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.

Peter Fray

Get your first 12 weeks of Crikey for $12.

Without subscribers, Crikey can’t do what it does. Fortunately, our support base is growing.

Every day, Crikey aims to bring new and challenging insights into politics, business, national affairs, media and society. We lift up the rocks that other news media largely ignore. Without your support, more of those rocks – and the secrets beneath them — will remain lodged in the dirt.

Join today and get your first 12 weeks of Crikey for just $12.

 

Peter Fray
Editor-in-chief of Crikey

JOIN NOW