Australia passes RPS of 12.5% that includes credit trading

Jan. 5, 2001–The Australian Parliament recently approved legislation which contains a renewables portfolio standard (RPS) provision requiring that 12.5% of the country’s electricity come from renewable energy sources by the year 2010, according to David Rossiter of the Australian Greenhouse Office (AGO) in Canberra.

Although the 12.5% goal appears modest compared to 1997 renewable electricity generation (10.5% of the nation’s electric power), Rossiter said, it will actually be a 60% increaseà‚–from about 16 billion kWh in 1997 to 25.5 billion kWh in 2010à‚–because of anticipated demand growth over the next decade.

The difference amounts to 9.5 billion kWh of additional electricity from renewables, or “enough to power the entire residential electricity needs of a city of about 4 million people,” he said.

The Renewable Energy (Electricity) Act 2000 forms part of a comprehensive program of actions undertaken by the Australian government to address greenhouse gas emissions in Australia, a large coal-producing nation.

The Act is the first legislation passed under the government’s program, and is expected to reduce Australia’s greenhouse gas emissions by up to 7 million metric tons in 2010.

The Australian RPS will use a system of tradable renewable energy certificates (RECs) to achieve its objectives. According to Rossiter, large buyers of electricity (wholesalers, retailers, large industrial users) are required to obtain RECs annually in proportion to the amount of electricity they purchase or suffer penalties under the Act.

The AGO Web site further explains, “In order to discharge their liability, liable parties will need to surrender [RECs] to the Renewable Energy Regulator. One [REC] can be created for each megawatt-hour of electricity generated from a new eligible renewable energy source. These certificates may be traded through a market separate to the market for physical energy.” Added Rossiter, “The separation of the ‘green’ part of the electricity from the ‘physical’ part of the electricity is a key to the operation of the system.”

Additional background material from Rossiter indicates that new investment in renewables of some A$2-3 billion (U.S. $1.1-1.7 billion) is expected to result from the requirement.

“The enactment of Australia’s RPS is another major step toward growing international acceptance of this concept, originally pioneered and championed by AWEA,” commented AWEA executive director Randall Swisher.

“Japan, China, and Denmark have all taken steps toward adopting renewables portfolio standards during the past year, as the superiority of the RPS as a low-cost, market-friendly method of encouraging the use of clean energy becomes clear.”

Australia is moving aggressively on the greenhouse emissions issue. The AGO, according to Rossiter, “provides a ‘whole-of-Government’ perspective and reports to a Ministerial Council comprising the Ministers for the Environment and Heritage, Industry Science and Resources, Agriculture Fisheries and Forestry, as well as the Minister for Finance.

The government has also developed several other packages to spur the growth of clean energy, including a proposal to encourage the purchase of green power, a rebate program for purchasers of solar photovoltaic (PV) systems, and a renewable energy commercialization program.

Further information on the Renewable Energy (Electricity) Act 2000 is available on the web at .

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