Official report shows renewables scheme is useless

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Ten billion dollars’ funding for renewable energy has been held up as one of the key wins from the carbon tax package.

The Expert review released to government on March 28 sets out how the Clean Energy Finance Corporation (CEFC), which will manage and spend the money, will work.

The review was led by Reserve Bank board member Jillian Broadbent. Greens leader Christine Milne said, “Jillian Broadbent’s report today is one more important step putting Australia on the path to 100 per cent renewable energy.”

Money for renewable energy sounds good, but will the CEFC deliver?

The CEFC will make $2 billion of funds available each year for five years starting from 2013-14.

But its projects will not be additional to the existing 20 per cent Renewable Energy Target, which forces power companies to source 20 per cent of their power from renewable sources and pre-dates the carbon tax. The review admits this by noting that CEFC projects will be eligible under the Renewable Energy Target.

So the money will see no more renewable energy installed beyond what was already guaranteed before the $10 billion fund was in place. This has been recognised by industry analysts like Stephen Bartholomeusz as well as Richard Denniss from the progressive think tank The Australia Institute.

Worse, a large chunk of the $10 billion will not actually be spent on renewable energy. Fifty per cent is earmarked for “low emissions technology” (defined at a level  which could include some gas plants) and energy efficiency. The other 50 per cent is designated for renewable energy, but even that can include “hybrid technology”, such as mixed solar and gas power plants, rather than straight out renewables.

The CEFC review anticipates it will primarily provide loans with co-investors like banks for renewables projects, not directly build or fund renewable energy. It has to deliver commercial rates of return at around the long term government bond rate. This means its loans will offer lower rates of interest than bank loans, but the projects it funds must still return a profit. These mandates are likely to prove inadequate to build concentrating solar thermal, a key proven technology which is getting cheaper, but is still capital intensive.

The renewable energy funding in the carbon tax package won\'t bring renewables

An alternative approach

The CEFC is modelled on similar government loans programs in the US, UK, and Germany. These programs have produced some high profile disasters. In the US solar company Solyndra declared bankruptcy making 1100 employees redundant, despite getting a $535 million loan guarantee from the US government.

The Liberal Party and business commentators hostile to renewable energy have called for the CEFC to scrapped. But what we need is a funding model for renewable energy that is guaranteed to work—and deliver the technologies that could take us in the direction of 100 per cent renewable energy, particularly concentrated solar thermal power.

If taxpayers are taking on the risk, then the choice of technologies should be open to public scrutiny, and the government guarantee that the projects would actually be built.

Solar could guarantee jobs

The climate action group Beyond Zero Emissions (BZE) has been campaigning to replace the aging Northern and Playford B coal power stations in Port Augusta, South Australia with a combination of six solar thermal power towers and 90 wind turbines. Solar thermal power can incorporate molten salt storage which allows electricity generation through the night.

The heavy polluting brown coal plants are facing closure. As BZE explains: “The closure of Port Augusta’s Playford B coal plant will occur in July and Northern Power Station could be forced to close by 2015. Alinta Energy, owner of the stations, confirmed a few days ago Northern Power Station will only operate for six months of the year soon.” Without government action the plants are likely to be replaced by gas power.

BZE’s renewables plan, “would also ensure continued employment of existing workers at local power stations; create 1300 construction jobs and 225 manufacturing jobs for South Australia.” With the future looking grim for power workers in Port Augusta, unions should be campaigning for the government to implement the BZE plan, and to guarantee jobs for those power workers who want to transfer to new renewable power facilities.

BZE also claim that recent health data shows twice the expected rate of lung cancer for 2007-2009 in Port Augusta. The power station chimney stacks are about three kilometres from the town of 15,000 people. Renewable energy would produce no ongoing emissions, and the BZE plan would save five million tonnes of CO2 a year.

The government needs to start funding projects like the BZE plan, not built-to-fail schemes like the CEFC.

Chris Breen

Website Comments

  1. Meg
    Reply

    Nothing satisfies you guys, can’t you at least try to put a bit of positivity in these articles -_-. I understand how you think the carbon tax or this fund may be stopping support for other climate mitigation activities but honestly, the reason it’s even come down to this; There was no support to begin with.

    The public are concerned with themselves and The political agenda is always going to consider economics first.

    How about trying to find solutions that could work instead of critizing everything.

  2. Chris Breen
    Reply

    Hi Meg, you are wrong that there was no support for policies to address climate change “to begin with”. The graph here http://blogs.crikey.com.au/pollytics/2010/05/31/lowy-poll-climate-change-and-public-hypocrisy/ shows how it has declined over time (though I don’t agree with the conclusions of article)

    I think a large reason for that is the carbon tax, which hurts workers, not the polluting businesses. You are right that people are concerned about economics, and the challenge for the climate movement has been to put forward policies which deal with climate change and improve living standards, not take them backwards. Solidarity has been arguing such solutions for a long time, such as government directly building renewable energy (like it once built all the coal fired power stations). This would get renewable energy built, it would provide jobs, and it needn’t raise electricity prices. Being positive about things that won’t work isn’t going to solve the problem. The carbon tax was a political trap to stop real action on climate change, that puts the interests of business before the climate… and even something like funding for renewable energy, which should be popular, and could work if done properly, has been forced to deliver market driven outcomes ahead of climate ones, which is what I was trying to show above. Governments don’t fund the building of schools like this, and renewable energy is important enough that they shouldn’t leave it to the market either.

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