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Parkinson: a green light for renewables

At a recent discussion in Sydney about the prospect of nuclear energy in this country, Resources and Energy Minister Martin Ferguson reflected that Australia may have no choice but to go nuclear if it was unable to find a clean energy alternative.

It was a valid point. The trouble was that few in the renewable energy industry were confident that Ferguson would want to invest enough money, and early enough, to give them the best chance of developing new technologies and getting the scale of deployment needed to reduce costs.

That need to unblock investment in emerging technologies seems to be the underlying reason behind the push by the Greens and environmental groups for two new statutory bodies, the Australian Renewable Energy Agency, and the Clean Energy Finance Corporation.

Both bodies will be independent and will sit beyond ministerial interference. Furthermore, the Australian Energy Market Operator has been commissioned to plan for the time when the Australian grid operates with 100% renewable energy.

The government has announced that Arena will assume $3.2 billion of funding that had already been allocated to about nine separate programs to be spent over nine years.

However, another new statutory body, the Clean Energy Finance Corporation, will be created with $10 billion of funding to be spent over a period of five years from 2013-14, which will be allocated through commercial loans, concessional loans, loan guarantees and equity.

Half of the funds will be reserved for a renewable energy “stream”, while the other half will be allocated to a “general clean energy” stream, but may also invest in renewables.  Officials say the first stream is designed to support emerging technologies such as solar and geothermal, as well as battery storage, although not necessarily as an extra boost to wind farms.

The other stream is supposedly not earmarked for gas-fired generators, but might include “hybrid” plants that combine solar and gas, or solar and coal, as two new projects at Kogan Creek in Queensland are designed to do. Carbon capture and storage is not included, and will continue to be managed by schemes under the auspices of Ferguson’s Department of Energy.

The CEFC will have an independent board, comprised of experts in banking, investment management and clean energy and low-emission technologies. A chair will be appointed by the Prime Minister to report back by 2012 on a proposed investment mandate, a policy on investment in foreign listed companies and how to frame risk management policies.

The funding in renewables, however, is nearly matched by compensation to coal-fired generators, which were to received $7.3 billion over 10 years under the CPRS, but will now receive $5.5 billion in cash and permits over six years, as well as loan guarantees, and the option of closing down capacity under a government-sponsored buy-back program.

The $5.5 billion in funding in cash and permits will be focused towards brown coal generators, meaning that back coal generators will miss out, which in most cases won’t matter because they were mostly owned by state governments. So this decision removes a perverse situation in the CPRS where the federal government was providing compensation to state governments. The government is handing $1 billion of this compensation over to those generators in 2011-12, ahead of the carbon price regime, as an upfront payment.

However, this figure does not include an unspecified amount of loan guarantees that will be made available to generators to help them buy permits if they are unable to source finance from elsewhere.

The government also says it has “provided scope” under the Energy Security Act to buy out 2000MW of capacity from coal fired generators by 2020. Note the language, it is not a commitment to buy out that much capacity.

This offer will be limited to the dirtiest generators of emissions of more than 1.2 tonnes of C02-e — which means that it will only be open to Hazelwood (1600MW), Yallourn (1480MW), Morwell (195MW)  and the Playford B plant in South Australia (240MW).  It won’t include Loy Yang B.

These so called “contracts for closure” were criticised by Professor Ross Garnaut as inefficient and unnecessary. He thought only loan guarantees would be required. However, a buyback of capacity will provide an extra signal for investment in gas-fired generation, but there appears to be no clear date for this to occur. Climate Change Minister Greg Combet said it “might be four or five years or more before any capacity is closed”.

*This first appeared on Climater Spectator.

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  • 1
    Frank Campbell
    Posted Tuesday, 12 July 2011 at 8:33 am | Permalink

    Renewables: “to give them the best chance of developing new technologies and getting the scale of deployment needed to reduce costs.”

    If only it were true. Expect most money to go to wind and solar, both proven failures: absurdly expensive, hopelessly irregular. Both have to be backed up 24/7 by fossil fuel powergen. British power companies are demanding $10 billion from the state to pay for the gas plants needed to back up wind turbines in the next few years. Utter stupidity.

    Of course renewables R and D is essential- but throwing money at useless existing technology is self-defeating.

    Other technologies have a claim, but most capital will inevitably be wasted- on projects such as geothermal in the Cooper Basin. Check analysts comments on Flannery’s Geodynamics for instance. Note that the shareprice fell from $2 in 2008 to 20 cents a fortnight ago. It has shot up to 43 cents since the carbon tax materialised. Because they know they can milk the state.

    Renewable energy is the pivotal fraud of the carbon tax.

    And this is the sleight of hand that Parkinson hopes you don’t see: “unblock investment in emerging technologies”. This conflates the good (R and D risk investment) with the bad (capital wasted on wind and current solar technology).

    You can bet that the money will go where it’s gone for the last decade- to the hollow political gestures- wind and solar.

  • 2
    Frank Campbell
    Posted Tuesday, 12 July 2011 at 2:06 pm | Permalink

    Gillard is saying it again today, just like last week:

    Coal has a fantastic future”.

    Sounds like she’s conceded the next election to the naked Jesuit…

  • 3
    jeebus
    Posted Wednesday, 13 July 2011 at 8:30 am | Permalink

    If countries like Germany and Britain can go for mass solar projects, it would be a bit of a joke if the sunburnt country didn’t take advantage of its greatest natural resource.

    Solar panels are increasing in efficiency and dropping in price every single year.

    General Electric says that watt for watt solar is already cost competitive with nuclear, and coal is just around the corner if the subsidies are taken into account. That doesn’t even factor in the savings from external costs like the amount of Co2, mercury, and radioactive particles belched into the air by coal plants, and the hundreds of billions of costs involved in storing nuclear waste for thousands of years.

    Solar is perfectly safe, decentralised, can be produced at the sources of consumption, and can be rolled out now.

  • 4
    Frank Campbell
    Posted Wednesday, 13 July 2011 at 8:43 am | Permalink

    Jeebus: that’s true, but domestic solar cost is still very high. Domestic solar was (and is) a middle-class indulgence. It’s being rolled back. And the cost per tonne of abatement is much higher still. Not to mention solar’s incapacity for baseload- except at very high cost.

    One again, prematurity is the killer. We’re paying for decades of research neglect.

  • 5
    william magnusson
    Posted Wednesday, 13 July 2011 at 3:33 pm | Permalink

    any politition who sprukes the nuclear energy theme should have the balls to offer their own electorate as the place to put the reactor….enough said

  • 6
    John Morgan
    Posted Wednesday, 13 July 2011 at 3:44 pm | Permalink

    We don’t need to “unblock investment in emerging technologies”. We need to unblock investment in existing technologies, ie tried and true low carbon current generation nuclear power.

  • 7
    Alternator
    Posted Wednesday, 13 July 2011 at 4:15 pm | Permalink

    Ok…seems like the usual alternative energy culprits are getting mentioned over and over again and none as yet are in a position to replace coal. Nuclear could do the job, but in the wake of the disaster in Japan it would be a political nightmare for whomever tries. So why not take the opportunity to explore more exotic alternative energy sources? For example, in some minor web articles (not widely published) there is mention a guy in Italy called Rossi who appears to have developed a device that runs on cold fusion (or LENR - there is contention on exactly how his device works)….however every expert and there appears to have been several….agree on one thing…his device called the e-cat rea;;y does seem to work. Surely it’s at least worth exploring. For starters, a good article in Crikey wouldn’t go astray….. thoughts?

  • 8
    John Morgan
    Posted Wednesday, 13 July 2011 at 4:36 pm | Permalink

    Rossi - my working assumption until proven otherwise: scam.

  • 9
    william magnusson
    Posted Wednesday, 13 July 2011 at 5:45 pm | Permalink

    theres a guy right here in oz that has made the solar cells so thin they can be painted onto buildings… meaning that whole buildings will be their own power generators….thats where the investment dollars need to go. green energy will be like the aviation industry was in the beginning, twelve feet at first then onto the moon 60 years later….i just hope we dont need two world wars to get us there :)

  • 10
    Flower
    Posted Friday, 15 July 2011 at 3:05 pm | Permalink

    “Resources and Energy Minister Martin Ferguson reflected that Australia may have no choice but to go nuclear if it was unable to find a clean energy alternative.”

    Australian citizens should reflect on how to get rid of Ferguson – the pin-up pollie for environmental bludgers.

    This industry sycophant has no control over the states that are running amok with impunity and he’s happy about that.

    The uranium industry is discharging its radionuclides into air, soil, workers, groundwater, rivers and aquifers with the full knowledge that regulations state that radioactive waste must be prevented from contaminating the environment for ten thousand years. Ferguson’s Supervising Scientist’s enforcement policy is virtually non-existent and has the clout of a soggy piece of lettuce.

    “Labor will only allow the mining and export of uranium under the most stringent conditions”; and “Labor will ensure that Australian uranium mining, milling and rehabilitation is based on world best practice standards” (ALP National Platform “Building a 21st Century Economy” Aug 2009).

    What a load of old cobblers. Ferguson looks the other way while the lawless uranium industry chews the arse out of the environment. Meanwhile he remains sufficiently deluded in believing he can dupe a discerning public into agreeing that nuclear reactors (“stringently” regulated of course) will fob off Armageddon. God save us from this fool. God save the nation.

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