Australian Senate Embraces Renewable Energy After Dumping Cap-and-Trade

Australia's Senate passed a renewable energy law today, a few days after opposition and minority parties joined forces to kill the federal government’s carbon-trading plan.

The new law sets a national renewable energy target that requires utilities and other large electricity users to procure 20 percent of their electricity from renewable sources by 2020. It comes with the promise of releasing about $22 billion in stalled investment funds, but it also carries concessions for heavy energy users and big coal, including an amendment declaring coal-seam methane gas a renewable energy source.

While the Greens and climate activists were disappointed in the concessions and had argued for a higher target, most still supported the split-off renewable energy bill.

"The renewable energy target is an important jigsaw piece in the clean energy low carbon solution, it will not only drive investment and innovation in clean energy jobs and industries but also lower costs of achieving longer term carbon pollution reduction goals," said John Connor, CEO of The Climate Institute.

However, he added, "The exemptions for big polluters are regrettable and irresponsible for those industries whose long term viability in Australia depends on the development of clean and renewable energy sources. Not only are they not doing their bit, these big polluters are potentially pushing greater costs on to households and the rest of the economy."

"We’ll need to watch these and other parts of the legislation to ensure we achieve at least the full 20 percent of our energy from a mix of genuine renewable energy sources by 2020."

Australia’s new renewable energy target matches the European Union’s stated goal and exceeds those proposed by the U.S. Congress. The U.S. House’s American Clean Energy and Security Act (ACES) would set a 20 percent goal but allow as much as 8 percent to come from energy efficiency, and the U.S. Senate Energy and Natural Resources Committee’s bill would set a target of 15 percent by 2021.

Prime Minister Kevin Rudd's government sought to regain momentum by pursuing renewable energy legislation in the wake of the defeat of its Carbon Pollution Reduction Scheme (CPRS). Decoupling the renewable energy target from the cap-and-trade legislation, the government was able to use widespread public support for renewable energy to its advantage and win Senate approval.

The successful passage of the renewable energy target guarantees that Australia can take at least one substantial national policy to the fast-approaching climate treaty negotiations in Copenhagen this December.

In a small victory for the opposition, the Liberal party managed to win an amendment that permits electricity produced from coal-seam methane gas to count towards the renewable energy target. Greens Sen. Christine Milne criticized the amendment arguing,

“The government has completely wrecked the integrity of the renewable energy target by including coal gas.” Coal-seam gas “is a fossil fuel, not a renewable energy source.”

Australian Greens senators put forward amendments intended to strengthen the law, but with the support of the opposition, the centre-left Labor government could ignore Greens proposals. While their amendments to increase the energy target to 30 percent by 2020 and limit compensation for industry were unsuccessful, Greens senators nonetheless voted to pass the law.

The coal-heavy country has a long way to go, starting with renewable sources today only accounting for about 8 percent of energy. Connor also noted that the renewable energy target would achieve only one-twelfth of the emissions reductions needed to cut the nation’s carbon pollution by 25 percent from 2000 levels, considered Australia’s fair share of a global agreement that could keep CO2 below 450 ppm.