Australia: Release Of Draft Legislation For The Renewable Energy Target Scheme

Last Updated: 4 February 2009
Article by Jennifer Mee and Peter Limbers

Originally Published 24th December 2008

Exposure draft legislation on the design of the expanded RET scheme has been released for public comment. Legislation to implement the scheme will be in place by mid 2009 and commencing in 2010.

What is the RET scheme?

The RET scheme is an expansion of the MRET scheme (which includes a legislated target of 9,500 gigawatt hours (GWh) in 2010). The RET scheme includes a target to source 45,000 GWh in 2020, designed to deliver the Federal Government's commitment that at least 20% of Australia's electricity supply is to be generated from renewable sources by 2020.

The RET scheme is being designed in co-operation with the states and territories through the Council of Australian Governments (COAG) and brings the existing MRET scheme and existing state based targets into a single national scheme.

Changes to the target and scheme length

The design includes a ramp-up of annual targets commencing in 2010 and peaking at 45,000 GWh in 2020. This target will be phased down from 2025 and will terminate at the end of 2030.

Other changes to the scheme

Multiplier for Renewable Energy Certificates created by small generation units

A transition is proposed from the rebate under the Solar Homes and Communities Plan to a multiplier under the RET scheme. The multiplier is to be applied to Renewable Energy Certificates (RECs) created by micro-generation units (including household solar panels).

From 2009, the multiplier will decrease over time from five RECs for every megawatt hour (MWh) of deemed renewable energy generation to one REC for every MWh of deemed renewable energy generation, so that by 2015 there will be no multiplier.

For each micro-generation system, the multiplier applies only to the first 1.5 kilowatts of system capacity, for bigger systems, only one REC can be created for each deemed MWh.

Scheme review

The RET scheme is to be reviewed in 2015. The terms of reference for the review have not been outlined.

Design aspects that are unchanged

Project eligibility periods

All projects would be able to create RECs until the RET scheme expires (this is consistent with the current approach under the MRET scheme).

Treatment of existing generators

All existing projects eligible under the MRET scheme will be eligible to participate in the RET scheme for the life of the RET scheme. The current baselines above which existing projects are able to create RECs under the MRET scheme remain.

Eligible sources

The same eligibility criteria as under the current MRET scheme applies, including solar hot water heaters and native forest wood waste.

Banking of RECs

The banking of RECs is permitted for the life of the RET scheme without restriction (this is consistent with the current approach under the MRET scheme).

Design aspects still to be considered

The treatment of electricity-intensive, trade-exposed industries

A decision is yet to be made as to whether certain electricity-intensive, trade-exposed industries may be excluded from liability under the RET scheme. This will be considered in detail following stakeholder consultations. Provisions to implement the decisions made will be included at a later date.

Setting the level of the shortfall charge

This will be set at a level marginally above the projected peak REC price to encourage compliance with the target as opposed to opting to pay the shortfall charge. The level will be finalised once the final design of the RET scheme has been completed by COAG. Similarly to the current approach, the penalty will not be indexed to CPI.

Transitional arrangements for the Victorian Renewable Energy Target scheme

The Commonwealth and Victorian Governments are working closely to finalise the arrangements for transition from the Victorian Renewable Energy Target (VRET) scheme into the national RET scheme by early 2009.

Further action

The draft legislation is available for download at

Interested stakeholders are invited to provide comments on the exposure draft legislation by Friday 13 February 2009 to or Joelle Richardson, Renewables, Offsets and COAG Branch, Department of Climate Change, GPO Box 854, Canberra ACT 2601.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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