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The Australian Government is set to open a heavily scrutinized auction next week that will award 40 percent of the country’s massive, yet little-known $2.3 billion “clean energy” auction.
On May 17, the multi-faceted sale of 21.8 gigawatts of low carbon generation — and A$38 billion in revenue — is set to launch. This is actually the third auction of the country’s “clean energy” sector since 2007. And last year, it even triggered a sell-off of more than A$10 billion of shares in AGL Energy, an electric utility.
Policymakers say that this auction could deliver A$1.6 billion in savings to consumers of electricity, gas and other fuels, while spurring Australia to meet its target of cutting emissions by a fifth by 2020. But in doing so, Australia risks effectively being “off-grid” within just a decade.
Ongoing carbon dependency
Australia’s clean energy auction is a serious step forward. In the past, Australian governments have “set the table” for potential support from international partners in regard to pricing carbon emissions, but have failed to enact the measures to actually accomplish that.
That was partly why the French government decided to impose its own emissions trading scheme in 2015.
But major emitters in the region simply have little incentive to shift to cleaner technology. Europe’s output of carbon dioxide has been growing consistently, the United States is engaged in a fight against climate change through President Trump’s resignation of the Paris climate agreement, and China is actively investing in coal technology.
The 2030 target the current Australian government has set of a 25 percent decrease in emissions by 2030 is no more than a goal. But what Australia is actually doing to achieve that target is in question.
Australia’s wavering commitment to renewable energy policy
The new A$40 billion Renewable Energy Target (RET) in Australia (renamed the Australian Renewable Energy Agency in 2014) was a response to the Kyoto Protocol’s commitment to reduce emissions.
The problem is that the RRE has been so poor at growing renewable energy that Prime Minister Malcolm Turnbull has struggled to figure out whether he can afford the target. That led to him resigning from his position as the party leader for the first time in his life.
In 2017, Turnbull announced that the government would spend A$3.5 billion over three years to grow renewable energy. But the potential cost to consumers was A$1.4 billion. With economic growth lagging, the most recent Resources and Energy Conference in Melbourne, Australia, during May was akin to a last chance.
A mad dash to meet the carbon threshold
So it is that in December, the Australian Government legislated that 80 percent of the energy produced in Australia must be cleaner by 2020. And within five years, 90 percent of the energy must be renewable by 2050.
And of that total, 60 percent must be solar and wind — something that only 15 percent of Australians are currently connected to.
Next week’s clean energy auction may be the second successful auction in Australia’s history. But it’s only an enticement. If there are actual policies to put the nation onto a more sustainable path, Australia will be losing the race.
Australia’s carbon addiction
Are Australia’s carbon emissions simply not something to be concerned about? The answer is yes and no. Yes, the country has actually made significant progress in mitigating these emissions in the past, especially since the World Bank is advising on best practices.
Yes, Australia’s emissions have seen an uptick in the past decade.
And yes, adopting other policies to reduce carbon emissions within the next several years will simply be too challenging to successfully implement.
Australia is fundamentally a fossil fuel economy. So while renewables are part of its future, they are not the answer.
Australia’s ability to curb its carbon emissions before 2030 will be among the central issues of Australia’s subsequent election in 2019.
Eleanor Salter is a researcher at the Perrett Center for Market Economics and a senior policy researcher at The Australian Centre for Independent Studies.
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