A popular pawn in election politics

Federal politics again threatened to cast a shadow over proceedings at this year's Auswind conference in Melbourne, with the wind market's future after this month's general election the topic of choice for most. Appearing cautiously optimistic was about the best any delegate could muster, although there was one bright spark in the crowd

Compared to last year's fervour at the Global Windpower conference when some 500 delegates from 28 countries converged on Adelaide, the 2007 Auswind conference held in Melbourne last month was a relatively quiet, homespun affair. Of this year's 390 delegates, just 16 made the long haul flight from overseas for the two-day event. The mood was more reserved than last year's exuberance, then buoyed with news of new state targets for renewables in the absence of federal action. At best this year delegates were cautiously optimistic, the wind taken out of their sails by federal election tit-for-tat battles that have seen renewable energy take on the role of political pawn in the game to win votes.

The Clean Energy Target (CET) proposed by Australia's beleaguered prime minister, John Howard, seemed a bitter pill for most delegates to swallow. The target is for 30,000 GWh of zero and low emission energy a year by 2020, to be introduced by 2010 at the latest (Windpower Monthly, October 2007). Many delegates warned that the CET improves little on existing state initiatives and could impede progress on existing plans by other states such as New South Wales (NSW).

"The critical elements to moving forward are an emissions trading scheme and more support measures for renewable energy, grid and network issues and planning approvals. The right approach will build a vibrant industry and attract manufacturing back to Australia," said Roaring 40s Mark Kelleher. "The CET start date is unconfirmed and the last thing we need is any delay to the uptake of the NSW Renewable Energy Target."

Peter Batchelor, Victoria state energy minister, agreed. "The Commonwealth is now promising a new Clean Energy Target but the reality is this is merely putting a cap on the state targets and creates uncertainty for investors," he said. "There is no silver bullet, rather we need a shell of buckshot -- a whole suite of policies." Peter Brun of turbine manufacturer Vestas concurred. "Wind must be a key part of energy policy planning. Long term political support is a must." The wind industry needs a level playing field, access to grids and fair permitting and planning processes, he stressed. "Vestas will screen the CET against these criteria."

With relatively little cheer on the platform and conference floor, the only real ray of hope came from Epuron, which surprised many by announcing plans for a $A2 billion wind farm in New South Wales. Epuron, operating out of Germany, is a developer and financier of wind and solar projects and part of the German Conergy group, a renewable energy company. "The Epuron announcement was a godsend, manna from heaven," acknowledged Tristan Edis of the Clean Energy Council, the new organisation which combines the former Australian Wind Energy Association and Business Council for Sustainable Energy. The development of about 500 turbines at Silverton will be built in stages over three or four years, according to Epuron's Andrew Durran. Given the size of the project it may use several turbine suppliers, he added. Upon completion it could supply 4.5% of total energy needs in New South Wales, supplying electricity to around 400,000 homes, says the company.

Epuron's Martin Poole is slightly more optimistic about the CET than others. "In the absence of a broader energy policy the CET announcement was a turning point and should give us confidence," he said. "It's the beginning of a phase of cautious optimism. Within seven to eight years Australia could get back on the world scale as a leading player."

Labor pledge

Opposition environment spokesman Peter Garrett vowed, if elected, a Labor government would make sure that happens. "At the earliest opportunity we will show Australia is serious about a global solution to climate change," he said. "Australia is missing out on billions in economic activity because of its stubborn refusal to ratify Kyoto." His party will lead by example, he said, and set a target to cut Australia's greenhouse pollution by 60% by 2050 and introduce a national emissions trading scheme by 2010. "This is the single most important incentive for greater investment in wind power," he added.

Garrett quoted Babcock and Brown Wind Partner's Miles George. "Miles George has suggested Australia has one of the best wind resources in the world and has the potential to turn into a A$16 billion industry. That would be a huge boost for regional Australia," he said. "A stronger renewable energy target would set Australia up as an exporter of renewable energy technology into a global market that is growing rapidly."

Garrett quoted "analysts" saying the market could be worth A$750 billion a year by 2016. "This is precisely where I think Australia should be heading -- building industrial capacity yet reducing greenhouse gas emissions at the same time."

John Howard's CET is not up to the job, he claimed. "It is simply stolen goods. The Prime Minister has taken the renewable energy targets set by state Labor governments, but in the process weakened the outcome for the renewable energy industry by allowing the targets to be met with low emissions technology. In other words, he has opened the door to nuclear reactors. Your industry deserves better."

Emissions trading

Whichever political party comes to power in the forthcoming elections, the introduction of an emissions trading system (ETS) in Australia seems almost inevitable. "Support is there for a national emissions trading scheme which is recognised as the most efficient and effective abatement," said Marianne Lourey of Victoria's primary industries department. "I am reasonably certain an ETS will be introduced by 2012. The key uncertainties are timing, cap and price."

A report prepared by McLennan MaGasanik for the Renewable Energy Generators Association says "early action and the establishment of complementary policy measures to develop and deploy clean energy technologies can lower the cost impact on the economy over time in conjunction with a broad based emission trading scheme." Such early action could save the Australian economy A$800 million by 2050, it adds.

If Australia does not get its act together, others are poised to exploit the market opportunities growing by the day, speakers warned. "Australia is the only country where there has been a political reversal," said Garrad Hassan's Andrew Garrad. "This is incredibly backward. You now have to recover from this."

Lure of China

Already many Australia wind firms have looked to China as an alternative market for investment, but Paulo Fernando Soares of turbine manufacturer Suzlon warned that foreign players face an uncertain future in China. "It is going to be very tough to do business in China because of the rapid increase in the size of the market and also because of other issues including the supply chain and getting personnel," he said. "There are now more than forty players currently operating in China. The top fifteen companies in terms of long-term developments are responsible for about sixty-one per cent of the total current development. Foreign players face very stiff competition."

Garrad agreed. He felt that in time Chinese firms will want to take their place on the global stage. "Right now they have enough work in China but they have to be taken seriously," he said. "In due course they will come outside. It would be a big mistake to underestimate the Chinese. They will be serious competition for Western companies." While broadly agreeing with Garrad's view, Vestas' Brun modified it somewhat. "Eventually they will go abroad but only to places where China has a strong influence on local economy. They are more comfortable in the Chinese environment," he said.

Steve Sawyer, head of the Global Wind Energy Council, offered Australia this advice: learn from the US, which while not signed up to the Kyoto Protocol (like Australia) ranks only behind Germany in terms of installed wind capacity. "The US is nearing as the leader in installed wind capacity and is likely to eclipse Germany. I hope to see Australia on this list very soon," he said.

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