Legislation to Encourage Renewable Energy Deployment: A Comparative Review
Centre for Climate Law and Policy, Australian National University, Climate Law Working Paper
Posted: 2 May 2008
Date Written: May 2008
Increased pressure to implement timely and effective responses to mitigate global warming - arising from the 4th Assessment Report of the IPCC - has underlined the importance of reviewing laws for the deployment of renewable energy (RE). Although debate in Australia has recently advanced towards adoption of more ambitious targets for RE generation, it has focussed largely on laws that create a market in renewable energy certificates (RECS). The Commonwealth mandatory renewable energy target legislation is discussed in light of commitments to expand it to reach a target of 20% of Australia's electricity by 2020. Recent European experience suggests that a commitment to this single strategy could limit the development of the RE industry.
This paper reviews the alternative of Feed-in Tariff (FIT) laws, which require utilities to purchase at a set price the electricity generated by RE generators. In Australia the option of FIT laws has been largely overlooked, with the exception of SA, and with some steps also taken in the ACT, Victoria and Queensland. Yet FIT laws have been adopted by preference in more than 41 jurisdictions overseas. The SA law and the ACT Bill are at threat from promises to "cut red tape" and bring State based targets within a single national scheme.
Review of the European experience suggests that FIT laws have been more effective than RECs laws in three respects: capacity deployment, industry development, and in some cases, price reductions. This suggests that FIT laws should be considered as potentially a more effective means to expand RE generation capacity in Australia.
Given present Federal proposals for the national harmonisation of renewable energy laws, review of the international literature about the comparative effectiveness of various legislative models is vital. State targets are likely to be replaced with a single Commonwealth renewable energy target.
Arguments concerning the compatibility of renewable energy laws with the operation of a national emissions trading system effective from 2010 are considered. It is concluded that RE legislation will be necessary until 2025, contingent on the effectiveness of the carbon trading legislation. Arguments running counter to the proposal by the PM's Task Group on Emissions Trading (2007), that all RE legislation be repealed at Commonwealth and State level are also examined.
Keywords: Renewable energy law, mandatory renewable energy target (MRET), renewable portfolio standard laws (RPS), feed-in laws/feed-in tariffs (FIT), emissions trading, carbon "lock in", economic efficiency, investment certainty, innovation, employment generation, harmonisation, planning law, NIMBYism
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