Rudd locks in green power plan

• Chris Hammer Canberra
• The Age, July 3, 2008

THE Rudd Government has set Australia on course for a new era of greener but more expensive electricity, pressing ahead with a plan to make 20% of our power come from renewable sources within just over a decade.

Honouring a key election pledge, Climate Change Minister Penny Wong has released a blueprint for mandatory renewable energy targets that is expected to be discussed at today's COAG meeting with state and territory leaders in Sydney.

The move comes on the eve of Professor Ross Garnaut releasing his draft report on climate change tomorrow, which also will set a course for higher energy prices through an emissions trading scheme.

Under Labor's renewable electricity proposal, existing state and territory plans would be overtaken by a single national scheme to source 20% of Australia's power from renewable sources by 2020.

Reaching the target could cost an average household about $50 extra a year in power bills, on top of additional costs that would come from the emissions trading scheme to be introduced in 2010.

The electricity plan defies the views of the Productivity Commission, which says a renewables target would be unnecessary once an effective emissions trading scheme is in place.

Finance Minister Lindsay Tanner yesterday reaffirmed a pledge to compensate low-income families affected by higher energy prices.

But the Government is set to come under increasing pressure over the prospect of even higher petrol prices resulting from efforts to halt global warming.

The Business Council of Australia will today press the case for including petrol in emissions trading — a move that would ensure price increases. "Raising the price of energy and those goods and services that use a lot of it is what has to be done if we are going to achieve a lasting reduction in emissions," BCA president Greig Gailey will say.

Under the Rudd electricity plan, renewable sources of power would include solar, wind, hydro and geothermal. Opposition Environment spokesman Greg Hunt said the plan had Coalition support but should also include natural gas and clean coal.

Renewable energy companies say they are poised to unleash up to $20 billion in investment once legislation is passed next year. The Clean Energy Council's Rob Jackson urged the Government to bring forward the scheme's launch to the start of next year. The Greens also want the scheme to begin sooner.

Environment groups largely welcomed the plan. But the Australian Conservation Foundation condemned the inclusion of solar hot water systems and energy generated by burning native forest wood waste. "We are concerned that would provide an incentive for further native forest logging," the foundation's Owen Pascoe told The Age.

WWF lamented that the Government had left open the possibility of compensating trade-exposed companies that use large amounts of electricity.

The Government plans are contained in an options paper that sets out two broadly similar approaches. Both build on the existing scheme introduced by the Howard government in 2001.

They would require buyers of wholesale electricity — essentially electricity retailers and some large industrial users — to source an increasing amount of electricity from renewable energy until the 20% target is reached.

Financial penalties would be imposed on companies not using enough renewable energy.

The two proposals differ mainly in time scales for phasing targets in and phasing the scheme out. The scheme would end around 2030, by which time renewable energy is expected to be price-competitive with fossil fuel-sourced power.