Australia renewable power levy suggested

Reuters Limited
AUSTRALIA: November 15, 1999 
Story by Wendy Pugh               

MELBOURNE - The Electricity Supply Association of Australia has proposed to the Federal Government that a consumer levy could help fund a two percent renewable energy use target.

Incoming ESAA chairman Allan Gillespie said the levy would be cheaper than the likely costs that would have to be passed on by the industry if it was forced to meet a two percent target mandated by government without assistance.

"The modelling that we have done suggests somewhere between three to five billion dollars capital costs, which could increase prices by 2.5 to 4 percent," he told Reuters.

"We think a lower level of levy with some form of grants to assist the development of renewable projects would be a more productive way to go."

Under the Federal Government's goal the  share of renewables in the electricity mix is targeted to rise to 12.7 percent by 2010.

But the government is yet to agree on legislation enforcing the target, mooted as part of Australia's strategy to meet its Kyoto Protocol commitment to reduce its greenhouse gas emissions to 108 percent of 1990 levels by 2010.

Gillespie said greenhouse emissions would be a major issue in his two-year term as ESAA chairman, which began on Thursday.

In 1996 electricity related emissions accounted for 33.3 percent of Australia's total emissions, reflecting the sector's heavy use of coal-fired generation.

Gillespie said the sector was already voluntarily reducing its emissions through the government's greenhouse challenge and a programme to improve generation efficiency.

EMISSIONS TRADING CAUTION

But he said Australia should be cautious about beginning emissions trading before international arrangements were agreed.     
                                                         
"Australia going alone won't have a huge impact. We need to be integrated with an international trading scheme, if there is going to be one," he said.                 

"We don't want to damage our industries in this country. We have to be careful to make sure our industries keep going ahead, but the emissions overall keep reducing."

Gillespie said the Australia was at the leading edge of debate on emissions and should develop a trading system that would work here and negotiate that internationally.

The International Energy Agency plans to hold a second emissions trading simulation in Europe early next year, with two participants in the Australian industry invited to be involved.

Australian generation remains dominated by coal-fired energy with new plants under construction and on the drawing board.

But Gillespie said new coal-fired power stations offered "super-critical" technology that increased efficiency by about four percent over existing black-coal technology.

"The new ones are getting better and undoubtedly more gas-fired power stations will be brought into service as we get more competition in gas fields," he said.

Of the green generation options he said biomass power such as energy derived from sugar mill bagasse, small hyro and wind power were the most competitive, with solar energy some way behind.                 

Gillespie said the other major issues facing the industry were the start of power market competition for householders from January 2001 and regulatory issues.

"The role we have going forward is to work with our members and government to get results that maintain investment in low-cost energy, and allow sustainable economic growth at the same time," he said.

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