Renewable Energy Target Initiative in Australia - Term Paper Example

Renewable Energy Target Initiative in Australia Name; Course Professor’s name: University name: City, state: Date of submission: Background of the policy The Renewable Energy Target (RET) is an energy scheme established in January 2011 by the government of Australia and regulated by the Clean Energy Regulator. The CER is a statutory body created by the Clean Energy Regulator Act 2011 of 2011. The scheme aims to generate renewable energy and increase the country’s Gigawatt power production by 20% by the year 2020. The Regulator seeks to build clean energy power capacity in compliance with the commonwealth government mandate of 2010 for generation of renewable energy (Commonwealth Government, 2010). An oversight body called Climate Change Authority set up in 2012 regulates and advises the CER and has jurisdiction over RET. The authority has the mandate to sponsor programs that advocate better climate, reduction of carbon air pollution and prevent the emission of fluorocarbon gases that lead to global warming and climate change. RET is one of the initiatives employed by the Australian government. The renewable Energy Target scheme operates by selling renewable energy certificates (RECs) (Martinot, 2003). Accredited power generation stations and other small-scale power suppliers generate the certificates, which represent units of power (in this case a certificate is equivalent to one megawatt of renewable energy). Certified electricity wholesalers buy and in turn remit the certificates to the regulator at a fee. The sale of the energy certificates creates a renewable energy investment that ensures the availability of sustainable energy all year round (Commonwealth Bank, 2011). Aims and objectives of RET The scheme operates on two plans, Large-scale RET and Small-scale RET. The scheme seeks to establish and encourage production of more renewable power through additional capacity of conventional hydro-power generation. Other inclusive small-scale power systems are either solar or wind-powered. It aims to reach a target of 20% additional renewable power by 2020 and efficiently reduce carbon pollution and gaseous emissions (Commonwealth of Australia, 2012). There have been increased installations of solar and wind power systems since the start of the program until 2012. Therefore, the trend towards renewable energy generation keeps increasing as the demand for renewable increases. Records from the Clean Energy Regulator show this. Although the Carbon pricing mechanism was not among the initial goals of RET, CER has adopted the method of selling carbon units to achieve the reduction of carbon emissions. Presently, the body is set to reduce the amount of carbon units sold to entities and establish a carbon-free environment in relation to international standards (Martinot, 2003). The principles are only attainable through increasing the amount of renewable sources of energy and replacement of energy sources that result in gaseous emissions. Graph On Progress Of Different Energy Sources Source: Commonwealth of Australia, 2012 The method of governance RET has mandate under the law through legislation acts that include Renewable Energy Acts of 2000 and Renewable Energy (Small-scale and Large-scale shortfall charges). The Electricity legislation principles govern the generation of power by both large-scale and small-scale schemes; provide legal procedures for generation of RECs as well as other governmental functions as stipulated by the law. The two other Acts guarantee Small-scale and large-scale shortfall charges of $65 per megawatt-hour of electricity produced. The large-scale renewable Energy Target (LRET) scheme mainly comprises of large hydroelectric generating stations, solar and wind farms. The plan involves the buying of Large-scale Generation Certificates (LGCs) by eligible persons or electricity wholesalers from the mass power generating entities for submission to the clean energy regulator. The small-scale Renewable Energy Scheme (SRES) incorporates small-scale power sources i.e. household solar panels and voltaic cells, power from solar water heating and wind power. SRES investment comes from Small-scale generation certificates (SGCs) generated by the electricity retailers. The only difference between SGCs and LGCs is that the former feature during system installations Consequence and suitability of RET RET seeks to increase renewable electricity generation to supply the existing and increasing demand. The consumption requirement will reduce with the increase in solar water heater systems and solar PV electricity generation. Decrease in Gas heating consumption will occur with the design of solar heaters and hybrid (solar and wind) systems. Renewable energy generable is viable over wide geographical areas. Extension of Transmission systems is possible to reduce incurred losses and overreliance on gas heating. The replacement of gases and petroleum products electricity generation with renewable sources will aid in the reduction of carbon and ozone gases emissions (Martinot, 2002). Policy repercussions and Stakeholder involvement The RET policy governs all the power sources are renewable. Petroleum products pollute the environment and therefore are not as renewable energy sources. The renewable energy capacity and generation has expanded ever since the initialization of the RET programs. The prospects of the program are achievable since capacity increased by 9050 GW hours from 2001 to 2012 (Angela, 2014). Ever since the inception of the mandatory renewable energy target (MRET), renewable energy generation has received double growth and is set to boost more energy by the year 2020. Renewable energy as a contributor of the total electricity in Australia has increased its output as the electricity demand has grown by 13%. There has been reduced generation of electricity from gases and petroleum products over the years as renewable sources have grown (Angela, 2014). Large-scale RET players have always had the upper hand when it came to renewable generation, but this has since changed with the diversification of the program to include small-scale players. Number of large-scale RET players has increased considerably over time with the number of solar installers and designers reaching a maximum of 4200 by September 2001 (Williams, 2005). Small-scale employees in the market have also increased to cater for the increased number of RET certificates generated annually. This number according to CER estimate was about 6000 by 2011 (Williams, 2005). Public perception of the issue The target has received irresistible public support with the majority of people optimistic that the forecasted renewable energy infrastructures will achieve the set target (Clean Energy council, 2014). Most people have criticized the abolishment of RET. The initiative is both economically sound and environmentally-friendly. A recent study by Crosby Textor, a marketing research firm contracted by pacific hydro has shown that majority of those interviewed gave a positive response concerning the success of the initiative. A poll conducted in August recorded 82% approving population that indicated that RET is the future of Australian energy sector. Renewable generation efforts have influenced the economic state of the country. Better still, a 17% population was against the program. Tony Abbot had earlier indicated that the initiative was unrealistic and would not achieve results in time. More people fear losing their jobs with the abolishment of RET or reduction in the required number of RET certificates Determining Political factors The political arena is also warming up to the challenge, and many politicians have come out strongly to support the initiative. Bill Shorten in a live interview indicated that his party would not support the plan to reduce the renewable energy target of 20% set. That would be tantamount to sacrificing the expected returns and future investments (Katherine, 2014). The news come after a review of the RET by an expert panel. The findings indicate that consumers will continue to pay a considerable amount above their electricity bills. According to the labor leader, the government has expressed uncertainty in achieving the ‘real 20%’ and claims that even with the forecasted renewable energy infrastructures the target is still unrealistic. On the other hand, the opposition has ousted the call to end RET since the renewable energy sector has employed a significant number of stakeholders through the sale of solar credits and renewable certificates. According to Katherine Murphy, the opposition has maintained that the set target of 41,000 Gigawatt hours of renewable energy producible by LRET is achievable (2014). SRET is set to supply the deficit as indicated by the initial estimate (Commonwealth of Australia, 2012). Conclusion In conclusion, the renewable energy program has been successful so far, and the stakeholders hope it will be successful until the end. Since the inception, there has been increased investment in RET electricity generation. RET investments in the Energy sector have grown to an excess of $5 billion by 2011 with small-scale RET investment providing $4.3 billion. The sector grows has continued to grow with the introduction of solar credit multipliers and certificates. The earnings are bound to increase over the extended period until 2020. Forecast indicates that there will also be residual decrease in coal investment during that period. RET will displace about 7% and 9% of energy generated by coal and gas respectively. The benefits of emission reduction will increase since there will be no increase in coal or gas generation with each considerable rise in renewable energy output into the grid. Other countries like India are embracing the solar system form of electricity generation as a means of providing electricity to rural households. The number of household solar installations and certificates generated has since increased with New South Wales and Queensland states recording massive solar panel and heater system installations. The investment growth will extend to other states as more people gain knowledge of the RET system. It is the hope of stakeholders that the initiative will deliver the desired results and achieve the set target. References Angela M. S., (2014,October), Wind producer infigen grows hopeful over renewable Energy Target survival,[Online] Available from: . [Accessed 12 Oct 2014]. Clean Energy council. (2014). [Online]. Available from: www.cleanenergycouncil.org.au/media-centre/media-releases/august-2014/140819-RET-submissions.html. [Accessed 12 Oct 2014]. Commonwealth Government of Australia. (2012). Clean energy regulator: About the Renewable Energy Target, [Online]. Available from: http://ret.cleanenergyregulator.gov.au. [Accessed 12 Oct 2014]. Commonwealth Bank. (2011). Global Markets Research, Economics: Update. Commonwealth Bank. Katherine M., (October 2014). Australia news; Bill shorten vows to fight to save renewable energy target. [Online]. Available from: www.theguardian.com/australia-news/2014/oct/10/bill-shorten-vows-to-fight-to-save-energy-target [Accessed 12 Oct 2014] Martinot, E., (2002). Renewable Energy in Developing countries Lessons leant for the market. Energy and the Environment, 2002. Vol. 27: p. 309 Martinot, E. (2003).Renewable energy markets in developing countries,’ Renewable Energy World. Williams, N. (2005). Chasing the Sun: Solar adventures around the World. 1st edition, Gabriola Island, Canada. New Society Publishers. Read More