Mandage legislation postponed -- Olympics get priority

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The Olympic Games has come in the way of legislation mandating 2% renewables in Australia's electricity supply, which has been postponed. The government chose to prioritise passage of a controversial new defence bill giving powers to the army to quell civil disobedience, hastily introduced in time for the Olympics. As a result the renewables 2% bill will not be debated until the next sitting of parliament early this month, even though the Senate environment committee's final recommendations on the bill had been submitted to members.

The committee concluded that once the legislation is passed a great deal of work is needed to make it fully operative. Its report puts forward 14 recommendations for government consideration based on concerns expressed to the committee from interested parties. One of the hotbeds of discussion centres on eligible energy sources, especially on the inclusion of biomass from old growth native forests, with opposition coming from the Democrats, Greenpeace, the Sustainable Energy Industries Association (SEIA) and the Australian Conservation Foundation. Senator Lyn Allison, a Democrat and the environment committee chair, says, however, that the government will not budge on forest product biomass and the only hope is that consumers will boycott retailers purchasing power from these resources. This will be difficult because retailers are not compelled to publicly disclose the source of their green power.

The committee recommends that more detailed rules and definitions needed to be worked into the regulation. Submissions from the Australian Wind Energy Association, Greenpeace and SEIA suggest a portfolio approach should be implemented so no single generation source was over-represented. The Australian Cogeneration Association and Electricity Suppliers Association of Australia were among the objectors to the notion of portfolios, suggesting the penalty cap for not complying with the 2% mandate provided enough incentive for all renewables to gain market share.

Penalty debate

The $40/MWh cap is another bone of contention, with submissions claiming it is both too low and too high. Up for debate, too, is whether the penalty should be tax deductible or subject to the inflation index. The argument against it being too low is based on claims that retailers could opt to incur the penalty instead of investing in marginal technologies.

Other recommendations include the phasing in of the new market structure in a linear form over the ten year time frame, as opposed to the dual linear approach originally planned and a ramping up of the 2% target after 2010. The need for uniform national codes to grid connection and net metering, to enable independent generators fair prices for output, was also expressed. There is also a recommendation for a mechanism for review of the measure every three years.

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