Thursday, August 20, 2009

Geothermal industry 'left on the shelf'

Adam Morton and Tom Arup

The Age, August 21, 2009

THE fledgling geothermal industry - described by the Federal Government as a potential competitor with coal-fired power - has warned that the design of new renewable energy legislation could set its development back two decades.

The 20 per cent renewable energy target belatedly passed the Senate yesterday after the Opposition secured bipartisan support for a substantially increased industry compensation package.

But the target immediately came under attack from backers of geothermal and large-scale solar thermal energy, who warned they risked being left on the shelf as wind farms and rooftop solar power - neither clean baseload solutions in their own right - met the target at a cheaper price in the early years.

Australian Geothermal Energy Association chief executive Susan Jeanes said energy drawn from kilometres underground was expected to eventually prove the cheapest alternative power source to heavy-polluting coal-fired power.

But she said it would first need support to reach 300 megawatts capacity - roughly a third the size of a coal-fired plant.

''We're very concerned that its potential is not being acknowledged in government programs.''

The chief executive of the Australian and New Zealand Solar Energy Society, John Grimes, joined Ms Jeanes in calling for part of the renewable energy target to be quarantined for technologies that could eventually provide baseload power.

The Opposition proposed setting aside a quarter of the target to come from renewable sources for emerging baseload technologies, but was rebuffed by the Government.

''I don't think the design has been well thought through to make sure these technologies mature,'' Mr Grimes said.

The criticism was at odds with the reaction of the Clean Energy Council, which said the ''landmark'' legislation could lead to $20 billion in clean-energy projects over the next decade, creating 28,000 jobs.

Climate Change Minister Penny Wong has said that the Government would support emerging renewables such as geothermal through other budget measures.

But Ms Jeanes said geothermal drilling had received only $50 million backing, and Energy Minister Martin Ferguson had indicated there was unlikely to be more available. She contrasted this with the $3.5 billion dedicated to the development of carbon capture and storage technology.

Senator Wong's spokeswoman said modelling showed the renewable energy target was big enough to support geothermal along with solar and wind energy.

Greens Senator Christine Milne joined climate groups in criticising the legislation's expanded industry compensation package, and the inclusion of energy generated using methane escaped from coal mines.

The number of industries to be compensated for higher electricity prices was increased from three to about 40. The Government has previously argued the cost of the target alone - without the added cost of an emissions trading scheme - was only enough to warrant help for aluminium, silicon and newsprint.

The Victorian Government said the target would help the state win enough renewable-energy projects to power 80,000 homes each year.

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