As part of its new carbon pricing policy, the Australian Government has announced several measures which are aimed at helping promote renewable energy. The Government has set a target of 20% of Australia’s energy to come from renewable sources by 2020.
Under the scheme, the estimated 500 Australian companies which produce more than 25,000 tonnes of carbon dioxide per annum will pay $23 per tonne of CO2, beginning on 1 July 2012. The tax will increase by 2.5% annually for three years and then be replaced by a market price scheme. Agricultural companies are excluded and some export-oriented industries will be compensated.
Some of the funds from the tax will be used to fund a $1.2 billion Clean Technology Program aimed at improving energy efficiency in manufacturing and supporting research and development of clean energy.
A new Clean Energy Finance Corporation, to be run by an independent board, will invest $10 billion over five years in renewables and low emission technlogies. These funds will not be available for carbon capture and storage projects.
A new Australian Renewable Energy Agency will be established to oversee the $3.2 billion in existing renewables funding programmes up to 2020 and any dividends from the Clean Energy Finance Corporation. The existing programmes include Solar Flagships, Geothermal Drilling Program projects, the Second Generation Biofuels Research and Development Program, the Australian Solar Institute, the Australian Biofuels Research Institute and the Renewable Energy Venture Capital Fund.
An Energy Security Fund will be established to pay for closure of up to 2,000 megawatts of highly-emissions intensive generation capacity by 2020.
The Government will also provide $40 million in grants, over the next four years, to industry associations and non-government organisations to promote energy efficiency measures among small businesses and community groups and will expand a household advice line and website to provide information on how households can improve energy efficiency.
Another $40 million will be provided to help remote indigenous communities access clean, affordable and reliable power supplies.
In the broader picture, Australia has lifed its CO2 reduction target for 2050 from 60% to 80% below the 2000 level. The target for 2020 remains at 5% below the 2000 level but a new Climate Change Authority will be established to recommend revised targets and caps every two years from 2014. The Government will not be obliged to adopt the recommendation but will have to give reasons if it does not do so.