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This article is written by Amarnath Simha, pursuing a Certificate Course in Electricity and Renewable Energy Laws from LawSikho.

 

This article talks about the Australian Parliament passing the Renewable Energy (Electricity) Amendment Act, 2015 (REEA Act for short) amending two acts i.e., Renewable Energy (Electricity) Act, 2000 (RET Act for short) and Climate Change Authority Act, 2011 and one regulation i.e., the Renewable Energy (Electricity) Regulations.

RET Act and Climate Change Authority Act, 2011

The RET Act established the commonwealth RET scheme and is administered by the Clean Energy Regulator. The aims of the Act included reduction of greenhouse emissions, increase in renewable energy production and production through ecologically sustainable renewable energy sources. The RET Act provided certain renewable energy production targets and also provided that the power generators have to purchase renewable energy certificates from renewable energy power generators to meet their renewable energy target. Section 40 of RET Act fixed the targets for generation of the GigaWatt Hours (GWh) of renewable source electricity. It gave the target for each year from 300 GWh in 2001 increasing upto 41000 GWh by 2030. It gave a partial exemption from the renewable energy obligations to those emissions intensive trade-exposed activities. It sought to meet the policy commitment of having at least 20% of the energy requirement from renewable energy sources by 2020. 

The Climate Change Authority Act, 2011 established the Climate Change Authority which is to review the Clean Energy Act, 2011, the Carbon Credits (Carbon Farming Initiative) Act, 2011, the National Greenhouse and Energy Reporting Act, 2007 and RET Act. The Climate Change Authority was empowered to conduct a review every two years examining the operation of the Act, its associated regulations and the environment and economic impact of the scheme. 

Purpose of REEA Act

The REEA Act sought to decrease the GWh target mentioned in section 40 of the RET Act to 33000 GWh from 2020 to 2030 instead of the original target of 41000 GWh from 2020 to 2030. The REEA Act has sought to give a full exemption from the renewable energy obligations instead of the earlier partial exemption given to emissions intensive trade-exposed activities. The REEA Act further sought to remove the review power of the RET Act from the Climate Change Authority. Instead it proposed an annual statement by the Clean Energy Regulator on the progress of the RET towards meeting the new targets and the impact it is having on household electricity bills. 

The REEA Act further sought to reduce the energy targets for renewable energy production as well as sought to introduce the ‘native forest wood waste’ (also as native biomass) as a category of wood waste which is treated as a source of renewable energy in the Renewable Energy (Electricity) Regulations. Thus the REEA Act sought to reduce the renewable energy obligations and commitment. 

Background

In the 2014 review of the RET Act by the Climate Change Authority, the authority recommended that the targets for renewable energy need not be changed but the time frame for 2020 may be extended by three years. It also recommended that the targets after 2020 should be increased. 

An expert panel also called the Warburton panel constituted by the Australian Government took a different view. It held that RET had met its objectives but it was not aiming at reducing emissions as such but at increased production of renewable energy. 

Committee consideration

The Selection of Bills committee and the Senate Standing Committee have not considered the bill.

Policy position of non-government parties/independents

The main opposition party, the Australian Labour Party had supported the bill except with respect to the opposition to the inclusion of native forest wood waste in the definition of the wood waste under the RET regulations. The Australian Greens had opposed the bill. Many minor parties and independent members supported the bill.

Position of major interest groups

Environmental groups had opposed the bill in all the three major aspects i.e., the reduction in GWh targets, exemption given to emission intensive trade activities and inclusion of native forest wood waste. The environmental group i.e, Australian Conservation Foundation suggested that the decrease in the GWh renewable energy targets meant the increased generation through old and inefficient coal-fired power stations and increase in prices to customers. Another environmental group i.e., Wilderness Society opposed the inclusion of native forest wood waste stating that it would lead to more logging including in the high conservation value forests and that the wildlife habitat cannot be brought into the heading ‘renewable’. 

Industry groups had called for increased cooperation between major political parties because this issue after the expert panel committee review had led to confusion leading to uncertain investment opportunities in the renewable energy sector. The Australian Aluminium Council welcomed the reduced targets as it would decrease the costs for the aluminium smelting and alumina refining. 

The Clean Energy Council had expressed disappointment at there being a delay in the resolution of the issue though it was not in favour of the reduced RET targets. It was concerned since around 15,200 jobs and 40 billion Australian dollars investment was in the pipelines in the renewable energy sectors. 

The Australian Forest Products Association welcomed the bill and the inclusion of the native forest wood waste in the definition of wood waste. 

Financial implications

The Explanatory Memorandum to the bill stated that the financial impact of reforms was expected to be minor though they were not yet finalized. 

Statement of Compatibility with Human Rights

Each bill to be passed by the Australian Parliament has to be compatible with the Human Rights (Parliamentary Scrutiny) Act 2011. This Act envisages that all the bills to be passed by the Australian Parliament are compatible with human rights. Human rights are defined to rights and freedoms recognized or declared by the seven international instruments enumerated therein. The Act envisages formation of a joint parliamentary committee of all members called the Parliamentary Joint Committee on Human Rights which has to give a report to the Parliament as to whether a particular bill is compatible with human rights or not.

In respect of the REEA Act, it was held to be compatible with the human rights in the Explanatory Memorandum to the bill by the Government. It was held to not raise any human rights issues and does not engage any of the applicable rights or freedoms. The Parliamentary Joint Committee on human rights gave the Twenty-third report of the 44th Parliament on 18.06.2015 to the compatibility of the REEA Act to human rights. It held in paragraph 1.8 of the report stated that REEA Act has been included along with other acts which are mentioned as not requiring additional comments as they either promote human rights or contain justifiable limitations on human rights (https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Scrutiny_reports/2015/Twenty-third_Report_of_the_44th_Parliament)

Key issues 

In respect of reduction of the RET, the same was not as per the review conducted by the Climate Change Authority and it was also not in accordance with the Warburton panel recommendations. The Warburton panel did not recommend reduction in target but recommended that the annual targets be fixed by the clean energy regulator. 

The Ministry for the Environment however stated that there was a drop in demand for electricity due to various reasons including the increased use of rooftop solar voltaic panels. It further stated that there was a decrease in the investments and the investment opportunities and it was not possible to meet the RET but the reviews seemed to suggest the RET was achievable. The Ministry maintained that it would require construction activity to be increased by three times the highest construction rate then existing to meet the targets which was not feasible. That would also require tremendous economic and human resources which was not foreseeable. 

The Minister in the Parliament (https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22chamber%2Fhansardr%2F2f554bb1-776c-4c6f-b693-214bf49ecaa3%2F0013%22) maintained that the drop in electricity demand was also due to a global financial crisis and closure of energy intensive manufacturing plants which played havoc in the electricity prices leading to lower investment. The credit bank of Renewable energy certificate to the tune of 23 million certificates has disheartened further investment in the renewable energy sector. Further the Minister maintained that the REEA Act would enable meeting the targets of 23.5% from renewable energy sources than the earlier 20% and hence there was not let down in that regard. 

With regard to full exemption to emission-intensive-trade-exposed activities, the Ministry maintained that the renewable energy obligations were adding to the costs of these industries and hence it was making them unsustainable in the global markets and they were losing out. There were said to be many representations by many members in that regard.

With regard to introduction of the native forest wood waste in the definition of the wood waste, it was maintained that the earlier position existing in the year 2007 was being restored and no fewer definitions were being brought in. It was stated that it was about the existing biomass to be used and not cutting new biomass to burn. It was maintained that there was no evidence that this had led to unsustainable practices or a negative impact on Australia’s biodiversity. It was maintained by the minister that leaving native biomass to decompose would lead to more methane and consequently more greenhouse emissions and burning them would actually be efficient for the environment. It was held that the native biomass was to be harvested naturally and through ecologically sustainable practices and not for the purpose of energy production. 

It was stated in the explanatory memorandum that removal of review by the Climate Change Authority was necessitated because of the need for certainty for the industries investing in renewable energy sectors. It was stated that the Clean Energy Council had estimated that the shortfall of investment in renewable energy sources was upto 88% following the 2014 review by the Climate Change Authority. 

Conclusion

It is becoming increasingly difficult to meet the industrial targets as well as the renewable energy targets simultaneously in a country like Australia. Thus, each aspect stated above serves as a lesson to all the other countries like India. Hence, in India, it becomes even more imperative to study all the factors that come to any policy decision.


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