Home: Renewable Energy News: Monday 28 April, 2008

Renewable Energy News

MONDAY 28 APRIL, 2008 |

Emission trading scheme tax arrangements need clarification

The Taxation Institute of Australia is warning that the proposed carbon trading scheme could reap more than $14 billion in businesses tax unless the Australian Government takes immediate steps to clarify the tax effects of the proposed carbon trading scheme.

The $14 billion is based on the assumption that permits are required by all companies operating in the transport and stationary energy sectors. Taxation Institute of Australia president Sue Williamson says the potential tax windfall would effectively translate into a seven per cent increase in today’s 30 per cent company tax rate if the Government did not commit in its upcoming budget to outlining the compensation measures needed to support the carbon trading plan.

“While we commend the Government’s commitment to reducing carbon emissions, it is important the tax treatment of carbon trading is given immediate attention and agreed well before the final model for an emissions trading scheme is established,” says Williamson.

“To date we have not seen any evidence of the tax implications of an ETS being fully considered, yet we know that many tax issues currently exist for businesses that have already implemented their own carbon abatement strategies,” she adds.

“The Government must ensure that its climate change efforts are not undone by hastily introducing an ETS without giving full consideration to the tax regime that will support it. Otherwise we could see consumers wearing unnecessary additional costs for goods and services which will ultimately generate a significant inflationary spike,” says Williamson. Williamson says the Taxation Institute also hopes that the Government’s upcoming budget would: clarify the tax position of existing voluntary abatement strategies; ensure tax laws are changed to encourage the development of alternative energy sources; and, consider tax arrangements in the development of the ETS with taxation experts.

Vic Government finds its geothermal hot spots

Strong industry interest in exploration for geothermal energy has promoted the release of 19 new Victorian exploration areas, according to the Victorian Government. Energy Minister Peter Batchelor says the new exploration areas are located mostly in the Wimmera, in the north of the state, and also in Gippsland, and cover more than 154,000 square kilometres.

Bachelor says the Government aims to increase energy generation from renewable sources to 10 per cent by 2016 under the Victorian Renewable Energy Target scheme. In 2007 the State Government granted 12 permits for geothermal exploration, to companies which have committed to spending a total of $64 million over five years.

Regional geothermal temperature and other geoscience data have been made available by the Government to help exploration companies considering applying for permits.

Meanwhile, Australian geothermal developer Petratherm Limited may be embarking on a plan to heat homes in Madrid, Spain. The Adelaide-based company says a pre-feasibility study into the proposal is due for completion as early as May 2008. The study is assessing the practical application and commercial viability of the “Madrid Basin Direct Heating” project.

The project proposes to drill into a shallow geothermal reservoir 1500 metres beneath the Madrid Basin at a site about 40 kilometres northeast of the Spanish capital.

The company says the move will provide first revenues for Petratherm which has pioneered Australia’s export drive into Spain and China’s emerging geothermal energy sectors.

Government reviews Climate Change programs

Citi’s head of government and public sector group, Roger Wilkins, will lead the Australian Government’s strategic review of climate change programs.

Minister for Finance and Deregulation Lindsay Tanner and Climate Change Minister Penny Wong announced the review in February 2008, which is due to report to Government in July 2008.

“Australia has a significant investment in programs that are designed to address climate change issues both domestically and internationally,” says Wilkins.

“Now is an opportune time to review this activity in light of the proposed introduction of an emissions trading scheme and adopt a more strategic, principled and disciplined approach,” he adds.

The introduction of an emissions trading scheme represents a fundamental shift in the way reductions in Australia’s greenhouse gas emissions are going to be achieved, according to Wilkins. Submissions to the review close on 20 May 2008.

US Govt invests $50m in renewable energy demonstration projects

The US Department of Energy plans to invest up to $50 million over five years, in nine demonstration projects competitively selected to increase efficiency in the nation’s electricity grid. The Renewable and Distributed Systems Integration (RDSI) technologies demonstrated in these projects aim to reduce peak load electricity demand by at least 15 per cent at distribution feeders.

“Cutting-edge technologies that enhance the efficiency and dependability of the nation’s electricity grid are critical to the Bush Administration’s overarching goal of ensuring an affordable and reliable supply of electricity to the American people,” says the Department of Energy.

“These proposals will help to increase reliability in our electricity grid by defraying both the cost and effort associated with upgrading distribution lines or adding new generation capacity to meet peak electrical load, furthering our ongoing efforts to increase national economic and energy security.”

$3m to reduce PNG deforestation

The Australian Government will provide $3 million for joint activities with Papua New Guinea to help reduce deforestation under the PNG-Australia Forest Carbon Partnership. At the Australia-PNG Ministerial Forum in PNG, Climate Change Minister Penny Wong and Foreign Affairs Minister Stephen Smith announced Australia would aid PNG in its participation in future international forest carbon markets, with a view to reducing deforestation. “We know deforestation contributes around 20 per cent of total global emissions,” says Wong. The $3 million is from the Government’s $200 million International Forest Carbon Initiative. Wong says funds available under the International Forest Carbon Initiative are being used to support Australia’s aims in ongoing international negotiations on climate change.

Europe looks to coal again

Europeans are switching back to coal. Over the next five years, Italy will increase its reliance on coal to 33 per cent from 14 per cent. Power generated from coal by energy company Enel will rise to 50 per cent. Italy is not alone in its return to coal. Driven by rising demand, record high oil and natural gas prices, concerns over energy security and an aversion to nuclear energy, European countries are slated to build around 50 coal-fired plants over the next five years that will be in use for the next five decades. European power-station owners emphasise that they are making the new coal plants as clean as possible. Enel, like many electricity companies, says it has little choice but to build coal plants to replace aging infrastructure, particularly in countries like Italy, which prohibit nuclear power. Fuel costs have risen 151 per cent since 1996, and Italians pay the highest electricity costs in Europe. Enel says it will start experimenting with carbon capture and storage technology in 2015.

Solar power for schools on the rise

More and more schools realise that solar power is a viable option for their school community to reduce their carbon footprint. For example for 10 months, students at Sydney's Pittwater High organised raffles and lobbied local businesses and finally raised $85,000 to go solar. "We could no longer sit on our hands and hope that others would do something about global warming," Pittwater High School principal Russ Cusworth said.

"We're certainly not in it for the money. As a matter of fact it can be an expensive exercise for a public comprehensive high school like us." Photovoltaic or PV panels now run 10 classrooms and during the holidays the school is expecting to feed electricity into the grid, and supplying this renewable, clean power to the surrounding suburbs. "If a school can do this, so can a hospital, so can a shopping centre, so can a factory," Mr Cusworth said. Nevertheless Australia still does lag behind other countries in offering incentives for hospitals or factories to feed solar power into the grid.

Woolworths' main liquor distribution centre in western Sydney has been purpose-built to carry $8 million worth of PV panels, but the leading food chain says it will not invest in them until there is a financial return on the solar panels. Woolworths' sustainability manager Armineh Mardirossian says at this point solar energy is still providing the returns which a commercial operator would want. Energy Matters Marketing Manager Markus Lambert says commercial roof tops, together with residential roof tops, are needed to deliver driving scale for the solar photovoltaic industry.

While Australia receives a world record in sunshine, and therefore we have the potential to emerge as a solar nation, this will only be possible with the right policy support," Mr Lambert said. Mark Diesendorf, from the Institute of Environmental Studies at the University of New South Wales, says Australia needs to "build the market to bring the price down, so we can give a genuine incentive".

Real Feed-in tariffs needed - rather than tokenism

Ever heard about the Feed-in tariffs? It’s the initiative which turned Germany into a power house of solar energy – even though they get less than half the sun of Australia. South Australia is the first state to offer that innovative incentive, the so-called "feed-in tariff".

"If we don't take action, we don't have credibility in preaching to others and that's why a small state like South Australia is taking the lead and I'm really pleased that other states are following," South Australian Premier Mike Rann said recently. But even this self promoting initiative, say critics, is tokenism. "Why should people who do the right thing and install solar power on their roofs to supply the grid be out of pocket for themselves? It doesn't really make sense," Jeremy Rich of Energy Matters said.

ACT Chief Minister John Stanhope says South Australia's legislation is based on a 2 per cent net model, which he doesn't believe will work. Mr Stanhope backs legislation based on Germany's example, where both homes and businesses are paid at nearly four times the standard rate for all the electricity they produce.

"In less than six years, we've seen the German solar panel market grow from about 100 megawatts to over a gigawatt, so that's a 10 times increase. That a kind of miracle for a country that has so much less sun power than Australia," Ms Rich said. Many ordinary Australians feel frustrated no such incentive is offered to them and wish that our own Government needs to do a lot more. Currently New South Wales, the state with the largest carbon footprint, the biggest CO2 emissions in the country is dragging the chain. "If we introduced feed-in tariffs on the gross amount of solar electricity fed into the grid we would see the solar industry expanding really rapidly, especially in NSW,” Mr Rich concluded.

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