Another good reason to speed up the transition is the growing awareness that a global peak in oil production is imminent and that this will greatly increase the demands on natural gas to the extent that its production peak will be reached within a few decades. Furthermore, a recent analysis by Steve H Mohr and Geoffrey M Evans at Newcastle University, New South Wales (in press) suggests that world coal production could peak between 2010 and 2048. So, even if carbon capture and sequestration becomes a commercial reality around 2025, it could only form part of the medium term solution to the twin threats of global warming and energy security. It is not a long term, sustainable solution.

The only zero-emission energy technologies and measures that are commercially available in Australia now and for the next 10–15 years are energy efficiency and renewable energy. The sooner a wide spectrum of these measures is disseminated into our energy system, the easier and more secure the transition will be.

Even if the Carbon Pollution Reduction Scheme (CPRS) passes through parliament, it will not be able to give much support to renewable energy in the first 5–10 years of its existence. The very small initial greenhouse target would lead to a carbon price of about $23/tonne of CO2 at best – little more half the amount needed to bridge the gap between conventional coal power and the cheapest forms of renewable energy. This price would assist a transition from brown coal to black coal and possibly allow a little gas power to compete with coal for base load generation. The qualification ‘a little’ is used because most of Australia’s natural gas reserves are likely to be exported and sold at international prices.

In practice, the few big Australian greenhouse gas emitters that actually have to purchase significant numbers of permits could obtain them overseas at much lower prices than $23/tonne. Clearly, the CPRS will not help renewable energy, which needs effective complementary measures to enable it to compete with conventional coal power. Before 2020, the principal renewable sources of electricity to be utilised are those that are most advanced commercially and least cost: wind power and bioelectricity from landfill gas (a very small source) and the residues of existing crops and plantation forests. Given appropriate policies, wind could contribute 10 per cent and bioelectricity 6–8 per cent of Australia’s electricity by 2020 and each of these sources could potentially supply over 20 per cent by 2030.

An Expanded Renewable Energy Target (ERET), if well designed, could close the cost gap between these sources and conventional coal. Yet there are concerns. As pointed out in a submission by the Clean Energy Council (CEC), the government’s proposal to phase out the target after 2024 could make it impossible to reach the 20 per cent renewable energy target. Furthermore, the government policy to allocate 5 renewable energy certificates (RECs) per megawatt hour from solar could further diminish the target. Another concern, not mentioned in the CEC submission, is that solar hot water could take a large share of the RECs away from wind and bioenergy.

After 2020, large contributions from solar electricity, both thermal and PV, and hot rock geothermal are possible, provided their rapid expansion is encouraged now. But ERET is designed to assist the lowest cost renewable energy sources and so initially large-scale solar and geothermal will not benefit significantly from it. Geothermal drilling is receiving some government grants. But from 1 July 2009, the only government policies to build the market for solar electricity in Australia are the RECs, the net feed-in tariffs in Victoria, South Australia and NSW and the gross feed-in tariff in the ACT. By their very nature, the net feed-in tariffs will give little assistance to most residential solar systems. The RECs are only payable for residential-scale solar systems up to 1.5 kilowatts. There is no market incentive to construct large solar power stations in Australia.

The Renewable Energy Fund ($500 million over seven years) is mostly for demonstration, and nothing was allocated from this fund to solar, wind or bioenergy in the 2008 Federal Budget. The Energy Innovation Fund ($150 million over four years) is mostly for research in solar thermal and PV, but again, no funding of substance is being made in FY 2008/09. On the present excruciatingly slow schedule, ERET is unlikely to be available before 2010.

Each of these 2007 election promises could have been implemented during 2008, given the political will. Unlike the CPRS, they were not conditional upon the long process of the Garnaut Review and the Federal Government White Paper. ERET, for example, could have been implemented by March 2008 by simply expanding the target in the Howard government’s MRET. Then the negotiations to incorporate the state schemes could have proceeded at leisure.

Large-scale solar power stations need support from either feed-in tariffs, or a special band in ERET additional to the 20 per cent target, or tax concessions on their capital costs, or some combination thereof. Without proper incentives, almost all the investment in solar power stations will continue to be made overseas. With incentives, Australia would see a new manufacturing industry growing, creating thousands of jobs at a time when they are desperately needed.

Meanwhile, until Australia has a carbon price that remains consistently above $50 per tonne of CO2, new conventional coal-fired power stations should be banned under the Environment Protection and Biodiversity Conservation Act.