What an incredible 18 months we have experienced on the policy front: a far cry from the dark days after the release of the Australian Government’s Energy White Paper.

I can still recall the series of Members’ Briefings we did in 2004 to explain the implications of the White Paper on our industry. In summary:

“The Prime Minister has delivered a bleak future for renewable energy and energy efficiency, and missed an important opportunity to comprehensively address climate change.”

The failure to expand the Mandatory Renewable Energy Target (MRET) even at the modest levels recommended by the Government’s Tambling Review meant that investment in renewable generation stalled and a number of companies left the industry.

Following the release of the White Paper the BCSE Board implemented a ‘state based’ advocacy strategy with a focus on achieving policy support at the state government level. Part of this strategy involved the expansion of our communications and media activities as well as appointing resources on a state basis. Our strategy was eventually to get federal support to wrap up the state schemes into a national scheme.

The key policy and program initiatives that are now supporting clean energy and the growth of our industry are summarised in Figures 1, 2 and 3, and it is an extensive list.

Market-based measures supporting renewables and gas-fired generation have provided an important policy framework to drive the investment in new clean energy generation. An impressive statistic is that since the beginning of 2006 more than 4,500 MW of gas and renewable generation projects became operational or are under construction. This compares with 850 MW of coal-fired generation.

Climate change is now clearly on the political agenda and both major parties now support action on climate change. Both major parties are committed to the introduction of emissions trading. However it looks as if we will be going to the federal election later this year without either party identifying the interim emissions targets, particularly the 2020-2030 targets. It is these interim targets that will be critical to driving new investment in the energy sector.

With more than 1,100 MW of new generation investment required to be built every year to meet our growing power needs, a greenhouse signal is critical to ensure that new investment reduces, and does not exacerbate, our greenhouse emissions.

Of concern is the Government’s position to convince the state governments to scrap their state- based initiatives – particularly the renewable energy targets:

“… the Government will be seeking to phase out less efficient abatement policies, and any policies that will interfere with the carbon price signal arising from emissions trading. All levels of government will need to rationalise existing measures. The Australian Government will review all greenhouse programmes in 2008 to ensure that they are complementary to the emissions trading system.”

Australia’s Climate Change Policy - July 2007, Page 9.

On the other hand, the ALP has committed to significantly increase the national MRET. This is a clear policy difference between the major parties.

Solar Initiatives

Looking at Australian Government initiatives, the recent expansion and extension to the Renewable Remote Power Generation Program ($123 million) and the PV Rebate Program ($150 million) will be critical in underpinning the growth of the solar PV industry in Australia. With the Prime Minister committing on national television to expand the program if demand warranted, the challenge has clearly been laid down to our industry.

South Australia was the first state to commit to solar PV feed-in tariffs in September last year and a number of states are following suit. The Queensland Premier Peter Beattie recognised the importance of feed-in tariffs in the Climate Smart Strategy announced in June 2007:

“A feed-in tariff will pay consumers for energy they contribute to the electricity grid from a solar panel system. This tariff will ensure that Queenslanders can maximise the benefits of the federal Photovoltaic Rebate Program.”

With an effective feed-in tariff that recognises the energy and network benefits of solar PV, it will come within the economic reach of most Australian families.

With the announcement of $252 million for solar hot water rebates of up to $1,000 for customers with an electric storage hot water system, the Commonwealth has finally tackled one of the most cost-effective forms of greenhouse abatement. About 30 per cent of a typical family’s greenhouse emissions comes from heating water, so moving to solar can make a significant contribution to emission reduction.

Renewable Energy Targets

As we can see from Figure 2, there are now five state and territory governments that have committed to mandatory renewable energy targets. The most recent was the ACT Government, which committed to a mandatory 15 per cent renewable energy target by 2020 and so joined the Victorian, NSW, WA and Queensland governments.

Following the failure of the Howard Government to extend MRET in 2004, state Energy Ministers issued a communiqué that sought to:

“Immediately establish an Inter-jurisdictional working group to recommend ways to increase the MRET from the current level and time frame; noting the recommendations of the Federal Government-commissioned Tambling Report as a minimum outcome.”

The Tasmanian and South Australian Governments also signed on to the communiqué; however SA and Northern Territory are the only governments not to have introduced a mandatory renewable energy target.

When we consolidate the targets that have been announced by the states and territories, more than 18,000 GWh of renewable generation will be supported to 2020, with an expected investment of around $11 billion.

Energy Efficiency

A broad range of measures are supporting energy efficiency, particularly at the domestic level. The Victorian Government commitment to introduce a mandatory Victorian Energy Efficiency Target, using tradable certificates similar to the renewables scheme, is an innovative and exciting development. When taken with the demand-side abatement component of the NSW Greenhouse Gas Abatement Scheme, it provides a strong market-based approach to supporting energy efficiency.

Some states provide fiscal support for energy efficiency in the commercial and services sector. Modest grants are now available in NSW, Victoria, Queensland and WA. However, there is still quite a way to go with energy efficiency, particularly in this sector.

The measures in place to support emissions reductions and development of clean energy in Australia will see $2 to $3 billion per annum of investment committed each year in our industry.