Renewable Energy Target (RET)
The RET scheme is designed to ensure that 20 per cent of Australia’s electricity comes from renewable sources by 2020. The RET scheme is helping to transform Australia’s electricity generation mix to cleaner and more diverse sources and supporting growth and employment in the renewable energy sector.
Since January 2011 the RET scheme has operated in two parts—the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET).
The LRET creates a financial incentive for the establishment or expansion of renewable energy power stations, such as wind and solar farms or hydro-electric power stations. It does this by legislating demand for Large-scale Generation Certificates (LGCs). One LGC can be created for each megawatt-hour of eligible renewable electricity produced by an accredited renewable power station. LGCs can be sold to entities (mainly electricity retailers) who surrender them annually to the Clean Energy Regulator to demonstrate their compliance with the RET scheme’s annual targets. The revenue earned by the power station for the sale of LGCs is additional to that received for the sale of the electricity generated.
The LRET includes legislated annual targets which will require significant investment in new renewable energy generation capacity in coming years. The large-scale targets ramp up until 2020 when the target will be 41,000 gigawatt-hours of renewable electricity generation.
The SRES creates a financial incentive for households, small businesses and community groups to install eligible small-scale renewable energy systems such as solar water heaters, heat pumps, solar photovoltaic (PV) systems, small-scale wind systems, or small-scale hydro systems. It does this by legislating demand for Small-scale Technology Certificates (STCs). STCs are created for these systems at the time of installation, according to the amount of electricity they are expected to produce or displace in the future. For example, the SRES allows eligible solar PV systems to create, at the time of installation, STCs equivalent to 15 years of expected system output.
The RET scheme legislation prescribes regular reviews of the scheme’s operation to ensure it is operating efficiently and effectively. On 17 February 2014, the Australian Government announced the review of the RET scheme by an independent expert panel. The Government is now considering the panel’s report that was released in August 2014.
Emissions Reduction Fund (ERF)
The Emissions Reduction Fund (ERF) provides positive incentives to businesses across the economy to reduce emissions. Its aim is to reduce emissions at lowest cost and contribute towards Australia’s 2020 emissions reduction target of five per cent below 2000 levels by 2020.
The Emissions Reduction Fund will operate alongside existing programmes that are already working to offset Australia’s emissions growth, such as the Renewable Energy Target and energy efficiency standards on appliances, equipment and buildings.
Projects expected to be completed by 2020 will be eligible to bid for a share of $2.55 billion in government funding under the ERF.
The Government expects that the ERF will attract projects to clean up waste coal mine gas, clean up power stations, capture landfill gas, improve energy efficiency in commercial buildings, revegetate marginal lands, improve soil productivity and increase reforestation.
The ERF will include a safeguard mechanism to limit emissions, which is intended to begin on 1 July 2015. Legislation to establish the ERF is expected to enter the Senate later this year.
Energy White Paper
The Australian Government is preparing a new Energy White Paper that will provide a comprehensive approach to national energy policy. The Energy White Paper will consider:
the supply and use of energy resources to deliver security of supply;
increases in new energy sources to ease demand and supply constraints;
regulatory reform to put downward pressure on price rises; and
improving energy productivity.
The Energy White Paper is expected to be released by the end of 2014. More information on the Energy White Paper is available at www.ewp.industry.gov.au.
Australian Renewable Energy Agency (ARENA)
ARENA is an independent statutory authority which commenced operations on 1 July 2012, with two objectives: to improve the competitiveness of renewable energy technologies, and to increase the supply of renewable energy in Australia. The governance of ARENA is defined by the Australian Renewable Energy Agency Act 2011.
ARENA has committed $1 billion to nearly 200 projects across a suite of renewable energy types. Industry has matched this investment with a further $1.8 billion, taking the investment in Australian renewables to a total of $2.8 billion as a result of the programme. More information on ARENA is available at: www.arena.gov.au.
Clean Energy Finance Corporation (CEFC)
The $10 billion CEFC ($2 billion per year for five years) provides investment in renewable energy, low-emission energy technology and energy efficiency projects in Australia. The CEFC was established on 3 August 2012 under the Clean Energy Finance Corporation Act 2012. The CEFC commenced funding investments on 1 July 2013. As at 30 June 2014, the CEFC has contracted investments of over $900 million in projects with a total value of over $3 billion.
The Solar Towns programme, a pilot measure, will allocate $300,000 each to seven regions to support the uptake of solar technologies. Programme details are expected to be announced in 2014.
In July 2009, the Council of Australian Governments (COAG) agreed to the comprehensive, 10-year National Strategy on Energy Efficiency (NSEE), to accelerate energy efficiency improvements and deliver cost-effective energy efficiency gains across all sectors of the Australian economy. The NSEE aims to streamline roles and responsibilities across government by providing a nationally consistent and coordinated approach to energy efficiency.