While we wait with feverish anticipation (or at least I do) for Garnaut and what he has to say about emissions trading, the government has released a new discussion paper about its other major greenhouse mitigation effort in the energy sector – the Mandatory Renewable Energy Target (MRET) scheme. If you’re concerned about the development of renewable energy technology, this is the one to pay attention to.
Some of the details of the proposed schemes are presented in the discussion paper; one key question is whether “banking and borrowing” permits encourages too much building of renewable energy installations, too early. You might assume that building as much renewable capacity as possible, as early as possible, is a good thing, but there’s a complicating factor; there’s a concern that this discourages the development of emerging technologies (solar thermal, wave energy, and the like are good examples) and will instead lead to more and more installations of “mature” renewable technologies. That, of course, means more and more terrestrial wind power, which as has been discussed at length on LP has severe limitations at dealing with fluctuations in wind speeds.
But perhaps the most interesting thing in the discussion paper is the ultimate fate of the MRET. The more laissez-faire economic types don’t like the MRET. Essentially, it presupposes a particular path to getting emissions down – renewable energy – when there may well be much lower-cost options available, such as conservation, emissions cuts in non-energy sectors, cleaner fossil fuel consumption, and so on. However, the argument in favour of the MRET is that renewable energy technology needs a leg-up to get established; effectively, the MRET subsidises developing and getting the kinks out of these technologies, leading to a better overall outcome than just letting emissions trading rip on its own. But that poses a question of its own – for how long should we keep subsidizing renewables before we let them compete on their merits?
The discussion paper provides an answer to this question:
The expanded national RET scheme is intended to provide interim stimulus for the deployment of renewables-based electricity during the early years of an ETS. The scheme is to be phased out between 2020 and 2030 as electricity prices rise under an ETS to allow renewables-based electricity to compete without the price support provided by the RET.
So that’s it then. The renewable energy industry has until 2020 to get its act together, and then its going to increasingly feel the hot breath of competition. I reckon that’s fair enough; if it still can’t compete, with the aid of an ETS and 20+ years of explicit government support, you’d have to say that it’s not likely to.
Thanks for this post and the link, Robert, does your mind never rest?
There will be several answers to the question posed. Certainly the discussion paper will suggest a termination date to renewables bias funding but there is one overiding consideration. The entire purpose of emissions control action is to reduce our net CO2 emissions to zero, and sustained at that level indefinitely. Every possible effort must be made to meet that objective. If it could be achieved tomorrow then that is what should happen. In all probability the 2020 target for emissions reduction is impossible to achieve with a policy of encouragement. I am prepared to bet that a further 10 years of polar ice melt coupled with a progressively increasing price for oil will produce a string of discussion papers, each with a more determined government involvement in driving the solutions. If there was some way of applying a PID (proportional integral derivative or target driven future demand based response) response to government action then we would be well into panic mode now. But it seems that overshoot is inevitable.
A word of caution. My good friend and partner in environment concern (”we have to stop using the coal now”) Raymond P was cleaned up by a car on Tuesday while out training on his cycle, and is in hospital with spinal injuries.
Take care out there. People who make a difference are rare and extremely valuable.
As regards the timing of this post, I’m currently in the United States and there was a session at the conference I’m currently attending that was of no interest whatsoever.
I figure I was contributing to the world more by providing a pointer to this discussion paper than listening to somebody drone on about “metadata models” and “state-based XML firewalls”.
Thanks Robert.
I am glad to see the discussion paper speaking of ‘energy generated’ vs. ‘installed capacity’ – the two being considerably different with most renewables other than hydro.
The ideas are fine, but I believe the difficult task will be defining the specific technologies to achieve the expressed goals [net generation as well as energy quality and reliability] at a price the Australian public and industry can afford – particularly over the interim- and longer-term. This is probably why the authors made calls to stakeholders for help in defining them as well as including technology mix in the scope of the planned consultancy.
Finally, I note the targets remain flat; while demand is forecast to increase steadily over the coming decades.
Seems good to me… just not enough.
I haven’t had a chance to read the paper yet, but I’ll just mention this simple calculation.
If our energy generation is indexed at 100 now with no renewables and it increases to 125 by 2020, we could then have 20% renewables without reducing emissions at all.
That’s just a calculation to demonstrate the problem, it’s not based on any data.
This is exactly the same problem we have with China and India, remembering that there the increase will be greater than 25%. They are interested in installing renewables, but it seems entirely unwilling to limit power generation from CO2 emitting sources in any way at all.
Ed – yes I wonder why the MRET targets aren’t defined as a percentage of energy production? Not that we should need an MRET once carbon trading is introduced.
Brian: I think that’s about right, but there’s also the ETS to take into consideration.
The more laissez-faire economic types don’t like the MRET.
In my experience the more laissez-faire economic types deny human-caused climate change altogether because they know it can’t be solved without some kind of government intervention, and in their distorted worldview the purity of the market is more important than a habitable planet.
The 2020-2030 phase out of MRET seems reasonable. Do we know whether renewable actually means renewable, or will this be a “clean energy target” which includes clean coal, nuclear etc?
With Garnaut and the Govt green paper coming up hopefully we will have an interim 2020 emissions reduction target. Such a target was studiously avoided by both sides of politics before the election.
Then we can have a look at the adequacy of that target and the means planned to meet it.
carbonsink: To determine whether “renewable actually means renewable”, first you’ve got to define what “renewable” actually means, in a meaningful, literal fashion. At the moment, it’s pretty arbitrary. Nuclear energy, for example, is a completely sustainable, zero emissions technology (in the same sense that wind or hydro are zero emissions technologies) – it meets any reasonable definition of what a sustainable energy system is.
Renewable is not the same as sustainable, for a start.
A hard-arsed definition of sustainable would require it to be renewable, but who wants absolutism? The sun itself won’t last forever.
But really, anything that needs the input of stuff dug up from the ground cannot be described as renewable. Arguably it could be sustainable “for a long time” if there’s enough in the ground of course.
Carbonsink, I disagree with Luke.
Currently, MRET has a list of what counts as renewable, which seems to capture what at the moment is actually what a reasonable person would count as renewable: eg,
hydro, wind, sewage gas, solar water heaters, geothermal, …
There is some discussion about certain biomass technologies such as whether to allow burning wood waste from native forests as opposed to plantations but I don’t think such quibbles show that there is a big problem with the definition.
Use of fossil fuel (such as coal however clean) or mineral resources such as uranium is of course not renewable and is not counted.
Another excellent post Robert.
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The laissez-faire argument against planning is p[artly doctrineaire and partly based on fact. The public sector is not a good place to come up with viable, competetive products and services. However the assumption that the market will take care of it is often made without asking the question: can you make money ‘taking care of it’?
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If you can’t, then the market won’t.
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So the question is what will the private sector do by itself and what else is needed to bring about the desired result. The arguments will range along the line from ‘everything’ to ‘nothing’ and I don’t know.
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One thing I do believe however is that it would be unwise to simply throw money at anyone who reproduces renewable energy. To do so will simply breed lazy organizations and inadequate energy supply. And a black market in fossil fuel use possibly.
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I don’t exactly know what the right mix is. However I do believe a mix is necessary and that part of that mix should be competition. In a competetive market driven by innovation – you get innovation. We need innovation to solve the problem.
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Look at the IT industry. Compare it with subsidized and protected industries like US agriculture. ‘Nuff said.
There’s an interesting article in The New Yorker this week, “Island in the Wind”, http://www.newyorker.com/reporting/2008/07/07/080707fa_fact_kolbert , in which Elizabeth Kolbert describes a visit to the Danish island of Samsø. Samsø has got its non-renewable energy use down effectively to zero. (Fossil fuel it uses in vehicles is offset by surplus wind-generated power exported to the mainland.)
She also visits Zurich to find out about the 2,000 watt society. This is founded to promote the principle that sustainable global energy consumption, if rationed fairly across all nations, would average out at 2,000 watts per person. The US currently sits at 12,000, India at 1,000 and China at 1,500.
Robert, you write as if there’s a lot of choice, and if renewables aren’t ‘competitive’, then, too bad. But in the end we have to have the maximum use of renewables, there isn’t any choice. So you question “for how long should we keep subsidizing renewables before we let them compete on their merits?” is a bit like your ‘clean jobs are bad’ idea – the merit of renewables is their ‘clean’ quality compared to other power sources – price isn’t as important as emissions.
Also we do need to act immediately and not let time talking about emerging technologies stop us from achieving progress. Where are we compared to Germany and other countries – a long way behind. Let’s copy what has worked for them, now, while encouraging new technologies.
Adrien – we need the government to be the buyer – that way we can get a diverse range of renewables feeding into our system, even if they all cost different prices, we need diversity. But if, say, solar panels are the quickest way we can get something up and running, the government can let industry know that it will be putting out a series of tenders every couple of years, for several hundred million $$ each time, and the cheapest and best will win the contract: that should encourage improved and cheaper technology. It’s definitely time to stop talking and start building renewable power generators, on a large scale.
“The renewable energy industry has until 2020 to get its act together, and then its going to increasingly feel the hot breath of competition.”
I agree, fair enough.
You’ll have to pardon my ignorance with this question… What sort of subsidies exist at present for the coal industry in Australia (which of course may be different from state to state)? Is it known if any such subsidies will also be phased out along with the MRET scheme?
Russell -
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We need to continue to supply civilization with the energy it needs. This necessitates adjustments in different areas: consumption, efficiency and source power. If you want to make people change then you’ll have to put all the political energy you’ve got into writing those laws, enforcing them, erasing the loopholes and fighting people who challenge those laws.
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Alternatively you can simply set the conditions and let it take care of itself. The understanding that we’re cooking the planet and something must be done is widespread now. What we need is the best technological solutions (and of course moderated consumption). Currently solar is not up to scratch. It might be sometime, it would be great if it was but you won’t help it get there by flinging great wads of public dosh for primitive technology.
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Why does government have to be a buyer?
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I’m sorry I used to work in the public sector and I don’t want those people buying anything for me. I can do a better job thanks. What I want is the government to stop cozying up to resources concerns and spinning energy policy in their favour and introduce a carbon tax to force companies to take responsibility for something that ’til now has been an ‘externality’. Maybe the government needs to foster research. But if you want technological innovation I’m tellin’ ya the government’s not where it’s at.
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We don’t need solar panels now. We need renewable energy in the mid-term future. Different thing.
Adrien,
We needed the solar panels yesterday, and even more today, when WA is in a power ‘crisis’ because a pipe somewhere blew up. Solar may be primitive, but so are bicycles and we still need to use those as much as reasonably possible.
There may be clever ways of making the market do things but I suspect that if you want something done now, and it isn’t necessarily ‘economic’, like buying renewable power from diverse sources even though some are more expensive than others, government purchasing is the best option. What governments are good at is procrastination and spin rather than action. We need action.
Russell, you have to interpret my posts with the caveat that I’m not opposed to nuclear energy. Nor am I opposed to geosequestration, assuming it can be demonstrated to work. Indeed, I think (and if you read Brian’s posts you’ll see why) that we will need to artificially remove CO2 from the atmosphere and sequester it in any case, which implies the use of some kind of sequestration technology to safely dispose of the captured carbon.
Furthermore, not all fossil fuels are equal; efficient combined-cycle natural gas beats the pants off brown coal being burnt to turn old, inefficient steam turbines like at, say, Hazelwood.
Finally, it might be cheaper in many cases to simply use less energy.
What combination of the above turns out to be the right mix at any given point is something I don’t know, and nor does anyone else. That’s why I think the principle of putting a charge on greenhouse emissions and letting the market sort it out seems a reasonable one to me.
Why not just state that at the moment renewables are the least efficent sources of power generation?
Most dont hold the base load, some are fickle, and others are written off for envioronmental reasons (hydro).
Unless the government is truthful about the higher costs due to this inherant inefficency Im not prepared to trust it on any of its forecasting.
Can anyone here say with a straight face they believe the average cost will only be about $50.00 per person per year? (the last figure ive seen mentioned by Rudd)
If so I have some Sydney bridge real estate for you.
If the impacts of climate change were pretty certain and pretty marginal and we only needed to reduce emissions by 60% by 2050 then there would be an argument for not providing support for renewables – we could probably achieve that sort of reduction by gas, energy efficiency, more sustainable farming practices and so on.
Unfortunately, carbon cycle feedbacks, albedo feedbacks, long tails in the way that short feedbacks affect climate sensitivity, melting ice sheets and a few surprises suggest that we will need to make deeper reductions much faster. It seems unlikely to me that our governments will enact policies that will lead to the carbon price being approximately equal to the social cost of carbon in the near future. Until that happens, there is a strong case for support for renewables. Until the carbon price approximates the social cost of carbon, greenhouse gas intensive industries are also recieving a subsidy.
The Senate Standing Committee on Environment, Communications and the Arts is presently conducting an inquiry into Christine Milne’s “Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008″ and is seeking submissions from the public by August 15. My understanding of the bill is that it is somewhat different to the feed-in-tariff laws in South Australia or Victoria – anyone is eligible for the feed-in-tariff provided that they are not receiving MRET certificates for it rather than just households. It also covers a variety of different renewable technologies.
Yes, I really should do a post on their feed-in tariff legislation – not that it has any chance of getting passed, but it’s good to examine alternative proposals for tackling climate change.
In essence and as I understand it, their model requires the responsible Minister to set a feed-in tariff for each different type of renewable energy (wind, solar PV, solar thermal, micro-hydro, wave energy, geothermal…) based on a) what is currently required to make it affordable, and b) the Minister’s judgement of its potential to produce economical electricity in the future. So if I propose to build a mouse-powered electricity generator that costs $1.00 per kilowatt-hour to create electricity, and I convince the Minister that future genetically-engineered gerbils will make this economically competitive down the track, there could be a feed-in tariff of $1.10 for gerbil electricity.
Now, of course, I’m being more than slightly facetious here, but the point is that it’s the Minister trying to pick and choose which technologies will succeed. In 2005, this would have resulted in money being thrown hand over fist at hydrogen-based energy systems, and corn ethanol.
Robert – I too don’t rule out any power source if we need it to maintain a civilised standard of living, but coal and nuclear are right down the undesirable end of our options.
There was something on the news recently about Rio Tinto’s much improved price for its iron ore which will result in an added unexpected royalty bonus of something like $200 million for WA next year. I’d spend the $200 million on solar panels – what else to do with all that unused, cleared, fenced, government owned, unobstructed space above our metropolitan railways? We really need to get a move on with things that work, while looking for things that work better.
Yeah hence my argument. Your comment re solar panels by yesterday and everything may be true. Given the wide spectrum of different views it’s hard to know what we need by when really. I’ll just say: As soon as possible
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But unless solar power can compete now we can’t really rely on it to solve the problem. And chuckin’ money at it won’t help necessarilly. It might very well hinder. Why would the solar industry get into the research needed to boost efficiency and make the building of huge fields of solar collection and energy transfer viable if we simply paid them to erect sub-standard stuff now?
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Of course that said markets work because people make money not because they necessarilly make the world a better place. It is an interesting question. We need transideological thinking and that means that supporters of different economic paradigms will have to get used to the idea that doctrine’s no good and facts are.
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I just feel it pertinent to stress the market virtues here. If I was arguing this on Catallaxy I’d probably be asking thorny questions viz will the market do the research we need?
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I do think we need to get the energy market open and keep it there however. Nuclear, as much as I HATE IT, looks like being a middle-term solution. But for obvious reasons renewables are more desirable. For everyone (except that lot that make money digging stuff up outta the ground). When/if renewables become viable, and I think they might soon, it’s important that the mining industries can’t lock the fatal competition out.
I think some of the concerns you suggest laissez faire types might have with quotas aren’t a big deal – eg if you’ve got a quota, and this makes the price go up a lot, then that’ll stimulate conservation itself (but maybe too much, or not enough, depending how big an effect on price there is, and whether you took that into account in your policy design or not). Others are, though (no stimulus to switch to less carbon intensive non-renewables).