Download giga-what? explaining australia`s renewable

GIGA-WHAT?
EXPLAINING
AUSTRALIA’S
RENEWABLE
ENERGY
TARGET
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CLIMATECOUNCIL.ORG.AU
Authorship:
Petra Stock
Published by the Climate Council of Australia Limited
ISBN: 978-0-9942453-4-2 (web)
© Climate Council of Australia Ltd 2015
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Council of Australia Ltd and the authors in the following manner:
Giga-What? A guide to the Renewable Energy Target by Petra Stock
(Climate Council of Australia).
© Climate Council of Australia Limited 2015.
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KEY FINDINGS
Key Findings
1. Renewable energy is a crucial
way to reduce carbon emissions
from electricity supply and
combat climate change.
›› Burning fossil fuels for electricity
production is the largest source of
greenhouse gas emissions driving
climate change.
›› Australia’s renewable energy
resources are capable of producing
500 times the amount of electricity
we currently use.
›› A Productivity Commission review
of more than 1,000 emissions
reduction policies found that
policies encouraging additional
large-scale renewable electricity
power plants were the secondmost cost-effective set of policies
after emissions trading schemes.
3. The Renewable Energy Target
has reduced greenhouse gas
emissions in Australia.
›› To date, the Renewable Energy
Target has reduced greenhouse
gas emissions by 22.5 million
tonnes carbon dioxide- equivalent
to 10 per cent of Australia’s annual
electricity emissions.
›› In future, if the current policy
continues, the RET will reduce
emissions by 58 million tonnes
carbon dioxide (2015–2020) –
equivalent to annual emissions
from all of Australia’s passenger
cars and light commercial vehicles.
2. While renewable energy is
booming globally, policy
uncertainty around the
Renewable Energy Target
means investment has
fallen in Australia.
›› Investment in large-scale
renewable energy projects fell 88
percent in Australia in 2014, while
global investment in renewable
energy grew.
CLIMATECOUNCIL.ORG.AU
Page 1
GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
1. Introduction
Over the past year, there has been
plenty of wrangling over the future
of Australia’s renewable energy target
(RET). The RET debate tends to get
caught up in technical terms and
specialised arguments – like how many
gigawatthours (GWh) the target should
be – making it difficult for anyone not in
the renewable energy industry to follow.
Renewable energy is an important
solution to climate change given the
energy sector is responsible for both the
largest proportion and biggest growth
of greenhouse gas emissions created by
people (IPCC 2014).
Page 2
The Climate Council is consistently
asked questions from the public and
the media about renewable energy and
the RET. This report aims to provide a
simple guide to how this policy works,
explaining key terms and concepts, and
answering common misconceptions.
Given the majority – over 70% - of
Australians support retaining or
increasing the RET (Climate Institute
2014), it’s important for all of us to
understand what changes, if any,
are proposed following the recent
Warburton (Commonwealth of Australia
2014) and Climate Change Authority
(2014) reviews. We hope this report
helps you to unscramble the technical
jargon and get to the bottom of any
announcements, reports or proposals
on the RET.
CLIMATECOUNCIL.ORG.AU
02
BACK TO BASICS: WHAT IS A RENEWABLE ENERGY TARGET?
2. Back to basics:
What is a renewable
energy target?
A renewable energy target is a policy
to encourage more renewable energy,
that is energy produced from naturally
replenished sources such as sunlight,
wind, rain, tides and heat from the
Earth (ARENA 2014).
abundant and free fuel source with
limited reliance on scarce resources
like water; health and environmental
benefits; energy access and security;
and to provide an economic boost to
regional economies (Box 1).
There are many reasons countries,
like Australia, adopt renewable energy
targets: action on climate change; an
Australia’s renewable energy resources are
capable of providing 500 times the amount
of electricity we currently use.
CLIMATECOUNCIL.ORG.AU
Page 3
GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
BE PREPARED: CLIMATE CHANGE AND THE
AUSTRALIAN BUSHFIRE THREAT
majority of the
nt should stay
n the confines
main margins,
while the grey
ound and box
push outside.
IN
IN DETAIL
DETAIL11
Box
1: Reasons
for having
a
Forest
Fire Danger
Index
renewable energy target
Note the switch
from a 7 column
grid to one with
6. This makes
increasing to
as be
the“severe”—a
season progresses.
In
fire ignited
The Forest FireFire
Danger
hasIndex
been(FFDI)
a feature
was of the 50 are considered
the most of what
moresothan
mm
on suchareas
a daythat
willreceive
likely burn
hot 1000
and fast
developed in the
1960s by CSIRO
scientist A.G.
Australian
environment
for at least
of
rainfall
per
year,
about
35%
of
the
land
that
suppression
becomes
difficult.
For
forests,
a
MacArthur
to
measure
the
degree
of
risk
of
65
million
years
(Cary
et
al.,
2012).
ACTION ON CLIMATE CHANGE
LIMITED RELIANCE ON SCARCE is essentially
can be
burnt
in a typical
year (Russellrating over
75 is
categorised
as “Extreme”.
fire in Australian
forests (Luke
and Macarthur,
Human
management
of fires also
an information
RESOURCES,
LIKE
WATER
Renewable
energy
aim
reduce Smith et al., 2007).
1978). The Bureau
ofaMeteorology
andstarting
fire to with
has
longtargets
history,
heavy page, and
The FFDI on
7th February 2009
in Victoria,
management agencies
the
FFDI to assess
fire
useuse
by
indigenous
Australians
Renewable
energy
technologies
emissions
in the
electricity
sector,
breaks up the
southeast
andranged
southwest,
known In
as the
“Black
Saturday”,
fromfires
120 to
fire risk and issue
warnings.farming”) up to 60,000
(“fire-stick
(other
than
hydroelectricity)
do not main section
which is “pivotal”
for
limiting
global 190, theare
common
the heathlands
dry
highest
FFDIin
values
on record and
(Karoly,
years ago.
European
settlement
require
large
of water for content further
sclerophyll
forests,
typically
occurring
2009). Following
these
fires
thequantities
FFDI
in Victoria
The index is calculated
inchanges
real time
by
brought
in2°C
fire activity
warming
to
no more
than
(Climate
aboutand
every
to 30 years,
with springor
and
was revised
the5category
“Catastrophic”
combining a number
of meteorological
with flow-on
effects to Australian
cooling unlike coal and nuclear (US by providing
Change
Authority
2014).
This is because
summer
being peak
fire season
(Clarke
variables: preceding
rainfall
and evaporation;
“Code Red”
was added
(FFDI>100).
Consistent
landscapes.
visual variety.
Environmental
Protection
et
al.,
2011; Bradstock
etof
al.,hot
2012a).
with
the
increasing
incidence
and Fires Agency 2014).
current
wind
speed;
temperature;
and
humidity.
globally and in Australia, electricity
3% andFire
10%Danger
of Australia’s land
in the southeast
arebeen
oftenaassociated
dry conditions,
there have
number of
A related index,Between
the Grassland
shown here):
o the specific
of the content
phs and tables
more detailed
se pages than
ed data in the
he document.
produced
using
fossil
fuels
is the
largest
every
year
(Western
with periods
of El Niño
drought (Murphy
declarations
of Catastrophic
conditions
around
Index (GFDI), isarea
alsoburns
used in
some
regions
andAustralian
HEALTH
AND
ENVIRONMENTAL
source
of greenhouse
gas
emissions
Land
Authority,
2013) (Figs.
et al.,
2013) and
may
be extremely
southern
Australia
since
Black
Saturday.
States, calibrated
for Information
more flammable
grassland
BENEFITS
1 and 2). In the north of the continent,
(El Niño is the phase of the
conditions.
(Department
of the Environment 2014; intense
extensive areas of the tropical savanna
El Niño-Southern
(ENSO)
The FFDI
is not only usedOscillation
by management
IPCC
2014).
In Australia,
around
90%agencies
of phenomenon
operation,
electricity emits
woodlands
and grasslands
are burnt
characterised
warm dry
toIn
calculate
risk,
it hasrenewable
alsoby
become
The FFDI
was originally
designed
on
a scale
every
winter
during
the
dry season.
conditions,
while
LaFor
Niña
phase is
an important
tool for
research.
example,
from 0 to 100. MacArthur
used
the
conditions
of High
electricity
is generated
by
fossil
fuels,
little
or
nothe
toxic
waste.
In contrast, each
rainfall
the summer
followed
characterised
by cool, wet
conditions).
the probability
of destruction
of property
in
the catastrophic
Black during
Friday fires
of 1939 to
set
with
75% coming
from
coal
(Australian
ofsclerophyll
coal’s
lifecycle
toxic and
by
a dry
winter,
together
with the Sydney
Firespart
in wethas
forests,
suchemits
as
basin
been found
to increase
the maximum
value
of warm
100.
These
fires
burned
the and
presence
of a highly
combustible
the mountain
ash forests
in(Bradstock
Victoria,
significantly
with increasing
FFDI
5 million hectares
constituted,
at the
time,
Energy
Market
Operator
2013a).
carcinogenic
substances
with severe
grass
creates
a very
flammable and Gill,
are
less frequent
of very
2001).
The FFDIbut
hascan
alsobe
been
used
one of the largest
firelayer,
events
known
globally.
Australia’s
coal fired power
stations
health
impacts
forinminers,
workers and
incidence
peaks
highin
intensity
when
do occur
projections
ofthey
fire risk
the(Gill,
An index of 12 environment.
to 25 describesFire
conditions
with
a inextensively
are
highly
polluting,
units
using
the
late winter
dry
season,
with
1975).
Fires are
in the
future (see
section
7). rare in rainforests
“high”
degree of
danger.
Daysageing
with
ratings
overintensity
local
communities
(Climate
Council
absence of disturbances
less efficient technology (Climate
2014b). In China, reducing air pollution
such
as logging
cyclones
* In Tasmania,
the or
“Catastrophic”
Forest Fire
Grasslandis
Fire
Council
2014a).
a major
driver
its renewable
category
is indicated
by the
because
of
the behind
moist
shaded
Category
colour black
Danger Index Danger Index
local
climate
(Little
et
al.,
energy (Sources:
targets
(Climate
Council 2014c).
CFA,
2009, Bureau
2012). Arid
central
Australia
150 +
of Meteorology http://www.
AN
ABUNDANT
AND
FREE 100 +
CATASTROPHIC
(CODE
RED)*
experiences
intermittent
bom.gov.au/weather-services/
FUEL
SOURCE
EXTREME
75–99
bushfire/)
fires,
typically following
ENERGY
ACCESS
AND SECURITY
100–149
periods of extremely high
50–99
Renewable
energy resources 50–74
are
SEVERE
Renewable
provide an
rainfall energy
associatedcan
with La
Niña events because these
readily
available
and
free
once
capital
25–49
25–49
affordable and reliable source of energy
VERY HIGH
events lead to increased fuel
isHIGH
invested to harvest them. In
Australia, 12–24withinload
country
12–24
(Murphyborders,
et al., 2013) thereby limiting
(Fig.
3).
our renewable energy resources
are
0–11
0–11reliance on imported fuels such as
LOW TO MODERATE
among the best in the world; potentially
oil andThe
gas
(IEAof2007).
concept
“fire
regimes” is important for understanding
capable of providing 500 times the
amount of electricity we currently
AN ECONOMIC BOOST TO
REGIONAL
ECONOMIES
Page
1
CLIMATECOUNCIL.ORG.AU
use
(Geoscience Australia and ABARE
2010; AEMO 2013b). On the other hand,
Renewable energy can attract investment
fossil fuels are never free, and most,
and create jobs in regional areas. Farmers
like oil, gas and black coal, are now
and landowners in regional areas can
priced through international trading
benefit from annual lease payments
mechanisms.
“drought-proofing” farms by providing
a reliable, alternative source of income
(Climate Council 2014d; REN21 2014).
Page 4
CLIMATECOUNCIL.ORG.AU
Page 16
03
RENEWABLE ENERGY TARGETS AROUND THE WORLD
3. Renewable energy
targets around the world
Australia was one of the first countries
in the world to introduce a national
renewable energy target (Clean Energy
Regulator 2013). Now, renewable energy
targets are common worldwide. At the
beginning of 2014, 144 countries (as well
as thousands of states, cities and towns)
had renewable energy targets in place
(REN21 2014; Figure 1).
Figure 1: The number of countries with renewable energy targets is growing
Countries
with Renewable
Energy Targets
144
T
I
L
A
U
Q
W
O
L
127
COUNTRIES
WITH RENEWABLE
ENERGY TARGETS IN
2012
138
E
G
A
Y IM
COUNTRIES
WITH RENEWABLE
ENERGY TARGETS IN
2014
COUNTRIES
WITH RENEWABLE
ENERGY TARGETS IN
2013
Source: REN21 2014
CLIMATECOUNCIL.ORG.AU
Page 5
GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
Table 1: Renewable energy target examples around the world
Area
Target
Denmark
50% renewable electricity by 2020
100% by 2050
Indonesia
26% renewable electricity by 2025
New Zealand
90% renewable electricity by 2025
California
50% renewable electricity by 2030
Australia
41,000 GWh large-scale renewable electricity annually by 2020
plus uncapped support for eligible small-scale solar and wind
South Australia
50% renewable electricity by 2025
Targets for all energy consumed (includes electricity, transport, heating...)
European Union (28 countries)
20% renewables of all energy consumed by 2020
Targets for heating and cooling
United Kingdom
12% renewables in total heating and cooling supply by 2020
Targets for transport
Germany
20% renewables of transport energy consumed by 2020
Targets for installing specific renewable energy technologies (capacity targets)
China
Overall target of 20% zero emissions energy for all energy
by 2030
Technology specific targets:
420 GW hydropower by 2020
200 GW wind power by 2020
50 GW solar photovoltaic power by 2020
200 GW concentrating solar power by 2020
30 GW biomass power by 2020
India
Overall target of 15% renewable electricity (not including
hydroelectricity) by 2020
Capacity targets:
100 GW solar power by 2022
60 GW wind power by 2022
Note: To gain a sense of the scale of capacity targets – the capacity of Australia’s total electricity supply is 56 GW,
and installed renewable electricity capacity is 15.7 GW
Sources: REN21 2014; RenewEconomy 2014a and b; Governor of the State of California 2015;
Institute for Energy Economics and Financial Analysis 2015
Page 6
CLIMATECOUNCIL.ORG.AU
03
RENEWABLE ENERGY TARGETS AROUND THE WORLD
China aims to increase wind power by
200 GW in the next 5 years, that’s more than
three times Australia’s entire electricity supply.
BE PREPARED: CLIMATE CHANGE AND THE
AUSTRALIAN BUSHFIRE THREAT
ty of the
ould stay
confines
margins,
the grey
and box
outside.
wn here):
specific
content
nd tables
detailed
ges than
ta in the
cument.
IN
IN DETAIL
DETAIL12
Box
2: What’s
a watt? Key
Forest
Fire Danger
Index
technical terms explained.
Note the switch
from a 7 column
grid to one with
6. This makes
increasing to
as be
the“severe”—a
season progresses.
In
fire ignited
The Forest FireFire
Danger
hasIndex
been(FFDI)
a feature
was of the 50 are considered
the most of what
moresothan
mm
on suchareas
a daythat
willreceive
likely burn
hot 1000
and fast
developed in the
1960s by CSIRO
scientist A.G.
Australian
environment
for at least
Gigawatts
(GW)
and
megawatts
(MW)
are
measures
of capacity.
Capacity
is the is essentially
of
rainfall becomes
per year,
about
35%For
of forests,
the
landa
that
suppression
difficult.
MacArthur to measure
the degree
of
risk of
65
million
years
(Cary
et al.,
2012).
can be
burnt
in a typical
year (Russellrating
over
75station,
is
categorised
“Extreme”.
fire in Australian
forests (Luke
Macarthur,
Human
management
of fires
also
maximum
amount
ofand
electricity
that
a power
or as
multiple
power stations are
an information
Smith et al., 2007).
1978). The Bureau
andstarting
fire
hasofaMeteorology
long history,
with
heavy page, and
capable
of
producing
(Climate
Council
2014a).
The FFDI on 7th February 2009 in Victoria,
management agencies
FFDI to assess
fire useuse
by the
indigenous
Australians
breaks up the
southeast
andranged
southwest,
known In
as the
“Black
Saturday”,
fromfires
120 to
fire risk and issue
warnings.farming”) up to 60,000
(“fire-stick
For example,
a typical
wind settlement
turbine has
a are
capacity
of
between
–dry3 MW, and themain section
common
the
heathlands
and
190, the
highest
FFDIin
values
on record1.5
(Karoly,
years
ago. European
sclerophyll
forests,
typically
occurring
Following
fires
the
in Victoria
The index
is calculated
inchanges
real time by
brought
in electricity
fire activity2009).
total
capacity
of Australia’s
supply
wasthese
56 GW
(orFFDI
56,000
MW) in 2012–13
content further
aboutand
every
to 30 years,
with springor
and
was revised
the5category
“Catastrophic”
combining a number
of meteorological
with flow-on
effects to Australian
(BREE
2014b).
by providing
summer
being peak
fire season
(Clarke
“Code Red”
was added
(FFDI>100).
Consistent
variables: preceding
rainfall and evaporation;
landscapes.
visual variety.
etincreasing
al., 2011; Bradstock
etof
al.,hot
2012a).
with the
incidence
and Fires
current wind speed; temperature; and humidity.
3% andFire
10%
of
Australia’s land
in the southeast
arebeen
oftenby
conditions,
there
have
aassociated
number
of
A related index,Between
the Grassland
Gigawatthour
(GWh)
is
aDanger
measure
ofdry
electricity
generated
a power
station/s over a
every
year
(Western
with periods
of El Niño
drought (Murphy
declarations
of Catastrophic
conditions
around
Index (GFDI), isarea
alsoburns
used in
some
regions
andAustralian
period
of time.
For example,
the
totalsouthern
amount
of electricity
generated in Australia in
Land
Authority,
2013) (Figs.
et al.,
2013) and
may
be extremely
Australia
since
Black
Saturday.
States, calibrated
for Information
more flammable
grassland
1 and
2). In the north
of the
continent,
conditions. was
2012–13
249,000
GWh
(BREE
2014b). intense (El Niño is the phase of the
extensive areas of the tropical savanna
El Niño-Southern
(ENSO)
The FFDI
is not only usedOscillation
by management
woodlands
and grasslands
are burnt agencies
phenomenon
characterised
warm dry
to calculate risk,
it has alsoby
become
The FFDI was originally
designed
on a scale
Renewable
energyused
certificates
are
a an
kind
of tradable
currency
representing
every winter
during
the dry season.
conditions,
while
the LaFor
Niña
phase is
important
tool for
research.
example,
from 0 to 100. MacArthur
the conditions
of High
rainfall
the
summer
followed
characterised
by cool,
wet
conditions).
the
probability
of =
destruction
of property
in
the catastrophic
Black during
Friday fires
of 1939 to
set(one
renewable
electricity
generation
certificate
one
MWh).
Renewable
energy
a dry
winter,
together
Firesbasin
in wethas
sclerophyll
forests,
such as
been found
to increase
the maximum by
value
of warm
100. These
fires
burnedwith the Sydney
certificates are created by large-scale renewable energy power plants or small-scale
the and
presence
of a highly
combustible
the mountain
ash forests
in(Bradstock
Victoria,
significantly
with increasing
FFDI
5 million hectares
constituted,
at the
time,
(household)
renewable
energy
systems.
Certificates
can
be
bought
grass
creates
a very
flammable
are
less frequent
but
of very
and Gill,
2001).
The FFDI
hascan
alsobe
been
used and sold, before
one of the largest
firelayer,
events
known
globally.
environment.
Fire
incidence
peaks
in
high
intensity
when
they
do
occur
An
index
of
12
to
25
describes
conditions
with
a
extensively
in
projections
of
fire
risk
in
the(Gill,
they are eventually handed in to the Clean Energy Regulator, a Commonwealth
the
late winter
season,
1975).
Fires are
“high” degree of
danger.
Daysdry
with
ratingswith
overintensity
future (see
section
7). rare in rainforests in the
Government department (Clean Energy Regulator absence
2014a).of disturbances
such
as logging
cyclones
* In Tasmania,
the or
“Catastrophic”
Forest Fire
Grassland Fire
category of
is indicated
by the
because
the moist
shaded
Category
colour black
Danger Index Danger Index
local climate (Little et al.,
(Sources:
CFA,
2009, Bureau
2012).
Arid
central
Australia
100 +
150 +
of Meteorology http://www.
CATASTROPHIC (CODE RED)*
experiences
intermittent
bom.gov.au/weather-services/
bushfire/)
fires,
typically following
75–99
100–149
EXTREME
periods of extremely high
50–74
50–99
SEVERE
rainfall associated with La
Niña events because these
25–49
25–49
VERY HIGH
events lead to increased fuel
12–24
12–24
load (Murphy et al., 2013)
HIGH
(Fig. 3).
0–11
0–11
LOW TO MODERATE
The concept of “fire
regimes” is important for understanding
Page 1
CLIMATECOUNCIL.ORG.AU
Page 16
CLIMATECOUNCIL.ORG.AU
Page 7
GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
4. About Australia’s
Renewable Energy Target
The RET aims to:
a)encourage additional renewable
electricity
b)reduce emissions of greenhouse
gases in the electricity sector
c)ensure that renewable energy sources
are ecologically sustainable.
The RET target is made up of:
›› A Large-scale Renewable Energy
Target (41,000 GWh annually by 2020)
– a capped target to encourage new
major renewable energy power plants,
like wind farms, large solar plants and
hydroelectric power stations (Figure 2a).
›› A Small-scale Renewable Energy
Scheme – an uncapped scheme to
encourage small-scale renewables,
such as household solar photovoltaic
panels and solar hot water heating
(Figure 2b).
Page 8
In 2009, the RET was expanded with
the aim to generate at least 20 percent
of Australia’s electricity from renewable
sources by 2020 (Climate Change
Authority 2012).
The Large-Scale Renewable Energy
Target steadily increases up to a
2020 target of 41,000 GWh, requiring
electricity retailers to source more
and more renewable electricity every
year (Clean Energy Regulator 2014a
and 2014b).
To meet the increasing targets, new
renewable power stations need to be
built. And, to finance these power
stations, renewable power generators
usually need long-term contracts with
electricity retailers (sometimes called
off-take agreements) to sell their
electricity and renewable energy
certificates (ESAA 2014).
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04
ABOUT AUSTRALIA’S RENEWABLE ENERGY TARGET
Figure 2: (from top to bottom) (a) Large-scale renewable energy and (b) Small-scale renewable energy
CLIMATECOUNCIL.ORG.AU
Page 9
1998
8.7*
1999
8.5*
CLIMATECOUNCIL.ORG.AU
2002
›› Target be
increased and
extended.
›› Broad
community
support for
MRET
2003-04
Tambling
Inquiry
2001
7.7*
8.5*
2004
8.9*
2005
9.3*
›› Transition statebased renewable
energy targets to the
national scheme.
›› Introduce incentives
for household
renewables
2007
8.2*
›› RET be
split into
large and
small scale
renewables
targets.
2009
8.6*
›› Reduce
frequency of
RET reviews
›› Retain RET as
GWh targets
2012 Climate
Change
Authority
review
2008
7.5*
Legislated target
– 45,000 GWh of
additional renewable
electricity by 2020
(above 1997 baseline)
RET increased
requiring at least
20 percent renewable
electricity by 2020.
7 September 2009
2010 Review
2006
8.7*
Both major
parties commit
to expand the
RET to 15-20
percent.
2007 Federal
election
2009 Consultation
on increasing
MRET:
2003
8.2*
›› New South Wales: 10
percent of electricity
consumption by 2010
(planned).
›› South Australia: 20 percent
of electricity generation
by 2020
›› Victoria: 10 percent of
electricity generation by
2016
MRET achieved –
Commonwealth Government
decides not to increase the
MRET. In response, States
introduce renewable energy
targets:
2006 – 07
2010
10.4*
›› Wind
back or
abolish key
elements
›› RET
meeting its
objectives
2014
Warburton
review
2011
10.3*
›› An uncapped
scheme for
additional smallscale renewable
electricity by 2020
›› 41,000 GWh of
additional largescale renewable
electricity by 2020
2012
13.1*
RET split into
large-scale and smallscale renewable energy
targets:
1 January 2011
Sources: Department of the Prime Minister and Cabinet 1997; Climate Change Authority 2012; BREE 2014b and 2014c*; Parliament of Australia 2014; Pitt&Sherry 2014 and 2015**
2000
8.0*
Legislated target
– 9,500 GWh of
additional renewable
electricity by 2010
(above 1997 baseline)
MRET introduced–
requiring two percent
additional renewable
electricity by 2010
1 April 2001
›› Recommendations
and findings
Inquiries and
Reviews
1997
8.6*
1997 is set as renewable
electricity baseline.
Australia’s renewable
energy target announced
- Prime Minister John
Howard announces the
Mandatory Renewable
Energy Target (MRET) in
Safeguarding the Future:
Australia’s Response to
Climate Change.
20 November 1997
Key Events
SHORT HISTORY OF THE RET
Percentage Renewable
Electricity Generation (%)
Page 10
2014
12.2**
(data not
including
WA and NT)
›› Defer largescale target
by up to 3
years
›› Retain the
RET as is
2014 Climate
Change
Authority
review
2013
14.3**
(data not
including
WA and NT)
Both major
parties commit
to retaining the
RET.
2013 Federal
election
04
ABOUT AUSTRALIA’S RENEWABLE ENERGY TARGET
Table 2: RET Report Card
How is the RET performing against its
objectives?
Objective
Comments
Encourage additional
renewable electricity
Large-scale renewables
›› More than 400 additional large-scale renewable power
stations built (Climate Change Authority 2014).
›› Increased renewable electricity from 8% (2001) to 13.1%
(2013) (BREE 2014c).
Small-scale renewables
›› Nearly 1.4 million rooftop solar photovoltaic systems
installed (Clean Energy Regulator 2015)
Reduce greenhouse
gas emissions in the
electricity sector
Australia’s RET was originally designed as a policy response
to climate change (Department of Prime Minister and
Cabinet 1997).
To date the RET has reduced greenhouse gas emissions by:
›› 22.5 million tonnes carbon dioxide (2001–2014) – equivalent
to 10% of Australia’s annual electricity emissions
In future the RET will reduce emissions by:
›› 58 million tonnes carbon dioxide (2015–2020) – equivalent
to annual emissions from all of Australia’s passenger cars
and light commercial vehicles
›› 299 million tonnes carbon dioxide (2015–2030) – equivalent
to half of Australia’s current total annual emissions (Climate
Change Authority 2014).
Ensure renewable
energy sources are
ecologically sustainable
CLIMATECOUNCIL.ORG.AU
All renewable power stations accredited under the Act comply
with all federal, state and local planning and environmental
laws (Commonwealth of Australia 2014).
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GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
Page 12
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05
HOW POLICY UNCERTAINTY AFFECTS INVESTMENT
5. How policy uncertainty
affects investment
To invest in renewable energy projects,
financiers, like banks, need certainty in
government policy and legislation to be
able to forecast future electricity prices
and revenue (ESAA 2014).
When governments change existing
policies and laws, or create concern
about possible future changes, this
heightens the sense of risk for investors.
This risk is called “sovereign risk” and is
one of the most damaging sorts of risks
to investors as it undermines the legal
basis on which past investments have
been made, and increases perceptions
of future investment risk.
International investors tend to look
for countries with low sovereign risk
in which to invest. Uncertainty about
government policy raises the cost of
capital, and damages investment, jobs
and growth (Global Commission on the
Economy and Climate 2014).
The Climate Change Authority (2012,
2014) argues frequent reviews of the
RET are contributing to uncertainty and
discouraging investment. There have
been six reviews of the RET since 2001,
two of which were in 2014 (Clean Energy
Council 2014; ESAA 2014; Infographic –
‘Short History of the RET’).
CLIMATECOUNCIL.ORG.AU
In Australia, policy uncertainty caused
by two reviews of the RET together
with the repeal of the Carbon Price has
effectively frozen new investment in
renewable energy since late 2013 (ESAA
2014; Sydney Morning Herald 2014).
“Banks stated that in the period from
2002 to 2013, there was growing
interest in renewables and strong
lending liquidity… In 2014, however
there have been very few (if any)
renewable energy transactions”
(ESAA 2014)
Bloomberg New Energy Finance
reported an 88% drop in large-scale
renewable energy investment in
Australia compared with 2013 – the
lowest investment in large-scale
renewables since 2002 (Sydney
Morning Herald 2015).
All renewable energy investment
in Australia fell 35 percent in 2014
to $3.7 billion even though globally,
investment in renewables grew by
16 percent. Bloomberg New Energy
Finance (2015) reported renewable
energy investment increased to
$310 billion worldwide in 2014, led by
China, investing $89.5 billion, and
Japan $41.3 billion.
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GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
Policy uncertainty also led to a
“hiatus” in mergers and acquisitions in
renewable energy assets in Australia
last year, despite the global value of such
deals in renewables rising 13 percent
(PwC 2015).
“A reduction in renewable targets
is likely to adversely affect the
industry, given investments already
made in achieving the existing
targets. It is difficult to foresee any
pick-up in Australian renewables
deal flow until there is a more
positive and certain policy outlook
for renewable power projects.”
(PwC 2015)
Even if a political deal is reached on the
future of the RET, the key challenge will
be to shift the sense of uncertainty and
return investor confidence to ensure the
targets set out in the Act can be met.
Investment in large-scale renewable energy projects fell
88 percent in Australia in 2014, as global investment in
renewable energy grew.
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CLIMATECOUNCIL.ORG.AU
CONCLUSION
Conclusion
Renewable energy targets are a “pivotal”
Australia is blessed with abundant
policy tool for reducing carbon emissions
renewable energy resources, more than
from electricity supply. After emissions
500 times our current electricity needs.
trading schemes, policies like the RET
Meanwhile our power plants are ageing
which encourage large-scale renewable
and will need to be closed or replaced
energy are the next most cost-effective
in coming decades.
way to reduce carbon emissions. Globally,
Over more than a decade, the RET
the number of countries with renewable
has increased the supply of renewable
energy targets is increasing over time,
energy thereby reducing greenhouse gas
as are the targets themselves.
emissions from electricity generation.
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GIGA-WHAT? EXPLAINING AUSTRALIA’S RENEWABLE ENERGY TARGET
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Image Credits
Cover photo: “Brown Hill Range wind turbines at
sunrise” by Flickr user David Clarke licensed under
CC BY-NC-ND 2.0
Page 9: Figure 2a Large Scale Renewables: “Albany
Wind Farm” by Flickr user Bentley Smith licensed
under CC by –NC-ND 2.0, accessed at https://www.
flickr.com/photos/superciliousness/29624786
Page 9: Figure 2b Small Scale Renewables:
“Solar panels on old home” by Flickr user Michael
Coghlan licensed under CC by –NC-ND 2.0,
accessed at https://www.flickr.com/photos/
mikecogh/9223731920
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