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New Federal target of 30,000 gigawatt hours of low-emission electricity by 2020 may make wind power chief beneficiary, draws criticism

Posted by gmarkets on 12 October, 2007

Producers of wind, coal and geothermal energy all expected a fillip from the government’s targets, wrote John Breusch in The Australian Financial Review (28/9/2007, p. 22).

Class of qualifying technologies expands: The new Federal target of 30,000 gigawatt hours of low-emission electricity by 2020 was a rough amalgam of existing or proposed federal and state renewable energy programs. But in a move that could open the way for the introduction of new power sources such as gas or coal-fired carbon capture and storage (CCS), the government had expanded the class of technologies that qualified, from renewables only to any power source that produced less than 200 kilograms of greenhouse gases per megawatt hour. Wind power was expected to be the chief beneficiary of the clean-energy target, given that CCS, geothermal and large-scale solar plants were still in development and hydro-electricity had limited opportunities to expand. But companies at the forefront of developing clean coal and geothermal — considered critical future sources of base-load power — believed the target would enable them to start contributing to the electricity grid well before 2020.

Clean-coal plant scheduled for before 2014: A proposed clean-coal plant being developed in Western Australia by Hydrogen Energy, a joint venture between Rio Tinto and BP, was scheduled to be up and running by 2014, putting it on track to be the first commercial coal-fired CCS plant to operate in Australia. Announcing the $2 billion Kwinana development in May, Hydrogen Energy had warned its plant would be economically viable only if the government introduced measures to support low-emissions technologies.

Criticism from some business groups: The clean-energy target, which the government believed would account for 15 per cent to 20 per cent of electricity supply by 2020, had been criticised as unnecessary by some business groups. They argued the sole driver of what clean-energy technologies came to market should be the carbon price set by emissions trading, which was due to begin in 2011. In effect, the target carved out a separate market for clean energy within the broader electricity sector. The trading scheme’s carbon price would then play a crucial role in determining which low-emissions technologies triumphed within that smaller market.

Environmental groups say target too modest: Environmental groups believed the target was too modest. The Climate Institute’s policy director, Irwin Jackson, said that by restricting the size of the target to existing state and federal schemes, the government had missed the chance to encourage the introduction of other clean-energy technologies.

The Australian Financial Review, 28/9/2007, p. 22

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