Gas Week

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Howard ignores explicit advice of hand-picked task group; wind has cost advantage, therefore soaks up most of energy subsidy plan

Posted by gasweek on 4 October, 2007

A 2004 government estimate that encouraging 10 per cent of power generation by 2020 to come from clean energy sources would cost $23 billion has been either ignored or quietly put to one side, according to an editorial in The Australian (25/9/2007, p.15).

Ignoring advice: “Instead, the Commonwealth has corralled the plethora of political fixes announced by State Governments in the heat of their own election campaigns and re-badged them as its own. To do so, Mr Howard has ignored the explicit advice of his hand-picked task group that there be an overarching policy rather than continue with a hotch potch of responses. He has also ignored the task group’s strong belief that the subsidy programs be abol­ished or phased out unless they were directed efficiently at clearly demon­strated policy gaps, or were necessary to build capacity in the lead up to the introduction of an emissions trading scheme.

Aiming low: “His plan does not solve the problem of the states’ disparate schemes because each state is unwill­ing to stop what it is doing. It is at stark odds with the advice of task group chair and prime ministerial confidant Dr Peter Shergold that the key to getting it right is to aim high, commit early to taking action and implement change with caution. The task group favoured a market-based solution driven by price signals. Support that was received from industry, other than wind, was luke­warm at best. This is because under the scheme outlined by Mr Howard that requires 30,000 gigawatt hours of electricity each year to come from technologies that emit fewer than 200 kg of greenhouse gases per mega­watt hour, there is really only one winner. Gas-fired electricity does not qualify and out of solar, wind and clean coal technologies that do, wind has a clear cost advantage.

Wrong approach: “It will therefore soak up most of the subsidy. Clean coal technology, where carbon is stored rather than released into the atmosphere, is unlikely to be commer­cially available until the end of next decade. A lot of work remains to be done to make solar competitive with wind, but Mr Howard’s latest plan is not the best way to go about it,” the editorial concluded.

The Australian, 25/9/2007, p. 15

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