Australia will see the biggest expansion in renewable energy in its history under the Gillard Government's policies for tackling climate change by moving to a clean energy future.
The passage of the Clean Energy legislative package today will give the renewables sector a major boost, creating the right combination of economic incentives, business certainty and Government support needed for new investment which will help drive down the costs of renewables.
This investment will not only reduce Australia's greenhouse gas emissions but it will also create jobs and support projects and skills to help us position ourselves in a low-carbon global economy.
The Government has a comprehensive suite of policies for delivering this transformation. The key policies are:
- The expanded Renewable Energy Target. This will ensure that the equivalent of 20 per cent of Australia's electricity comes from renewable sources by 2020. The RET is already driving a significant expansion in renewable energy.
- Introducing a carbon price from 1 July 2012. This will create powerful economic incentives for further growth in renewable energy. Putting a price on carbon pollution will increase demand for alternative energy sources. It will give businesses a financial incentive to reduce emissions in producing and consuming energy. Carbon pricing will also spur investors, innovators and entrepreneurs to develop and bring new renewable energy technologies to the marketplace.
- Creating a new statutory body, the Australian Renewable Energy Agency. ARENA will administer $3.2 billion in Government support for research and development, demonstration and commercialisation of renewable energy technologies. It will provide independent, efficient and streamlined administration of funding for projects that strengthen renewable energy and enabling technologies.
- Establishing a new commercially-oriented Clean Energy Finance Corporation. The CEFC will have $10 billion in funds available to invest in businesses seeking to get innovative clean energy proposals and technologies off the ground. It will encourage private sector investment and help overcome capital market barriers to commercialising clean energy technologies. The Government has appointed the Reserve Bank board member and experienced businesswoman, Jillian Broadbent AO, to chair an expert review to report on an investment mandate, risk management approach and governance arrangements for the CEFC. Legislation to establish the CEFC will be introduced into Parliament next year.
Australia's electricity generation sector currently relies heavily on fossil fuels, particularly coal. Therefore, support for renewable and clean energy technologies is necessary to bring on technological advances, reduce costs and increase the deployment of clean technologies.
Under the Government's reforms around $100 billion is expected to be invested through to 2050 in the renewable and clean energy sources of the future.
Electricity generation will be transformed away from reliance on coal and towards low and zero-emissions energy sources like natural gas, wind, solar, ocean and geothermal power.
Treasury modelling shows that by 2050 the renewable energy sector (excluding hydro) will be 18 times larger than it is today as a result of the Government's Clean Energy Future plan.
The Government's policies will ensure Australia is well positioned to meet the environmental and economic challenges of competing in a low-carbon world.