tag:theconversation.com,2011:/id/topics/clean-energy-finance-corporation-1715/articlesClean Energy Finance Corporation – The Conversation2021-03-21T18:50:33Ztag:theconversation.com,2011:article/1574042021-03-21T18:50:33Z2021-03-21T18:50:33ZGenuine about climate action, Mr Cormann? Here’s how to turn over a new leaf<p>Former Australian finance minister Mathias Cormann was last week elected Secretary-General of the Organisation for Economic Co-operation and Development (OECD), after campaigning on a platform with climate action as a <a href="https://www.linkedin.com/pulse/pandemic-climate-trade-global-cooperation-more-than-mathias-cormann/?trackingId=6rDB9A%2Bv71STRbqwT7wSYQ%3D%3D">central plank</a>.</p>
<p>In a statement following his appointment, Cormann <a href="https://www.cormannoecd.gov.au">pledged to</a> “drive and promote global leadership on ambitious and effective action on climate change to achieve global net-zero emissions by 2050”.</p>
<p>Cormann’s selection came despite <a href="https://www.theguardian.com/australia-news/2021/mar/05/not-a-suitable-candidate-climate-groups-urge-oecd-not-to-appoint-mathias-cormann-as-next-head">concerns</a> his climate track record in federal parliament made him an unsuitable candidate.</p>
<p>It’s said the best predictor of future behaviour is past behaviour. If that proves correct with Cormann, we shouldn’t expect much on climate change. But his new gig does present an opportunity for Cormann to change his stripes.</p>
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<img alt="Mathias Cormann and Tony Abbott" src="https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=359&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=359&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=359&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=451&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=451&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390538/original/file-20210319-15-1mhva2d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=451&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Mathias Cormann was a key member of the Abbott government when it dismantled Labor’s carbon price.</span>
<span class="attribution"><span class="source">Richard Wainwright/AAP</span></span>
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<h2>A poor climate record</h2>
<p>From 2013 to 2020, Cormann was finance minister in the Abbott-Turnbull-Morrison governments – an administration with arguably one of the worst records on climate change of any OECD government.</p>
<p>Just last week, Australia ranked last on a list of the world’s 50 largest economies for “green” spending to aid economic recovery after the COVID pandemic, according to a United Nations <a href="https://www.unep.org/resources/publication/are-we-building-back-better-evidence-2020-and-pathways-inclusive-green">report</a>.</p>
<p>The litany of the Coalition’s indictments is too long to list in full here. But dubious highlights include:</p>
<ul>
<li><a href="https://www.abc.net.au/news/2014-07-17/carbon-tax-repealed-by-senate/5604246?nw=0">abolishing</a> Labor’s carbon price in 2014</li>
<li><a href="https://theconversation.com/axing-the-climate-commission-splits-australians-from-science-18425">abolishing</a> the Climate Commission</li>
<li>unsuccessfully seeking to <a href="https://reneweconomy.com.au/abbott-to-continue-fight-to-scrap-cefc-arena-41294/">kill off</a> the Clean Energy Finance Corporation.</li>
</ul>
<p>And Cormann has also discouraged the climate action of others. For example, in 2017 he <a href="https://www.theguardian.com/australia-news/2017/may/01/mathias-cormann-says-westpacs-restrictions-on-coal-lending-are-very-disappointing">described</a> Westpac’s lending restrictions on coal projects as “very, very disappointing”.</p>
<p>The <a href="http://www.oecd.org/environment/australia-needs-to-intensify-efforts-to-meet-its-2030-emissions-goal.htm">OECD itself has condemned Australia</a> as “one of the most carbon-intensive OECD countries and one of the few where greenhouse gas emissions (excluding land use change and forestry) have risen in the past decade”.</p>
<p>It is not hard to see why many around the globe lobbied against Cormann’s new appointment, <a href="https://www.smh.com.au/world/europe/british-labour-demands-boris-johnson-blacklist-cormann-s-oecd-bid-over-climate-record-20201213-p56mzk.html">including the British Labour Party</a>.</p>
<p>In stark contrast to his political record, Cormann embraced the need for climate action during his campaign for the OECD job. This included an <a href="https://www.linkedin.com/pulse/pandemic-climate-trade-global-cooperation-more-than-mathias-cormann/?trackingId=6rDB9A%2Bv71STRbqwT7wSYQ%3D%3D">opinion piece</a> in support of net-zero emissions by 2050 – a target Prime Minister Scott Morrison has yet to commit to.</p>
<p>So if Cormann really <em>has</em> had a genuine change of heart, what can he do on climate action in his new role?</p>
<figure class="align-center ">
<img alt="wind turbines" src="https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=325&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=325&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=325&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=408&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=408&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390556/original/file-20210319-23-i545zn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=408&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Cormann campaigned on the need for climate action when vying for his new job.</span>
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<h2>Cormann’s climate opportunity</h2>
<p>Cormann may be used to being a cabinet minister, but his new role is more like a departmental secretary, but with new political masters.</p>
<p>The Paris-based OECD consists of 37 member states which run the organisation. Cormann answers to them, and many – including the <a href="https://theconversation.com/bidens-senate-majority-doesnt-just-super-charge-us-climate-action-it-blazes-a-trail-for-australia-153090">United States</a> and the <a href="https://www.gov.uk/government/news/uk-becomes-first-major-economy-to-pass-net-zero-emissions-law">United Kingdom</a> – have adopted strong climate targets. </p>
<p>With a budget of around A$600 million and a permanent secretariat of more than 2,500 staff, the OECD has at its disposal <a href="http://www.oecd.org/about/budget/member-countries-budget-contributions.htm">significant resources</a> to set international agendas and standards that can shape climate policies around the globe.</p>
<p>It regularly does so in other domains. For example, since the global financial crisis in 2008 the OECD has led the way on <a href="https://www.oecd.org/tax/beps/">taxation reform</a>. It helped forge new rules governing how national tax authorities share information, and how they might address multinational tax avoidance.</p>
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<img alt="OECD flag against city skyline" src="https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390562/original/file-20210319-19-oco0ls.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The OECD has an environment directorate, through which climate policy could be advanced.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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</figure>
<h2>Cormann in a tight spot</h2>
<p>If Cormann is genuine about his climate action agenda, he may be forced to take positions at odds with the Morrison government.</p>
<p>The first potential pressure point involves carbon prices and carbon tariffs, for which the OECD could be called upon to play a coordinating role.</p>
<p>A carbon price sets a price on carbon pollution at home. Carbon tariffs do so at the border. Crudely speaking, these are taxes on imports that produce considerable carbon pollution, and which originated in countries not pulling their weight on climate change. </p>
<p>The agenda of US President Joe Biden <a href="https://www.reuters.com/article/us-usa-trade-biden-idUSKCN2AT3EX">includes</a> a “carbon adjustment fee” for countries failing to meet climate and environmental obligations. The <a href="https://www.bloomberg.com/news/articles/2020-02-18/here-s-how-the-eu-could-tax-carbon-around-the-world-quicktake">European Union</a> is also pressing ahead with a similar proposal.</p>
<p>Given even the OECD has concluded Australia is a climate action laggard, we look likely to be slugged. Predictably, Energy Minister Angus Taylor has <a href="https://www.smh.com.au/politics/federal/australia-dead-against-climate-tariffs-declares-taylor-20210211-p571iq.html">declared</a> his government is “dead against” such tariffs, and there are early signs Cormann will back his former colleagues on the tariff issue. </p>
<p>He last week urged caution, <a href="https://www.afr.com/politics/federal/oecd-s-cormann-urges-carbon-price-caution-20210315-p57aq1">saying</a> the measure entailed “many downside implications for global trade and the world economy”.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/no-point-protesting-australia-faces-carbon-levies-unless-it-changes-course-155200">No point protesting, Australia faces carbon levies unless it changes course</a>
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<p>The second pressure point is fossil fuel subsidies. In 2009, <a href="https://www.reuters.com/article/us-g20-energy-idUSTRE58O18U20090926">G20 countries agreed</a> to phase out trillions of dollars in government handouts that prop up the oil, gas and coal industries. Since then, the OECD has campaigned against the subsidies, <a href="https://www.oecd.org/newsroom/fossil-fuel-support-is-rising-again-in-a-threat-to-climate-change-efforts.htm">describing</a> them as “environmentally harmful, costly, and distortive”.</p>
<p>OECD countries may come under growing international pressure to eliminate the handouts. This includes Australia which, according to <a href="https://reneweconomy.com.au/global-fossil-fuel-subsidies-reach-5-2-trillion-and-29-billion-in-australia-91592/">IMF estimates</a>, maintains US$29 billion in fossil fuel subsidies each year.</p>
<p>The third, lesser known point involves the rules governing export financing for fossil fuel infrastructure. In 2015 the US Obama administration <a href="https://www.theguardian.com/environment/2015/nov/18/oecd-countries-agree-to-restrict-financing-for-overseas-coal-power-plants">pushed</a> for OECD countries to restrict financing for new coal power plants in overseas countries. The bid succeeded, despite opposition from <a href="https://www.eenews.net/stories/1060026972">Australia</a> and a handful of other nations.</p>
<p>While not perfect, the rules were a first step in phasing out coal. Many environmental groups are now campaigning for these rules to be tightened and to extend to oil and gas. It is not hard to guess what Australia’s position will be.</p>
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<img alt="Mathias Cormann" src="https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=416&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=416&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=416&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=522&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=522&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390572/original/file-20210319-15-1ob6myl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=522&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Morrison government’s stance on climate and energy measures departs starkly from the OECD’s.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<h2>A new chapter?</h2>
<p>The outgoing head of the OECD, Ángel Gurría, last month <a href="https://www.theguardian.com/business/2021/feb/17/oecd-chief-angel-gurria-environment-covid-price-carbon">said</a> tackling the world’s environmental crises was “the single most important intergenerational responsibility […] We are on a collision course with nature and we have to change course for future generations”. </p>
<p>He urged countries to “put a big fat price on carbon” – a position clearly at odds with the Morrison government.</p>
<p>Unsurprisingly, Cormann’s rhetoric so far has been more restrained. But if he is to match the climate ambition of the OECD’s biggest member states, his future behaviour will have to be very different to that of his past behaviour.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/six-questions-about-mathias-cormann-newly-appointed-secretary-general-of-the-oecd-157305">Six questions about Mathias Cormann, newly appointed Secretary General of the OECD</a>
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<img src="https://counter.theconversation.com/content/157404/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Christian Downie receives funding from the Australian Research Council.</span></em></p>It’s said the best predictor of future behaviour is past behaviour. Let’s hope that’s not the case with Mathias Cormann’s climate stance when he joins the OECD.Christian Downie, Associate professor, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1544782021-02-03T18:59:16Z2021-02-03T18:59:16ZMorrison has embraced net-zero emissions – it’s time to walk the talk<figure><img src="https://images.theconversation.com/files/382122/original/file-20210203-21-1deumv4.jpg?ixlib=rb-1.1.0&rect=0%2C20%2C4506%2C2974&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Mick Tsikas/AAP</span></span></figcaption></figure><p>Prime Minister Scott Morrison on Monday <a href="https://www.pm.gov.au/media/address-national-press-club-barton-act">acknowledged</a> what many Australian businesses, investors and others have long known: the global economy is transitioning to net-zero emissions, and so too must Australia.</p>
<p>Morrison said the nation should get to net-zero “as soon as possible”, and preferably by 2050. We welcome this move – a net-zero goal will provide clarity, lift ambition and create focus. But Morrison must back the rhetoric with investment and policy commensurate with the task.</p>
<p>We are researchers at ClimateWorks, an independent advisory body based at Monash University. For much of the past decade, we have investigated how Australia can reach net-zero emissions. </p>
<p>The transition will require targeted government spending and specific, forward-thinking policies for each sector. Without this, Australia risks missing the opportunities being seized by our international peers.</p>
<figure class="align-center ">
<img alt="A wind farm" src="https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/382125/original/file-20210203-13-kh0ynr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Australia is well-placed to seize the opportunities of the clean transition.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>Australia needs a game plan</h2>
<p>Experts <a href="https://www.un.org/press/en/2020/sgsm20411.doc.htm">say</a> developed economies such as Australia should aim to achieve net-zero emissions by 2050 to meet their commitments under the Paris climate deal. The target must be achieved <a href="https://www.ipcc.ch/sr15/%20https://www.ipcc.ch/sr15/">earlier</a> if the world is to limit global warming to 1.5°C, beyond which catastrophic climate change is predicted. </p>
<p>Our <a href="https://www.climateworksaustralia.org/resource/decarbonisation-futures-solutions-actions-and-benchmarks-for-a-net-zero-emissions-australia/">research last year</a> examined mature and emerging technologies, and found Australia could reach net-zero by 2035. Here, we set out a possible course.</p>
<p>Australia boasts world-beating wind and solar energy and plentiful mineral resources. That means we could produce green steel, aluminium and hydrogen and export it to the world.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/view-from-the-hill-now-scott-morrisons-preference-is-for-net-zero-emissions-by-2050-154394">View from The Hill: Now Scott Morrison's 'preference' is for net zero emissions by 2050</a>
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<p>The Morrison government has good foundations on which to continue the clean transition. For example, the Australian Renewable Energy Agency (<a href="https://arena.gov.au">ARENA</a>) and Clean Energy Finance Corporation (<a href="https://www.cefc.com.au">CEFC</a>) have proven effective vehicles for government investment. And the <a href="http://www.cleanenergyregulator.gov.au/ERF">Emissions Reduction Fund</a>, while far from perfect, creates a framework that could be scaled up. </p>
<p>The government also has state government partners and businesses willing to cooperate on climate action. And current low interest rates are good news for governments wanting to borrow to invest. </p>
<p>The Morrison government must now develop a more comprehensive approach to emissions reduction across all sectors of the economy. This should include:</p>
<ul>
<li><p>using its purchasing power to stimulate demand for clean technologies. This might mean transitioning to all-electric government fleet cars and net-zero energy offices, and requesting net-zero options in government tenders</p></li>
<li><p>ensuring all federal government spending is assessed for its contribution to the net-zero transition</p></li>
<li><p>designing “decarbonisation roadmaps” for each sector of the economy in partnership with industry</p></li>
<li><p>setting higher energy efficiency standards in buildings, industry and transport.</p></li>
</ul>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Tall buildings covered in green plants" src="https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=425&fit=crop&dpr=1 754w, https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=425&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/371692/original/file-20201127-21-5zp0l4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=425&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australia’s building sector is ripe for emissions reduction technologies.</span>
<span class="attribution"><span class="source">Shutterstock/SAKARET</span></span>
</figcaption>
</figure>
<h2>Time to hit the accelerator</h2>
<p>Economically feasible technologies for zero-emissions already exist across the economy. Now the task is to dramatically scale up.</p>
<p>In Australia’s electricity sector, renewable energy generation is being installed at <a href="https://www.minister.industry.gov.au/ministers/taylor/media-releases/australia-sets-new-renewables-records-2020">record rates</a>. Yet as Australia’s ageing coal-fired generation retires, more investment and national policy is needed to ensure reliability and a smart, flexible grid.</p>
<p>This includes incentives for better energy management, storage and transmission. The transition to a fully renewable electricity sector would unlock emissions reductions in other sectors that are big electricity users - especially buildings, transport and industry.</p>
<p>Buildings can be more <a href="https://www.climateworksaustralia.org/resource/built-to-perform/">energy efficient</a> and fully electrified, producing lower energy bills and more comfort for users. Doing this in existing buildings can be complex, but state energy efficiency schemes are a start.</p>
<p>For transport, the solutions are well-established <a href="https://www.climateworksaustralia.org/project/transport/">overseas</a>. In Norway, for example, electric vehicles comprise <a href="https://www.weforum.org/agenda/2020/10/norway-electric-cars-majority-sales/">60% of new car sales</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/345953/original/file-20200707-18-1an5t76.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Electric vehicles are the answer to road transport emissions.</span>
<span class="attribution"><span class="source">Shutterstock/mastersky</span></span>
</figcaption>
</figure>
<h2>Where the challenges lie</h2>
<p>For industry, challenges exist in transitioning from old technologies and scaling up new ones. However clean technologies are emerging and some businesses are looking to invest. For example, Andrew “Twiggy” Forrest wants his Fortescue Metals Group to <a href="https://www.abc.net.au/news/2021-01-22/boyer-lecture-andrew-twiggy-forrest-green-hydrogen-climate/13077070">pilot renewable hydrogen</a> to produce green steel.</p>
<p>The federal government’s Technology Investment <a href="https://www.industry.gov.au/data-and-publications/technology-investment-roadmap-first-low-emissions-technology-statement-2020">Roadmap</a> and $A1.3 billion <a href="https://www.industry.gov.au/news/modern-manufacturing-initiative-and-national-manufacturing-priorities-announced">Modern Manufacturing Initiative</a> are a useful start, but don’t go far enough. The roadmap, for example, sets “stretch goals” for low-emissions steel and aluminium, but no timeframes or comprehensive plans. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/forget-about-the-trade-spat-coal-is-passe-in-much-of-china-and-thats-a-bigger-problem-for-australia-153300">Forget about the trade spat – coal is passé in much of China, and that's a bigger problem for Australia</a>
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</em>
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<p>The government should implement policies tailored to each sector. It could follow the lead of the British government, which is <a href="https://www.argusmedia.com/en/news/2161948-uk-mulls-biojet-mandate-by-2025">considering</a> a sustainable aviation fuel mandate by 2025.</p>
<p>In Australia, major businesses are <a href="https://energytransitionsinitiative.org">partnering</a> with each other and research organisations to investigate net-zero pathways for industries such as steel, aluminium and chemicals. But other national governments are investing in these measures far more heavily than Australia’s. </p>
<p>If Australia wants to be globally competitive, it must match the net-zero ambition and technology investment of our international peers. The United Kingdom, for example, has laid out <a href="https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution/title">sector strategies</a> for a green industrial revolution. And South Korea’s <a href="https://theconversation.com/south-koreas-green-new-deal-shows-the-world-what-a-smart-economic-recovery-looks-like-145032">Green New Deal</a> involves a US$61.9 billion (A$81.3 billion) investment targeting the creation of 659,000 by 2025.</p>
<figure class="align-center ">
<img alt="South Korean President Moon Jae-in, centre" src="https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/357090/original/file-20200909-17-1rqapmw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">South Korean President Moon Jae-in, centre, has backed a huge investment in green technology.</span>
<span class="attribution"><span class="source">Yonhap/EPA</span></span>
</figcaption>
</figure>
<h2>The art of the possible</h2>
<p>In the post-pandemic economy, stimulus measures for zero-emissions technologies could provide a “triple dividend” - address climate change, strengthen the economy and create jobs. </p>
<p>In his first few weeks on the job, US President Joe Biden <a href="https://www.bbc.com/news/world-us-canada-55829189">has shown</a> the breadth of action possible to shift to a net-zero economy. Australia, if it dramatically scales up action, can get there too. </p>
<p>As Morrison <a href="https://www.afr.com/politics/federal/nationals-wary-about-pm-s-net-zero-plans-20210202-p56yn1">said</a> this week, the central question about achieving net-zero was “not when, it’s how”. Most parts of the economy already know how. Now it’s time to put the theory into action.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/bidens-senate-majority-doesnt-just-super-charge-us-climate-action-it-blazes-a-trail-for-australia-153090">Biden’s Senate majority doesn't just super-charge US climate action, it blazes a trail for Australia</a>
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</p>
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<img src="https://counter.theconversation.com/content/154478/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anna Malos is part of ClimateWorks Australia which receives funding from philanthropy and project-based income from federal, state and local government and private sector organisations.
ClimateWorks Australia receives funding from several philanthropic foundations, and project-specific financial support from a range of private and public entities.</span></em></p><p class="fine-print"><em><span>Anna Skarbek is CEO of ClimateWorks Australia which works within the Monash Sustainable Development Institute. ClimateWorks Australia receives its core funding from philanthropic foundations and also undertakes projects which attract funding from industry and government departments and agencies. Anna holds also non-executive director roles with Impact Investment Group, Sustainable Australia Fund, the Green Building Council of Australia and of the Centre for New Energy Technologies.</span></em></p>A net-zero goal will provide clarity, ambition and focus. But Morrison must back the rhetoric with investment and policy commensurate with the task.Anna Malos, Australia - Country Lead, Climateworks CentreAnna Skarbek, CEO at ClimateWorks Australia, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/598842016-05-25T20:12:09Z2016-05-25T20:12:09ZWithout extra money, the Coalition’s low-emissions roadmap is a trip to nowhere<figure><img src="https://images.theconversation.com/files/123888/original/image-20160525-25205-1drmyql.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">CSIRO has the know-how to develop commercial-scale green energy, with a clear plan and enough money.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ACSIRO_ScienceImage_2141_Solar_Array_at_the_CSIRO_Energy_Centre.jpg">CSIRO</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>On Friday, the Coalition made a low-key announcement of its new <a href="http://www.joshfrydenberg.com.au/guest/mediaReleasesDetails.aspx?id=223">Low Emissions Technology Roadmap</a>. To be developed by the CSIRO, it will aim to “highlight areas of growth in Australia’s clean technology sector”.</p>
<p>Unveiled jointly by the industry and science minister, Christopher Pyne, the environment minister, Greg Hunt, and the energy minister, Josh Frydenberg, the plan asks the CSIRO to identify the most promising ways to reduce emissions and to come up with plans to accelerate the development and commercialisation of Australian technologies such as solar panel components.</p>
<p>With the election campaign in full swing and announcements coming thick and fast, some will obviously get more airtime than others. Still, it was surprising to see this one quietly released on a Friday afternoon, given the seniority of the ministers involved, not to mention the importance of both renewable energy and greenhouse emission reductions as issues in this election.</p>
<p>It’s also not immediately clear what is actually involved in developing a “technology roadmap” like this. It might conceivably follow a model <a href="http://prod.sandia.gov/techlib/access-control.cgi/1997/970665.pdf">previously developed at the US Sandia National Laboratories</a>, which identified three key elements: </p>
<ul>
<li><p>preliminary activity, which involves defining the project’s precise scope</p></li>
<li><p>developing the roadmap, by deciding which technologies to include and defining specific targets for their development</p></li>
<li><p>follow-up, by working out how the plan is actually going to be implemented.</p></li>
</ul>
<p>The announcement in itself has kick-started the first of these three stages. CSIRO has been given the lead for the second element. But it is the third stage – the actual implementation – where roadmaps typically lose their way. Many governments have set roadmaps in the past, only for successive ones to choose different objectives and therefore move down a different path.</p>
<p>The key for any roadmap to deliver its intended outcome is the successful implementation of its proposals. The policy and, crucially, the funding committed to the project will determine whether the ultimate objectives are met. </p>
<h2>Pay to play</h2>
<p>In the announcement’s <a href="http://www.joshfrydenberg.com.au/guest/mediaReleasesDetails.aspx?id=223">press release</a>, Pyne said the roadmap would “achieve a large-scale technology transformation”. But looking at the steps above, this will require policy and investment in those technologies that are to drive the transformation process. </p>
<p>While this announcement supports previous policy pledges, notably the <a href="https://www.environment.gov.au/news/2016/03/23/clean-energy-innovation-fund">A$1 billion Clean Energy Innovation Fund</a> uneviled two months ago, will this be enough to drive the crucial third stage of the roadmap: developing commercial-scale clean energy generation to the level required to make serious inroads into emissions reduction?</p>
<p>In the past Australia has tended to adopt the cheapest available energy technologies, particularly given that much of the electricity sector is moving from <a href="http://www.abc.net.au/news/2015-06-03/electricity-privatisation-legislation-passes-nsw-parliament/6519708">public to private-sector ownership</a>. </p>
<p>Will this change now? Frydenberg’s statement that “the Coalition is committed to a technology-neutral approach to energy policy” would suggest that it may not.</p>
<p>With the <a href="https://theconversation.com/rising-electricity-demand-could-be-here-to-stay-44190">minimal growth in electricity demand</a> over recent years, new generation on a large scale will need to be more economical than existing assets, or else policy measures should be put in place to make the new technologies competitive.</p>
<p>Part of the Coalition’s plan, as also stated by Frydenberg, is to “help identify opportunities for Australian businesses to be involved in the global energy supply chain, with the potential of creating new industries that create new jobs and growth in Australia”. History has shown that while Australia has been a very innovative nation, much of the technology developed here tends to move offshore. </p>
<p>Pyne added that “by 2018 Australian solar technology will be embedded in over 60% of the world’s [photovoltaic] panels”. But how much of this global supply chain has created jobs and growth in Australia?</p>
<p>Hunt also stated that the roadmap will help Australia meet its greenhouse emissions target, which calls for a 26-28% reduction on 2005 levels by 2030. But 2030 is not that far away, and the process of drawing up roadmaps, developing technologies and then commercially deploying them takes time. Support for existing mature technologies, such as solar and wind energy, must be continued in the meantime.</p>
<p>While existing agencies such as the <a href="http://arena.gov.au/">Australian Renewable Energy Agency (ARENA)</a> and the <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation</a> support these technologies, ongoing funding is a constant subject of debate within the government. These bodies will jointly administer the new Clean Energy Innovation Fund, but if this new roadmap is to be a success, ARENA’s funding must continue beyond its currently planned expiry date of 2022, and the CEFC needs a longer business plan than the current one which runs to 2019.</p>
<p>In the meantime, it pays to think carefully about the initial phase for the roadmap: defining its precise scope. According to the announcement, the areas to be considered include “renewable energy, smart grids, carbon capture and storage, electric vehicles and energy efficiency” – all areas in which CSIRO has existing research programs. As such, it is well placed to understand the challenges, the investment needed, and realistic time frames for implementation. All of these need to be identified and quantified precisely, given that the plan only spans a few years. </p>
<p>Introducing innovative technology into an existing sector, which is already working, will always draw resistance, particularly from the operators (as well as equipment manufacturers, maintenance companies and fuel suppliers) of existing generation assets. But, of course, decisions about electricity generation have much wider effects than just the provision of energy. </p>
<p>The need to reduce emissions affects every aspect of how we will live our lives in the future. No major political party disputes the need to move from existing technology to a clean energy future. But policy, with sufficient financial backing, needs to be put in place now and supported by successive governments to have any chance of hitting the deadlines we face.</p><img src="https://counter.theconversation.com/content/59884/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Coalition has asked CSIRO to develop a “roadmap” towards commercialised clean energy. It’s a good idea as long as the plan is clear, and there’s enough money behind it.Craig Froome, Global Change Institute – Clean Energy Program Manager, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/567322016-03-23T06:45:23Z2016-03-23T06:45:23ZTurnbull’s renewable fund could drive much-needed investment, but…<figure><img src="https://images.theconversation.com/files/116161/original/image-20160323-28206-1glip0s.jpg?ixlib=rb-1.1.0&rect=1083%2C269%2C2520%2C2401&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Large-scale solar projects have been highlighted for investment in the new fund</span> <span class="attribution"><span class="source">Solar image from www.shutterstock.com</span></span></figcaption></figure><p>Prime Minister Malcolm Turnbull has announced the creation of a <a href="http://www.malcolmturnbull.com.au/media/turnbull-government-taking-strong-new-approach-to-clean-and-renewable-energ">A$1 billion Clean Energy Innovation Fund</a>, to be jointly managed by the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA). </p>
<p><a href="http://arena.gov.au/">ARENA</a> is designed to research and develop new clean energy technologies, while the <a href="http://www.cleanenergyfinancecorp.com.au/">CEFC</a> is meant to finance projects and earn a return on investment. Both were created under the previous Labor government. </p>
<p>ARENA has enjoyed consistent bipartisan support (although it had some future funding cancelled under the previous budget), while the the current coalition government has always previously vowed to axe the CEFC. </p>
<p>So what could the new fund mean for the renewables sector?</p>
<h2>What will the new fund do?</h2>
<p>This announcement does three things:</p>
<ul>
<li><p>It saves money by scrapping any extra funding originally allocated to ARENA. There will be screams of protest, but it just confirms actions that the government had already taken. It also means a move away from high risk areas where there was no requirement to get a direct return on funds.</p></li>
<li><p>It preserves the CEFC, not just the A$1 billion allocated to this new fund, but the remainder of the CEFC’s original A$10 billion.</p></li>
<li><p>It creates a fund to do research and development that sits between the existing roles of the CEFC and ARENA. It is not yet clear how investment decisions will be made, nor how exactly the projects will be financed. </p></li>
</ul>
<p>The fund will accept lower returns on investment, which implies higher risk than the government currently expects of the CEFC.</p>
<h2>Carbon pricing should drive clean energy</h2>
<p>ARENA’s mandate was to provide grants to clean energy projects at the research and early development stage of new technologies. These are high-risk decisions, but if effective, should drive down the costs of low-emission technologies. </p>
<p>There are barriers to early movers, and so far the carbon market has failed to provide a clear, long-term signal for investors. Therefore, government funding is justified here. </p>
<p>The CEFC was born out of a political compromise to secure the previous Labor government’s climate change legislation, and the model was Britain’s <a href="http://www.greeninvestmentbank.com/">Green Investment Bank</a>. There was no obvious consideration of the countries’ different circumstances, and whether Australia needed such a body. </p>
<p>There was always the risk that the CEFC would be intervening in the market without adequate assessment of whether the benefits outweighed the costs. It was effectively a solution looking for a problem.</p>
<p>The CEFC might have a role but only if we first define the problem it seeks to solve. It is not the reduction of carbon emissions: this is the territory for climate policy. </p>
<p>It is not a lack of R&D funding for new clean energy technologies: ARENA was designed for that. </p>
<p>It is not a shortage of capital: clean energy projects are being financed in Australia by the private sector. </p>
<p>The problem is a shortage of projects that offer investors the necessary financial return.</p>
<p>The financial returns for low-emission and renewable energy investments should be driven by the emissions price that comes directly or indirectly from credible climate change policy. We had a poor version of this between 2012 and 2014 and the government’s current Emissions Reduction Fund has yet to fill the void. </p>
<p><a href="https://theconversation.com/how-will-the-reduced-renewable-energy-target-affect-investment-41505">Political uncertainty</a> and poor design have led to real challenges to the Renewable Energy Target delivering its intended investment in renewable energy. Policy instruments such as state-based feed-in tariffs for household rooftop solar have provided very expensive, lesser supports.</p>
<p>The CEFC has a mixed record. On the one hand just deploying more of the same, such as refinancing an existing wind farm, is a poor use of public funds. However, underwriting green investment bonds such as that issued by NAB did successfully address a <a href="http://medianet.com.au/releases/release-details?id=816967">clear market failure</a>. </p>
<h2>We need low-cost technologies</h2>
<p>The creation of the Clean Energy Innovation Fund seems intended to provide a new mandate that will target higher-risk, more innovative investments than currently supported by the CEFC. The fund will also be encouraged to look at storage and non-renewables, outside ARENA’s current remit, and that is a good thing. </p>
<p>However, it will be a great pity if higher risk technologies, currently funded by ARENA, are lost due to the requirement to earn a return on investment. It would be ironic if the new fund retains the mandate of the CEFC that the government had targeted for termination, while weakening ARENA which enjoyed consistent bipartisan support. </p>
<p>The government has indicated that the new fund will target technologies such as large-scale solar with storage, off-shore energy, biofuels and smart grids.</p>
<p>Despite the emphasis on large-scale solar with storage, the technology was unsuccessful under the Labor government’s <a href="http://www.businessspectator.com.au/article/2012/7/2/policy-politics/labor%E2%80%99s-solar-flagships-mirage">Solar Flagship Program</a>. It is making slow progress around the world and the new fund will be seeking a return on its investments.</p>
<p>So, it remains to be seen whether today’s announcement becomes a sound use of public funding to drive innovation in low-emission technologies through addressing real market failures, or whether the need to save money will lead to an ugly combination of lost opportunity and wasted money.</p><img src="https://counter.theconversation.com/content/56732/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Through his superannuation fund, Tony Wood owns shares in several energy and resources companies that would have an interest in the topic covered by this article.</span></em></p>Prime Minister Malcolm Turnbull has announced a new “Clean Energy Innovation Fund”. But will it generate much-needed investment in the sector?Tony Wood, Program Director, Energy, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/447002015-07-16T19:30:11Z2015-07-16T19:30:11ZBioenergy: making money, and clean energy<figure><img src="https://images.theconversation.com/files/88663/original/image-20150716-5111-2cdo6p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A biogas plant in Queensland. </span> <span class="attribution"><span class="source">NH Foods Oakey Beef Exports</span>, <span class="license">Author provided</span></span></figcaption></figure><p>The government’s <a href="https://theconversation.com/the-clean-energy-finance-corporation-is-meant-to-back-winners-not-minnows-44593">draft direction</a> this week to the Clean Energy Finance Corporation to invest in “emerging” clean energy over mature sources such as wind and rooftop solar has added yet more uncertainty to the renewable sector in Australia. </p>
<p><a href="http://arena.gov.au/about-renewable-energy/bioenergy/">Bioenergy</a> (renewable energy derived from plants or animals) is one such emerging technology. It currently makes up <a href="http://www.cleanenergycouncil.org.au/policy-advocacy/reports/clean-energy-australia-report.html">7.9%</a> of total clean energy generation, or about 1%, of Australia’s total energy generation.</p>
<p>From <a href="http://www.smh.com.au/action/printArticle?id=998193936">media reports</a> to date it remains unclear whether technologies included under the bioenergy banner will be included in the investment mandate for “new and emerging technology”. </p>
<p>So what are the prospects for bioenergy? </p>
<h2>Bioenergy’s popularity on the rise</h2>
<p>The <a href="http://www.cleanenergycouncil.org.au/policy-advocacy/reports/clean-energy-australia-report.html">Clean Energy Council</a> ranks bioenergy as Australia’s fourth-largest generator of renewables energy behind hydro, wind and solar. </p>
<p>Clearly bioenergy is getting bigger. As of September 2014 renewable energy projects in the CEFC pipeline are headed by bioenergy at 38%, well ahead of solar photovoltaics at 27% in second place. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=497&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=497&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=497&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=625&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=625&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88453/original/image-20150715-21728-8rp7df.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=625&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The CEFC’s pipeline of projects.</span>
<span class="attribution"><span class="source">http://www.cleanenergyfinancecorp.com.au/investments/our-pipeline.aspx</span></span>
</figcaption>
</figure>
<p>At a <a href="http://www.bioenergyaustralia.org/">Bioenergy Australia</a> business breakfast last month, the CEFC said it was considering A$800 million in investment in bioenergy to accelerate A$3 billion in projects.</p>
<p>While bioenergy is common and hugely popular in other parts of the world including Germany, the United States and China, it remains a relatively new technology in Australia.</p>
<p>Despite its relatively small scale, bioenergy has a nationwide footprint, with <a href="http://www.cleanenergycouncil.org.au/technologies/bioenergy.html">139 plants</a> across Australia in operation as of late 2014.</p>
<h2>Sector attracts private, government investment</h2>
<p>One of the key questions for financing clean energy is the return on investment. The CEFC’s contracted investments are currently expected to earn a portfolio weighted average yield of <a href="http://www.cleanenergyfinancecorp.com.au/media/releases-and-announcements/files/cefc-has-helped-accelerate-$35b-in-total-investment-towards-a-competitive-clean-energy-economy.aspx">around 6%</a> across their lifetime. How does bioenergy stack up?</p>
<p>The CEFC has <a href="http://www.cleanenergyfinancecorp.com.au/media/76571/cefc-quarterly-report-june-2014.pdf">forecast</a> a 8.9% rate of return over six years for one New South Wales investment, while a Western Australian project is expected to return 8.2% over 10 years.</p>
<p>This figure relates to the debt component of the transaction and CEFC assumes the return on equity will be higher, giving a higher weighted average total return on the project.</p>
<p>While some of these bioenergy projects have been wholly funded by the businesses themselves, many have attracted funding from state and or federal government.</p>
<p>This funding has been granted because governments see the wisdom in underpinning investment in key businesses, some of which employ hundreds of people.</p>
<p>It has also come about because local, state and federal governments are concerned about the pressures of a growing population, waste accumulation and odour from landfill and industry.</p>
<h2>Technologies active in alleviating waste problems</h2>
<p>Bioenergy technologies such as biogas can be incorporated into existing operations to provide elegant solutions to turn waste into power, heat and other valuable by products such as fertiliser.</p>
<p>These technologies can be introduced in “closed-loop” systems and operate regardless of whether the sun is shining or the wind is blowing. The figure below shows the principles of a closed “carbon-loop” system.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=331&fit=crop&dpr=1 600w, https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=331&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=331&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=416&fit=crop&dpr=1 754w, https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=416&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/88455/original/image-20150715-21743-u0pg92.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=416&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The closed ‘carbon loop’ for bioenergy.</span>
<span class="attribution"><span class="source">http://www.resourcesandenergy.nsw.gov.au/energy-consumers/sustainable-energy/bioenergy</span></span>
</figcaption>
</figure>
<p>With CEFC funding of up to 50% in some cases, bioenergy is now in use in sectors which include meat processing at plants like <a href="http://www.cleanenergyfinancecorp.com.au/media/76497/cefc-pdf-factsheet-bindaree_lr.pdf">Bindaree Beef</a> at Inverell, piggeries, egg production and the garden products industry.</p>
<p>Australian bioenergy sources feedstocks from a number of sectors, including:</p>
<ul>
<li><p>agricultural-related wastes like sugarcane residue (bagasse) and manure </p></li>
<li><p>municipal wastes including sewage and landfill </p></li>
<li><p>energy crops such as sorghum used to produce ethanol.</p></li>
</ul>
<p>Bioenergy has the ability to literally swallow waste created by humans in municipalities, animals in intensive livestock operations, and crop production.</p>
<p>Outside the square is the biggest and longest-running user of bioenergy in Australia, the sugarcane industry.</p>
<p>For decades, selected mills in Queensland and NSW have been burning bagasse, the woody pulp left after sugar has been extracted from cane, to generate heat and electricity for use in in sugar processing, and selling surplus electricity to the grid.</p>
<p>The massive <a href="http://i-fed.com.au/project/">Integrated Food and Energy Developments</a> project proposed for North Queensland includes sugarcane production incorporating steam and electricity production from bagasse. This could be a prime candidate for CEFC funding.</p><img src="https://counter.theconversation.com/content/44700/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bernadette McCabe is a member of Bioenergy Australia and is Australia's National Team Leader for the International Energy Agency's (IEA) Bioenergy Task 37: Energy from Biogas.</span></em></p>The government has issued a draft direction to the Clean Energy Finance Corporation to invest in “emerging” clean energy such as bioenergy. But what are the prospects for bioenergy?Bernadette McCabe, Associate Professor and Vice Chancellor's Senior Research Fellow, University of Southern QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/445932015-07-13T20:19:31Z2015-07-13T20:19:31ZThe Clean Energy Finance Corporation is meant to back winners, not minnows<p>In defending the federal government’s decision to <a href="https://theconversation.com/the-government-should-keep-its-hands-off-clean-energy-finance-44581">bar the Clean Energy Finance Corporation (CEFC) from investing in wind and small-scale solar power</a>, environment minister Greg Hunt <a href="http://www.abc.net.au/radionational/programs/breakfast/greg-hunt-on-govts-renewable-energy-investment-bans/6614576">explained to ABC Radio</a> what he sees as the future direction for the CEFC. He said that the funding was to focus on projects that were “not mature and not commercial”, identifying three main areas as worthy recipients of investment:</p>
<ul>
<li>large-scale solar, including new solar thermal technologies</li>
<li>emerging technologies such as wave energy</li>
<li>measures to improve energy efficiency.</li>
</ul>
<p>Yet despite Hunt’s claim that these objectives are consistent with the reasons why CEFC was first established, they are not. The CEFC was not designed to back minor players; it was set up to make money from relatively safe investments. As its <a href="http://www.cleanenergyfinancecorp.com.au/what-we-do.aspx">website states</a>:</p>
<blockquote>
<p>The CEFC focuses on projects and technologies at the later stages of development which have a positive expected rate of return and have the capacity to service and repay capital.</p>
</blockquote>
<p>True, the corporation’s <a href="http://www.cleanenergyfinancecorp.com.au/what-we-do/2018-portfolio-vision.aspx">2018 Portfolio Vision</a> envisages around half of its investments being made in “energy efficiency and low emissions” projects, but the other half of its portfolio, focused on renewable energy, features wind and solar photovoltaic at the top of the list. How does Hunt’s description of “not mature and not commercial” relate to the CEFC’s mission to invest in “later stages of development which have a positive expected rate of return”?</p>
<p>The renewable energy goalposts appear to be moving yet again, although many would question whether they have held any stationary position in Australia over the past few years. </p>
<h2>New technologies already have an agency</h2>
<p>Most people would agree that emerging renewable energy technologies need support, particularly during the “not mature and not commercial” stage. But that is the job of the <a href="http://arena.gov.au/">Australian Renewable Energy Agency (ARENA)</a>. This body was put in place to provide funding (not loans) to develop emerging technologies to a point where the commercialisation stage is within reach. Then, with commercial viability on the horizon but not yet secure, the CEFC can step into a zone where commercial lenders might not dare tread.</p>
<p>If we look at ARENA’s <a href="http://arena.gov.au/about-arena/">objectives</a>, we see that they are stated as: </p>
<blockquote>
<p>…to improve the competitiveness of renewable energy technologies and to increase the supply of renewable energy within Australia.</p>
</blockquote>
<p>The government’s latest move appears to shift the responsibility for delivering emerging renewable energy technologies from ARENA (a taxpayer-financed support agency) to the CEFC (a statutory finance institution).</p>
<p>It is not difficult to imagine that the government will argue that ARENA will become redundant should this change in responsibilities occur. And thus another nail would be hammered into the already built coffin of renewable energy support in Australia.</p>
<h2>Remember the RET</h2>
<p>A complete picture of the issue also needs to take account of the <a href="https://theconversation.com/au/topics/renewable-energy-target">Renewable Energy Target (RET)</a>, and indeed Hunt did refer to it several times during his interview. While this program is, to quote the minister, “a mandate” for renewable energy, the benefits are only obtainable after the infrastructure is in place and generating electricity.</p>
<p>A joined-up, comprehensive renewables policy would use the already existing agencies to do the following:</p>
<ul>
<li>fund technology development (ARENA);</li>
<li>finance potentially commercially viable technologies (CEFC); and</li>
<li>support existing renewables until competitive with fossil fuels (RET).</li>
</ul>
<p>All of the above programs are important if we want to move from our current position to a more sustainable energy future, where energy security is not reliant upon imports or minerals with a life expectancy that, while hard to predict exactly, will surely be only a few generations. </p>
<p>But what we have instead is a process that appears to be geared towards stagnating the development of renewable energy, under the guise of promoting it.</p><img src="https://counter.theconversation.com/content/44593/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Environment minister Greg Hunt wants the Clean Energy Finance Corporation to focus on new technologies, not wind and solar. But that’s not what it was set up to do, and Australia already has an agency for that.Craig Froome, Global Change Institute – Clean Energy Program Manager , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/445812015-07-13T05:48:37Z2015-07-13T05:48:37ZThe government should keep its hands off clean energy finance<figure><img src="https://images.theconversation.com/files/88191/original/image-20150713-1344-9e94lx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Australian government has instructed the Clean Energy Finance Corporation to stop investing in wind. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/penagate/2950975041/">penagate/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Can the government tell its clean energy finance body what to invest in? Recent news that the Clean Energy Finance Corporation will be banned from investing in wind farms and small-scale solar suggest that the government is trying to do just that. </p>
<p>However a closer look at the law suggests the government may have breached its obligations under the corporation’s legislation. </p>
<p>On Saturday a <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbott-has-escalated-his-war-on-wind-power-20150711-gia3xi.html">Fairfax report</a> revealed that the government had issued a draft direction for the A$10 billion Clean Energy Finance Corporation to invest no further in wind. It was later revealed that the direction also <a href="http://www.theguardian.com/environment/2015/jul/12/abbott-government-extends-ban-on-renewable-energy-to-solar-panels">included small-scale solar</a>. Instead, the corporation will focus on new and emerging technologies, including <a href="http://www.abc.net.au/radionational/programs/breakfast/greg-hunt-on-govts-renewable-energy-investment-bans/6614576">large-scale solar and storage, geothermal, and wave energy</a>.</p>
<p>The Coalition government has previously tried to abolish the corporation. <a href="http://www.cleanenergyfinancecorp.com.au/investments.aspx">Since 2013</a> the corporation has invested over A$900 million in the clean energy industry, with around a quarter going to wind energy. </p>
<p>The decision to explicitly exclude wind contravenes the original purpose of the Clean Energy Corporation which, when set up by the Gillard government, was to promote capital investment in a range of different forms of renewable energy. </p>
<p>Two of the most successful and important forms of renewable energy in Australia are wind and solar. These two industries are absolutely crucial for future climate change mitigation and adaptation.</p>
<p>If enforceable, the investment mandate will have strong ramifications for the wind industry, which was reportedly anticipating an <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbott-has-escalated-his-war-on-wind-power-20150711-gia3xi.html">investment of A$8.7 billion</a> in wind power over the next five years. To date, the Clean Energy Finance Corporation has invested approximately A$300 million in wind projects and this has helped the industry enormously, particularly given recent reductions to the Renewable Energy Target.</p>
<h2>What power does the government have?</h2>
<p>Arguably, the government has breached its obligations under the <a href="https://www.comlaw.gov.au/Details/C2012A00104">Clean Energy Finance Corporation Act 2012</a>. </p>
<p>Section 64 of the act allows the ministers to give the corporation “directions” about how the corporation should invest. These directions are collectively known as the “investment mandate”. </p>
<p>In providing direction within an investment mandate, the Ministers are explicitly required consider the object of the Act: to facilitate increased flows of finance into “the clean energy sector”. There is no explicit exclusion of wind within the definition of the “clean energy sector” and clearly any such exclusion would be nonsensical given that wind is a key form of clean energy in the modern world.</p>
<p>The investment mandate issued by the Ministers has the power to set out broad policies that include: matters relevant to risk and return, what constitutes clean energy that the corporation can invest in, the type of investments that the corporation can authorise, and other broad operational matters. </p>
<h2>What power doesn’t the government have?</h2>
<p>There is, however, a significant and explicit limitation on the investment mandate which may be issued by the Ministers. </p>
<p>This is expressly set out in section 65 of the act. A direction cannot be made which has the effect, or which is likely to have the effect, of requiring the Board of the corporation not to make a particular investment that would otherwise be authorised. Nor can the direction be to make an investment that is inconsistent with the act. </p>
<p>The reasoning underlying the section 65 limitation is that the purpose of the investment mandate is only to provide broad guidance and direction for the corporation. The corporation itself must exercise its own discretionary power when choosing what to invest in. This power should not be usurped by the ministers via an investment mandate. Any such attempt constitutes a direct contravention of the framework and provisions of the legislation. </p>
<p>Hence, the act does not allow the ministers, through the investment mandate, to issue a qualified, prohibitory direction impeding the legitimate scope of the corporation’s legislated investment authority. </p>
<p>The investment mandate was devised with the aim of providing investment direction for the clean energy sector. The decision to invest must lie, ultimately, with the corporation. </p>
<p>Wind is a legitimate and important form of clean energy. An investment mandate that seeks to excludes investment in wind energy undermines the authorised powers of the corporation as set out in the legislation.</p><img src="https://counter.theconversation.com/content/44581/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samantha Hepburn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Can the government tell its clean energy finance body what to invest in? Recent news that the Clean Energy Finance Corporation will be banned from investing in wind farms and small-scale solar suggest that the government is trying to do just that.Samantha Hepburn, Professor, Faculty of Business and Law, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/445612015-07-13T00:26:59Z2015-07-13T00:26:59ZHow baffling is the Abbott government’s assault on windfarms?<figure><img src="https://images.theconversation.com/files/88150/original/image-20150712-17437-mdn2p8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">AAP/Alan Porritt</span></span></figcaption></figure><p>The confirmation by Trade Minister Andrew Robb that the Clean Energy Finance Corporation (CEFC) has been ordered to cease future investments in wind power is a major setback to renewable energy, investment and delivery. It also further isolates Australia as not only having abolished a price on carbon, but one that has scaled back its renewable energy target and now is winding back the wind power sector.</p>
<p>The directive, which was revealed by <a href="http://www.smh.com.au/federal-politics/political-news/tony-abbott-has-escalated-his-war-on-wind-power-20150711-gia3xi.html">Fairfax Media</a> only this weekend, was jointly issued by Treasurer Joe Hockey and Finance Minister Mathias Cormann late last month. It rediverts funds from the A$10 billion “green bank” away from wind and into long-term research and development (R&D). </p>
<p>The move is the Coalition’s next-best scenario to actually abolishing the CEFC, which it has sought to do twice now only to be blocked in the Senate. This constitutes a genuine trigger for a double dissolution if it is needed.</p>
<p>Labor, which was party to downsizing the size of the Renewable Energy Target, labelled it as an attempt to sabotage the renewable sector altogether. Labor leader Bill Shorten commented that the CEFC would now be limited to investing in “flying saucers”. This is because, he says, the directive cannot fund an initiative through to completion, as by definition it would then be considered mature or “established”.</p>
<p>The Abbott government’s decision to effectively cease all new investment in the “mature technology” of wind power in favour of “emerging technology” comes straight from the policy vault of Bjorn Lomborg.</p>
<p>Lomborg, whose influence over the Abbott government’s climate policies is <a href="http://theconversation.com/the-bjorn-supremacy-is-australia-getting-the-climate-advice-it-deserves-40716">well known</a>, has tried to find asylum for his climate-belittling “Copenhagen Consensus Centre” in Australia. He is also an occasional columnist for The Australian.</p>
<p>In October 2013, Lomborg <a href="http://www.theaustralian.com.au/opinion/columnists/the-world-is-warming-but-theres-no-need-to-panic/story-fni1hfs5-1226731120767">wrote</a> a column titled:</p>
<blockquote>
<p>The world is warming but there’s no need to panic. </p>
</blockquote>
<p>Lomborg declared:</p>
<blockquote>
<p>In the Copenhagen Consensus for Climate, economists found that the smartest long-term solution is substantially to increase funding for green energy research and development. In other words, we shouldn’t subsidise today’s hugely inefficient green technologies but focus on innovation to reduce the cost of future versions of wind and solar energy and the many other amazing possibilities.</p>
<p>Making future green technology cheaper than fossil fuels would mean that everyone would switch, not just subsidised, well-meaning Westerners.</p>
</blockquote>
<p>In an earlier column in <a href="http://www.theaustralian.com.au/news/features/wrong-way-go-back/story-e6frg6z6-1226614414896">April 2013</a>, Lomborg admitted that R&D alone is full of uncertainty:</p>
<blockquote>
<p>Of course, R&D holds no guarantees. We might spend billions and still come up empty-handed in 40 years’ time. But it has a much better chance of success than continuing the futile efforts of the past 20 years.</p>
</blockquote>
<p>Since Lomborg wrote those articles, renewable energy technologies have already become price competitive. They easily beat fossil fuels if we price in the cost of health to future generations. The improvement has largely been found in the cost of production, not the technologies themselves.</p>
<p>Nevertheless, Lomborg’s recommendations of two years since seems to have prevailed in the comments Robb has offered over the CEFC intervention. Robb was not able to elaborate on exactly what the “emerging technologies” even are – only that wind power has already matured to the point of not requiring further investment.</p>
<p>No-one is going to deny the merits of ongoing R&D. But when it is put up as a replacement for subsidising the manufacture of existing technologies rather than alongside them, it is very easy to become sceptical. </p>
<p>Witness the US$1.5 billion of American taxpayer money wasted by Republican administrations on R&D for <a href="http://phys.org/news/2006-12-hydrogen-economy-doesnt.html">Hydrogen–fuelled</a> cars. It became a gigantic technocratic hoax designed to kill off investment in the production of the electric car – which it succeeded in doing for more than 20 years, much to the delight of oil company lobbyists in Washington. But, we don’t have <a href="https://www.newsouthbooks.com.au/books/big-coal/">coal lobby</a> groups in Canberra? Do we?</p>
<p>Yet there appears to be a split within the government between advocates for dead-end R&D and simply moving the funding from wind to solar. On the same day that Fairfax reported Environment Minister Greg Hunt being angered by the intervention of his fellow ministers a few weeks earlier, he took to Twitter to deny the claim. He also revealed in a further tweet yesterday that his own preference is to focus on solar and emerging technologies.</p>
<p>But Tony Abbott’s soundbite on the same day under the cover of the not-so “visually awful” or “noisy” presence of military helicopter turbines at a war game exercise in Darwin did not mention solar, but only “new and emerging technologies”.</p>
<p>It is too early to gauge the complexity of the crossbench deals needed to endorse the changes being made to the CEFC’s mandate. But certainly, appeasing the three conservative senators – David Leyonhjelm, Bob Day and John Madigan – who are strident anti-wind campaigners is a major objective. </p>
<p>In a piece he wrote for <a href="https://www.thesaturdaypaper.com.au/news/politics/2015/06/27/tobacco-industry-playbook-used-kill-renewables/14353272002054#.VaJT71wzNuY">The Saturday Paper</a> at the same time as the CEFC was just getting its directives, Mike Seccombe had researched the backroom Senate powerplays in considerable detail. He demonstrates how the tobacco lobby tactics of old have been used in the 21st-century wind politics in denouncing medical expertise on windfarm safety. </p>
<p>But the important detail is the workings of the most recent Senate Select Committee on Wind Turbines. It has six members, half of whom are the above named senators, who also now hold the largest crossbench power block in the Senate. Seccombe charts the connection of two of the senators, Day and Leyonhjelm, to the <a href="http://www.ipa.org.au">Institute for Public Affairs</a>, as well as the background of Madigan’s chief-of staff, whose previous work in anti-wind journalism earned him <a href="http://www.windturbinesyndrome.com/wind-turbine-syndrome/">windturbinesyndrome.com’s</a> “journalist of the year award” in 2011.</p>
<p>The importance of pandering to these senators may explain the mercenary assault on wind power that we have seen from Abbott’s inner cabinet. This includes Abbott’s baffling comments to <a href="http://stopthesethings.com/category/alan-jones/">Alan Jones</a> last month that wind turbines were “visually awful” and “make a lot of noise”.</p>
<p>Abbott’s comments are baffling on so many fronts. For someone who is so poll- and audience-driven, he might well consider that Volkswagen has used wind turbines in an <a href="http://reneweconomy.com.au/2015/volkswagen-uses-wind-turbines-to-help-sell-e-golf-didnt-get-abbotts-memo-46204">ad campaign</a>. The car company researched that they appeal to people and spent money on advertising with them.</p>
<p>But more baffling is that, as coastal winds <a href="http://www.smh.com.au/environment/climate-change/coastal-winds-intensifying-with-climate-change-study-says-20140706-zsydt.html">intensify</a> around the world as a result of climate change, we are going to need wind turbines – not just for energy, but for our protection. <a href="http://theconversation.com/wind-turbines-could-put-the-brakes-on-hurricanes-23705">Modelling in 2014</a> published in Nature Climate Change found that wind turbines can cut wind speeds and storm surges by life-saving magnitudes. </p>
<p>In a climate-adaptive future, it is possible to imagine large cities ringed by wind turbines to save them from storm damage. In this case, what would unfold is that the most baffling comments from Australia’s prime minister are actually referring to the greatest baffle that human beings have ever made – to protect themselves.</p><img src="https://counter.theconversation.com/content/44561/count.gif" alt="The Conversation" width="1" height="1" />
The confirmation by Trade Minister Andrew Robb that the Clean Energy Finance Corporation (CEFC) has been ordered to cease future investments in wind power is a major setback to renewable energy, investment…David Holmes, Senior Lecturer, Communications and Media Studies, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/417702015-05-15T01:57:58Z2015-05-15T01:57:58ZThere are no green shoots for sustainability in this Budget<p><em>Budget: The Longer View. The dust has begun to settle on Tuesday’s federal budget – and some key issues and themes are emerging. What are they? This long-read essay is part of a special package intended to answer that question.</em></p>
<p>The 2015-16 Budget is very disappointing in the broad area of environmental protection. Last year’s cuts to important bodies like <a href="http://www.edo.org.au/">Environmental Defenders Offices</a> have not been reversed. Even the funding of a core Coalition initiative, the <a href="http://www.environment.gov.au/land/green-army">Green Army</a>, has been cut by A$73 million over four years. </p>
<p>While it is not in the Budget, government members are running a <a href="https://theconversation.com/government-inquiry-takes-aim-at-green-charities-that-get-political-40166">parliamentary inquiry</a> which seems to be aimed at removing charitable status from environmental groups, sparked by claims from the <a href="http://www.minerals.org.au/">Minerals Council of Australia</a> that environmental objections are adding to the cost of new projects. </p>
<p>The argument being run by some Coalition politicians is that it is quite acceptable for community groups to plant trees or rehabilitate degraded landscapes, but unreasonable for them to campaign against logging old-growth forests or degrading the land with new open-cut mines. Presumably they hope that removing charitable status would make it less likely that the public would donate to environmental groups, reducing their capacity to embarrass the government or slow down new proposals with destructive impacts. </p>
<p>Like the withdrawal of funds from EDOs, it suggests that the government really believes its rhetoric about “green tape”, the claim that we have been over-zealous about protecting the environment and consequently have held back desirable investments. On the contrary, successive reports on the state of the environment and ABS reports on measures of progress all show that the most significant environmental indicators are all getting worse while the economy continues to grow. </p>
<p>While there is an extra A$100 million over four years for measures to protect the <a href="https://theconversation.com/au/topics/great-barrier-reef">Great Barrier Reef</a>, the cuts to Landcare and the continued promotion of the export coal industry put the reef under increased pressure. There is no new money for the <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation</a>, which has been making a real difference. </p>
<p><a href="https://theconversation.com/small-business-tax-should-be-cut-by-5-shorten-41831">Bill Shorten’s Budget in Reply</a> was no better on environmental issues. While there was a welcome commitment to funding science and science education, which contrasts with the apparent government hostility to the science which keeps providing inconvenient evidence about the environmental costs of current approaches, I did not hear any concrete plans to apply science to protect the integrity of our ecosystems.</p>
<h2>Still not serious about climate</h2>
<p>Critically, the government’s budget still shows no sign that it is taking seriously our responsibility to curb greenhouse gas emissions. The allocation for the <a href="http://www.environment.gov.au/climate-change/emissions-reduction-fund">Emissions Reduction Fund</a> will not meet <a href="https://theconversation.com/on-these-numbers-australias-emissions-auction-wont-get-the-job-done-40761">even the present inadequate target</a>, let alone the sort of goal Australia will be <a href="https://theconversation.com/an-objective-way-to-decide-on-a-fair-australian-emissions-pledge-41241">expected to take to the Paris talks later this year</a>. </p>
<p>There is no funding for urban public transport, but the government will spend billions on roads. This is possibly not surprising, given that the ministers who drew up and approved the Budget have probably not been on a train, bus or tram for decades, but it is gross negligence in the context of urban development. Not only is public transport critical for millions of city-dwellers today; it is the only credible way of coping with the increasing numbers in our cities that the government is proposing. </p>
<p>Transport also links directly to questions of energy use, urban air quality and our contribution to climate change. Unless there is a dramatic shift to electric cars or hydrogen vehicles, road traffic will continue to burn petroleum fuels, polluting the city atmosphere and driving climate change. </p>
<p>A political fight on transport policy is looming in Victoria, where the budget retains A$3 billion for the cancelled <a href="https://theconversation.com/au/topics/east-west-link">East-West Link</a> road project. The Commonwealth government is reportedly <a href="http://www.abc.net.au/news/2015-05-15/victoria-must-return-east-west-link-funds-hockey-says/6472172">demanding that Victoria return the A$1.5 billion</a> that was allocated before the state election. With Prime Minister Tony Abbott having said before that election that it would be a <a href="http://www.heraldsun.com.au/news/breaking-news/vic-election-referendum-on-ew-link-pm/story-fni0xqi4-1227116976197">referendum on the road project</a>, the new Victorian government feels it has a mandate to use the funds for other transport projects. The Coalition’s polling in Victoria is looking dire, so it will be interesting to see if they try to take transport money from the state government.</p>
<p>Public transport not only uses energy much more efficiently, it can also be driven by cleaner forms of energy from the sun and wind. While ordinary Australians are still voting with their roofs in unprecedented numbers, installing more solar panels in the first quarter of this year than in the corresponding period last year, the government’s <a href="https://theconversation.com/planned-cut-to-renewable-energy-target-a-free-kick-for-fossil-fuels-33317">attack on the Renewable Energy Target</a> has predictably all but halted investment in large-scale wind and solar projects. </p>
<p>The Opposition has made very <a href="https://theconversation.com/how-will-the-reduced-renewable-energy-target-affect-investment-41505">significant, arguably borderline irresponsible, concessions</a> to try to end the impasse, but the Coalition’s proposed conditions of allowing forestry residues to count as renewable energy and requiring further reviews every two years has proved a bridge too far. </p>
<p>While the government is openly attacking investment in clean energy technologies, the budget made no attempt to wind back the massive subsidies of fossil fuel supply and use. In fact, a question in the Senate revealed a possible further subsidy that was not noticed in the initial discussions of the Budget. The promised <a href="http://www.smh.com.au/business/federal-budget/federal-budget-2015-northern-australia-to-receive-5-billion-in-infrastructure-loans-20150512-1mzhdq.html">multibillion-dollar fund for infrastructure in northern Australia</a> could be used to pump public funds into the struggling proposals for massive new coal mines in Queensland. </p>
<p>With financial institutions increasingly unwilling to support projects that look dubious investments in strictly financial terms, finance minister Mathias Cormann <a href="http://www.smh.com.au/business/federal-budget/federal-budget-2015-greens-blast-northern-australia-plan-20150514-gh1hpv.html">refused to rule out</a> the possibility that the infrastructure fund could be used to help kickstart coal mines. He repeated <a href="http://www.abc.net.au/news/2014-10-13/coal-is-good-for-humanity-pm-tony-abbott-says/5810244">Abbott’s famous assertion</a> that “coal is good”, not just pointing to the export revenue the mines provide but also claiming that new coal mines will “lift millions out of poverty”. </p>
<h2>Still under the influence of denial</h2>
<p>Underlying the deafening silence about climate change in the budget and the continuing promotion of coal exports is the lingering suspicion that the government isn’t serious about the most urgent global environmental problem. The <a href="http://www.theaustralian.com.au/opinion/the-un-is-using-climate-change-as-a-tool-not-an-issue/story-e6frg6zo-1227343839905">latest intervention by Abbott’s chief business adviser Maurice Newman</a> bordered on farce, not just denying the science but claiming that the world’s scientists are part of a gigantic conspiracy organised by the United Nations. That assertion makes ideas that the Moon landings were faked on a back lot in Hollywood, or the CIA organised the 2011 attacks on the World Trade Centre, seem comparatively rational. </p>
<p>More worrying than Newman’s bizarre public statement was a subsequent letter to the editor from a Coalition politician, Senator Cory Bernadi, praising Newman for his contribution to the debate. That reveals openly that sections of the Coalition party room are still in denial about the scientific evidence which has now been clear for decades.</p>
<p>In 1992, the <a href="https://www.coag.gov.au/">Council of Australian Governments</a> adopted the <a href="http://www.environment.gov.au/about-us/esd/publications/national-esd-strategy">National Strategy for Ecologically Sustainable Development (NSESD</a>. It committed the Commonwealth and all state and territory governments to a pattern of development that would not reduce opportunities for future generations. The current emphasis on minerals exports sits uncomfortably with this goal, as it is systematically reducing the capital stock available to future generations to provide money for this generation. </p>
<p>More fundamentally, the NSESD says explicitly that economic development should recognise the need to protect our unique Australian biodiversity and maintain the integrity of our ecological systems. We are <a href="https://theconversation.com/climate-change-could-empty-wildlife-from-australias-rainforests-41023">still losing biodiversity</a>, mainly because of the destruction of habitat, compounded by the impacts of introduced species and now increasingly by the changes to the climate. </p>
<p>The Budget and the Opposition’s response suggests that neither side recognises the imperatives of the NSESD. The government clearly thinks that the economy is supremely important and that the integrity of our environment is an optional extra. What is portrayed as a <a href="https://theconversation.com/path-to-budget-surplus-built-on-shifting-foundations-41350">path back to surplus</a> makes several heroic assumptions, most fundamentally ignoring the inevitable limits to growth and the impacts of proposed economic developments on our ecological systems. People often find economic forecasting a bit depressing. But what is most depressing is the diminishing prospect of a sustainable future.</p><img src="https://counter.theconversation.com/content/41770/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian Lowe is a past president of the Australian Conservation Foundation.</span></em></p>Amid talk of paths to surplus and investing in infrastructure, both sides of politics seem to have forgotten Australia’s longstanding responsibility to govern sustainably, and not just for the economy.Ian Lowe, Emeritus Professor, School of Science, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/416192015-05-13T01:29:16Z2015-05-13T01:29:16ZBudget brief: what’s in the budget on climate change and renewables?<p><em>The Conversation’s Budget briefs series aims to answer reader questions about the 2015 federal budget. Thanks to readers Amy Holly and Carolyn van Langenberg for this question.</em></p>
<p>Not much was announced in last night’s budget on climate change and renewable energy. However, a total of A$400 million was announced for drought assistance and tax breaks for farmers to implement water infrastructure, which could become increasingly necessary given we are seeing possibly <a href="https://theconversation.com/the-rise-and-rise-of-the-2015-el-nino-41616">the biggest El Niño</a> – a phenomenon often linked to drought in Australia – since 1997-98.</p>
<p>Although not badged as such, this could be considered as climate-related finance to deal with <a href="http://www.csiro.au/en/News/News-releases/2015/Greenhouse-warming-increases-frequency-of-devastating-La-Nina-events">increasingly extreme drought, and flood, climatic conditions in Australia</a>. The new package includes money to boost economic activity in the towns and regions badly hit by drought, as well as drought-specific loans, infrastructure grants, and financial and psychological counselling for families finding it tough under these conditions. This is actually rather forward-thinking, given the increasing physical, economic, and <a href="https://www.psychology.org.au/publications/tip_sheets/climate/">psychological problems</a> associated with dealing with climate change. </p>
<p>Unfortunately, the rest of the budget doesn’t show much change in the current rate of climate change investment.</p>
<h2>No new funds for cutting emissions</h2>
<p>There is no change in allocation of money to the Emissions Reduction Fund (ERF). A$2.55 billion was previously allocated to the ERF under the government’s <a href="https://theconversation.com/au/topics/direct-action-plan">Direct Action</a> policy. This is the principal mechanism for reducing emissions in Australia, in line with its internationally agreed target to <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook44p/GlobalClimate">cut emissions by 5%, relative to 2000 levels, by 2020</a>. </p>
<p>The fund’s first “reverse auction”, <a href="https://theconversation.com/infographic-emissions-reduction-auction-results-at-a-glance-40728">held last month</a>, yielded 47.3 million tonnes of carbon reductions at an average price of A$13.95 per tonne. This was cheaper than the previous government’s carbon pricing scheme, although there are <a href="https://theconversation.com/on-these-numbers-australias-emissions-auction-wont-get-the-job-done-40761">concerns about whether the ERF’s budget is big enough to meet the target</a>. </p>
<p>Federal environment minister Greg Hunt <a href="http://www.afr.com/news/politics/budget-2015-no-topup-for-emissions-fund-says-greg-hunt-20150510-ggx52c">noted recently</a> that he would not seek any extra funds for the ERF. Yesterday’s budget certainly reflects this.</p>
<h2>Closing down climate advice</h2>
<p>The Budget features A$6.1 million to fund the continued operation of the <a href="http://www.climatechangeauthority.gov.au/">Climate Change Authority</a>, which advises the government on issues such as emissions reduction targets. But there is no funding after the end of 2016, when the Authority is presumably set to be shut down.</p>
<p>The <a href="http://www.environment.gov.au/climate-change/emissions-reduction-fund/expert-reference-group">Emissions Reduction Fund Expert Reference Group</a> has been shut down as part of wider savings in the Environment Department under the “Smaller Government” savings package, with the government saying the group’s work is done now that the ERF is up and running. </p>
<p>Although the government’s <a href="http://ewp.industry.gov.au/sites/test.ewp.industry.gov.au/files/EnergyWhitePaper.pdf">Energy White Paper</a> noted the proposed abolition of the <a href="http://arena.gov.au/">Australian Renewable Energy Agency (ARENA)</a> and the <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation</a>, both seem to have avoided the chopping block for now.</p>
<h2>Other measures</h2>
<p>The <strong><a href="http://www.environment.gov.au/land/green-army">Green Army</a> is on reduced rations</strong>, with the Budget noting savings of A$73.2 million due to “efficiencies” in this network of local environmental and heritage projects. “The Government will continue to provide $701.9 million over four years from 2015-16 for <a href="http://budget.gov.au/2015-16/content/bp2/html/bp2_expense-11.htm">Green Army projects</a> and will deliver on its election commitment of 1,500 projects in 2018-19,” it says. </p>
<p>Yet Greg Hunt has <a href="http://www.greghunt.com.au/Home/LatestNews/tabid/133/articleType/ArticleView/articleId/3275/categoryId/21/179-million-boost-to-Green-Army-and-100-million-for-Reef-Trust.aspx">claimed</a> the Green Army is A$179 million better off than in last year’s budget. </p>
<p>There is <strong>no new funding for renewable energy</strong>, with the government and opposition finally having agreed, bar a few last-minute details, on a compromise to reduce the Renewable Energy Target (RET) to 33,000 gigawatt hours by 2020, down from its previous level of 41,000 GWh. <a href="https://theconversation.com/how-will-the-reduced-renewable-energy-target-affect-investment-41505">Although certainty now exists, investment renewable energy still faces multiple challenges in Australia</a>. The RET scheme is an industry cross-subsidy and is therefore not directly funded by the taxpayer.</p>
<p>There is <strong>A$200 million for the Green Climate Fund</strong>, but this was already covered under the aid budget. <a href="http://www.theaustralian.com.au/national-affairs/climate/australia-to-contribute-200m-to-green-climate-fund/story-e6frg6xf-1227150858029">Australia will donate the money over four years</a> to the US$10 billion international fund to help developing nations tackle global warming. </p>
<p>There is also <strong>an extra A$100 million for the Reef Trust</strong>, besides the A$40 million previously pledged, which will aim to improve water quality and coastal habitat, control pests, and protect species like the turtle and dugong living on or near the Great Barrier Reef. The budget doesn’t mention the major long-term challenge facing the reef: <a href="https://theconversation.com/the-plan-to-save-the-great-barrier-reef-is-destined-to-fail-unless-33542">climate change and ocean acidification</a>.</p>
<p>Prime Minister Tony Abbott may have predicted that the Budget would be “<a href="https://au.news.yahoo.com/video/watch/26704689/federal-budget-dull-and-boring-abbott/#page1">dull and boring</a>”, but it certainly doesn’t read that way if you’re considering Australia’s need for a sustainable economy that is resilient to both climate change impacts and in line with the <a href="https://theconversation.com/landmark-us-china-pledge-is-a-step-towards-2c-climate-goal-34140">direction our key trading partners are taking on a low-carbon future</a>.</p>
<hr>
<p><em>Read more of The Conversation’s <a href="https://theconversation.com/au/topics/federal-budget-2015">Federal Budget 2015</a> coverage.</em></p><img src="https://counter.theconversation.com/content/41619/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Adam Bumpus receives funding from the Australian Research Council and University of Melbourne. He is affiliated with the University of Melbourne.</span></em></p>Environment minister Greg Hunt hasn’t asked for any more money for the Emissions Reduction Fund. So what is actually in the budget, as far as climate change is concerned?Adam Bumpus, Senior Lecturer, Environment & Development, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/415052015-05-08T04:31:35Z2015-05-08T04:31:35ZHow will the reduced Renewable Energy Target affect investment?<figure><img src="https://images.theconversation.com/files/80949/original/image-20150508-9093-1xvhnhf.jpg?ixlib=rb-1.1.0&rect=10%2C122%2C2258%2C1340&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Investment in technologies beyond the existing wind and solar could stagnate in the face of the government's reduced Renewable Energy Target.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File%3ACallicum_Hills_Wind_Farm.jpg">Rolandg/Wikimedia Commons</a></span></figcaption></figure><p>After <a href="https://theconversation.com/why-has-investment-in-renewable-energy-projects-stalled-34197">months of uncertainty</a> over the future level of Australia’s Renewable Energy Target (RET), the federal government and opposition have <a href="http://www.abc.net.au/news/2015-05-08/government-opposition-reach-deal-on-renewable-energy-target/6455406">reached a compromise agreement</a> to scale back the target.</p>
<p>The deal will see the RET wound back to 33,000 gigawatt hours of renewable energy by 2020, down from its previous level of 41,000 GWh. The government had earlier sought a target of <a href="https://theconversation.com/planned-cut-to-renewable-energy-target-a-free-kick-for-fossil-fuels-33317">around 27,000 GWh</a>, but the new compromise was reached after the <a href="http://www.businessspectator.com.au/news/2015/4/8/policy-politics/labor-backs-33500gwh-compromise-target-ret">Labor opposition</a> and the <a href="http://reneweconomy.com.au/2015/cec-proposes-compromise-deal-and-massive-cut-to-ret-86215">renewables industry</a> each indicated they would be willing to agree on a level in the low-30,000s to end the stalemate.</p>
<p>An end to uncertainty, yes, but what will the new target mean for the future of Australia’s renewable energy industry? </p>
<h2>Fossil fuels still dominant</h2>
<p>The Energy Supply Association of Australia, in its <a href="http://www.esaa.com.au/policy/electricity_gas_australia_2014">Electricity Gas Australia 2014</a> report, indicates that 88% of power generation (192,205 GWh of the 218,000 GWh total) still comes from fossil fuels. Most of the rest comes from hydro power, most of which falls outside the RET scheme. Solar, wind and biofuels only account for about 8,000 GWh.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=456&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=456&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=456&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=573&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=573&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80936/original/image-20150508-1212-so5146.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=573&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australia’s energy-generation mix.</span>
<span class="attribution"><span class="source">ESAA (2014)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>This means that to meet the newly mandated 33,000 GWh in 2020, the renewable energy sector will have to more than quadruple in size from its current level of output. Encouraging investment will be crucial.</p>
<p>The government’s rationale for the cut is that, given future projections, 41,000 GWh will end up being far more than the 20% of total energy output that the scheme was intended to deliver. But future energy projections are inherently uncertain, being dependent on economic growth and a host of other factors.</p>
<p>What we can say, based on the most recent (2012-13) annual power generation figure of 218,000 GWh, is that if this level of demand is the same in 2020, then 20% of that would be 43,600 GWh of renewables. This is more than the current 41,000 GWh provided in the legislation, so why reduce the target and widen the gap even more?</p>
<p>Cutting back the RET risks future investment, because many companies looking at investing in projects that would help deliver this 20% are now likely to think twice, given that the reduced target means there is now much less subsidy on offer. It’s just as likely that future economic growth through to 2020 would require more electricity, not less – unless the government is planning to leave the economy in neutral, which is hardly likely given what its <a href="http://ewp.industry.gov.au/">Energy White Paper</a> has to say about growing resource exports. </p>
<h2>The investment pipeline</h2>
<p>Besides the renewable energy facilities that are already up and running, there is currently a further 1,540 megawatts of committed renewable energy projects (1,287 MW of wind and the rest solar) in the pipeline, according to a <a href="http://www.industry.gov.au/industry/Office-of-the-Chief-Economist/Publications/Pages/Major-electricity-generation-projects.aspx">report from the Bureau of Resource and Energy Economics</a>. (The intermittency of many renewable energy sources makes it difficult to say exactly how many GWh of power this new capacity will deliver.)</p>
<p>While Australia has been a leader in innovative renewable energy research in fields such as geothermal and wave systems, there is currently nothing committed in these two areas.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=365&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=365&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=365&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=458&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=458&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80937/original/image-20150508-1207-1d2zl2q.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=458&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Hydro and wind are the most established renewable sources, but there is little more in the pipeline.</span>
<span class="attribution"><span class="source">BREE (2014)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>If we extend this to include renewable energy projects that are currently going through the feasibility stage, then the amount of renewable energy projects under consideration increases by an extra 14,048 MW of capacity. </p>
<p>But to put this into context, there is also an extra 13,094 MW of non-renewable generation – and given that the government’s <a href="http://ewp.industry.gov.au/">Energy White Paper</a> states that 75% of existing coal-fired power plants have already passed their expected useful life (and promises a “technology-neutral” approach to future generation capacity), one would expect to see even more coal and gas plants being developed before renewable projects, to ensure that baseload power needs are met.</p>
<p>As the Energy White Paper shows, the government is intent on ensuring that no favours are handed to the renewable energy sector. Instead, its focus is on how to progress exploration in the coal and gas sectors and increase revenues from exports, rather than delivering future energy security by diversifying into renewable energy.</p>
<h2>The problem with investing in renewables</h2>
<p>One of the constant problems with renewable energy projects is the up-front cost of development. </p>
<p>For the projects noted above that are at the feasibility stage, the total cost of the renewable projects is A$21.8 billion, compared with only A$9.1 billion for the fossil fuel projects with almost the same power-generating capacity.</p>
<p>But this comparison fails to take into account the cost of fuel over the life of the fossil fuel projects. While renewable projects may have higher up-front costs, they also deliver considerable long-term benefits. Initiatives such as the <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation (CEFC)</a> recognise this, but as stated in the Energy White Paper, the government is keen to push ahead with plans to abolish it. </p>
<p>This, along with the planned abolition of the <a href="http://arena.gov.au/">Australian Renewable Energy Agency (ARENA)</a>, will prolong the uncertainty for the renewables industry, even after the end of the guessing-game over the level of the RET.</p>
<p>This means we are likely to see further stagnation in investment in renewable energy projects. Many of the recently completed generation projects were approved several years ago, and while newer projects can still be expected to enter the planning phase, many will not move out of the feasibility stage.</p>
<p>While the RET will be retained in its reduced form, without the support of the CEFC and ARENA the ability to help industry to move projects from concept to deployment will be significantly diminished.</p>
<p>This means that renewable energy in Australia will be based solely on using mature and proven technologies (such as solar and wind), at the expense of less established prospects such as geothermal or wave energy. The innovation that Australia has been known for internationally within this sector would become a distant memory.</p><img src="https://counter.theconversation.com/content/41505/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After months of deadlock, a deal has finally been reached to reduce the Renewable Energy Target, ending the uncertainty for industry but also risking an already sparse pipeline of future projects.Craig Froome, Global Change Institute – Clean Energy Program Manager , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/341972014-11-23T19:12:40Z2014-11-23T19:12:40ZWhy has investment in renewable energy projects stalled?<figure><img src="https://images.theconversation.com/files/65044/original/image-20141120-29250-1943tki.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The renewable energy sector is looking a little gloomy thanks to record low investment. Is RET uncertainty to blame?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/moe/2584921/in/photolist-efpB-9jbLzM-f1aajT-oy6vwb-nSGYT5-7xCgSQ-4XYHYP-e2Jh7t-kGnsa6-nMwyBS-fcyCYd-c19yny-kGoA2p-p8cfvX-879bqL-f1aaoF-dWCBmx-5f9amJ-gcjfvf-hBirF1-c5jgLq-9AvPLb-891fXo-b2W2ht-dYroHX-8XXf7u-8XUceM-8XXeYW-fcyCTC-eD2caT-mUj8NF-9AvQ1J-8x9WJn-SJCaw-3xU14-877AKs-8bdFk7-8wp5aw-fruCW9-mvq8rB-f1aan6-f1puQy-pkRusa-f1puMh-f1puF5-dApvXw-daEnaa-ftjEpR-frtPEW-iqNkri">Stephan Mosel</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>You may have seen recent reports that Australia’s renewable energy sector is suffering. According to a <a href="http://about.bnef.com/landing-pages/investment-freeze-australia-continues/">Bloomberg analysis</a>, investment in the sector in the year to September 2014 was down 70% on investment during the 12 months previous.</p>
<p>The report attributed this decline to the ongoing uncertainty over the future of the Renewable Energy Target (RET). The <a href="http://www.greghunt.com.au/Media/MediaReleases/tabid/86/articleType/ArticleView/articleId/3026/Renewable-Energy-Target.aspx">coalition’s position</a> is currently to cut the 41,000-gigawatt-hour target to a “real 20%”, and is negotiating to pass the changes through government. </p>
<p>But there are a number of other policy uncertainties affecting the sector.</p>
<h2>An uncertain future</h2>
<p>The RET has come under <a href="https://theconversation.com/review-calls-for-renewable-energy-target-cuts-what-it-means-29787">much scrutiny</a> in recent months as the federal government attempts to <a href="http://www.greghunt.com.au/Media/MediaReleases/tabid/86/articleType/ArticleView/articleId/3026/Renewable-Energy-Target.aspx">wind it back</a>. This has also seen the government — both federal and state — take a negative approach to policy measures that promote more renewable energy in the energy system. </p>
<p>The result is that many proposed projects that factored in income from the RET have been put on hold, due to the uncertainty of their future income. In the shadow of this uncertainty, finding finance for projects is also a major issue as financiers become more wary. </p>
<p>As stated in the <a href="https://retreview.dpmc.gov.au/sites/default/files/files/RET_Review_Report.pdf">RET review</a>, its objectives are to “encourage the additional generation of electricity from renewable sources; reduce greenhouse gas emissions in the electricity sector; and ensure that renewable energy sources are ecologically sustainable”. </p>
<p>Still, the government’s opinion is that with <a href="https://theconversation.com/factcheck-does-australia-have-too-much-electricity-31505">surplus electricity generation</a> (and decreasing demand) the only future value of the target is to help Australia meet its emissions reduction target of 5% below 2000 levels by 2020.</p>
<p>Therefore, the financial incentives that could drive investment in renewable energy infrastructure are instead being utilised for other key government initiatives.</p>
<p>While the legislation to repeal the RET has failed to pass through the Senate, it still isn’t clear what funding will be available for future projects.</p>
<h2>The federal vs state policy divide</h2>
<p>While the RET and Emission Reduction Fund are federal, other incentives to promote deployment – such as feed-in tariffs for solar rooftops – have been left to the states. </p>
<p>This is further complicated as legislation is divided between departments. For example on a federal level legislation is divided between the industry and environment departments, so nobody has outright responsibility. </p>
<p>While the federal government has completed its review of the RET, no decision has yet been made in relation to what action should be taken moving forward. It is unlikely that anything will happen soon with the current difficulties getting legislation through the senate, and the public outcry opposing change to the RET from those that control the votes.</p>
<p>It is here that the <a href="http://arena.gov.au/">Australian Renewable Energy Agency </a>(ARENA) and <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation</a> (CEFC) have filled the void. Similar to the RET, the federal government has tried to wind back their operations. </p>
<p>The CEFC seems to have a more certain future, as they <a href="http://www.cleanenergyfinancecorp.com.au/media/releases-and-announcements/files/cefc-reports-on-successful-first-full-year-of-investing.aspx">recently announced</a> that they would look closely at energy efficiency projects that support the Emissions Reduction Fund. </p>
<p>This may result in less funding available for renewable energy projects, although under the <a href="http://www.comlaw.gov.au/Series/C2012A00104">CEFC Act</a> funding “is designated for investment in renewable energy technologies”. To date 56% of funding has been for renewable energy projects, primarily wind and solar panels.</p>
<h2>Not just a funding issue</h2>
<p>Most renewable technologies (particularly those considered commercially mature) are intermittent by nature. As renewables increase their penetration into the grid, service providers are becoming more and more cautious when they negotiate connection agreements because it introduces a less reliable supply of electricity. This caution could add costs to renewable projects, as well as create delays when trying to obtain approval.</p>
<p>For independent renewable project developers, as opposed to companies such as AGL which generate and distribute renewable energy, there is the added problem of selling the electricity generated with financiers in a long-term Power Purchase Agreement. The requirement for retailers to purchase renewable energy is a requirement under the RET. </p>
<p>The uncertainty that surrounds the future of the RET has also made it difficult to obtain a Power Purchase Agreement, particularly at the speed required for many projects to be financially viable.</p>
<h2>Growing renewable consumption</h2>
<p>Although electricity demand continues to fall, the consumption of renewable energy has increased by 11.5%. This is primarily driven by solar panels where consumption increased by 49.2%. </p>
<p>The majority of solar panels are domestic roof-top systems, with Australia still well behind most developed countries for utility, commercial and industrial size projects.</p>
<p>Commercial and industrial size solar panel systems are fast approaching the point of being cost competitive when compared to traditional forms of generation (particularly when replacing diesel). This means traditional sources of finance are now more comfortable funding projects. </p>
<p>The same is true for wind farms, where the technology is now mature. However, the same cannot be said for emerging and hybrid technologies as these aren’t competitive yet. </p>
<p>The uncertain future of new renewable energy projects will continue until there is greater assurance in relation to the policy measures currently in place. A more robust emissions policy could strengthen the sector, and allow us to strive for more clean energy generation. </p>
<p>At the end of the day, developers need surety that policy decisions will not affect the future financial viability of their projects. Until then they will continue to sit on the fence and wait – to the detriment of the renewable energy sector as a whole.</p><img src="https://counter.theconversation.com/content/34197/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>You may have seen recent reports that Australia’s renewable energy sector is suffering. According to a Bloomberg analysis, investment in the sector in the year to September 2014 was down 70% on investment…Craig Froome, Global Change Institute – Clean Energy Program Manager , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/307962014-08-29T04:32:05Z2014-08-29T04:32:05ZAbbott’s environment agenda is even harsher than he promised<p>Before the 2013 election, Tony Abbott gave us fair warning that he would turn the clock back on the environment. As promised, his government has devoted itself to short-term economics and the sort of hardline ideas peddled by the <a href="http://ipa.org.au">Institute of Public Affairs</a>. The result is that environmental protection is being given a lower priority than it has by any federal government since the first environmental legislation was introduced some 40 years ago. </p>
<p>Abbott made explicit commitments to reverse moves by the Rudd and Gillard governments, <a href="http://lpa.webcontent.s3.amazonaws.com/realsolutions/LPA%20Policy%20Booklet%20210x210_pages.pdf">pledging to remove the price on greenhouse emissions</a> as a first order of business. He also made clear his ideological opposition to the historic <a href="https://theconversation.com/tasmanian-forests-agreement-deeply-flawed-worth-backing-14035">forestry “peace deal in Tasmania</a> and his enthusiasm for an old-fashioned approach to developing northern Australia. </p>
<p>Yet beside the election commitments there have been nasty surprises too. As in other fields like health and education, the Abbott government has turned the clock back much further in ways that it didn’t warn voters about. While all governments are tempted to dismiss environmental problems that stand in the way of economic development, the past year has seen a dramatic increase in that trend.</p>
<h2>Sceptics and economics</h2>
<p>The issue which has captured most public attention is climate change. The government does not just have backbenchers who are still in denial about the science; it has climate-sceptic ministers, like Senate leader <a href="http://www.abc.net.au/am/content/2009/s2755120.htm">Eric Abetz</a>, and senior advisers, like <a href="http://www.theaustralian.com.au/opinion/were-illprepared-if-the-iceman-cometh/story-e6frg6zo-1227023489894">Maurice Newman</a>, chairman of the Prime Minister’s Business Advisory Council, and Dick Warburton, who has just handed down the controversial <a href="https://retreview.dpmc.gov.au/ret-review-report-0">review of the Renewable Energy Target</a>.</p>
<p>The government dressed up its attack on the carbon price as an economic move, framing it as "taking the handbrake off the economy”. Yet there was no evidence at all that the price was slowing the economy. In fact, the package of measures inherited from the previous government, including the Renewable Energy Target and the <a href="http://www.cleanenergyfinancecorp.com.au/">Clean Energy Finance Corporation</a>, have catalysed billions of dollars of investment and created thousands of jobs. </p>
<p>Future investment and job opportunities have been put at risk by the government’s approach. It is almost impossible to find an economist who takes seriously the claim that the so-called <a href="https://theconversation.com/au/topics/direct-action-plan">Direct Action</a> policy will achieve even the basic promised 5% reduction in Australia’s greenhouse gas emissions by 2020. </p>
<p>The situation would have been far worse if the government had been able to control the Senate, where the unpredictable Palmer United Party members have not supported most of the proposed changes.</p>
<h2>Delays and dissent</h2>
<p>While the <a href="https://theconversation.com/carbon-tax-axed-how-it-affects-you-australia-and-our-emissions-28895">scrapping of the carbon price</a> was meant to be the first priority of the new government, it actually took 10 months to get it through the Senate. </p>
<p>The focus now turns to the Renewable Energy Target, a previously bipartisan policy to encourage clean energy technologies. Warburton’s review has recommended that it be <a href="https://theconversation.com/review-calls-for-renewable-energy-target-cuts-what-it-means-29787">drastically downgraded and parts of it scrapped</a>. Again, it is not obvious that Senate cross-benchers will endorse this act of environmental vandalism.</p>
<p>The Abbott government has also supported moves by the incoming Tasmanian Liberal state government to undo the <a href="https://theconversation.com/tasmanian-forests-agreement-deeply-flawed-worth-backing-14035">Tasmanian Forests Agreement</a>, the result of long negotiations between industry, the union representing timber workers, the former Labor government, and environmental groups. </p>
<p>It even made <a href="https://theconversation.com/new-danger-for-australian-world-heritage-wilderness-18077">an unprecedented approach to the United Nations</a> to try and excise an area accepted for World Heritage listing, a proposal that was <a href="http://www.smh.com.au/federal-politics/political-news/unesco-rejects-feeble-abbott-government-bid-to-wind-back-protection-of-tasmanian-forests-20140624-zsjhz.html">dismissed as “feeble”</a> by the international body.</p>
<h2>Beef over the Reef</h2>
<p>The other decision which has attracted public attention was the approval of the proposed expansion of the Abbot Point coal port, requiring extensive dredging and the <a href="https://theconversation.com/australia-courting-danger-with-the-great-barrier-reef-20411">dumping of millions of cubic metres of spoil</a> within the boundaries of the Great Barrier Reef Marine Park. The level of outrage in the marine science community led to an <a href="http://www.abc.net.au/4corners/stories/2014/08/18/4067593.htm">ABC Four Corners</a> documentary on the subject.</p>
<p>Given less attention by the media, but probably at least as significant in the long term, was the government’s approach of abandoning its environmental responsibility under the Environmental Protection and Biodiversity Protection Act, passed by the Howard government. Claiming that “green tape” and duplication of effort is holding back economic development, the government has proposed handing over its powers to State and Territory governments. For several decades, dating back to the Whitlam and Fraser governments, the Commonwealth has acted as a brake on the enthusiasm of growth-oriented States to approve irresponsible proposals. </p>
<p>Here again, the government has a problem in the Senate, which seems unlikely to pass this proposal in its entirety, and the entire policy <a href="https://theconversation.com/coalitions-environmental-one-stop-shop-is-falling-apart-30965">may now be coming unstuck</a>. PUP senators have said they will join Labor and the Greens in voting to retain the “water trigger” added to the law by former independent MP Tony Windsor, meaning that the Commonwealth will still be responsible for assessing the cumulative impact of proposed developments on both surface water bodies and groundwater.</p>
<h2>More pain in the pipeline</h2>
<p>There are plenty more environmentally damaging policies which the government did not flag before the election. It has sneakily undone the legislated network of marine protected areas by <a href="https://theconversation.com/without-management-plans-marine-parks-will-not-provide-environmental-benefits-21503">abolishing the management plans</a> that gave the agreement legal teeth. </p>
<p>It has shifted transport funding away from public transport projects, <a href="http://www.perthnow.com.au/news/western-australia/no-money-for-perth-airport-rail-link-in-liberals-plans/story-fnhocxo3-1226712380359">even those proposed by Liberal state governments</a>, in favour of the sort of urban road schemes that Infrastructure Australia had decided are <a href="http://www.infrastructureaustralia.gov.au/priority_list/files/IPL_Web_update-2013.pdf">a waste of public money</a>. It has <a href="https://www.immi.gov.au/media/statistics/statistical-info/visa-grants/index.htm">increased immigration</a>, adding to the environmental pressure of human demands.</p>
<p>The government has fulfilled its pre-election promise of a great leap backwards on environmental protection, under the guise of economic advancement. While restrained by the Senate in some areas, it has exceeded expectations in others. There may well be plenty more surprises to come.</p>
<p><em>This is the final piece in The Conversation’s Remaking Australia series. You can catch up on the rest of the series <a href="https://theconversation.com/au/topics/remaking-australia">here</a>.</em></p><img src="https://counter.theconversation.com/content/30796/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian Lowe was president of the Australian Conservation Foundation until April 2014.</span></em></p>Before the 2013 election, Tony Abbott gave us fair warning that he would turn the clock back on the environment. As promised, his government has devoted itself to short-term economics and the sort of hardline…Ian Lowe, Emeritus Professor, School of Science, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/284972014-06-26T04:24:43Z2014-06-26T04:24:43ZAUDIO Q&A: What’s in and out of Palmer’s climate strategy<p>In a <a href="https://theconversation.com/palmer-will-repeal-carbon-tax-but-rejects-other-parts-of-abbotts-package-28457">surprising announcement</a> last night Clive Palmer promised to abolish Australia’s current carbon price, and block the coalition’s Direct Action policy. </p>
<p>But Palmer has said he will vote to retain the Clean Energy Finance Corporation, the Climate Change Authority, and the Renewable Energy Target in its current form — all currently on the coalition’s chopping block.</p>
<p>You can listen to Professor Michael Raupach assess Palmer’s climate policies below.
But first, this is what they mean for Australia’s climate action: </p>
<h2>What’s out…</h2>
<p><strong>Carbon pricing</strong> Palmer will vote to abolish the current fixed price on carbon. Under Australia’s <a href="https://theconversation.com/explainer-australias-carbon-price-mechanism-in-six-dot-points-4230">carbon pricing scheme</a>, polluters (including industry, electricity and waste) are charged per tonne of CO<sub>2</sub> emitted. Currently set at AU$24.15 per tonne of CO<sub>2</sub>, polluters are not charged for the majority of their emissions. Before the last election Labor had proposed moving to an emissions trading scheme, with a floating price, from July this year – <a href="http://www.abc.net.au/news/2013-07-16/38-billion-to-terminate-carbon-tax-says-kevin-rudd/4822556">a year earlier than originally planned</a>. </p>
<p><strong>Direct Action</strong> Palmer has vowed to block the coalition’s Direct Action scheme. Direct Action is the coalition’s <a href="https://theconversation.com/direct-action-the-coalitions-voluntary-approach-to-environmental-policy-part-1-12514">voluntary scheme</a> to reduce carbon emissions. Under the scheme, polluters makes bid into an Emission Reduction Fund (currently AU$2.55 billion until 2018) on emissions reductions — such as improving farming techniques to store carbon. The government will then distribute funding to the “lowest cost” method of reducing emissions. </p>
<p>Many commentators have argued the scheme <a href="https://theconversation.com/three-major-loopholes-in-the-direct-action-climate-plan-21838">is flawed</a> because it will not provide <a href="https://theconversation.com/coalitions-carbon-budget-shortfall-will-be-4-billion-unless-17103">enough funding</a>, will not set a baseline on emissions, and will not punish polluters for exceeding baselines. </p>
<h2>…and what’s in</h2>
<p><strong>Renewable Energy Target</strong> Palmer will not support any change to the RET before 2016. The Renewable Energy Target, currently <a href="https://theconversation.com/billions-axed-in-clean-energy-renewable-target-is-next-26578">under review</a>, rules that 20% of Australia’s electricity supply must come from renewable sources by 2020. According to <a href="https://retreview.dpmc.gov.au/sites/default/files/papers/preliminary_modelling_results_workshop.pdf">recent modelling</a>, the scheme will <a href="https://theconversation.com/is-15-a-year-really-too-much-to-pay-for-renewable-energy-22848">increase household power bills</a> until 2020, with savings forecast after. </p>
<p><strong>Clean Energy Finance Corporation</strong> Palmer will vote against abolishing the CEFC. The CEFC is a “<a href="https://theconversation.com/is-the-clean-energy-finance-corporation-the-best-way-to-get-clean-energy-3923">green bank”</a>, with AU$10 billion available to finance “clean energy” - half is reserved for renewable energy. The corporation has already attracted more than AU$1 billion in <a href="https://theconversation.com/a-modern-economy-needs-a-clean-energy-finance-corporation-21084">external funding</a>. </p>
<p><strong>Climate Change Authority</strong> Palmer will vote against abolishing the Climate Change Authority. The authority reviews and advises on Australia’s climate policies. <a href="https://theconversation.com/steep-emissions-cuts-needed-or-well-blow-australias-carbon-budget-climate-authority-23425">This year</a> it recommended Australia increase its emissions reduction target from 5% below 2000 levels by 2020 to 19% below 2000 levels by 2020. </p>
<p><strong>Emissions trading scheme?</strong> Palmer said he will introduce an amendment for a emissions trading scheme, with no price until it is linked with key trading partners — China, Japan, Korea, the US and the EU. </p>
<p>In an interview with The Conversation, Professor Michael Raupach, Director of the Australian National University Climate Change Institute said Palmer’s policy is “step back, and a couple of small steps forward”.</p>
<iframe width="100%" height="166" scrolling="no" frameborder="no" src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/156065648&color=ff5500&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false"></iframe><img src="https://counter.theconversation.com/content/28497/count.gif" alt="The Conversation" width="1" height="1" />
In a surprising announcement last night Clive Palmer promised to abolish Australia’s current carbon price, and block the coalition’s Direct Action policy. But Palmer has said he will vote to retain the…James Whitmore, Deputy Editor: Arts + Culture, The ConversationLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/250842014-04-02T19:47:14Z2014-04-02T19:47:14ZClimate policy: could it be the boxing Prime Minister’s glass jaw?<figure><img src="https://images.theconversation.com/files/45388/original/s23p7qpj-1396421183.jpg?ixlib=rb-1.1.0&rect=33%2C16%2C5548%2C3699&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Politically, the carbon tax issue has been great for Tony Abbott, allowing him to position himself as a friend to business.</span> <span class="attribution"><span class="source">AAP Image/Lukas Coch</span></span></figcaption></figure><p>Nine years ago, I spent long days inside Downing Street working with the then British Prime Minister Tony Blair on how to position his government on the global climate problem. Blair was keen to work out the level of future climate risk, and – given that risk – how he could help develop domestic and international policies to address what he recognised as an unprecedented challenge. </p>
<p>We knew that traditional environmental policies just wouldn’t get the job done. Tackling climate properly would involve radical changes to investment flows, technology development, and energy policy. And the costs would have to be shared fairly within and between different nations. </p>
<p>We held numerous briefings with climate scientists, public servants, energy economists, environmental groups, lawyers and diplomats, all charged with the task of developing policies to make large-scale emissions cuts. Blair seemed to have the enthusiasm and discipline of a focused child building a model rocket – asking others for help, then creatively and determinedly bringing together the glue, cardboard, glitter and bottle tops.</p>
<p>Looking back, 2005 was a big year for international climate policy. On January 1, the <a href="http://ec.europa.eu/clima/policies/ets/index_en.htm">European Emissions Trading Scheme</a> began. In February the <a href="https://unfccc.int/kyoto_protocol/items/2830.php">Kyoto Protocol</a> came into force after Russia was persuaded to ratify it the previous November, giving the world its first active climate treaty (albeit a weak one). And at the G8 summit in July, Blair became the first head of state to bring the issue to the <a href="http://www.unglobalcompact.org/docs/about_the_gc/government_support/PostG8_Gleneagles_Communique.pdf">top of the international diplomatic agenda</a>.</p>
<p>Late that year, while Downing Street was preparing to launch the <a href="http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/sternreview_index.htm">Stern Review on the Economics of Climate Change</a>, one of my senior colleagues asked him whether he had now perhaps “done enough” on climate change. Blair’s answer was that you could never do enough – the task of developing effective climate policy would most likely be exercising political leaders for the next 50 years.</p>
<p>It has certainly exercised Australia’s political leaders. Although given that the current government’s stated priority is to wind back the current policy framework, they give little sense of wishing to invest terribly much political capital on seriously tackling the climate problem.</p>
<h2>Urgency and complexity</h2>
<p>I was deeply professionally and personally involved in Downing Street’s efforts, so my perspective is necessarily subjective. But a key word used at the time – in private briefings and <a href="http://www.theguardian.com/politics/2004/sep/15/greenpolitics.uk">public statements</a> – was “urgency”. Tempting as it would have been to delay given the wicked complexity of the problem, that would only have made the challenge even harder, more costly and probably less effective.</p>
<p>In Australia 2014, any sense of the need for an urgent policy response has stalled, despite this week’s reminder from the Intergovernmental Panel on Climate Change of the <a href="http://ipcc-wg2.gov/AR5">threats we face</a> – not to mention the <a href="http://www.bom.gov.au/state-of-the-climate">warming already seen in Australia</a> and the increase in extreme climate events. </p>
<p>Recent Australian experience makes bringing together the words “climate”, “policy” and “leadership” seem fanciful. Trying to reduce the risks of climate change and develop serious policy has been a poisoned chalice for two Labor Prime Ministers and a Liberal opposition leader. We should not forget that Malcolm Turnbull lost the Liberal leadership by a single vote, having made securing his party’s support for the <a href="http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4127%22">Carbon Pollution Reduction Bill</a> a matter a fleeting personal principle. </p>
<p>Kevin Rudd was never at Blair’s craft table; he preferred the sandpit of international summits and stages, with his rhetorical hyperbole leaving something of a mess for others to clean up when his carbon pricing scheme was defeated by the Greens. Julia Gillard was a masterful negotiator who managed to put a price on carbon and establish institutions such as the Climate Change Authority and the Clean Energy Finance Corporation, which would give climate policy the stability and continuity required. Yet she struggled to explain it all to the voters, and was ultimately bested by the pugilistic and highly effective Abbott.</p>
<h2>Abbott’s climate currency</h2>
<p>Putting aside what one’s views might be on the global climate problem and Tony Abbott’s perspective on it, the current Prime Minister has, until now, been the master of using the climate issue to his own and his party’s benefit. He owes his job and political reincarnation to his crude perspective on climate change. Deliberate diffidence on the science, mixed with playing to the gallery on carbon pricing, has served him well. </p>
<p>So his response to this week’s IPCC warning was nothing if not predictable. He “welcomed” the report, stated that it was consistent with advice that had been forthcoming from the organisation over many years, and used it as a means to remind people of his commitment to the government’s <a href="https://theconversation.com/topics/direct-action-plan">Direct Action plan</a>. Job done, question answered. Time to move on to the next item in the diary. </p>
<p>It was the political equivalent of raising your bat above your head, letting the ball through to the wicketkeeper and, with a slight smirk and the briefest of looks, letting it be known that the bowling was hardly menacing. </p>
<p>Yet to perhaps stretch the cricketing metaphor, this bowler is rather like a genetic mix of Shane Warne and Mitchell Johnson: they won’t get you out every time, but when they do they can make top batsmen look like rank amateurs.</p>
<h2>Direct Action not enough</h2>
<p>Read the IPCC’s predictions and it is clear that potentially irreversible climate forces are at play. Yet Abbott, the master of climate politicking, would be wise to turn his attention to the political and policy risks of pursuing his current course. </p>
<p>The two-word Direct Action policy agenda largely consists of the A$1.5 billion Emissions Reduction Fund, which will allow the government to pick winners. Even the best government officials are likely to make some expensive errors. Climate economist Ross Garnaut <a href="http://www.abc.net.au/news/2014-04-01/ross-garnaut-weighs-into-wa-senate-election-debate/5360508">slammed it this week</a>, joining Bernie Fraser and Ken Henry in the <a href="http://www.smh.com.au/federal-politics/political-opinion/tony-abbott-or-ken-henry-bernie-fraser-and-ross-garnaut--who-do-you-believe-20140313-34oxf.html">chorus of expert dissent</a>.</p>
<p>It is truly a policy with no friends – even those who want the government to do less on climate change rightly see it as an expensive “big government” way to go about it.</p>
<p>Beyond our borders, the international push to reduce emissions will continue, through actions such as China’s significant investment in <a href="http://www.ft.com/intl/cms/s/0/e32449f8-9469-11e3-a0e1-00144feab7de.html#axzz2xhkOiS5U">cleaning up its emissions-intensive energy network</a> and its <a href="http://www.state.gov/r/pa/prs/ps/2014/02/221686.htm">growing collaboration with the United States</a>. Next year’s <a href="https://unfccc.int/meetings/unfccc_calendar/items/2655.php?year=2015">United Nations negotiations in Paris</a> will focus on developing a stronger successor to Kyoto.</p>
<p>Australia, no matter what Abbott may wish, will have to be part of this, or risk being simply ignored by the international community. From Abbott’s point of view that would be worse than attracting condemnation, because if Australia remains a pariah while the world pursues a low-carbon future, Australia will both miss out on economic opportunities and expose itself to the risk of the economic and trade rules being drafted by others.</p>
<p>Abbott’s political mentor John Howard knew how to deftly change tack in response to prevailing circumstances. Unless he does likewise, and responds to the environmental, economic and political risks presented by climate change with the proper urgency, Tony Abbott’s domestic mastery of climate politics is unlikely to serve the climate, or the nation, well. </p><img src="https://counter.theconversation.com/content/25084/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nick Rowley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nine years ago, I spent long days inside Downing Street working with the then British Prime Minister Tony Blair on how to position his government on the global climate problem. Blair was keen to work out…Nick Rowley, Professor, Sydney Democracy Network, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/210842013-12-04T03:07:08Z2013-12-04T03:07:08ZA modern economy needs a Clean Energy Finance Corporation<figure><img src="https://images.theconversation.com/files/36838/original/vxrxbsxv-1386110789.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Clean Energy Finance Corporation is supporting industry - like the world-leading Sundrop Farms - in a way no other body does.</span> <span class="attribution"><span class="source">Sundrop Farms</span></span></figcaption></figure><p>This week, the Australian Senate is considering the government’s package of “carbon tax” abolition bills – bills abolishing the carbon tax, the Climate Change Authority (CCA) and the Clean Energy Finance Corporation (CEFC). </p>
<p>The Senate’s first move was to hold hearings on the abolition of the CCA and CEFC, and to split them off from the rest of proposed legislation. This was a first victory for a <a href="http://www.smh.com.au/federal-politics/political-news/labor-and-greens-join-forces-in-bid-to-save-climate-agencies-20131203-2ymsr.html">combined Greens and Labor vote in the Senate</a>, signalling that the new Abbott government will not have an easy task in dismantling these structures.</p>
<p>Defending the role of the CEFC is not just playing politics. In its short life, the corporation has already demonstrated an impressive track record in financing investment in new, green and cleantech projects throughout Australia. It is attracting significant investment into the sector – capital that would not be appearing without it.</p>
<p>There is a looming debate over the efficacy of the CEFC, with room for rational argument from both sides. </p>
<p>The case brought by Environment Minister Greg Hunt is basically that the CEFC “crowds out” private investment; that it adds no “additionality” and simply funds what would be funded anyway. He says that it adds nothing new to what was already being achieved by the Renewable Energy Target. He also usually adds that its projects are “highly speculative” and that it is therefore putting public funds at risk.</p>
<p>Minister Hunt was making these points <a href="http://www.theage.com.au/federal-politics/political-news/labor-and-greens-join-forces-in-bid-to-save-climate-agencies-20131203-2ymsr.html">again on Tuesday</a> at the Carbon Expo conference in Melbourne – even after they had been <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/Clean_Energy_Legislation/Submissions">thoroughly refuted</a> by the CEFC in its submission to the Senate Inquiry the Senate Environment and Communications Committee launched last week.</p>
<p>How well do the Minister’s assertions stand up?</p>
<p>Far from crowding out private investment in renewables and cleantech projects, the CEFC has attracted A$2.90 from private funds for every A$1 it has invested in projects. In this way the CEFC has been able to catalyze over A$1.55 billion in non-CEFC funding for renewables and clean tech projects. These funds would otherwise not have been made available.</p>
<p>The problem facing most renewable energy projects is that financial institutions are too conservative to back their projects. But if a project is “proofed” by the CEFC then it becomes much more attractive to conventional finance.</p>
<p>A good example of this is the visionary <a href="http://www.sundropfarms.com/farms2/">Sundrops Farms</a> project in Port Augusta, South Australia. Here, sunlight and seawater are being turned into food, fresh water and energy, using greenhouses and thermal solar arrays. </p>
<p>Each part of this project uses established technology. But no one had put it together in quite this form, quite literally greening the desert. </p>
<p>The founders of this project were having a hard time finding adequate finance to scale up until the CEFC provided support. They co-financed the project’s expansion to 20 hectares of greenhouse operations, producing over 15,000 tonnes of tomatoes and other fresh produce for metropolitan markets across Australia. </p>
<p>This project is a world leader and already attracting emulators such as the <a href="http://saharaforestproject.com/">Desert Forest projects</a> in the Middle East.</p>
<p>As for whether the CEFC has been indulging in “speculative” investments, it is remarkable that of all its investments so far, not one has collapsed. This is a rate of success far higher than for conventional banks or venture capitalists.</p>
<p>The CEFC argues they are acting to help Australian firms access the potentially enormous cleantech markets that are emerging out of investments made by China, India, Japan and Germany in these advanced energy and clean technologies. </p>
<p>This is the successor industry to the fossil fuel industry of the 20th century. Countries will only be able to become players if they have smart financial institutions - such as the CEFC - that play a catalytic role.</p>
<p>What the Minister’s arguments ignore is that these cleantech industries are the sectors with a great future, particularly in our part of the world. Singapore – ever a bell-wether for the major trends in the global economy – has already recognised this, and is now actively promoting its <a href="http://www.eco-business.com/news/cleantech-one-officially-opens-singapores-first-eco-business-park/">Cleantech One technology park</a>. It is offering incentives to foreign firms to establish their eco-operations on the island, to service markets throughout SEAsia.</p>
<p>There is already considerable business support behind the CEFC. Its chair is Jillian Broadbent, a former member of the Board of the Reserve Bank. The CEO is Oliver Yates, formerly of Macquarie Bank. This business support speaks to the fact that the CEFC is serving a real need, and is likely to be far more effective in building investment in a green sector in Australia than anything else – including a carbon tax.</p>
<p>It was distressing to see so much argument and political capital expended in Australia over the issue of a carbon tax, when the reality is that market-based disincentives like taxes are known to have very little impact in changing investment patterns. (Market-based incentives on the other hand, such as payments to farmers in China not to plant crops on steeply sloping lands, have been very successful.)</p>
<p>After all, it is a matter of record that railways did not succeed because of a tax on canals; nor PC-based word processors come of age through a tax on typewriters.</p>
<p>These world-historic transitions (of which the transition to green energy and cleantech is the latest manifestation) are blocked by incumbents and their vested interests. The transition is achieved only if there is financial pump-priming so that the new and cheaper technologies can be allowed to prove themselves.</p>
<p>One hopes Minister Hunt will come to see the merits of this argument, and perhaps adopt the CEFC - as if it were he who invented it - as part of his Direct Action package. For this is what it’s a true example of - Direct Action - in a shape and form that is actually working well. </p><img src="https://counter.theconversation.com/content/21084/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Mathews does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>This week, the Australian Senate is considering the government’s package of “carbon tax” abolition bills – bills abolishing the carbon tax, the Climate Change Authority (CCA) and the Clean Energy Finance…John Mathews, Professor of Strategic Management, Macquarie Graduate School of ManagementLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/154742013-06-25T04:33:45Z2013-06-25T04:33:45ZCan we do without a clean energy finance bank?<figure><img src="https://images.theconversation.com/files/26106/original/yrtwyq24-1372124251.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Renewable Energy Target does a good job supporting wind power, but other agencies are needed to get a diversity of renewables.</span> <span class="attribution"><span class="source">Matthew Kenwrick</span></span></figcaption></figure><p>The Opposition has clearly stated its intention to remove the Clean Energy Finance Corporation if it takes government at the next election. Will the Coalition introduce another mechanism to take its place? How will an Abbott Government make sure Australia brings to market the diverse range of renewable technologies we need to transform our energy sector?</p>
<p>Last week Opposition resources and energy spokesman Ian Macfarlane said an Abbott Government would <a href="http://www.afr.com/p/australia2-0/coalition_committed_to_renewable_sW0UwoZJbg58ftAdpJfXRP">support the Australian Renewable Energy Agency</a> (ARENA). But the Opposition <a href="http://www.smh.com.au/business/carbon-economy/green-funds-first-deal-to-support-victoria-wind-farm-20130613-2o7a3.html">remains opposed to the Clean Energy Finance Corporation</a> (CEFC). According opposition spokesman for Climate Action, Environment and Heritage, Greg Hunt, the Clean Energy Finance Corporation is “putting at risk $10 billion of borrowed taxpayers’ money”, and is a “direct competitor to those already in the renewable sector”.</p>
<p>The corporation aims to “plug the gap” in Australia’s renewable investment landscape by providing targeted support for emerging technologies as they approach commercial deployment. Renewables at an early stage of research and development can get grant-based funding through ARENA. Mature renewable technologies are deployed under the market-based Renewable Energy Target. But the corporation aims to support technologies in the so called “valley of death” between by providing “innovative financing” to bring emerging technologies to commercial deployment.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/26071/original/3sdyxzt6-1372053535.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Figure 1 – Renewable energy support schemes in Australia, illustrating the intended role of the CEFC.</span>
<span class="attribution"><span class="source">The Clean Energy Finance Corporation – Helping Australia Compete in the Renewable Energy Race’, Australian Conservation Foundation</span></span>
</figcaption>
</figure>
<p>The corporation does not provide grants. It is designed like a “green bank”, providing loans for clean energy projects. Loans must be ultimately paid back, and the corporation is expected to make a return over the investment portfolio. Dividends will be paid to ARENA. The intention is to provide an ongoing, self-supporting scheme that keeps producing renewable technologies over the long term without being a drain on taxpayers.</p>
<p>The corporation is required to co-finance projects with the private sector so that support does not displace private investment. Schemes of this sort have been or are being established around the world (such as the UK Green Investment Bank and the US Green Bank), and in Australia (such as the Low Carbon Australia fund, which achieved a private investment ratio of 13:1).</p>
<p>Without the corporation, the Renewable Energy Target will support significant deployment of the most mature renewable technologies. This likely to be mostly wind generation. However, as recently reiterated in detailed modelling by the <a href="http://www.climatechange.gov.au/reducing-carbon/australian-energy-market-operator">Australian Energy Market Operator</a>, a reliable renewable power system needs diversity. Wind still has room to expand significantly, but ultimately we will need a diverse mix of technologies such as <a href="https://theconversation.com/explainer-what-is-photovoltaic-solar-energy-12924">photovoltaics</a>, <a href="https://theconversation.com/topics/concentrated-solar-thermal">solar thermal</a>, biomass, <a href="https://theconversation.com/explainer-what-is-geothermal-energy-12913">geothermal</a>, <a href="https://theconversation.com/explainer-what-is-ocean-energy-12921">wave</a> and <a href="https://theconversation.com/the-missing-link-why-australia-needs-energy-storage-10846">storage</a> technologies.</p>
<p>Last week, it was suggested that the <a href="http://www.smh.com.au/business/carbon-economy/green-funds-first-deal-to-support-victoria-wind-farm-20130613-2o7a3.html">corporation’s first investment</a> would be a $100 million-plus loan to the 420MW Macarthur wind farm project in Victoria. Wind farms are viewed as a mature technology that is already being deployed in Australia without corporation support, so this has raised concerns that the corporation could undercut existing lenders, investing public money in projects that could have been supported by private investment alone. There are also concerns about transparency, with corporation deals being negotiated on a case-by-case basis behind closed doors.</p>
<p>The corporation has a challenging task – it has to invest in a rather narrowly defined portfolio of emerging technologies while managing risk and making a consistent return. In many cases emerging technologies will be higher risk (attracting higher premiums under normal circumstances) and higher cost (requiring concessional financing to be competitive). But the corporation is expected to invest prudently and make a return over the long term. This is probably why the corporation has defined a <a href="http://www.cleanenergyfinancecorp.com.au/investment/investment-policies/investment-strategy.aspx">portfolio vision</a> that includes wind, in a diversified mix with solar, biomass, geothermal, tidal and other emerging technologies.</p>
<p>There is certainly no lack of proponents keen to take advantage of what the corporation offers. One hundred and fifty projects with a total capital cost of <a href="http://reneweconomy.com.au/2013/cefc-receives-proposals-for-more-than-10bn-in-projects-23772">more than $10.5 billion</a> have already expressed interest since the corporation launched in April. </p>
<p>Analysis by Ernst & Young shows that the corporation has increased <a href="http://reneweconomy.com.au/2013/cefc-boosting-investor-interest-in-australian-renewables-report-13952">private sector interest</a> in investing in renewables in Australia. And that has increased Australia’s “attractiveness” in the global renewables investment market, pushing us to fourth place (below the US, China and Germany).</p>
<p>Ongoing policy uncertainty due to the lack of bipartisan support for the scheme undoubtedly undermines market confidence. However, Oliver Yates, the CEO of the corporation has said he believes that the Opposition’s view is <a href="http://reneweconomy.com.au/2013/interview-oliver-yates-on-coalition-myths-about-cefc-83503">based upon “preconceptions”</a> that no longer apply now the CEFC is in operation with a clearly defined investment strategy and approach.</p>
<p>The Opposition has said it will not honour contracts written by the corporation, discouraging companies from investing in projects reliant upon those contracts. Although Yates acknowledges that this is possible, he suggests that this would be an <a href="http://reneweconomy.com.au/2013/interview-oliver-yates-on-coalition-myths-about-cefc-83503">unusual precedent</a> that could threaten the attractiveness of any government contract in future.</p>
<p>If the Opposition does remove the corporation, the underlying issue will remain to be addressed. In order to effectively transform our electricity sector, Australia needs a diverse range of technologies reaching commercial deployment, and this will require an appropriate support mechanism. </p><img src="https://counter.theconversation.com/content/15474/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jenny Riesz does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Opposition has clearly stated its intention to remove the Clean Energy Finance Corporation if it takes government at the next election. Will the Coalition introduce another mechanism to take its place…Jenny Riesz, Research Associate – Centre for Energy and Environmental Markets, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/77692012-06-25T23:25:37Z2012-06-25T23:25:37ZRethink RET, and the Clean Energy Finance Corp could kick off a new industrial revolution<figure><img src="https://images.theconversation.com/files/12129/original/jn3vx2kg-1340589761.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Countries overseas are creating renewable energy funders just like the CEFC.</span> <span class="attribution"><span class="source">Walmart Stores</span></span></figcaption></figure><p>The $10 billion Clean Energy Finance Corporation (CEFC) has just passed the Senate and is now law. For all the attention it has received you may not have noticed, but a new industrial revolution is afoot. </p>
<p>A clean energy boom that continues to go from strength to strength saw $260 billion invested last year in renewable energy. That’s a new investment record. In fact, four of the last five years have seen the previous year’s record surpassed. </p>
<p>Last year was the first year global investment in clean energy outstripped investment in traditional fossil fuel energy. In Australia, wind and solar accounted for nearly 60% of the new installed capacity last year. </p>
<p>The CEFC will be at the vanguard of this revolution. It is in essence a public investment bank. It will have at its disposal a suite of innovative financing tools to address the many barriers to investment in clean energy technologies. </p>
<p>By providing loan guarantees, the CEFC can make innovative projects more attractive to commercial lenders who might otherwise worry that the technology is “unproven”. By overcoming these kinds of barriers, it will attract sufficient private finance to make viable the next wave of clean energy technologies in Australia. </p>
<p>Done properly, the CEFC could unlock $100 billion of private investment in technologies like big solar, geothermal or bioenergy, and create up to 100,000 new jobs. Done properly, it will kick-start our shift to a clean energy economy, helping us catch up to countries that are currently way ahead of us, like China, the USA and Germany.</p>
<p>Despite these benefits, however, the CEFC is being criticised from all sides. Its opponents call it the “<a href="http://www.liberal.org.au/Latest-News/2011/11/02/Bob-Brown-Bank.aspx">Bob Brown Bank</a>” and wrongly label it a slush fund. It is also panned by <a href="http://www.crikey.com.au/2012/04/19/the-governments-clean-energy-bank-and-the-abbott-proof-fence/">would-be supporters for being ineffectual</a>, because it can’t invest in projects that would contribute above the 20% of our energy supply that will come from renewables by 2020 under the <a href="http://ret.cleanenergyregulator.gov.au/">Renewable Energy Target</a> (RET).</p>
<p>As it stands the CEFC is a powerful tool for driving positive change in our energy mix. It could be made vastly more effective if the impediment of the 20% target was removed.</p>
<p>The CEFC will provide many benefits. First, it will deliver us crucial diversity in energy supply. While the RET favours the lowest cost clean energy (at the moment, wind), the CEFC will allow the next wave of technologies to make it to market. These are technologies on the brink of commercialisation; technologies that other countries have supported and proved. Spain, for instance, dominates large-scale solar thermal, despite its average solar radiation only being equivalent to Melbourne’s. </p>
<p>Second, in bringing these new technologies forward, the CEFC will help Australia build new industries, with new jobs and new export opportunities. Why should Spain lead the way in solar technologies and Scotland be creeping ahead of us in wave energy? Why do we sit back and see more solar power installed in Germany than here? Why not use our trademark innovation, ingenuity and manufacturing base to establish these and other clean energy technologies here and export them to the world? Our renewable resources – solar, wind, wave, geothermal energy – are the envy of the world. It is time to develop these to provide clean energy.</p>
<p>Third, the CEFC will deliver a suite of technologies that together will help end our dependence on <a href="https://theconversation.com/newsflash-solar-power-costs-are-falling-below-fossil-fuels-7215">increasingly expensive fossil fuels</a>. Without a booming and diverse clean energy sector, how else will we achieve the legislated 80% reduction in Australia’s greenhouse pollution by 2050?</p>
<p>All this demonstrates that the CEFC can build new energy supply systems that will transform our economy into a modern, clean and competitive one – an economy that can compete globally in a low-carbon future. But reaching this goal will be constrained in the short term if the CEFC is not allowed to invest above and beyond the 20% by 2020 <a href="http://ret.cleanenergyregulator.gov.au/">Renewable Energy Target</a>. This is a limitation that the government must address during this year’s review of the RET. </p>
<p>But this does not mean that there aren’t several excellent reasons to go ahead with the CEFC anyway. A clean energy finance corporation is not a risky, scary endeavour that is unique to Australia. The UK is implementing a <a href="http://www.bis.gov.uk/greeninvestmentbank">Green Investment Bank</a>. The US is now considering a Clean Energy Deployment Agency, having successfully delivered the <a href="http://www.lgprogram.energy.gov/">Loan Guarantees</a> program for clean energy. A <a href="http://www.nefco.org/">Nordic Environment Finance Corporation</a> operates across Scandinavia and the Netherlands is working on a <a href="http://www.hollandfinancialcentre.com/theme.php?cat=13&language=EN">Green Investment Corporation</a>. China is making huge investments in clean energy, with future plans that will leave the rest of the world for dead. </p>
<p>The clean energy race is one Australia simply cannot afford to lose. The CEFC is our best chance to get out in front.</p>
<p><em>This article was co-authored by Claire Maries. Claire is a climate change campaigner at the Australian Conservation Foundation.</em></p><img src="https://counter.theconversation.com/content/7769/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ian Lowe is President of the Australian Conservation Foundation.</span></em></p>The $10 billion Clean Energy Finance Corporation (CEFC) has just passed the Senate and is now law. For all the attention it has received you may not have noticed, but a new industrial revolution is afoot…Ian Lowe, Emeritus Professor, School of Science, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/39232011-10-23T19:37:26Z2011-10-23T19:37:26ZIs the Clean Energy Finance Corporation the best way to get clean energy?<figure><img src="https://images.theconversation.com/files/4705/original/green_energy_truthout.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The CEFC isn't the be-all and end-all of green power, but scrapping it would be a mistake.</span> <span class="attribution"><span class="source">Truthout.org/Flickr</span></span></figcaption></figure><p>Last week the Coalition announced it would <a href="http://www.abc.net.au/unleashed/3579222.html">scrap the Clean Energy Finance Corporation (CEFC)</a> if it forms government.</p>
<p>As the main renewable energy investment measure included in the Clean Energy Future package, the CEFC is intended to fill a gap in Australia’s climate change and energy policy. Scrapping the CEFC would be a substantial setback to the emerging renewable industry.</p>
<p>By itself, Australia’s carbon price legislation will do little to deliver new renewable energy capacity. Instead, the carbon price is expected to shift the electricity sector from coal to gas generation. </p>
<p>As my Melbourne Energy Institute colleague Patrick Hearps <a href="http://theconversation.com/a-carbon-price-wont-bring-zero-emissions-23">explains</a>:</p>
<p>“Analyses from the Australian Energy Market Operator (AEMO) and Melbourne Energy Institute numbers show that if carbon costs around $25-70/tonne the electricity sector will switch from coal to gas-fired power, and would not drive any extra investment in renewables beyond the Mandatory Renewable Energy Target”.</p>
<p>Developing a renewable energy industry is crucial to achieving decarbonisation throughout the economy. The Clean Energy Finance Corporation will help address the carbon price’s limited ability to encourage large-scale renewables in the near future. </p>
<h2>What the CEFC will do</h2>
<p>The Clean Energy Finance Corporation (CEFC) is modelled on the UK’s recently instituted <a href="http://www.bis.gov.uk/greeninvestmentbank">Green Investment Bank</a>. From 2015, the CEFC will have $10 billion to invest in renewable energy, energy efficiency, enabling infrastructure and “low emissions” technology. Half of the fund is quarantined for renewable energy.</p>
<p>The body is slated to be independent of government (similar to the status of the Reserve Bank). Creating a renewable energy investment program at arm’s length from government is a sensible move, providing insulation from the political cycle, political interference and the uncertainty that has plagued many renewable programs to date. </p>
<p>The CEFC can make investments that are currently beyond the capacity of the private sector. This bridges an important gap in the renewable energy market. Given the carbon price will benefit gas, and the <a href="http://www.biofuelsassociation.com.au/index.php?option=com_content&view=article&id=181&Itemid=197">Large-Scale Renewable Energy Target</a> will likely target wind energy, the CEFC can focus on bridging the “valley of death” between the commercialisation and deployment of less-mature technologies. </p>
<h2>Is the CEFC enough?</h2>
<p>The CEFC has to deliver commercial returns. This could be a potential barrier preventing investment in immature technologies and new players such as <a href="http://theconversation.com/with-a-bit-of-concentration-solar-thermal-could-power-your-town-2005">concentrating solar thermal</a>. Such technologies have excellent prospects for getting cheaper but are currently capital intensive. </p>
<p>To meet the energy needs and challenges of the future, we need a suite of technologies. If the commercial imperative makes the scope of the CEFC too narrow, additional policy mechanisms and levers may be needed. </p>
<p>Nothing in the government’s Clean Energy Future legislation prevents other mechanisms being implemented. Other mechanisms such a well-designed national <a href="http://en.wikipedia.org/wiki/Feed-in_tariff">feed-in tariff</a> (FiT) scheme.</p>
<p>The FiT mechanism has delivered around 80% of the world’s installed renewable energy (non hydro) capacity. </p>
<p>When managed properly, FiTs can get renewable energies to a stage where the premium tariffs can be reduced year-on-year until they are no longer necessary. In Germany, Europe’s strongest economy, FiTs have expanded photovoltaic electricity generation.</p>
<p>The <a href="http://www.epia.org/fileadmin/EPIA_docs/public/Global_Market_Outlook_for_Photovoltaics_until_2014.pdf">cumulative installed capacity</a> of photovoltaics in Germany increased from 2,900 megawatts in 2006 to over 17,000 megawatts in 2010. </p>
<h2>Additional policies can speed things up</h2>
<p>Implementing additional policies such as feed-in tariffs could quicken the pace of renewable energy deployment – essential to matching the challenge of climate change – by driving important cost reductions through economies of scale and learning effects.</p>
<p>Critics of the measure say national renewable energy FiTs cost too much. But should the predicted cost reductions and developments come to fruition, these technologies will become the cheapest way to abate carbon. </p>
<p>If these technologies become competitive with (or even cheaper than) traditional fossil generators, there is no longer a marginal cost of abatement.</p>
<p>The cost of such schemes could also be offset by reductions they deliver in the wholesale price of electricity, through the “<a href="http://www.ewea.org/fileadmin/ewea_documents/documents/publications/reports/MeritOrder.pdf">merit order effect</a>”. By offsetting fossil fuel generation, renewable energy can bring down the overall price of power.</p>
<p>This well-documented effect would occur as a result of any new renewable generation. With the brown coal generators <a href="http://www.audit.vic.gov.au/reports__publications/reports_by_year/2010-11/20110406_fred.aspx">arguing that</a> “too much renewable energy too quickly would reduce wholesale electricity prices and adversely affect existing generators”, it is imperative that any mechanism to facilitate renewables is administered by an authority kept at arm’s length from government. </p>
<p>The CEFC will provide incentives for the renewable energy industry, and help address a limitation of carbon pricing. Some renewable energy technologies may even require additional measures on top of this. </p>
<p>Whatever the case, scrapping (or even threatening to scrap) the CEFC – currently the main renewable energy deployment policy – would stifle the development of the emerging renewable energy industry in Australia at a decisive point in its development.</p><img src="https://counter.theconversation.com/content/3923/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Last week the Coalition announced it would scrap the Clean Energy Finance Corporation (CEFC) if it forms government. As the main renewable energy investment measure included in the Clean Energy Future…Dylan McConnell, Research Fellow, Melbourne Energy Institute, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.