Carbon tax totalling $2 billion a year will be put into a renewable energy fund to drive a 17-fold increase in Australia’s use of clean power, in a key Gillard Government concession to the Greens.
The West Australian understands the fund will be managed by an independent commission and provide seed funding for solar, wind and other clean energy projects.
But proponents of clean energy generation projects part-funded by the scheme would be expected to repay the investment over time, once the project becomes commercially viable.
The renewable energy fund has been one of the Greens’ key demands in climate change negotiations which are nearing conclusion ahead of an announcement within a week.
In tandem with greater emphasis on renewable energy, the multi-party climate change committee is believed to have agreed on offering financial incentives for the nation’s dirtiest coal-fired power stations to close or switch to gas.
Three brown coal power stations in Victoria - Hazelwood, Yallourn and Loy Yang - and South Australia’s Playford B power station will be the top targets for early closure or retrofitting to gas-fired.
It is also understood the committee has agreed to a starting carbon price that is much closer to $20 than $30 in an acknowledgment that a “soft start” is crucial for the Government. Treasurer Wayne Swan yesterday revealed that renewable energy sources, excluding hydro electricity, would comprise 40 per cent of Australia’s energy mix by 2050, up 1700 per cent. This would translate to a 60 per cent cut in emissions from the electricity sector, on current levels.
The renewable energy investment fund would operate independently of government, along the same lines as the Future Fund.
Industry estimates suggest that for every $1 of government money, $2 to $4 could be leveraged from the private sector, with the cash vital to help underwrite investor risk before projects make a profit.
The Government’s top climate adviser Ross Garnaut recommended between $2 billion and $3 billion revenue to be spent on renewables, while the Australian Conservation Foundation has been pushing for a stand-alone $2 billion a year financing corporation that would help companies get new projects off the ground and boost energy efficiency measures.
ACF climate change campaigner Claire Maries said at least $100 billion was needed over the next decade for clean energy projects but any funding must be limited to real renewable energy sources, such as solar, wave and geothermal.
The Greens have resisted allowing carbon capture and storage projects being eligible for funding under the scheme.
The Clean Energy Council’s Kane Thornton said use of carbon price revenue would “kick-start a range of emerging early stage renewable technologies”.
