The federal government appears to be throwing open its doors to lobbyists and special interest groups in a last-minute attempt to cobble together a credible climate change policy to take to a snap election, and to prevent the embarrassing collapse of two nascent industries just as it goes to the polls.
Government officials have been calling for ideas from specialists in the banking community, renewable energy and energy efficiency sectors, as well as NGOs and various industry groups, as it seeks to put forward a package of “direct action” measures to reduce emissions.
“It’s a good time to lobby,” said the head of one industry group yesterday.
The Gillard policy package is expected to encompass some sort of energy efficiency and renewables initiatives, though it is not yet clear how wide ranging these will be.
The difficulty for the government is that it has been told by all and sundry that whatever “direct action” initiatives that might be put in place, its impact will be much reduced, and more expensive, without a carbon price.
A carbon price, however, seems to be off the agenda, at least for the moment, with the government determined to avoid any measure that could be portrayed as a “great big new tax” by the opposition. In an ABC TV interview last night, Gillard said she was “holding to the decision that was announced by the government that we will review in 2012 the nature of the community consensus in Australia about the Carbon Pollution Reduction Scheme.” The problem is that this is holding up anything between $50 billion and $100 billion in much needed energy investments.
But the government has also been warned that two sectors — geothermal and forest carbon — are under threat of imminent collapse.
The geothermal industry has suffered from the lack of a carbon price, delays in the renewable energy target and a loss of faith from the investment community. Some companies are said to have only a few weeks of cash left in the bank.
The collapse of geothermal would be a massive indictment of the Labor government’s policies, which has predicted geothermal to provide nearly one third of the renewable energy target by 2020. However, that would require investment of about $17 billion and right now geothermal companies are unable to raise even the several million required for drilling programs.
The industry says it needs half a billion dollars to keep going, and argues that because — under the government’s own predictions — it offers the best chance of cheap, emissions-free, base-load power in the future, it should receive at least as much as solar and carbon capture and storage. These latter sectors share the bulk of the $5.1 billion to be made available to low emission technologies over the next five years, but geothermal has so far only been allocated $200 million.
The forest carbon industry is under a similar threat of collapse, because the delay in the CPRS has killed interest in voluntary offsets, and forests are not included under the National Carbon Offset Program. All but a few companies face serious financial difficulties as a result. “Some are on the verge of going broke, the rest of them are dying. It’s absolutely tragic,” said one insider.
The solar industry, meanwhile, is reinforcing its calls for feed-in tariffs to be extended to large-scale installations, and for the creation of loan guarantees, similar to those announced this week by the Obama Administration, which is providing the loans to build a 280MW solar thermal plant and a large manufacturing facility. Australia’s solar flagships program allows for the creation of just two large-scale facilities by 2015, and the industry says it could potentially support many more with the right incentives.
There is also great uncertainty in the energy efficiency industry. A report prepared by the Prime Minister’s Task Force on Energy Efficiency has been submitted, but it is unclear whether Gillard’s office intends to release the entire report, or merely cherry-pick a handful of recommendations to present in its pre-election policy package.
Recommendations are likely to go to cabinet early next week.
Have they really? Yikes. That’s a massive gamble on a technology that is still, AFAIK, yet to produce a commercial joule of electricity anywhere in the world.
It is not surprising to see geothermal languish in the alternative energy race. It sticks to a traditional energy model. Large plant sending power into an old grid. Solar and wind power deployed locally offer immediate renewable energy alternatives with massive social benefit. The city of Victor Harbor using a model first suggested by Dr Andrew Blakers at ANU recently completed a solar panel retrofit of existing houses under the last federal rebate scheme. All told the program managed to get 1800 houses under panels. This has resulted in a baseline carbon saving of 1,700 tons per annum. Housholders who a few months ago could not even spell kWh now call in and tell the council how much they are saving. Under the program housholders were offered a minimum 1.05kWh PVP system for $1995 installed. It was designed to negate one quarter of their energy bill. Many took the opportunity to install bigger systems. With average quarterley bills of $200 to $300 being saved and in many cases credits being awarded under the state rebate scheme the social impact of more money in the community is measurable. Here is the proof of Blakers model and a key signal to the Gillard Govt. Traditional energy players who contrpol enormous plant and distribute energy over vast (70 year old grids) grids, sadly stick to the old model. The CSIRO issued a March 2010 report (Intelligent Grid) which clearly demonstrated that distributed energy (solar/wind) will dominate our energy market from 2015 and be worth some $130b by 2050. Origin Energy has seen the light and has entered the market with an offering only $1k more than the Victor Harbor initial model and payable on the never never. The price of solar panels is estimated to fall a further 30% by years end. Too late the traditional energy lobbyists. Ratepayers are already leaving them behind.
Absolutely correct Mike Duffett
Geothermal could only be commercially viable in places like New Zealand and even there horrendous corrosion would destroy almost all the infrastructure.
To dig down to hot rocks in Australia, add water to the mix (and not salt water which would corrode everything) and then try to get it to the grid would waste millions of taxpayer dollars.
Let us hope someone in government understands some science.
Fair enough to kick hot rocks in the head – the technology is in its infancy and highly speculative.
Why not place even more well-aimed kicks in the direction of the coal producers’ pipe dream, CO2 sequestration? It is receiving much more research funding, is even m ore speculative, and doesn’t offer a time line which comes within cooee of serious results before climate change forces even more radical surgery.
Well done, politicians! Missed out on all points again!
Hints: Many technologies will play a part in any real solution. For the market to winnow out the winners and the losers it will take at least a carbon price. Lobbyists cannot be trusted to provide the best or most up to date information. The proceeds from this Not Very Big New Tax would best be directed to those consumers and businesses in need of transitional support, rather than by being fed back into selected power generators based on politicians’ electoral prognoses.