Australia: Winds of change blowing through energy policy

AUSTRALIA is in the middle of a revolution in energy policy driven by the threat of dangerous climate change.

Whatever the outcome of the looming federal election, Australia will have a national emissions trading scheme operating from around 2011, based on economic analysis to be completed next year.

But it is generally agreed that trading alone will not be enough to deliver the deep cuts in greenhouse gases required both here and overseas.
Along with the debate over privatisation of government-owned energy generation and retail assets, the next big climate change policy debate confronting Australia will be about shaping a comprehensive industry strategy for energy.

The stakes are high. Energy users have already forecast that up to $75 billion of new-generation infrastructure will be needed by 2030 to achieve emissions cuts and increase supply to sustain economic growth. Business accepts the change, but wants it at the lowest possible cost and has started to weigh in to the debate.

At the heart of the current debate is renewable energy, which holds an iconic status in the hearts and minds of Australians. This has already encouraged the creation of a national mandatory renewable energy target (MRET) of 9500 gigawatt hours or about 2 per cent of national supply. Much of this has been taken up by improvements and expansion of hydro schemes.

The Howard Government decided in 2004 not to go with an independent review recommending a doubling of the target by 2020, saying the expansion would cost the economy $5 billion by 2020.

That’s because the cheapest form of new renewable energy – wind power – costs about double that of coal-fired power without any price on emissions. Mandating renewable energy means either subsidising the extra supply until it becomes cheaper, or the introduction of a price on greenhouse emissions levels out the playing field.

The Australian