Labor and The Greens have held up a “massive $13 billion investment in renewable energy” as a key benefit of the carbon tax package. It is one of the main things The Greens claim to have used their Senate numbers to negotiate.
But $3.2 billion of the money, for a new Australian Renewable Energy Agency, is recycled from existing programs over the next ten years.
It is positive that responsibility for these programs will be taken from Resources Minister Martin Ferguson, who is in the pocket of the coal and uranium companies. But this is not actually new money.
The rest, $10 billion, is for a Clean Energy Finance Corporation (CEFC). Only half of that money is set aside for renewables—the rest can be spent on vaguely defined “clean energy measures” which could include gas. While compensation for corporations will start in full next year, proper funding for the CEFC has been put off until 2015.
And as Melbourne University renewables experts Patrick Hearps and Dylan McConnell noted, “The budget provided indicates that most of this money won’t be available until the latter half of the decade, with only $944 million provided to 2015.”
The model for the new Clean Energy Finance Corporation is premised on securing most of the investment from business. Climate Change Minister Greg Combet told Climate Spectator, “it will be a commercially oriented body and is expected to earn returns on its investments… It’s not a grants body… It provides loans, loan guarantees or equity investments.”
Large scale solar misses out
But this model means it will not be able to deliver large-scale solar power plants, let alone solar thermal with storage—the technology Beyond Zero Emissions recommends. The advantage of storage is that it allows solar to operate 24-hours a day, so that it can provide baseload power to replace existing coal power stations. Otherwise it can only supplement the existing power plants when the sun is shining.
This is why Hearps and McConnell argue, “Low-interest financing may not be enough in itself to get first-stage renewables off the ground.” Solar thermal power will be much more expensive than fossil fuels until built on a large scale. Therefore only direct government support to subsidise power produced by renewable sources will see them built.
The only reason we are seeing the installation of wind turbines and rooftop solar panels at the moment is because they power they produced is subsidied through the federal government’s Mandatory Renewable Energy Target and state-level feed-in tariffs.
What would really make a difference is a government plan to start building the renewables we need, and subsidising the power produced. This could be funded through progressive taxes like corporate tax or hitting high income earners.
But because any projects funded with the $10 billion have to be profitable within the existing energy market, no new additional renewable energy will come from the $10 billion above what is already provided for by the 20 per cent Mandatory Renewable Energy Target and state government feed-in tariffs. So it won’t actually increase the use of renewable energy.
Leaving things to the free market is a disaster for renewable energy. This is shown by the Labor government’s existing Solar Flagships program, which requires the private sector to fund two-thirds of any project.
As a result we have seen renewables projects collapse. Solar Systems, the Victorian company which won government funding to build a solar plant at Mildura, was forced to close in 2009 when it could not secure enough additional private sector funding.
The carbon tax package won’t work for renewables. We need to fight for direct government investment and subsidies if we want to see any serious growth in renewable energy.
By James Supple