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Labor's 2020 target for a renewable energy future.



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Labor’s 2020 target for a renewable energy future

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Labor’s 2020 target for a renewable energy future

Election 2007

Policy Document

Kevin Rudd MP Federal Labor Leader

Peter Garrett MP Shadow Minister for Climate Change, Environment and Heritage

Senator Chris Evans Shadow Minister for National Development, Resources and Energy

October 2007

www.kevin07.com.au

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Labor’s 2020 target for a renewable energy future

Overview

Climate change is a critical economic challenge for Australia’s future and for the global economy. Taking decisive action on climate change is critical for future jobs and economic growth in Australia.

The core initiatives in Labor’s comprehensive plan to deal with the economic challenge of dangerous climate change are:

� Establishing market-based incentives to reduce greenhouse gases through an emissions trading scheme;

� Demand side management measures, assisting households to contribute to reducing carbon emissions;

� Supply-side measures including support for zero emission and low emission technologies through a National Clean Coal Initiative and a strong renewable energy target

Australia has abundant solar, wind and geothermal energy. We can harness this clean, renewable energy to power our homes and businesses to help tackle climate change. Yet renewable energy has gone backwards under the Howard Government, and many leading edge Australian renewable energy businesses have been forced offshore by the Government’s inaction on climate change and renewable energy.

A Rudd Labor Government will ensure that the equivalent of at least 20 per cent of Australia’s electricity supply - approximately 60,000 gigawatt hours (GWh) - is generated from renewable sources by 2020 as part of Labor’s comprehensive approach to tackling climate change.

This is equivalent to the electricity used in Australia’s seven and a half million homes.1

According to industry economic modelling, a 20 per cent renewable energy target will deliver emission reductions of 342 million tonnes of greenhouse gases between 2010 and 2030 compared to just 219 million tonnes under a 15 per cent clean energy target. 2

Scientists - including the CSIRO - are telling us that Australia must achieve emissions reductions of 60 per cent by 2050 if we are to avert the significant economic consequences of dangerous climate change. These reductions can be achieved while maintaining strong economic growth.

Renewable energy technologies will play a critical role in achieving these cuts as well as providing substantial employment opportunities, particularly in regional Australia. Economic modelling shows that significant cuts to emissions can be achieved at the lowest cost by combining emissions trading with a strong renewable energy target and investment in energy efficiency.3

Federal Labor has a long standing commitment to introduce emissions trading that will provide the incentive to cut Australia’s emissions through innovative approaches.

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But while the introduction of emissions trading will help bring cleaner technologies into the market over time, an interim renewable energy target will accelerate their use, driving cost reductions by encouraging economies of scale - and achieving overall emission reductions at lower cost.

As emissions trading matures, however, a renewable energy target will no longer be required. Under a Rudd Labor Government the renewable energy target will phase out in the period 2020 to 2030.

As part of Labor’s 2020 vision for a clean renewable energy future, Federal Labor will:

� Ensure the equivalent of at least 20 per cent of our electricity supply - or approximately 60,000 GWh - is generated from renewable sources by 2020.

� Increase the Mandatory Renewable Energy Target (MRET) to 45,000 GWh to ensure that together with the approximately 15,000 GWh of existing renewable capacity, Australia reaches Labor’s 20 per cent target by 2020.

� Work cooperatively with State and Territory Governments to bring both the national MRET and existing state-based targets into a single national scheme.

� Phase out the renewable energy target from 2020 as emissions trading matures and prices become sufficient to ensure a mandatory renewable energy target is no longer required.

� Establish a $500 million National Clean Coal Initiative to invest in the development and application of advanced coal technologies to secure jobs in the coal industry.

� Introduce household energy efficiency measures to reduce energy use and lower energy bills.

� Use Commonwealth revenue from emissions trading to ensure that fixed and low income households are not disadvantaged by energy price increases flowing from measures aimed at cutting greenhouse gas emissions.

The global market for renewable energy is set to be worth US$750 billion a year by 2016. Countries around the world are setting renewable energy targets to help reduce emissions and position themselves to benefit from this growing market. China has a target of 20 per cent by 2020 and 33 per cent of California’s energy will come from renewable sources by 2020.

On the eve of the federal election and after years of inaction and false claims that any increase to the renewable energy target will cost jobs, Mr Howard announced a low emission target of 30,000 GWh. This is just months after Mr Howard rejected calls to increase MRET and endorsed a report calling for the abolition of State-based renewable energy targets.

Mr Howard is also now trying to take credit for the renewable energy capacity that will be generated from targets that the State Labor Governments have set themselves.

Nuclear reactors will be eligible under Mr Howard’s scheme, helping to achieve his plan to build 25 nuclear reactors across Australia. The head of Mr Howard’s nuclear review, Ziggy Switkowski, has said Mr Howard’s new target is a “positive step for a future nuclear industry.”

Mr Howard’s plans for the development of a large scale nuclear industry stand in sharp contrast to Federal Labor’s vision for a renewable energy future.

Under Federal Labor’s scheme, only renewable energy will count towards the target and the eligibility criteria will remain the same as the current scheme. Labor will examine how the use of micro-generation, including rooftop solar panels, solar hot water and small scale generation, can be increased to encourage the development of new technologies.

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Labor’s renewable energy target is part of our comprehensive approach to tackling climate change, which includes:

� Immediately ratifying the Kyoto Protocol.

� Setting a target based on science to cut Australia’s greenhouse gas emissions by 60 per cent on 2000 levels by 2050.

� Establishing an emissions trading scheme by 2010 to put a price on carbon.

� Introducing practical measures to improve household energy efficiency, including generous rebates for solar power systems and solar hot water and low interest loans for Australian families to undertake water and energy efficiency improvements in their homes.

� Offering landlords rebates of up to $500 to help install energy-efficient insulation in 300,000 rental homes.

� Establishing a $500 million National Clean Coal Initiative to invest in the development and application of advanced coal technologies to secure jobs in the coal industry.

� Making every Australian school a solar school within eight years.

� Encouraging the development of a strong and vibrant Australian clean energy industry with a $15 million Clean Energy Export Strategy and a $20 million Clean Energy Innovation Centre.

� Establishing a $50 million Australian Solar Institute and a $50 million geothermal initiative.

A Rudd Labor Government will ensure that 20 per cent of Australia’s electricity supply is generated from renewable sources by 2020.

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The need for action on climate change

Australia is particularly vulnerable to climate change.

The CSIRO has warned that we face hotter and drier summers, more intense droughts and extreme weather events, less water for our cities, the loss of our snow fields - a vital water source - and the devastation of the Great Barrier

Reef.

These impacts not only hurt the environment, but the economy as well.

According to Allianz SE, Europe's biggest insurer, insured losses from natural catastrophes due to climate change are expected to rise 37 per cent in the next decade, resulting in the need for alternative ways to manage risk.4

Global losses from catastrophes such as floods and hurricanes could jump to $49 billion a year in the period 2010 to 2019, up from $36 billion a year in 2000 to 2006.

For 11 long years, the Howard Government has denied and downplayed this threat - from John Howard down to his backbench.

The vast body of scientific and economic evidence shows that the costs of failing to act on climate change will far outweigh the costs of early and decisive action.5 And the longer we wait, the higher the costs will be.

A Rudd Labor Government is committed to cutting emissions by 60 per cent below 2000 levels by 2050. This has been supported by business leaders looking for investment certainty as part of an effective climate change response.

Economic modelling commissioned by the Australian Business Roundtable on Climate Change - including leading companies like BP, Westpac and Origin Energy - has confirmed that emissions reductions of this size are feasible and consistent with maintaining strong employment and economic growth.

Renewable energy technologies will be critical in meeting this challenge.

Renewable energy in Australia

Renewable energy sources, which emit no greenhouse gases, include hydro-electricity, wind, solar, biomass, geothermal and tidal and wave power.

Australia is blessed with an abundance of these renewable resources: 6

� Enough sunshine falls on Australia and New Zealand on an average day to power the two countries for 25 years.

� Australia has some of the best hot dry rock resources in the world and can draw on the heat of these deep rocks to power geothermal energy power stations.

� Australia has a huge coastline and significant wave energy resources, particularly along the southern coast of the mainland and the west coast of Tasmania.

� The southern coastline of Australia and New Zealand is directly in the path of the “Roaring Forties”, one of the best sources of wind in the world.

Australia is vulnerable to climate change

Australia can cut emissions by 60% by 2050 and maintain strong economic

growth

Enough sunshine falls on Australia and New Zealand on an average day to power

the two countries for 25 years

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If Australia is to achieve the cuts in greenhouse gas emissions needed to avert dangerous climate change, we will need to develop cost competitive renewable and low emission energy technologies. But after 11 years under Mr Howard, renewable sources contribute a smaller proportion to Australia’s electricity supply than in 1997.

FIGURE 1: RENEWABLE ENERGY UNDER A DECADE OF HOWARD

Source: ABARE (2006) Australian Energy: National and State projections to 2029-30

Regional opportunities

Australia has more than a hundred potential projects for which planning is well advanced and which could thrive once strong policies are in place to drive the development of renewable energy.

Amongst these many projects are:

� The Roaring 40’s Musselroe (129 MW) and Waterloo (117 MW) wind farms in Tasmania.

� A sewage biogas-to-energy project in Shepparton, Victoria.

� Epuron’s 30 MW wind farms at Conroy’s Gap and Cullerin Range in NSW.

� Acciona Energy’s 50 MW wind farm at Gunning in NSW and their Berrimal 24 MW wind farm in Victoria.

� Carbon Partners’ organic waste-to-energy project in Dandenong, Victoria.

� A 35 MW sugar cane waste project at Racecourse Mill in Queensland.

Labor’s renewable energy target will provide certainty and support for dozens of renewable energy projects currently in the planning phase, which will generate jobs and ultimately increase renewable electricity for Australian

homes.

These projects have particular significance for rural and regional Australia.

A recent CSIRO report to the Agricultural Alliance on Climate Change 7 highlighted the role that rural Australia can play in providing clean energy and electricity.

The report found that:

“A substantial increase in clean electricity generation would be possible and cost effective with the introduction of a strong clean, renewable energy target or an ambitious medium-term emissions reduction target, and that it

Renewable energy has gone backwards under Mr Howard

There are more than a hundred projects that are well advanced and ready

to go with a strong target

8

9

10

11

1997 2007

Contribution to electricty supply (%)

9.5%

10.5%

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is likely that a range of clean energy technologies will be able to meet projected demand for peak and base load power to 2050 and beyond …

“Renewable energy offers significant financial and other benefits to landholders and rural communities. Previous reports imply wind and bio-electricity could generate total annual revenues of $300-1000 million by 2020 with an ambitious emissions reduction target or other policy support for renewable energy. Estimates undertaken for this report suggest potential wind royalties of up to $150 million a year, or more.”

FIGURE 2: PROPOSED RENEWABLE ENERGY PROJECTS

Source: Parliamentary Library (2007)

The challenges for renewable energy

Globally, the demand for renewable energy technologies is increasing dramatically. Australia could, and should, be well placed to play a significant role in this growing industry.

The main obstacle to this growing industry in Australia has been a government full of climate change sceptics.

Over the last four years, the Howard Government has consistently rejected calls to increase the MRET.

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In 2003, the Government's own review of the MRET scheme identified that new renewable development would stall in 2007. The review recommended increasing the target. Mr Howard rejected this recommendation, claiming it would cost jobs.

In April 2007, the Minister for Industry, Tourism and Resources, Ian MacFarlane, derided State renewable energy targets as:

“Mickey Mouse schemes that were publicly popular, and had very limited effect, and to date, have had very limited effect in investment decisions.”8

Earlier this year, Mr Howard again rejected calls to increase MRET and endorsed a report calling for the abolition of State-based renewable energy targets.

On the eve of this federal election, Mr Howard announced a low emission target of 30,000 GWh. Given his long-term and consistent opposition to targets, Australians have every right to be cynical about this backflip.

Mr Howard’s target is a simple combination of all existing and proposed State-based renewable and clean energy targets. In other words, Mr Howard is trying to take credit for the renewable energy capacity that will be generated from targets that the State Labor Governments have set themselves because of his consistent refusal to act. These are the same State based targets he wanted to abolish just months ago.

In contrast to his long-term reluctance to support the development of a renewable energy industry in Australia, Mr Howard has been constant in his support for a nuclear industry.

The Prime Minister considers nuclear power the ”cleanest and greenest power generation source of all” and has plans for up to 25 nuclear reactors built across the country.

Mr Howard’s clean energy target will be used to achieve his nuclear ambitions, with the head of Mr Howard’s nuclear review, Ziggy Switkowski, claiming the new clean energy target as a “positive step for a future nuclear industry”.9

Australian jobs lost overseas

Because of the Howard Government's consistent refusal to support the industry with policies that encourage clean energy sources, many Australian companies have been forced to move off shore to find opportunities to grow and to sell their locally developed technologies.

� Dr Zhengrong Shi, a graduate of the University of NSW's School of Photovoltaic and Renewable Energy Engineering and an Australian citizen, founded solar energy leader Suntech in 2002. In less than three years, Suntech has multiplied its manufacturing capacity by 12 times, making it one of the world's top 10 manufacturers of PV cells based on production output. Dr Shi has been ranked by Forbes magazine as the wealthiest businessman in China, and was named one of TIME Magazine’s ‘Heroes of the Environment’ in 2007. Dr Shi has made it clear that he would have located solar energy investments in Australia if the policy environment was more supportive of renewables:

Mr Howard is trying to take credit for targets set by State Labor Governments

Australian renewable energy companies have gone offshore as the domestic market stalled under Howard Government

policies

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“If Australia had a similar type of incentive program (to China’s), we definitely would have set up a manufacturing facility in Sydney or Australia ”.

Dr Zhengrong Shi The Sunday Telegraph, 27 August 2007

� Clean energy company Roaring Forties announced in 2006 that $750 million of wind investments would be stalled due to the Howard Government’s failure to increase its renewable energy target beyond the current level.

� Roaring 40s announced in 2006 it was stopping work on projects at Heemskirk in Tasmania and Waterloo in South Australia because of poor government support and a failure to increase MRET.

“Without an increase in the initial [renewable energy] target level, electricity retailers are reluctant to commit to long-term REC deals which are crucial in financing renewable energy targets. Further substantial investment in the renewable energy industry is unlikely without an increase in the target.”

Roaring 40s Managing Director Mark Kelleher, 12 May 2007

� In February 2007, Pacific Hydro announced it was investing $500 million in Brazil because Australian renewable energy projects had been stalled by the Howard Government's refusal to ratify the Kyoto protocol.

“Pacific Hydro has 1800MW of clean energy assets around the world at various stages of development. While growth in Australia has been held back due to Australia not signing the Kyoto Protocol, the company continues to look internationally for investment opportunities, namely in

countries that are enacting positive policies to reduce greenhouse gas emissions and address global warming.”10

Media release, 15 February 2007

� In August 2006, Vestas Nacelle announced it would close its wind turbine assembly plant in northern Tasmania, costing 65 jobs.

Vestas “would welcome an increased target because that would allow us to expand”. 11

Vestas Managing Director, Erik Laursen, 26 August 2007

� In March 2007, the Australian company Global Renewables announced a $5 billion deal to cut greenhouse pollution in the UK, because they could not get support for their technology here in Australia.

“In Australia there is no incentive to invest in our technology compared to cheaper options [landfill] which effectively allow polluting for free. We had to go to a jurisdiction that recognised our contribution to taking greenhouse gases out of the atmosphere.

“We are 10 to 15 years behind Europe. When Australia does get serious about renewables we will hopefully be able to come back.”12

Chairman of Global Renewables, John White

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Australia left behind

While the Australian clean energy industry is going overseas under Mr Howard, countries around the world are setting higher renewable energy targets to encourage the development of their own renewable energy industries and to position themselves to capture a greater share of the growing international market.

� The UK has a target of 10.4 per cent by 2010 and 15.4 per cent by 2016.

� The European Union has a 20 per cent target by 2020.

� China has a 20 per cent renewable energy target for 2020.

� Spain has a 29.4 per cent by 2010.

� Italy has a 25 per cent target by 2010.

� France has a 21 per cent target by 2010.

� Germany has a 12.5 per cent target by 2010.

In the United States - which has also failed to ratify the Kyoto Protocol - State Governments are legislating renewable energy targets. The best known of these is California, which has set a target of 33 per cent by 2020.

Once a leader in renewable energy, Australia has fallen behind the rest of the

world

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Labor’s fresh ideas for renewable energy

As part of Labor’s 2020 vision for a clean renewable energy future, a Rudd Labor Government will:

� Ensure that by 2020, at least 20 per cent of our electricity supply - or approximately 60,000 GWh - is generated from renewable sources, equivalent to the electricity used in Australia’s 7.5 million homes.

� Significantly increase the MRET to 45,000 GWh by 2020 to ensure that together with existing renewable capacity, Australia reaches its 20 per cent target.

� Work cooperatively with State and Territory Governments to bring both the national MRET and existing State-based targets into a single national renewable energy scheme.

� Phase out the renewable energy target from 2020 as emissions trading matures and prices become sufficient to ensure a mandatory renewable energy target is no longer required.

� Establish a $500 million National Clean Coal Initiative to invest in the development and deployment of advanced coal technologies to secure jobs in the coal industry and our coal exports.

� Establish complementary household energy efficiency measures to reduce energy use and keep overall energy bills as low as possible.

� Use Commonwealth revenue from emissions trading to ensure that fixed and low income households are not disadvantaged by price increases flowing from measures aimed at cutting greenhouse gas emissions.

A renewable energy target will help achieve emission reductions at lower cost

Federal Labor has a long standing commitment to introduce emissions trading to enable the market to set a price on carbon, unleash innovation and cut Australia’s emissions.

Complementary measures that deliver energy efficiencies, support technological innovation, and create the right market signals will help achieve emission reductions at lower cost if introduced alongside emission trading.

Industry groups recognise the need for a range of complementary policies that will work together to deliver emission cuts at the lowest cost.

The Australian Business and Climate Group - comprising leading companies including Anglo Coal, BP, Deloitte, Rio Tinto and Westpac - recognised that:

… “in the early stages of emissions trading there are strong reasons to support complementary policies for research, development, demonstration and first-of-a-kind large-scale commercialisation of technologies”.

The reasons for complementary measures include:

� The need to lower the cost of breakthrough low-emission technologies.

� The benefits of sharing the risks of technology development.

� The opportunities to create export know-how.

A comprehensive approach to climate change will achieve emission reductions

at least cost

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� Increased confidence in international markets through the development and application of breakthrough technologies.

� Broad global deployment of breakthrough technologies.

Similarly, the Australian Business Roundtable on Climate Change noted that in addition to emissions trading there should be:

…“fiscal incentives to encourage the deployment of emerging and breakthrough technologies for power generation and transport to build scale and reduce costs”.

Many renewable energy technologies have the capacity to dramatically reduce their costs over the coming decades as they grow in capacity. We will achieve these savings faster, the more those technologies are used.

While the introduction of emissions trading will help bring renewable technologies into the market over time, an interim renewable energy target will accelerate their use, driving cost reductions with economies of scale - and achieving overall emission reductions at lower cost. As emissions trading matures, however, a renewable energy target will no longer be required.

Modelling by McLennan Magasanik Associates (MMA), commissioned by the Renewable Energy Generators of Australia also shows that the broader economic impacts of a renewable energy target are small.

The modelling shows that combining a 20 per cent renewable energy target with a moderate carbon price in order to achieve emission reductions will have a negligible impact on real GDP when compared to a carbon price alone. At the same time it will drive additional investment and deliver higher emissions abatement. 13

A 20 per cent renewable energy target will deliver emission reductions of 342 million tonnes of greenhouse gases between 2010 and 2030 compared to just 219 million tonnes over the same period with a 15 per cent clean energy target.

FIGURE 3: EMISSION REDUCTIONS FROM LABOR’S TARGET

Source: Based on McLennan Magasanik Associates scenarios 14

A renewable energy target complements emissions trading and lower overall costs

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Coalition 15% clean energy target

Labor's 20% renewable energy target

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Coalition 15% clean energy target

Labor's 20% renewable energy target

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Coalition 15% clean energy target

Labor's 20% renewable energy target

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The Renewable Energy Generators of Australia said that:

“Confining the scheme to renewable generation only ... results in a small net cost, but significantly increases the level of emissions abatement.”

Renewable Energy Generators of Australia, 2 October 2007

A number of business representatives have identified the need for a strong renewable energy sector if Australia is to achieve long-term cuts to our greenhouse gas emissions. Andrew Richards, CEO of Pacific Hydro argued that:

“If we are to begin stabilising and reducing our emissions, clean energy infrastructure like wind farms must be part of our future energy mix.”

Media Release, 15 August 2007

Action on climate change is affordable

Labor’s comprehensive approach means that Australia can properly tackle climate change with the least cost to families and to the economy.

Economic modelling by MMA shows that a 20 per cent renewable energy target, in operation alongside an emission trading scheme, can be achieved at a net present value cost of around $600 million between now and 2050 at a low carbon price and around $200 million at a moderate carbon price. That is equivalent to an average total cost of $10 to 30 for every Australian.

15

In the longer term a detailed study by the CSIRO-led Energy Futures Forum found that households will spend less in real terms on electricity in 2050 than they do now, even with substantial cuts to greenhouse gas emissions. 16

For over a decade, Mr Howard has refused to act on climate change, rejecting a comprehensive approach that includes emissions trading, energy efficiency and a renewable energy target.

This inaction has put our economy and environment at further risk. The longer we delay, the greater those risks - and therefore costs - will be.

Improving the energy efficiency of homes will be critical to both reducing carbon emissions and minimising the cost of overall reductions.

In 2003, a working group of Federal and State Governments found that energy use in Australian homes and offices can be reduced by 20-30 per cent with greater use of current commercially available and cost effective technologies.

That is why a Rudd Labor Government has a range of policies designed to assist households to improve their energy efficiency:

� Low Emission Plan for Renters: Labor will provide a rebate of up to $500 to help landlords install energy-efficient insulation in 300,000 Australian rental homes in a practical measure to help fight climate change.

� Green Loans: Labor’s Solar, Green Energy and Water Renovations Plan will offer loans of up to $10,000 each to make 200,000 existing Australian homes more energy and water efficient, along with subsidised environmental audits and free Green Renovations packs.

� Climate-Friendly Appliances: Labor will introduce a new 10-star appliance rating system and Greenhouse and Energy Minimum Standards (GEMS)

Investing in energy efficiency will deliver savings to families

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that fast-track smart efficient technology, helping Australian families save money, cut energy use and reduce greenhouse gas emissions.

� Climate-Friendly Hot Water: Labor will phase-out the installation of greenhouse-intensive electric hot water heaters in new and existing homes with access to reticulated natural gas by 2010, and as installations in all existing homes by 2012. Exemptions will be granted for dwellings where the installation of climate-friendly systems is impractical.

Ensuring the most disadvantaged are not worse off

Labor recognises that some households are better able to adapt to climate change than others. Indeed, some of the poorest Australians live in the most inefficient and poorly insulated homes and are unable to invest in energy-

saving technology.

Labor’s policies to drive efficiency improvements across the economy will help all households, but Labor will ensure that those households least able to adapt are not disadvantaged by action to address climate change.

Labor will work with the community services sector, energy retailers and State and Territory Governments to develop policy measures targeted to the specific needs of disadvantaged Australians.

Labor will use revenue from the auctioning of permits under an emissions trading scheme to ensure that fixed and low income households are not disadvantaged by price increases flowing from measures aimed at cutting greenhouse gas emissions.

The costs to Australians of failing to act responsibly on climate change will be much higher than acting decisively to reduce emissions now and therefore Labor’s plan ensures that the most disadvantaged Australians are not left

exposed to these costs in the future.

Developing a vibrant renewable energy industry

Federal Labor is committed to making renewable energy central to Australia’s economic and environmental future and to establishing Australia as the clean energy hub of the Asia-Pacific.

The global market for renewable energy is set to be worth US$750 billion a year by 2016.

Labor will harness renewable energy research, innovation and enterprise, so that Australia can build a low carbon economy and export climate change solutions to the world.

“The clean energy industry has the capacity to deliver on a Clean Energy Target of more than 20% renewable energy by 2020 and more than 30% by 2030 with minimal cost to the economy.” 17

The Australian Clean Energy Council

Studies conducted by CSIRO and ABARE, Allen Consulting Group and Energy Strategies all indicate that renewable energy sources are capable of delivering a very large proportion of Australia's electricity needs. 18

Australia could be the clean energy hub of the Asia Pacific

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The CSIRO 2006 Energy Futures Forum report, The Heat is On, includes scenarios in which the renewable energy sector supplies nearly 50 per cent of Australia's electricity needs.

The CSIRO report states that:

“The economic modelling generally concludes that renewables will play a much more substantial role in energy supply than they currently do with the introduction of a carbon price and as their relative costs fall.

“By 2050, the share of non-hydro renewables in total electricity generation ranges between 10 and 41 per cent across the scenarios.”19

Economic modelling by MMA and commissioned by the Climate Institute found that “[i]n the short term, renewable energy sources - in particular wind and bio-energy - could account for 18-25 per cent of national generation by

2020.” 20

Specific initiatives to help Australian businesses get a larger slice of the international renewable energy market will include:

� A $15 million Clean Energy Export Strategy to provide critical capacity in Austrade to promote Australian clean energy exports. Austrade liaison officers will work with clean energy firms to match their strengths with opportunities in clean energy growth markets such as China, India, Japan and the US.

� A $20 million Clean Energy Innovation Centre to help Australia’s small and medium sized clean energy companies become export-ready with benchmarking services, practical assistance and access to prototyping and testing facilities.

� A $50 million funding package to establish an Australian Solar Institute, which will be a global hub for solar thermal energy research.

� A $50 million investment in geothermal drilling to assess the potential for harnessing of geothermal energy in Australia through hot dry rock technologies.

Why we need a single national renewable energy target

Because of the Howard Government’s refusal to act for 11 long years, State Governments have introduced or are proposing their own renewable energy targets:

� Victoria has a legislated target of 10 per cent renewable energy by 2016.

� New South Wales has committed to a legislated 15 per cent renewable energy target by 2020.

� South Australia has announced a target of increasing renewable electricity use to 20 per cent of electricity consumption by 2014.

� Queensland has announced a low emission target of 10 per cent by 2020.

� The ACT has announced a 15 per cent renewable energy target by 2020.

� Western Australia is reviewing a proposed 15 per cent renewable energy target.

Because of the Howard Government’s refusal to act, State

Governments have set their own renewable energy targets

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While these State-based targets will increase the use of renewable energy, having a number of different schemes comes at a cost. Reducing red tape and streamlining the schemes will result in substantial cost savings as well as other benefits to scheme participants and the broader economy.

Federal Labor will work cooperatively with States and Territories to bring both the MRET and existing State-based targets into a single national harmonised scheme.

All renewable energy projects that have been approved under existing State-based schemes will be eligible under the expanded MRET, ensuring that no developments already approved are disadvantaged.

Labor’s 20 per cent target by 2020

Under Federal Labor’s scheme, only renewable energy will count towards the target. The eligibility requirements will remain the same as the current MRET.

Labor will examine how the use of micro-generation, including rooftop solar panels and small scale generation, can be increased to encourage the development of new technologies.

As part of its comprehensive approach to climate change, Labor has already indicated that it will develop mechanisms to ensure that Australian operations of emissions-intensive trade-exposed firms are not disadvantaged before an effective global regime is in place. This will be pursued as a key component of emissions trading, alongside the expanded MRET.

In the period 2020 to 2030, the target will be phased out as emissions trading is fully implemented and the cost reductions achieved in the renewable energy sector allow those technologies to compete with other forms of power. As the carbon price affects fossil fuels and as renewable energy technologies increasingly deliver cost reductions, renewable energy will be cost-competitive without the need for a MRET.

On the basis of current National Electricity Market Management Company (NEMMCO) electricity consumption projections, the contribution of additional clean energy capacity from existing and proposed schemes is set out in the following table.

TABLE 1: RENEWABLE ENERGY AS PROPORTION OF TOTAL

ELECTRICITY CONSUMPTION, 2020 (%)

Pre-existing renewable energy (prior to 1997) 5.2

Howard Government MRET

Howard Government clean energy target

3.1

0

State Government’s clean energy targets (existing/proposed)

Federal Labor's substantial increase in MRET

6.7

5.0

Total proportion of renewable energy by 2020

This includes pre-existing capacity, the current MRET and Federal and State Labor schemes.

20

Labor will deliver 20 per cent renewable energy by 2020

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FIGURE 4: 2020 CONTRIBUTION OF RENEWABLE ENERGY TO ELECTRICITY SUPPLY

Solar feed in tariffs

Federal Labor recognises a number of State and Territory Governments are seeking to introduce solar 'feed in' tariffs, where solar photovoltaic installations receive a premium price for electricity produced, which is then fed back into the grid.

Consistent with Federal Labor's approach to renewable energy targets, Labor believes it is important that there is a consolidated and consistent approach across jurisdictions to renewable energy policy. A Rudd Labor Government will work through the Council of Australian Governments to develop a

consistent national approach to feed in tariffs.

Complementary investment in clean coal and gas

Clean coal, gas and renewable energy all have critical roles to establishing a sustainable energy mix for Australia’s future.

Clean coal and low emission technologies are in the early stages of their development and it generally expected that they are several years away from commercial deployment.

In March this year, Labor announced a National Clean Coal Initiative, committing $500 million in funding to accelerate the development and deployment of clean coal technologies in Australia. Coal producers have since matched that funding with a commitment of $1 billion over ten years towards developing clean coal.

If successful, these clean coal technologies will produce substantially less greenhouse gases for every megawatt hour of electricity produced than

Labor has committed $500 million to a National Clean Coal Initiative

Pre-MRET renewable energy

The existing MRET

States / Coalition’s 15% clean energy target

Labor's 20% renewable energy target

0%

5%

10%

15%

20%

Pre-MRET renewable energy

The existing MRET

States / Coalition’s 15% clean energy target

Labor's 20% renewable energy target

0%

5%

10%

15%

20%

Election 07 Policy Document Labor’s 2020 target for a renewable energy future

New Leadership 17 www.kevin07.com.au

existing fossil fuel technologies, and will involve the capture and storage, or geosequestration, of carbon dioxide.

While there is a lot of promising research and development going into these technologies, currently there are no full-scale operating examples of clean coal technology. Labor’s renewable energy target does not include these technologies as they are not yet commercially available.

Nonetheless, these technologies deserve substantial and direct support to assist with their development. Clean coal technologies have the potential to dramatically cut emissions from existing and future power stations and significantly contribute towards achieving a long-term emission target.

Once those technologies are ready for deployment, Labor will review conditions in the emissions trading market, to ensure that there are sufficient market incentives to accelerate the use of clean coal technologies.

If additional measures are necessary we will take the most appropriate measures in consultation with the industry.

At this stage, what the coal industry needs is support for early stage research and development and clean coal technology trials.

That is why Labor has outlined a National Clean Coal Initiative that includes a clean coal fund worth $500 million (over the period to 2015) to generate $1.5 billion in new investment in clean coal projects, in partnership with the private sector.

Almost 80 per cent of our electricity demand is currently met by coal fired electricity. Projections show that coal will remain a significant source of power over the next 40 years both in Australia and across the world.

As with coal, Australia has vast reserves of natural gas, including coal seam methane in Queensland, and in offshore fields in the Bass Strait and North West.

Current technology, through combined cycle gas turbines (CCGT), allows gas to be used to generate electricity at very high efficiency and with substantially lower greenhouse gas emissions when compared with coal - around 300 to 400 kilograms per megawatt of electricity generated.

This is higher than future low emission technologies but lower than coal fired power stations.

As such, natural gas provides Australia with a ‘transitional fuel’ to help meet growing energy demands over the next decade while we develop the capacity of our renewable and low emission technologies.

Election 07 Policy Document Labor’s 2020 target for a renewable energy future

New Leadership 18 www.kevin07.com.au

Financial implications

Labor’s 2020 target for a Renewable Energy Future is fully costed and funded.

Labor will boost the existing funding for the Office of the Renewable Energy Regulator by $1.7 million over the next four years to a total of $15 million to ensure it has the resources needed to administer Labor’s substantial increase in the Mandatory Renewable Energy Target.

FINANCIAL IMPLICATIONS - IMPACT ON UNDERLYING CASH BALANCE ($M)

2007-08 2008-09 2009-10 2010-11 Total

Office of the Renewable Energy Regulator

1.0 0.6 0.1 1.7

Gross Total 1.0 0.6 0.1 1.7

Total Offsets

Net impact 0 1.0 0.6 0.1 1.7

Endnotes

1 ABARE Australian Energy historical data series, which shows the residential sector consumed 223PJ of electricity in 2005-06, which is equivalent to 62,000GWh.

2 Renewable Energy Generators of Australia (2007) Increasing Australia’s low emission electricity generation - an analysis of emissions trading and a complementary measure. The moderate carbon price commences at $12/tonne in 2010 and increases to $33/tonne in 2030.

3 See for example, The Climate Institute (2007) Making the Switch: Australian Clean Energy Policies and Renewable Energy Generators of Australia (2007) Increasing Australia’s low emission electricity generation - an analysis of emissions trading and a complementary measure

4 Allianz (2007) Hedging Climate Change 5

Australian Business Roundtable on Climate Change (2006), The Business Case for Early Action

6 Australian Business Council for Sustainable Energy (2007) Clean Energy Report 2007

7 CSIRO Sustainable Ecosystems (2007), Rural Australia Providing Climate Solutions.

8 ABC Four Corners program, 16 April 2007

9 Australian Financial Review 24 September 2007

10

Pacific Hydro (2007) Carbon Credit Opportunities Drive Pacific Hydro’s Entry into Brazilian Market , media release, 15 February.

11

“PM blows out rescue: flak flies over wind factory”, Hobart Mercury , 26 August 2006.

12

“What a waste: company moves to greener pastures”, Australian Financial Review , 27 March 2007, p5.

13

See end note 2

14

Renewable Energy Generators of Australia (2007) Increasing Australia’s low emission electricity generation - an analysis of emissions trading and a complementary measure.

15

Ibid

16

CSIRO Energy Futures Forum (2006), The heat is on: the future of energy in Australia.

Election 07 Policy Document Labor’s 2020 target for a renewable energy future

New Leadership 19 www.kevin07.com.au

17

Auswind and Business Council for Sustainable Energy (2007) One Powerful Voice, Auswind+BCSE .

18

CSIRO Energy Futures Forum (2006), The heat is on: the future of energy in Australia

19

Ibid.

20

The Climate Institute (2007) Making the switch