The EcoGen 2011 Conference held in September brought together the key politicians charged with debating and implementing the Federal Government’s Clean Energy Future carbon pricing package in the houses of Parliament.

EcoGen 2011 played host to Australian Greens Deputy Leader Senator Christine Milne, Federal Parliamentary Secretary for Climate Change and Energy Efficiency Mark Dreyfus, and Federal Shadow Minister for Climate Change and the Environment Greg Hunt, as well as numerous economic experts, who briefed delegates on the implications of the legislation for clean energy.

Senator Milne urged the Australian clean energy industry to “get out there” and support the Clean Energy Finance Corporation (CEFC) that will be established to fund new projects, and to prepare for a “massive assault” on the Renewable Energy Target (RET) after the carbon pricing mechanism is implemented.

In response, Mr Hunt said that his Federal Liberal Party is committed to supporting the RET, and turned delegates’ attention to questions surrounding the future of electricity pricing and industry competition under the Clean Energy Future plan.

“Even without carbon pricing there are other global pressures that are pre-existing, and if you add an additional price to manufacturing – even if there’s some sort of compensation – it will cause jobs and emissions and investments to leak overseas,” Mr Hunt argued.

Future funding

While the financing available through the Clean Energy Future package presents many opportunities for growth in Australia’s clean energy industry, several speakers at EcoGen 2011 highlighted that there are questions still to be answered about how the associated CEFC and Australian Renewable Energy Agency will allocate the funding to spur that growth.

As Grattan Institute Research Fellow for Energy Tristan Edis noted, the industry remains concerned about the allocation process for funding, how the entities will prioritise stakeholder input and how their board members will be appointed.

However, Mr Edis said that the Clean Energy Future package is still a “far a superior platform” when compared to similar carbon plans mooted in the past because its legislated nature means that it will be difficult to change suddenly – providing greater stability for the clean energy industry.

“Clean energy is just like any other market, where you want to have an environment that’s conducive to investment, because buyers and sellers need confidence in the market that they’re participating in to invest and trade,” Mr Edis told attendees.

“These characteristics have not been in place for other government schemes.”

Pricing explained

Also at EcoGen 2011, Seb Henbest from Bloomberg New Energy Finance Australia detailed his forecast that Australia’s carbon price will drop to $16 in 2015–16. Mr Henbest noted that this prediction underscores the importance of securing measures beyond the carbon price to stimulate investment in large-scale clean energy projects and emerging technologies.

“The ‘messiness’ of the international carbon market is not taken into account in the Federal Treasury’s carbon pricing modelling,” Mr Henbest said.

Mr Edis highlighted that most clean energy stakeholders agree the price of $23 ascending to $29 per tonne of CO2 in the first decade of the scheme will not answer the industry’s prayers, as under these prices, other mechanisms will also be needed to ensure that clean energy projects get up and running – but he encouraged stakeholders to focus on the long term.

“A lot of other policies are going to tail off with a limited lifespan, but the Clean Energy Future package provides a platform for stability around what is going to make a project commercial or not commercial over the longer term.”

SKM MMA Principal Consultant Walter Gerardi discussed the economic impacts of the package on Australian energy markets, and in particular he noted that clean energy will compete with other low-emissions sectors to meet target caps in the scheme.

“The contribution of renewable energy will depend on its relative costs, and based on historical evidence, the scheme will initially favour mature technologies,” Mr Gerardi said.