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Energy policy: The greening of politics

Calls from the UN for Australia and the US to play a full role in efforts to develop a new global climate agreement may be working, writes Ian Lewis

Australia is on the brink of a general election that, polls suggest, will bring to power the opposition Australian Labor Party (ALP), whose campaign to oust the conservative coalition of long-serving prime minister and Kyoto-sceptic John Howard has been heavy on anti-climate change initiatives.

Australia and the US are the only two large developed countries not to have signed the Kyoto Protocol, which seeks to establish worldwide mandatory caps on emissions of gases believed to contribute to global warming. This has led to accusations that both are protecting domestic industry heavily dependent on fossil fuels at the expense of the global environment; Australia is the developed world's largest emitter of greenhouse gases (GHGs) per capita, according to OECD research.

ALP leader Kevin Rudd says that if his party wins the election – to be held on 24 November – he would sign Kyoto, which expires in 2012. He could even do so before a crucial UN meeting in Bali, Indonesia, in December, which aims to pave the way for a successor agreement. That would leave the US without its main ally in the developed world on climate-change matters.

Even the government – possibly inspired by opposition and public pressure – has adopted a more conciliatory tone towards some of the Kyoto objectives, while remaining opposed to signing it. This raises the prospect that, whoever wins the election, Australia may play a more pro-active role in future global climate-change talks.

Labor has pledged to cut Australia's GHG emissions by 60% by 2050, to set up a national emissions-trading scheme (ETS) and "substantially" increase the country's mandatory renewable energy target. The ALP plans to do this without turning to nuclear energy, which is a central part of the government's strategy to cut emissions.

Environment minister Malcolm Turnbull announced plans in September to introduce a national target for 15% of Australia's energy to be supplied from low and zero-emissions energy sources by 2020, replacing targets set by state and territory level energy policies. However, the federal government has faced criticism for lagging behind Australia's state governments in setting green energy targets and the 15% target has attracted further disapproval in some states for potentially imposing a less stringent target on them than those they have in operation already.

All this has taken place against a background of increasing public support for measures to fight climate change at a time when parts of Australia are experiencing a prolonged drought and scientific research indicates the country could be one of those to suffer most from a warming world.

Despite its vociferousness on green issues, the ALP has yet to explain how it would encourage the large investments needed to promote the wide-scale development of renewable energy. Its proposals include a A$50m ($45m) project to establish an Australian Solar Institute to make the country "a world leader in solar thermal power demonstration and research by 2010".

The coal conundrum

However, the ALP's emissions-reductions plans depend, to a large extent, on clean-coal projects. Australia's heavy dependence on its large coal reserves for electricity generation means a rapid switch away from coal to other sources of power would be prohibitively expensive and probably politically damaging, so it is tempting for any government to exploit coal to the full, if environmental damage can be reduced to levels deemed acceptable by the electorate.

"The problem is that coal dominates Australia's energy supply, so both main parties feel the need to protect the industry," says Baldave Singh, the Perth-based Asia-Pacific editor at New Energy Finance (NEF), a renewable-energy consultancy.

The ALP wants to introduce commercially viable clean-coal technologies that "significantly reduce" emissions by 2020 and wants near-zero emissions, carbon capture and storage (CCS) projects to be commercially viable by 2030. In February, Rudd said government support would come in the form of A$0.5bn of federal funds, which he hoped would leverage a further A$1bn from the private sector.

Some politicians have raised doubts over the economics of expensive retro-fitting of Australia's existing 35 coal-fired power stations. However, newbuilds are already being considered. In May, BP and Rio Tinto said they planned to build a A$2bn coal-fired power-generation project at Kwinana, Western Australia, using undersea carbon storage to reduce emissions. However, the companies stressed the project was dependent on government policy being in place to make it commercially viable.

Both main parties have also said they are working on ways to introduce an ETS to fill a void in part created by the country's rejection of Kyoto. In July, the government announced plans to set up an ETS covering 80% of all emissions outside agriculture and about 55% of total emissions in Australia by 2011. Labor has said it would produce a detailed design for a national ETS by 2008 with a view to implementation by 2010.

While the prospect of the ALP gaining power may have helped push green issues higher up the government's agenda in recent months, prospects for renewable energy use in Australia had, in any case, improved significantly compared with a few years earlier. Cheaper and more efficient technology has meant projects involving sun and wind, which Australia has in abundance, are easier to launch, even if public finance is still needed.

Big projects planned

For example, a 154 megawatt solar plant is planned for Victoria state by Australian firm Solar Systems. The project is the world's biggest to create power by using mirrors to focus the sun's rays on to solar cells and will be partially backed by both federal and Victoria state funding. Meanwhile, Epuron, a subsidiary of Germany's Conergy, plans to build a 500 turbine wind farm, the country's largest, in New South Wales, potentially meeting 4.5% of the state's needs.

Australia is also one of relatively few countries with viable geothermal resources, mostly from so-called hot dry rocks. Government estimates suggest 5.5 gigawatts or nearly 7% of Australia's power could come from geothermal resources by 2030. "Geothermal is still in its infancy, but a lot of licences are being issued to explore," says NEF's Singh. Over A$445m of investment in exploring geothermal energy is forecast for the period 2002-12, most of it in South Australia, according to NEF.

Biofuels is another area in which Australia might be expected to take a lead, given a big agricultural base, crops from which could be turned into bioethanol or biodiesel. But the sector has not featured heavily in pre-election sparring. Australia has adopted a more cautious approach to biofuels than the EU, which has used Australian wheat as feedstock for its own industry. Targets for usage are relatively modest and legislation to promote blending is virtually absent.

And, given the drought, which has severely hit domestic crop production, there is little political capital to be gained from over-emphasising any policy likely to result in a greater wheat import bill.

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