Policy Responses to Climate Change and Energy Security Post-Cancun

Policy Responses to Climate Change and Energy Security Post-Cancun10Singapore, 18 March 2011

Policy Responses to Climate Change and Energy Security Post-Cancun: Implications for the Asia-PacificPost-Cancun: Implications for the Asia-Pacific

Region’s Energy Security

Australian Perspective

Policy Responses to Climate Change and Energy Security Post-CancunSingapore 18 March 2011

Eva OberenderRegional Director REEEP South East Asia & Pacific


Overview

Australia as a major emitterj

Australia as a resource-intensive economy with small energy security issues

Australia as a “Disneyland” of renewables

Australia chooses fixed carbon price to reduce emissions

Australia’s future position in the international ti ti negotiations


The “world champion” - Australia’s per capita emissions remain the highest in the world

Source: World Bank 2010 Development report


Australia is a net exporter of energy sources and is heavily reliant on coal for electricity generation itself

Black coal 53.2%

Brown coal 22.5% Australia uses easily accessible

surface coal for electricity

Gas 15.6%

surface coal for electricity generation

Australian electricity prices are y palmost the lowest in the world -just over half of those in most European countriesEuropean countries

Source: Clean Energy Australia 2010


Australia’s low electricity prices impedes on attracting investment in renewables

Source: PowerGen, 2010

Policy Responses to Climate Change and Energy Security Post-Cancun 610Singapore, 18 March 2011

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The majority of investment flows into wind power development

Source: Clean Energy Australia 2010Source: Bloomberg New Energy Finance 2010


Household clean energy technologies are the success story of Australia’s 2010 clean energy sector



Large-scale clean energy projects grew modestly due to political and policy uncertainty

The success of household renewable energy such as solar power and solar hot water in 2009 led to an oversupply of renewable energy certificates hot water in 2009 led to an oversupply of renewable energy certificates (RECs) in the market, which led to a drop in their price.

For large-scale projects this REC price is critical. Combined with the For large scale projects this REC price is critical. Combined with the financial crisis, the situation made it extremely difficult for developers to secure financing.

The Federal Government’s therefore redesigned the scheme to split the scheme into large and small technologies effective from 1 January 2011. It should go a significant way towards returning some stability and g g y g ysupporting renewable energy investment in Australia.


Australia relies on existing hydro power for its clean electricity generation but wind power is gaining on i ifisignificance



Energy security is not a major concern, but climate change is: New Garnaut review is clear about the link between

h d l b l irecent extreme weather events and global warming

“If we are seeing an If we are seeing an intensification of extreme weather extreme weather events now … you ain't seen nothing ain t seen nothing yet''.


New Garnaut review is clear about the link between recent extreme weather events and global warming.

Unprecedented warm sea surface temperatures in 2010 contributed to the record rainfall and high humidity across Eastern Australia in winter and spring.

Nearly 250,000 homes—together with essential infrastructure—could suffer inundation and storm damage as sea level rose and more suffer inundation and storm damage as sea level rose and more ferocious storms ensued; estimated to cost up to $63 billion dollars within the century. The coast around Sydney is particularly vulnerable.

While heavy rainfall in 2010 ended a decade-long dry spell in much of southern and south-eastern Australia, the southwest suffered its driest year on record including record low inflows to Perth’s water storages year on record, including record low inflows to Perth s water storages.


New Garnaut review is clear about the link between recent extreme weather events and global warming

At the same time, there is an increasing risk of flooding as rainfall becomes concentrated into more intense torrential downpours.

The frequency of tropical cyclones is decreasing but their wind speeds are increasing, making for storms potentially more costly in lives and property property.

The intensity, frequency and extent of droughts is projected to rise in coming decades if there is insufficient action to arrest the rise in coming decades if there is insufficient action to arrest the rise in pollution.


Businesses call for certainty

BHP Billiton the world’s largest BHP Billiton, the world s largest mining company, urges the government to “take more decisi e action on climate change decisive action on climate change in the wake of Labor dropping its emissions trading scheme ...

"We do believe that [international agreement] will eventually come and when it does Australia will and, when it does, Australia will need to have acted ahead of it to maintain its competitiveness."


Nuclear energy won’t emerge in Australia for at least another two decades

Prime Minister Julia Gillard made it clear earlier this week that that the country had no need for it country had no need for it.

Even without the safety concerns, there is no energy utility in Australia t e e s o e e gy ut l ty ust al a possessing the attributes allowing contemplation of such a scale of investment investment.

The opposition’s policy on nuclear is not to have a policy unless Labor does p y– a unique position of bipartisanship


The largest short-term abatement will be delivered by the gas industry and then by renewables

Spending on new gas-fired power generation in Australia may almost d bl A$14 7 billi ($14 5 double to A$14.7 billion ($14.5 billion) in the next six years if the nation imposes a price on carbon emissions.

Even in the absence of a carbon price as much as A$7 8 billion may price, as much as A$7.8 billion may be invested in gas-fired plants during that period.

Source: Bloomberg New Energy Finance 2010


Worldwide investment into clean energy has reached record high levels

Worldwide investment in clean energy increased by 30 per t l t t d $US243 billi d i b l g cent last year to a record $US243 billion, driven by large

investment in China, offshore wind and rooftop solar in Europe, as well as increased spending on research and development generally.

Barack Obama offered a new goal: America would get 80 per cent of its energy from ''clean'' sources (including clean per cent of its energy from clean sources (including clean coal, gas and nuclear) by 2035.


Australia’s BAU emissions buck the tendency of developed countries as a result of the resource-intensive economy

This will not be easily understood by other countries, and is likely to bring Australian mitigation policy under close scrutiny.

It is unlikely that Australia will meet international expectations of proportionate effort without getting credit for substantial international purchases of legitimate international entitlements purchases of legitimate international entitlements.

More fundamentally, any failure of proportionate mitigation effort will invite critical and in some circumstances damaging international g gresponses.


Financing a key issue for the global climate change community

It is expected that sources of finance will be a key focus for negotiation in 2011.

Not all sources of finance require a decision from the UN.

Domestic action to identify how countries can mobilise new funding beyond what it being delivered through the aid budget will be needed.

Two options available to Australia are the use of revenue from a domestic pollution price and the re direction of fossil fuel subsidies pollution price and the re-direction of fossil fuel subsidies.

Broader options include funding from international aviation and shipping.


Fixed carbon price a preferred option

An initial fixed price would make it easier for parties to agree on an emissions target and trajectory, especially at a time when there are few international markets to link to and domestic industry is pleading for y p gpredictable CO2 prices.

The future potential to link to other regional carbon markets and hence h i ll k i lid h i f b ld b h theoretically keeping a lid on the price of carbon would be among the

main reasons for why Australia would pick trading over a tax.

Such a link would allow Australian emitters to pick up carbon credits Such a link would allow Australian emitters to pick up carbon credits through reducing emissions in other countries at a lower cost than domestically.


Garnaut calls for a start-up carbon tax of up to $30/t

Initial compensation for trade-exposed industries is almost as generous as the former government's emissions trading scheme.

The model has the big advantage of being already worked out and accepted by large sections of the business community.

The most trade exposed industries would be required to buy only 10 per cent of their permits, after receiving 90 per cent for free, with a second tier of trade-exposed industries required to buy permits for 40 per cent p q y p pof their emissions.

The government should shift to a full emissions trading scheme, where the price is set by the market, in 2015.


Garnaut calls for a start-up carbon tax of up to $30/t

From that date industry assistance should be offered on the less generous basis - with compensation paid only for the gap between the world prices

d i h l b l b i d i h l b l b i i expected with a global carbon price, and without global carbon pricing.

The proposal is for the price of between $20 and $30 a tonne from next year and to be increased by 4 per cent a year for the first three years year and to be increased by 4 per cent a year for the first three years, before the move to a full market.

Low income households that would benefit less from the tax cuts could be offered extra energy efficiency assistance and hard-hit regions such as coalmining areas could be offered upfront structural adjustment assistanceassistance.


Businesses call for certainty

BHP Billiton the world’s largest BHP Billiton, the world s largest mining company, urges the government to “take more decisi e action on climate change decisive action on climate change in the wake of Labor dropping its emissions trading scheme ...

"We do believe that [international agreement] will eventually come and when it does Australia will and, when it does, Australia will need to have acted ahead of it to maintain its competitiveness."


Domestic action on abatement and carbon pricing is paramount for Australia to regain international standing in h fi h f li hthe fight of climate change For Australia, it is crucial that a domestic limit and pricing system is put

i l ith th it t hi t l t th f ll t g t g in place, with the capacity to achieve at least the full target range pledged under the Copenhagen Accord (5-25% off 2000 levels by 2020).

This will send a clear signal that Australia is serious about contributing to This will send a clear signal that Australia is serious about contributing to the global effort on climate change.

With the extent of global action becoming clearer, the Cancun Agreement reinforces the need for Australian pollution and climate change policy to be flexible enough to go beyond the 5 per cent 2020 reduction targets.

I 2011 th A t li P li t ill d t ti t fl ibl In 2011, the Australian Parliament will need to negotiate a flexible package with not only a pollution price, but also limits and other policies that can enable more ambitious pollution reduction.



thank you


REEEP

questions?

REEEP

Eva OberenderRegional Director, REEEP Southeast Asia & PacificRegional Director, REEEP Southeast Asia & Pacific

T: +61 410 277 393 [email protected]

www.reeep.org

www.reegle.info

Supported by


Renewable Energy and Energy Efficiency Partnership an international partnership established at the 2002 World Summit

S i bl D l i J h bon Sustainable Development in Johannesburg

working primarily in developing countries and in countries in transitiontransition


facilitating the development of market conditions for

REEEP’s focus

facilitating the development of market conditions for the accelerated uptake of renewable energy and energy efficient technologies through:

structuring policy and regulatory initiatives for clean energy, and

facilitating financing for clean energy projects

REEEP adds unique value of bringing the private REEEP adds unique value of bringing the private sector to the table


REEEP partners- businessesbusinesses- G8 countries- developing

t icountries- NGOs

Currently more than 320 partners:

• 45 Governments

• International organisations, NGOs and companies


Regional Secretariats delivering value


REEEP’s goals: increase the sustainability of demand and supply side

fof energy systems

reduce market barriers and financial obstacles for renewables and energy efficiency systemsrenewables and energy efficiency systems

establish on-the-ground project activities that are targeting policy improvements and innovative finance g g p y pmechanisms

improve energy access for the poor through reliable and clean energy services

replicate success across the developed and developing worldworld


Establishment of the Pacific Establishment of the Pacific Islands Sustainable Energy Association & Certification

Scheme

• Project outputs:

An active industry association f i bl i d Scheme for sustainable energy industry companies active in the PICs

Establishment of a certification scheme for auditors, installers and designers which will consequently increase the consequently increase the quality of RE installations

• Project partners: – Global Sustainable Energy

Solutions Pty Ltd (Australia) and Pacific Islands Greenhouse Gas Abatement through Renewable Energy Project (PIGGAREP)


Pacific Renewable Energy and Microfinance (PREM) Project

• Innovative & sustainable microfinance loan products for renewables & energy efficiencyy

Project Outputs • Baseline survey of microfinance • Development of training materials and

training on basic awareness on RE and EE.A f i l i k d • Assessment of environmental risks and needs

• Continuous mentoring of institutions i l dinvolved.


• Creating a model to adopt a stakeholder approach to a low carbon tourism sector

Tourism Sector Energy Efficiency & Renewable Energy Program

approach to a low-carbon tourism sector in Fiji

• Promoting a range of energy efficiency d ll l bl and small-scale renewable energy

technologies available to the hotel & resort sector in FijiR i i f l d b • Raising awareness of related carbon financing opportunities

• Project outputs: – Reduce GHG emissions through

demand-side abatement initiatives in Fiji’s hotel and resort sector.

– Enhance Fiji’s ecoTourism credential.


• Strengthening regulatory framework in Tonga

RE & EE regulatory frameworks in Kingdom of Tonga

Tonga

Project Outputs• Implementation of the revised RE Act

through endorsed RE regulations • Development and adoption of energy p p gy

efficiency policy


P ifi I l d C t i (PIC ) E Effi i A diti d Pacific Island Countries (PICs) Energy Efficiency, Auditing and Appliance Labelling

• Project aim: To progress the implementation of PIC national energy implementation of PIC national energy action plans including Energy Efficiency and Energy Conservation strategies to ultimately enhance energy security in the Pacific.

• Project outputs: Output 1 – Appliance labeling &

standards (Samoa, Tonga & Vanuatu)Vanuatu)

Output 2 – Energy Auditing (RMI, Palau & Vanuatu)

O 3 EE & EC A Output 3 – EE & EC Awareness

Output 4 – Project evaluation & Assessment

• Project partner: SPC


REEEP toolswww.reegle.infowww.reegle.info

www.retscreen.net

Documents

Policy Responses to Climate Change and Energy Security Post-Cancun