In December last year, we updated you on the Federal Government's proposed implementation of the Renewable Energy Target (RET), which will result in at least 20% of Australia's electricity supply being generated from renewable energy sources by 2020.
Since that time, some important developments have occurred that are sure to give the green light to more clean energy developments.
Go-Ahead From COAG
On 30 April 2009, the Council of Australian Governments (COAG) agreed to the new expanded RET in essentially the same terms as we reported on last year. However, some more detail has been given about the design of the scheme.
As we foreshadowed, COAG has recognised the impact of the RET on trade-exposed industries in the context of the Carbon Pollution Reduction Scheme (CPRS) and the global recession. Therefore, emissions-intensive trade exposed (EITE) activities covered by the CPRS will enjoy some exemptions from liability under the RET. Exemptions of 90% or 60% will apply, corresponding to the level of assistance provided under the EITE framework (it is likely that these exemptions will be revised to reflect the Global Recession Buffer, which increases assistance to 95% and 70% respectively – see our Legal Update on Changes to the CPRS). The exemptions will only apply above the RET's existing 9,500 GWh target and will be reviewed in 2014.
Under the current RET scheme, liable entities can elect to pay a shortfall charge to meet their obligations. At the time of our last update, the shortfall charge for the RET had not been set. COAG has now indicated that the shortfall penalty will be increased to $65 per MWh. The current shortfall is $40.
COAG has also agreed to examine some of the eligibility provisions of the RET for new small-scale technologies as well as heat pumps and rules for off-grid resource projects to ensure that the eligibility rules remain relevant to reflect new technologies and developments.
2009 Federal Budget To Drive Further Investment In Clean Energy
On 12 May 2009, the Federal Government handed down its budget, which included several important measures to drive an increase in renewable energies. In particular, the Government announced that it would invest $4.5 billion in a new Clean Energy Initiative, the purpose of which is to provide the critical infrastructure that supports low emission technologies and creates low pollution jobs.
As part of this initiative, the Federal Government intends to:
- Establish a new body called Renewables Australia, which will receive $100 million in new funding and administer $365 million of the existing Renewable Energy Fund;
- Establish up to four new Solar Flagship Projects to demonstrate the viability of solar technologies, investing up to $1.5 million over six years;
- Provide an additional $271 million to continue the Solar Homes and Communities Plan until the introduction of Solar Credits as part of the expended RET; and
- Provide $2 billion over nine years towards carbon capture and storage (CCS) flagship projects to help accelerate the development and deployment of low emission coal technologies by supporting the demonstration of industrial scale CCS flagship projects.
Conclusion
Even with the uncertainty surrounding the implementation of the CPRS, it appears that Government support of and investment in clean energy technologies will continue. We will continue to update you on any further developments.
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