The renewable energy scheme that isn't

Issue 

Federal parliament passed a renewable energy bill on August 20. The target is to source 20% of Australia's energy from renewables by 2020. The reality is that it won't do what Prime Minister Kevin Rudd says it will.

The government and the opposition hailed the new laws as a big step towards a clean energy future. But it includes alarming concessions to the fossil fuel lobby. A law that should have been green has been "browned" considerably.

Originally, the ALP government had tied the renewable energy measures to its flawed Carbon Pollution Reduction Scheme (CPRS). After the scheme was rejected by the Senate on August 13, it separated the two bills.

The CPRS legislation will be resubmitted to parliament by November for a second vote.

The new renewable energy scheme adapts an older system first introduced by the previous Howard government. The 20% by 2020 renewable energy target was an ALP election promise in 2007.

Under the plan, companies that produce energy from renewable sources — such as wind, solar and geothermal — will receive credits for each unit of energy. The credits — officially called Renewable Energy Certificates — can be bought and sold on the market.

The government intends to mandate a set number of credits to meet the 20% target — equal to 45,000 gigawatt hours of energy.

Electricity companies will be required to buy some of these credits. The theory is the proceeds will spark the growth of the privately-owned renewable energy industry in Australia.

Yet the structure of the scheme undermines the 20% target from the start.

Preposterously, the government accepted a coalition amendment to allow energy made from burning the methane gas found in coalmines to qualify for renewable energy credits.

Climate change minister Penny Wong tried to deflect criticism about this by promising coal gas energy would not be counted towards the 20% target.

But stopping climate change requires we move quickly to keep all remaining fossil fuels underground. The scheme will subsidise the expansion of this fossil fuel energy source — in the name of "renewable energy".

Another issue is the tradable nature of the credits themselves. How much will they cost? Nobody can say for sure in advance. The government says the price of the credits will vary according to market conditions.

The credits can be cashed in straight away. They can also be held on to and sold to a buyer at a later date. This opens the door to artificial manipulation of the new credit market by speculators.

The government's plan also gives big subsidies to some of Australia's biggest polluters — although the payouts are less than the huge $16.4 billion proposed in the CPRS.

Late in the piece, the government accepted more coalition amendments that make energy-guzzling aluminium and cement industries exempt from meeting the full 20% target. For everyone else, the targets are mandatory.

Another big problem is that the plan incorporates a Solar Credits Scheme that will make sure the 20% target cannot be met.

An August 17 post on the Greenpeace Australia Pacific blog explained the swindle. The Solar Credits Scheme "works by creating five [credits] for every unit of electricity produced by solar panels.

"Only one of these [credits] is for actual renewable energy produced, the other 4 are just pretend [credits] that create a financial incentive for people to install solar panels.

"So if all of the Renewable Energy Target was met through solar photovoltaic, Australia would only be producing 4% of our total energy from renewables, not 20% as promised.

"In reality, other technologies (notably wind) will take up a lot of the renewable energy target, but this Solar Credits Scheme is still a scam that will reduce the total amount of renewable energy produced under the [scheme]."

If the government was serious about meeting a renewable energy target, it would put an immediate moratorium on all new coal-fired power stations and invest directly in building new wind and solar thermal power plants.

However, the coal-fired power industry is set to expand massively in the coming decade. New coal-fired stations are planned in NSW at Lithgow, the Central Coast and the Hunter Valley.

The billions the government already gives to the fossil fuel industry, along with the extra billions it plans to hand out in the future, would make a good start for a public renewable energy industry.

A serious program to reduce overall energy consumption and a widespread energy efficiency drive would allow renewable energy to provide far more than 20% of Australia's energy by 2020.

However, the biggest problem with the plan is that the 20% target is still nowhere near enough to avoid catastrophic runaway climate change. The Climate Action Summit in January called on the government to achieve 100% renewables by 2020 to ensure a safe climate. This demand is based on the climate science.

Dealing with climate change is a race against time. The government hopes to allay public fears with its 20% target. But like any race, running 20% of the way won't get us across the finish line. We need to move quickly to the full 100%, otherwise, we lose.