Renewable Energy & Greenhouse Update

By Mark Dwyer,Tim Power, John Taberner, Tony van Merwyk and Michael Back.

National greenhouse gas inventory 2001 released

The national greenhouse gas inventory 2001 (inventory), released in September 2003, tracks Australia's progress towards reaching its greenhouse gas emission targets under the Kyoto Protocol. The inventory predicts that Australia will reach 110 per cent of its 1990 greenhouse emission levels by the year 2010, just two per cent above the 108 per cent target Australia agreed to under the 1997 Protocol.

The inventory reports, under the Kyoto inventory accounting provisions, that Australia's net greenhouse gas emissions in 2001 totalled 542.6 Mt of carbon dioxide equivalent. Total net emissions declined by 0.1 per cent between 1990 and 2001, and by 0.4 per cent between 2000 and 2001. Under the United Framework Convention on Climate Change (UNFCCC) inventory accounting provisions, Australia's net greenhouse gas emissions in 2001 totalled 528.1 million tonnes of carbon dioxide equivalent. Total net emissions, under the UNFCCC provisions, increased by 2.4 per cent during the 1990 to 2001 period, although net emissions declined by 0.1 per cent between 2000 and 2001.

The inventory reports that emissions from the energy sector continue to rise with the energy sector accounting for 68 per cent of total emissions in 2001, following a 1.4 per cent increase in emissions during 2000 and 2001. Emissions from land use change and forestry have continued to decline, with emissions from land clearing dropping by 69.2 per cent from 1990 levels. Carbon dioxide was the main greenhouse gas emitted in 2001 constituting 69.9 per cent of greenhouse gas emissions.

The inventory is based on international guidelines established by the Intergovernmental Panel on Climate Change and can be viewed at www.greenhouse.gov.au/inventory.

New Commonwealth Bills aimed at cleaner fuels

The Energy Grants (Cleaner Fuels) Scheme Bill 2003 was introduced to the House of Representatives on 11 September 2003. The Bill proposes to establish the Energy Grants Cleaner Fuels Scheme (Scheme) to entitle manufacturers and importers of fuel blends containing biodiesel to offset their customs charge or excise duty during the period 18 September 2003 until 30 June 2008. The grants payable on both biodiesel and ethanol will be gradually phased out from 1 July 2008 to 1 July 2012. The Scheme is also proposed to apply to the manufacture and importation of ethanol from 30 June 2008.

The Bill also proposes to provide for the payment of grants to encourage the production of low sulphur fuels. A grant would be paid for the importation and manufacture of premium unleaded petrol with less than 50 parts per million sulphur from 1 January 2006 for a period of two years. A similar grant would be implemented for diesel with less than ten parts per million sulphur from 1 January 2007.

National survey reveals overwhelming support for renewable energy policies
The results of a national survey of 1,000 Australians, conducted in August 2003 for the Australian Wind Energy Association (AusWEA), have found that 95 per cent of respondents supported the use of wind power with 91 per cent responding that it was more important to build wind farms for electricity than avoid building them in rural Australia. The survey also reports:

• 94 per cent of respondents support the Mandatory Renewable Energy Target (MRET) legislation with less than 3 per cent of respondents considering the current target to be too high
• 76 per cent of respondents were found to be prepared to pay five per cent more on their electricity bills for 10 per cent more clean energy
• 71 per cent of respondents held reducing greenhouse pollution outweighs protecting industries that rely on reserves of fossil fuels.

The results of the survey can be viewed at www.auswea.com.au.

In brief

• ActewAGL has proposed to construct three wind farms in the Australian Capital Territory on private land. Commercial arrangements have been entered into with the owners of the land who will be able to continue farming around the proposed 10-15 wind turbines to be built on each site. Electricity generated from the $2 million wind turbines will be fed into the New South Wales grid and sold to ActewAGL green choice customers or as accredited green electricity. The three projects will together generate electricity to power 45,000 homes and cost $250 million. ActewAGL has also been reported to be investigating burnt-out pine forest areas in the ACT as potential sites for wind farms.
• Hydro Tasmania has opened its first interstate mini hydro project. The 1.9 MW project, a joint partnership with SA Water, captures energy from Adelaide's water supply to generate 7,000 MW hours of renewable energy each year, sufficient to power 1,000 households and reduce annual carbon emissions by 6,000 tonnes. The project has received green power approval and the renewable energy generated will be sold to mainland electricity generators.
• Hydro Tasmania has lodged supplementary information, with West Coast Council and the Department of Primary Industries, Water and Environment, to its development proposal and environmental plan for Heemskirk Wind Farm. The supplementary information deals with issues raised during the public consultation process, predominantly bird flight paths, visual amenity, pubic access, wilderness quality, historic heritage values and economic benefits.
• The New South Wales Government has introduced new housing rules, effective from July 2004, requiring each new house and unit to reduce water consumption by 40 per cent and greenhouse gas emissions by 25 per cent. The greenhouse gas requirement will rise to 40 per cent in 2006. Compliance with emission targets will be measured by the government's point-based Building Sustainability Index (BASIX). The Urban Development Institute of Australia has argued that the targets will raise the cost of housing by $12,000 - $15,000.
• The world's first macadamia nut fuelled power plant has opened in Gympie, Queensland. The $3 million co-generation facility, a joint venture between Ergon Energy and Suncoast Gold Macadamias, will use the discarded shells of macadamia nuts to power 1,200 Queensland homes and reduce the emission of 9,500 tonnes of greenhouse gases annually.
• The Minister for Environment and Heritage, Dr David Kemp has announced that Australia's consumption of ozone depleting substances has reduced by over 70 per cent since 1992.
• Shell has launched a new diesel fuel, termed 'Aquadiesel fuel', that will reduce nitrogen oxide emissions by 15 per cent and carbon monoxide emissions by up to 50 per cent. The Aquadiesel, which contains 13 per cent water, is currently available for commercial customers in New South Wales, and will be available in Victoria by the end of October 2003.
• Green Electricity Watch has released its second report (September 2003) and the 2^nd annual 'Green Electricity Watch scorecard'; a ranking of energy companies and their green credentials. All 14 electricity retailers in Australia were surveyed regarding their energy efficiency programs, their support for policies to reduce greenhouse pollution and the Green Power products they offer. Australian Inland Energy and Origin Energy topped the list. The scorecard can be viewed at www.acfonline.org.au/docs/general/00485.pdf.
• A consultation paper has been produced for the development of a 'National Biodiversity and Climate Change Action Plan', outlined in the previous Renewable Energy and Greenhouse Update. Comments on the paper close 17 October 2003. To view the paper visit www.erin.gov.au/nrm/publications/biodiversity/index.html.
• The Australian Competition and Consumer Commission (ACCC) is prosecuting Sanyo Airconditioners Manufacturing Singapore Pty Ltd for allegedly misleading consumers by not indicating that a refrigerant it uses is a greenhouse gas. The company issued brochures for its air conditioners containing the phrases 'environmentally-friendly HFC 'R407C' Added' and 'for a new ozone era – keeping the world green'. Although hydrofluorocarbon R-407C is used by various air-conditioner manufacturers as a substitute for ozone-depleting hydrochlorofluorocarbons it is actually a greenhouse gas. It is also alleged that the company failed to indicate that several of their air-conditioners used R-22, also a greenhouse gas, as a refrigerant.
• The Premier of New South Wales, Bob Carr has signed a $172 million agreement with a French-Italian semiconductor manufacturer STMicroelectronics to plant 12 million trees on the mid north coast of New South Wales to absorb atmospheric pollution. The native hardwoods and plantation pines will be planted on 12,000 hectares over the next seven years to absorb seven million tonnes of carbon dioxide.
• Victoria's first Industry Greenhouse Roundtable, held in September 2003, has reported that 60 submissions were received to the 'Greenhouse Challenge' discussion paper released by the Victorian Government in June 2003. The Roundtable reported that issues raised by the submissions focused on the need for policy certainty and a national approach to greenhouse gas abatement.
• Stanwell Corporation has officially opened its Wivenhoe Small Hydro. The $7.5 million hydro power station has been supplying 4,500 homes with electricity for six months. The station took 18 months to construct and is expected to abate 20,000 tonnes of greenhouse gas emissions per year.
• The Australian Building Codes Board and the Australian Greenhouse Office have issued a regulation document proposing the development and introduction of energy efficiency measures into the Building Code of Australia for Class 2, 3 and 4 buildings. The regulation document closes for public comment on 4 March 2004.
• Kings Creek Hotel in Hastings, Victoria will become Australia's first wind-powered pub. The hotel plans to install a commercially-zoned micro wind turbine to reduce greenhouse gas emission by 100 tonnes per year.
• The Northern Territory Government will offer a dollar-for-dollar cash rebate for Territorians living in remote regions without grid power for converting to renewable energy sources. The rebate scheme is part of the $38 million grants program to offer alternatives to diesel generated power.

International

World's first voluntary electronic emissions trading market commenced

The world's first voluntary electronic trading market in greenhouse gas emissions has been launched in the United States. The Chicago Climate Exchange (CCX) commenced its market operations on 30 September 2003 with its first auction of carbon dioxide emission allowances.

The auction was an organised sale of emission allowances, based on metric tons of carbon dioxide, using a sealed-bid process. 100,000 metric tons worth of allowances having a 2003 vintage and 25,000 metric tons worth of allowances having a 2005 vintage were made available. The sealed-bid auction attracted 22 bidders resulting in 20 successful bids. A total of 125,000 tonnes of carbon dioxide was sold at 98 US cents per tonne.

The CCX is the first multi-sector, multi-national market to reduce and trade greenhouse gas emissions. The CCX is a self-regulatory exchange that represents the first voluntary binding commitment by a cross-section of North American corporations, municipalities and other institutions to establish a rules-based market for reducing greenhouse gases. It enables members to receive credit for reductions, and to buy and sell credits to determine the most cost-effective means of achieving emission reductions.

In brief

• UN: The CDM Executive Board has received 13 new proposals for CDM methodologies. The proposals include an 18 MW Biomass Power Project in India and a capture and combustion of methane from swine manure treatment in Peralillo. Public input on the proposals closed on 6 October 2003.
• UN: The Carbon Finance Fund Manager of the World Bank has reported that greenhouse gas credits already purchased or under negotiation total approximately US$250 million.
• US: The California Climate Action Registry has reportedly been approached by an undisclosed potential buyer of 500,000 tonnes of carbon dioxide reductions.
• US: FPL Energy, the largest US wind power producer, has officially opened the High Winds Energy Centre, the largest wind farm in California. The total capacity of the wind farm will be raised to 162 MW by the end of 2003 to generate power to 75,000 homes.
• US: The governors of California, Oregon and Washington have announced a tri-state effort to curb greenhouse gas emissions. The States will co-ordinate efforts to develop and promote renewable energy, develop uniform efficiency standards, create standardised methods to track emissions and seek better co-ordinated scientific research. The three States will also combine their purchasing power to purchase fuel-efficient vehicles and reduce emissions from diesel trucks and ships.
• Canada: ENMAX Corporation and Vision Quest Windelectric have opened their $100 million McBride Lake Wind Farm in Southern Alberta. The 75 MW wind farm is the largest single site farm in Canada, consisting of 114 wind turbines to generate 235,000 MW hours of electricity per year to power more than 32,500 homes annually.
• Canada: Boralex Inc. has successfully acquired five hydroelectric power stations in New York State from Black Hills Generation Inc. The hydro power stations totalling 32 MW of capacity were purchased for US$8.7 million.
• New Zealand: The New Zealand Government is offering 4 million carbon credits as a subsidy for projects that reduce greenhouse gas emissions. Applications are being sought from businesses seeking negotiated greenhouse agreements. To be eligible the project must deliver savings of at least 10,000 tonnes of carbon dioxide equivalent during the first commitment period of the Kyoto Protocol. The New Zealand Government's tender to allocate credits for greenhouse gas reduction projects closes on 24 October 2004. It is expected the credits will be internationally tradeable upon the Kyoto protocol coming into force.
• New Zealand: The New Zealand Government has announced a two year tax break for motorists who use petrol blended with ethanol.
• Japan: Nissho Iwai Corp plans to introduce an investment fund in 2004 to offer carbon dioxide emission rights from its afforestation operations to investors as dividends. The fund will total five billion yen to plant acacias over 70,000 hectares of land in Vietnam.
• Japan: Ashai Breweries will acquire a 19 per cent equity stake in a wind power-based electricity generation company wholly owned by J-Power, the semi governmental electric power development.
• EU: Denmark, Finland, Germany, Iceland, Lithuania, Norway and Sweden have signed the regional Testing Ground Agreement for Flexible Mechanisms of the Kyoto Protocol. The agreement aims to stimulate climate investment projects in the energy sector of the Baltic Sea region. The remaining countries of the Baltic Sea Region are expected to sign the agreement at a future date to enable the agreement to come into force.
• EU: The EU Parliament has adopted a report on a framework for energy taxation in the EU which will allow Member States to offer companies tax incentives in return for specific undertakings to reduce emissions.
• Spain: Danish company Neg Micon is proposing to construct a 49.5 MW wind farm consisting of 33 turbines, in La Mancha, Spain. The €48 million project would generate power for 100,000 people.
• Portugal: ENERSIS will purchase 16 turbines from GE Wind Energy to be installed in two wind farms in Portugal. The two projects with a combined capacity of 24 MW will generate power to 13,600 homes and are expected to be commissioned by January 2004.
• Norway: A unique sub sea power station driven by the tidal current generated by the gravitational pull of the moon on the earth is generating electricity for homes on the Arctic tip of Norway. The 80 million Norwegian crown plant, in essence an underwater windmill, will annually generate 700,000 kilowatt hours of electricity to power 30 households.
• Netherlands: The Minister of Foreign Trade has signed a Memorandum of Intentions with three Russian regions aimed at co-operation and development of projects to reduce the emission of greenhouse gases under the Kyoto Protocol.
• Russia: The European Commission in Russia has announced that it will grant €2 million towards the support of the Kyoto Protocol if the Protocol is ratified by Russia.
• Ireland: Construction has begun on the world's largest turbines to installed in a wind farm. The Arlow Bank offshore wind park will consist of seven 3.6 MW turbines to generate power for 16,000 homes.
• Ireland: Centrica will construct a £100 million wind farm in a joint venture with two Scandinavian power groups. Thirty turbines will be constructed off Walney Island, Cumbria.
• Ireland: A report by Sustainable Energy Ireland, a result of an 18 month study of 26 companies, claims that negotiated energy agreements have the potential to reduce carbon dioxide emissions by twice as much as a carbon tax alone. Negotiated agreements can be made between firms, or groups of firms, and government, to achieve substantial reductions in energy use and emissions and can mitigate the negative impact of such a tax on industry's competitiveness.
• Ireland: The Irish Finance Minister has proposed to introduce a carbon tax of €7.4 euros per tonne of emissions in January 2004, rising to €40 per tonne over a four year period. If the proposal is adopted Ireland will become the eighth European Union state to tax businesses on carbon dioxide emissions.
• UK: The Department of Trade and Industry has approved development of offshore wind farms to provide up to 6,000 MW of new energy by 2010, sufficient to supply the needs of nine million people.
• UK: The British Government has awarded £1.65 million in funding for 12 renewable energy projects, including the first award of funding in Northern Ireland to generate green power for offices of Northern Ireland Electricity.
• Morocco: Apex-BP Solar, a subsidiary of BP France, in partnership with Moroccan oil company CHM have been awarded a contract by Moroccan state-owned electricity utility Office National de L'ElectricitA for the supply and installation of solar power systems to provide electricity to household's in Morocco's Chichaoua Province. A new company BP Solar Maroc is being established to be responsible for the supply and installation of solar panel systems over three years and managing the systems for a further 10 years.

The Renewable Energy and Greenhouse Update is a review of recent domestic and international news items. The information is provided for the readers' interest only and has not been verified for accuracy.

This article provides a summary only of the subject matter covered, without the assumption of a duty of care by Freehills. The summary is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.