Larvatus Prodeo

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?

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