequesters its greenhouse emissions.[124]
3.33
The ACF doubts the ability of geosequestration to
deliver the necessary greenhouse gas reductions. Even if coal-based carbon
capture and storage proves environmentally, technologically and economically
viable:
... an independent report [The Australian Institute, Discussion
Paper 72, September 2004] assessing its role in Australia’s energy future
estimates it may only reduce Australia’s electricity emissions by less than
2.5% to 2030. It found that extensive energy efficiency improvements, combined
with use of gas and renewable energy, could reduce electricity sector emissions
to 2030 by more than ten times as much as geosequestration alone.[125]
3.34
The ACF is also concerned about the problems of waiting
for the geosequestration difficulties to be overcome:
... while geosequestration may have a role in reducing Australia’s
emissions in the longer term, waiting for its large-scale application still
means that in order to meet strong climate protection targets, Australia’s
emissions would have to be reduced by unrealistically large amounts in future
decades.[126]
3.35
Greenpeace also warned of potential environmental
dangers of geosequestration:
Clearly, if the sequestered greenhouse emissions leak back into
the atmosphere, then geosequestration will have failed as a climate policy
because the leaked emissions will cause more global warming. In addition if the
leakage is rapid it can asphyxiate humans and animals in the vicinity.[127]
3.36
Discussion and evidence presented to the Committee on
the amount of emission reduction facing Australia
in the decades to come if there is further delay in setting reduction targets
is explored further in chapter 4.
3.37
The ACF also raised concerns that investment in
geosequestration will not occur unless a price is set on greenhouse emissions
through either an emissions trading scheme or a carbon levy.[128] This issue is also explored further
in chapter 4.
Fuel excise reductions and LPG
3.38
As discussed in chapter 2, the EWP outlines the
Government's proposals to implement a major program of reform to modernise and
simplify the fuel excise system.[129]
Some explanation on the purpose of the excise credits arrangement was given by
DEH:
Fuel excise has been demonstrated not to be a driver of fuel
usage. The Bureau of Transport and Regional Economics examined the elasticity
of transport fuels and found that it is low – price fluctuations do not have a significant
impact on demand... The new measures outlined in the White Paper providing
conditional access to excise credits provide an incentive to the owners and
operators of high polluting diesel vehicles to have their vehicles tested in
accordance with the Diesel NEPM and maintained.[130]
3.39
The Committee notes the removal of $1.5 billion in fuel
excise, in particular on diesel. Given that lowering prices could be expected
to increase consumption, concerns were expressed that greenhouse emissions
would increase as a direct result. Mr McGlynn
from the Australian Greenhouse Office told the Committee:
The analysis looked at a range of issues. The original analysis
indicated that there was the potential for those changes to lead to some
increase in emissions, and that is why some of the complementary measures that
were put into the package were put in place—in terms of air quality, the
conditionality for heavy vehicles; in terms of greenhouse, the requirement for
large excise users to join the greenhouse challenge.[131]
3.40
The Committee notes that these 'large excise users'
(using more than $3 million of excise credits per year) will be required to
demonstrate effective management of their greenhouse gas emissions as a member
of the Greenhouse Challenge program[132]
- a single point of entry to provide information to industry on energy use and
emissions and meant to:
... deliver 13.2 Mt of abatement in 2010 which has helped more
than 700 Australian companies identify and act on emissions abatement
opportunities while saving money and increasing product quality.[133]
3.41
The Committee appreciates the need to achieve low
levels of particulate emissions, and recognises that modern diesel engines and
diesel fuels contribute to particulate emission reduction.[134] In relation to vehicle emissions,
the Committee heard that the EWP:
... sets out new requirements to encourage the owners and
operators of high-emitting, heavy diesel vehicles to reduce exhaust particulate
emissions and other pollutants to acceptable levels. It also has incentives to
make sure vehicles meet the emission standards set under the diesel national
environmental protection measure. Starting from 1 July 2006, heavy diesel trucks and buses will need to
satisfy one of five emission performance criteria to establish that the vehicle
is not likely to be a high polluter in order for the user to be eligible for
excise credits as part of the road user charging arrangements set out.[135]
3.42
In relation to monitoring compliance of diesel vehicles
with those emission standards, Ms Mackie
from DEH told the Committee:
We looked at increasing the measure, but we decided to go with
just these criteria because, over time, diesel fuel is becoming cleaner and the
fleet is turning over. So, over time, the problem of the very high emitters in
the diesel fleet is sorting itself out. We wanted to keep this measure
relatively simple.[136]
3.43
The Committee notes, however, that while the proposed
EWP excise credit system targets the emissions of particulates from the burning
of diesel,[137] it does not contribute
to CO2 emission reductions.
3.44
The Committee is concerned that, while the 90 000
households across Australia
that use heating oil and kerosene[138]
for heating will become exempt from current excise, those households using
cleaner LPG for heating will incur the new excise that is to be phased in from 1 July 2006.[139]
3.45
The Australian Liquefied Petroleum Gas Association Ltd
(ALPGA) was concerned that the EWP outlines proposals to remove the excise on
off-road business usage of diesel and petrol in two stages, and thus reduce
costs of these fuels to end users. The EWP states:
The changes will lower compliance costs, reduce tax on business
and remove the burden of excise from thousands of individual businesses and
households... All fuels used off-road for all business purposes will become
excise-free over time.[140]
3.46
In response ALPGA argues that:
This policy change will erode the competitive position of LPG
across the whole industry and cause an initial loss of 33% of commercial and industrial
LPG business as current LPG customers to switch from LPG to other fuels,
primarily imported diesel, with a consequent increase in air pollution and
greenhouse gases.[141]
3.47
The Committee notes that the ALPGA is currently
assisting the Government to create additional policy initiatives to alleviate
the impacts that excise reduction on diesel and petrol will have on the LPG
industry.[142] The ALPGA seeks to
establish a joint industry/government working group to develop a range of
positive policy solutions, which include, among other initiatives,
investigating options for using LPG as an electricity generation fuel and
increasing the use of LPG in rural and regional Australia.[143]
3.48
The Committee also recognises that off-road diesel and
petrol emissions are significantly higher than the greenhouse gas emissions
from liquid petroleum gas,[144] and
that using these fuels rather than LPG will contribute to overall increases in
greenhouse gas emissions in Australia.
Figures supplied by the ALPGA indicate that the rise will be significant; an
estimated initial loss in 2008 of about 7.9 petajoules sales of LPG would
result in an extra 20,000 tons of CO2 released into the atmosphere, rising to
80,000 tons per annum by 2012.[145]
3.49
The Committee notes that the BCSE is concerned that the
EWP does not acknowledge the role LPG can play in CO2 emission reduction. One
initiative that would reduce emissions at little cost would be:
... encouraging greater use of natural gas in energy generation.
[C]ombined cycle gas turbines and gas fired co-generation generate electricity
with a third to a half of the emissions from the coal-fired power that is used
to generate the vast majority of Australia’s
electricity. These gas technologies are used in a large number of countries
around the world, where they generate substantial quantities of reliable,
continuous electricity. There is nothing in the White Paper that encourages the
use of natural gas for electricity generation.[146]
Energy efficiency
3.50
The EWP bases much of its proposals to reduce
greenhouse gases on energy efficiencies.[147] As shown below, many submissions expressed
concern that the EWP will fail to deliver these technologies in time for them
to have much impact on abatement levels needed to prevent global warming.
Reducing Australia's
energy consumption
3.51
As noted in chapter 2, the EWP defines energy
efficiency as 'gaining the same or a higher level of useful output, using less
energy input',[148] and goes on to say
that:
Energy efficiency is, and will remain, a central element of a
cost-effective greenhouse abatement strategy, delivering about 40 per cent of
expected energy sector abatement in 2010.[149]
3.52
The Committee notes that the EWP does not define the
term 'cost-effective' nor what figure is given to the 'expected' energy sector
abatement, as used by the EWP. Without this figure, the 40% abatement claim is
not measurable; an important omission, given that energy efficiency is a
central element of the Government's abatement strategy.
3.53
Several submissions pointed out that, as Australia
delays in facing the problem of escalating greenhouse gas emissions, the cost
to rectify the problem in future decades will increase substantially.[150]
3.54
The Committee acknowledges the need for these
efficiencies in the energy industry, but has some reservations, in the light of
evidence presented during this inquiry, that '40% of expected energy sector
abatement' will mean very much in 2010. The ACF, for example, stated that the
largest source of emissions is from the energy sector:
... and these emissions are spiralling out of control. Between
1990 and 2010 energy sector emissions are expected to increase by over 40%. The
energy sectors' heavy reliance on coal-fired electricity makes Australia
the highest per capita emitter of greenhouse gasses in the industrialised
world.[151]
3.55
The Committee notes that
significant energy efficiencies can be achieved using technologies that are
available now, but that there are other factors that need to be addressed for
these efficiencies to be realised. This point is explored further in
chapter 4.
Carbon trading scheme
3.56
The EWP mentions briefly the concept of a carbon
trading scheme, but only in the context of a possible future strategy:
Australia
will not impose significant new economy-wide costs, such as emissions trading,
in its greenhouse response at this stage. Such action is premature, in the
absence of effective longer-term global action on climate change.[152]... Should such an effective global
response be in prospect, the government will consider least-cost approaches to
constraining emissions. This consideration would encompass the possible
introduction of market-based measures (such as an emissions trading scheme) in
the longer term, noting the potential for these to lead a better resource allocation
and provide industry and individuals with the greatest flexibility in
determining how best to respond.[153]
3.57
The Committee notes, however, that the emissions
trading scheme was raised in many of the submissions. For example, the ACF
stated that:
Direct emission reduction polices such as taxes, emissions trading
schemes and emission reduction targets can encourage “learning-by-doing” as
companies are forced to undertake actions to reduce emissions that they would
not otherwise undertake. As the company gains experience with such actions they
can discover ways to bring costs down through the discovery of new products,
processes and management systems.[154]
3.58
The Committee notes also that the state Premiers have
very recently set in motion the first steps towards developing a carbon trading
scheme across Australia.[155] The ACF was quick to comment:
By putting a price on carbon we are sending a signal to the
marketplace that continuing to pump greenhouse pollution into the atmosphere is
bad for the environment, our health and our economy... A well designed emissions
trading scheme will help reduce greenhouse pollution by encouraging industry to
reduce emissions and invest in clean technologies such as solar and wind power.
It will help unlock Australia's
innovative spirit and create thousands of jobs in new clean industries.[156]
3.59
Emissions trading was mentioned in other submissions in
relation to the Kyoto Protocol and the concerns expressed about the absence of Australia's
ratification.[157] The next section
discusses these concerns.
Research and investment
Kyoto: Opportunities lost
3.60
Some submissions were critical of the Federal
Government's refusal to ratify the Kyoto Protocol on CO2 emissions, which they
argued was an essential step if Australia
is to reduce emissions through investment in the renewable energy industry.[158] The Kyoto Protocol's Flexibility
Mechanisms established the carbon markets which have created opportunities for
investments in emission reduction technologies and abatement projects,
investments only available to Kyoto
signatories. As REGA pointed out:
This market is already operating, with direct linkage to the
European Union's Emissions Trading Scheme. Point Carbon estimates that the
value of the global emissions trading market by 2010 will be worth in excess of
$AUS53 billion.[159]
3.61
As noted in chapter 2, the EWP states, however, that
the Government is convinced that ratification is not in the national interest:
The Kyoto Protocol does not provide the basis for an effective
long-term response as it does not include all of the largest emitters in the
world, nor does it include a pathway for addressing developing countries, whose
emissions will soon overtake those of industrialised countries.[160]
3.62
Greenpeace questioned the real reason for the
government's refusal to ratify:
Greenpeace believes the Kyoto Protocol does provide a global framework required for meeting long-term
objectives and its effectiveness depends on the political will of governments.
The [Federal] Government equates the Kyoto Protocol with the
first commitment period, which is incorrect as the clear intention throughout
the Kyoto negotiations has been
that there would be subsequent commitment periods with progressively greater
emission reduction targets and the involvement of developing countries. The
Government is fully aware of this, having been part of the negotiations.
This, combined with the fact that the Government has
deliberately sought, during negotiations, to weaken the Protocol and refuses to
ratify, despite studies, (including one commissioned by the Government,) which
show it would be cheaper for Australia to meet our Kyoto target if we ratified
... lead[ing] Greenpeace to believe that the Government’s primary reason for
opposing the Kyoto Protocol is because it contains mandatory targets for
reducing greenhouse emissions.[161]
3.63
The Committee also notes the ACF's concerns about the
lost opportunities in Australia
of not ratifying the Kyoto
protocols:
Kyoto ratification
would ... send a powerful signal across the Australian community, to business and
industry, and the international community, that Australia
was prepared to act decisively to secure Australia’s
economic, social and environmental prosperity. Allens Consulting Group recently
concluded:
having renounced Kyoto
the Commonwealth Government is less able to influence the emerging global
framework and, as a major fossil fuel exporting country, to provide some
measure of international leadership.[162]
3.64
The Committee also heard that the curbing of projected
increases in Australian greenhouse emissions since 1990 was due to the
reduction in land clearing over the period. The EWP:
... acknowledges that the reason Australia's
greenhouse emissions haven't risen significantly in the period 1990-2002 is
because the large increase (34%) in emissions from the stationary energy has
been almost completely offset by significant declines in land use emissions.
This reduction in land use emissions is a one off saving and does not do
anything to address the major sources of greenhouse emissions in Australia
– stationary energy and transport.[163]
3.65
A similar view was expressed by the ACF:
The principle reason that Australia is on track to meet the Kyoto
target is due to large reductions in emissions from [reduction in] land
clearing.[164]
Research and development
3.66
As outlined in chapter 2, the EWP places much
importance on research and development, for example, through allocation of $500
million for the Low Emissions Technology Demonstration Fund for renewable and
fossil fuel technologies, $75 million for the Solar Cities project, $14 million
for wind forecasting and $100 million for the Renewable Energy Development
Initiative.[165]
3.67
However, the Committee notes that many submissions were
very critical of the EWP's emphasis on research and development. For example,
the ACF stated:
The government’s approach thus far has been to concentrate on
research and development. R&D into new technologies is required, but this
should not be used as an excuse for delay on other fronts. [166]
3.68
The BSCE was also clearly concerned that the EWP avoids
facing the issue of emission reduction and instead resorts to research,[167] leading to delay, and warned:
Delay has its costs, which was the one of the most important
findings from the recent Avoiding Dangerous Climate Change Conference held
recently in Exeter in the UK.
The conference reported that a 20 year delay of action could result in required
rates of emission reductions 3-7 times greater than that required for a more
immediate response to the same temperature target. This kind of 20 year delay
is exactly what this Energy White Paper appears to be.[168]
3.69
The BCSE also claims that greater government spending
on research and development to lower emissions from energy use is absolutely
essential but insufficient.[169] Other
submissions also criticised the EWP in that funding for research is, in the
end, very costly without the adoption of other, more important, measures. For
example, the ACF stated that:
... to reduce greenhouse gas emissions in the most cost-effective
way, two broad types of climate policy are required – technology incentives
(such as R&D) and direct emission policies (such as targets, emissions
trading schemes or carbon levies). Focusing on only one of these options is
likely to be very costly, as reiterated by the Intergovernmental Panel on
Climate Change, which concluded that, in general, a R&D subsidy by itself
does not offer the least-cost approach to reducing carbon emissions.[170]
3.70
Given that the EWP proposes that only $300 million of
its $1 billion budget will be given over to renewable energies[171] and a total of $700 million will be
available for the Low Emissions Technology Development Fund, the Committee
noted that some submitters are concerned that the fund will be used to fund
fossil fuel technologies.
3.71
The Committee received some suggestions from various
groups on ways to address research and investment for Australia's
future energy needs. Greenpeace recommended that the Government:
- Remove direct and indirect subsidies which
encourage the use of fossil fuels;
- Increase funding for renewable energy, energy
efficiency and demand side management;
- Put a price on greenhouse pollution – either
through a revenue neutral carbon levy and/or a national emission trading scheme
designed to deliver genuine emission reductions, with stringent emission caps
reduced over time and which does not exempt any emitters nor grandfather permits
to them.[172]
3.72
The Committee acknowledges REGA's comments about
research and development of renewable energies:
The heavy reliance on technology development is important but
[the government] fails to acknowledge that Australia
has already developed world-leading zero emissions technology and it fails to
give credit and encouragement to the major achievements of the renewables
industry. The White Paper does not solve the problem of getting this
technology, or the technology that it proposes to fund, into the Australian
electricity market.[173]
3.73
The Western Australian Sustainable Energy Association
(WASEA) also supports the claim that the renewable energy industry is well
developed and ready to contribute more to the reductions of greenhouse gas
emissions:
The White Paper wrongly implies that the Australian renewable
energy industry is still at the infancy stage and ignores the fact that we have
a world class photovoltaic and solar water heater industry.[174]
3.74
The Committee notes that a submission from Tarwin
Valley Coastal Guardians (TVCG) in Victoria pointed out that the claim by the
wind industry that sufficient subsidy will create a local manufacturing centre
has not proven to be the case, and that the planned production in Portland in
Victoria of four bladed wind generators will now go to China.[175]
3.75
TVCG also saw little benefit in the continuation of
wind turbine development, citing figures to demonstrate that there are better
cost-efficient renewable energy sources than wind energy. TVCG warned that:
... the retail cost of wind energy offered by most suppliers is
some 35% more expensive than that of traditional generation.[176]
3.76
REGA pointed out that the Australian industry has not
been assured by the Federal Government that it will be able to participate in
the opportunities presented through the carbon markets, and that:
The White Paper offers no framework to provide confidence to
future investors in either renewable energy projects or fossil fuel projects to
calculate what the risks and benefits from future carbon pricing regimes will
be.[177]
3.77
The Committee also notes that the BCSE argued that the
EWP lacks incentive for investment in the renewable energy industry. There are,
according to the BSCE, a number of technologies available now that could
achieve significant reductions in emissions from energy without imposing a
major impost upon the economy, and:
... the analytical work undertaken in the development of the
National Framework indicates that energy consumption in the manufacturing,
commercial and residential sectors could be reduced by 20–30% with the adoption
of current commercially available technologies with an average payback of four
years.[178]
3.78
The Committee notes with some concern the statement
from REGA, in arguing the case for supporting renewable energy development in Australia,
that:
... the world leading photovoltaic silicon thin film technology
developed by the University of New
South Wales will now be produced in Germany
with the production facility and market entry incentives available there. The
White Paper’s failure to provide any further incentives to address this level
of competition will see Australia losing jobs and investment in projects here
and run the very real risk of buying back our own technology in the future when
forced to do so by international climate change obligations and world trade.[179]
3.79
The Committee is aware that this technology is being
further developed and marketed in Germany,
backed by the German Government, with a target production of 100,000 rooftops
by the end of 2005. The International Energy Agency (IEA) states that:
... the EEG [Renewable Energy Sources Act],
together with the '100 000 Rooftops Solar Electricity Programme,' are the
driving forces for the development of the German PV market.[180]
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