Fotowatio Plans to Build Australia’s Largest Solar-Power Project

Fotowatio Renewable Ventures, the solar-power plant developer backed by U.S. energy investor Denham Capital Management LP, won the right to build a 20-megawatt project near Australia’s capital.

Fotowatio will participate in the Australian Capital Territory’s feed-in tariff program, which rewards generators of solar power by paying above-market prices for the electricity, Simon Corbell, ACT minister for the environment and sustainable development, said today in a statement.

The Royalla solar farm, to be built about 25 kilometers (16 miles) south of Canberra, will become the largest in Australia by 2014, according to the statement. The venture will help in an effort to lower carbon emissions and shift away from fossil fuels, the ACT government said.

Fotowatio, which is based in the Netherlands, sought a new project in Australia after losing a competition earlier this year for federal government funds to build a large-scale solar plant in New South Wales state. Denham Capital in March reached an agreement with Fotowatio to invest $190 million in solar projects in markets including Australia.

Over Regulation Driving Mass Exodus in Australia's Resources Sector

 

The New Trend for Primary Sector resource Companies operating in Australia is to go offshore seeking reallocating their capital to projects with less overhead cost and greater certainty.

2012 Has seen the introduction of a Carbon Tax (Carbon Trading System) and a Mining Tax which combined with a heavily reduced Iron Ore price and weakening demand has seen any new or planned venture on paper, look far less economical.

There has been an incremental shift in Australian Companies increasing profiles overseas where the cost of business are seen as being significantly less such as Papua new guinea and South Africa.

The Australian Governments Justification for the Mining Tax (Resource Super Profits Tax) are basically two fold:

The Commodities Prices are rising so fast the taxation system is unable to stay in-line with the super normal profits mining companies are experiencing during this resources boom.

Most of our mining companies are majority foreign-owned and are receiving a huge windfall at the Australian taxpayer’s expense.

The Carbon Tax will also progressively increase the costs of production capabilities for miners and primary resource companies in an indirect way through increased costs such as electricity which is one key input to mining and yielding primary resources, some to a break even and shut down point where the cost of production is outstripped by costs and economics uncertainty. 

The outcome of these creeping legislation's are that incrementally Australian companies will and have been considering a more international approach as the disincentives to operate inside Australia grow to a level were companies will be forced into this position.

The eventuation is that the price put on commodities in Australia will ensure that they are plentiful for generations to come as the opportunity cost of mining in Alternate resource rich countries becomes too much. 

This Legislation is effectively creating commodities world where 3rd world countries seek out cheaper countries to do business in and in a way at least its almost like Australian Government was slow to catch on to Globalisation and outsourcing production to countries with cheaper labour and less Government Bureaucracy where businesses and economies thrive.

Strong on Solar: Australia Eyes CSP Leadership

A move into concentrating solar thermal power (CSP) could not only drive Australia's de-carbonization but establish a global technology lead, says a new analysis from the Australia Solar Institute.

Solar Dawn, as its name suggests, is a CSP project with aspirations as a catalyst. Based near Chinchilla — "Australia's melon capital" — in rural Queensland, at 250 MW, if completed its impact would be felt worldwide.

"Hugely significant for the industry" is how Dr. Keith Lovegrove of IT Power Australia describes the A$1.2 billion (US$1.2 billion) initiative. The scheme is backed by Australia's federal Solar Flagships Programme and the consortium behind Solar Dawn has dubbed it "the largest solar project in the Southern Hemisphere".

But, while Solar Dawn could bring up the sun for Australian CSP with a jolt, its chances of seeing daylight are fading. On 1 July 2012, the scheme missed an extended deadline for funding. The state of Queensland promptly withdrew its support, leaving a A$75 million (US$79 million) hole. "None of us knows what's happening," says Lovegrove.

But he would deny that Australian CSP's prospects are also dimming. Spectacular daybreak may look off the cards, but several glimmers of light are showing.

For a start, less ambitious CSP projects remain on track. Just down the road from the proposed site for Solar Dawn, the 44 MW Kogan Creek Solar Boost is now under construction. On completion, the hybrid plant will feed additional solar generated steam to the existing 750 MW coal-fired Kogan Creek Power Station.

In strategic terms, CSP's fit for Australia's meteorology, economy and climate objectives is also arguably as snug as a lifeguard's Speedos. In the recent report Realising the Potential of Solar Power in Australia, a team led by Lovegrove floats the idea of CSP providing up to 15 GW in "the near-to-mid-term".

Without a radical overhaul of its grid, Australia could have 2 GW in CSP by 2020 and 10 GW by 2030, according to the report's roadmap. In the longer term, the technology could meet half of the country's energy needs by 2050.

Letting the sunshine in

Blistering sunshine obviously figures in Australia's appeal for CSP. As a technology, concentrating solar thermal requires "excellent direct normal insolation from the sun, mostly met in the 15° to 35° latitude bands," in the words of the International Energy Agency.

But top solar locations are, almost by definition, a poor match with existing distribution and transmission infrastructure. Australian networks have developed to transmit electricity from large central generators near coal, gas or hydro resources. Electricity from CSP would need to flow over long distances in different directions.

To see precisely how well CSP could map onto solar resources and existing systems, Lovegrove's team examined the potential of various types of CSP, both off-grid and grid connected. The study concluded that 15 GW of CSP capacity could be achieved with "only modest grid extensions". Initial installations could cover hybrid systems at existing fossil-fuel plants and smaller off-grid plants for mines and towns. Further down the line, "nation-building" grid extensions could unlock more substantial solar resources.

Of this 15 GW potential, 8 GW would be high-capacity standalone plants with enough thermal storage to justify fairly modest grid extensions. Another 2 GW would be hybrid plants delivering steam to established coal-fired plants, while 3-4 GW would be standalone plants with capacities of 50-150 MW linked to existing grids. Medium-scale grid-connected and off-grid plants are also seen as likely to take off, although totalling less 1 GW of capacity.

Cleaning the energy mix

In any case, the hurdles to adding CSP capacity to Australia's grids could be overshadowed by the risks of sticking with fossil fuel. By coincidence, Solar Dawn's recent thunderclap broke amid a political storm over an attempted overhaul of the energy mix.

Also on 1 July, 2012, Prime Minister Julia Gillard's flagship Carbon Price came into force. From now on, the country's 294 top polluters must pay A$23 (US$24) for each tonne of carbon emitted, although the price is expected to ease from 2015. A glance at Australia's current energy mix reveals why the law's proposers were willing to brave fierce public opposition. Australia's 50 GW of installed capacity is among the world's dirtiest, with coal providing three quarters of electricity. In per-capita carbon emissions, Australia is the developed world's number one.

The new law - labelled the Carbon Tax by its many opponents - is aimed at cutting carbon emissions from 2000 levels by 5 per cent by 2020 and by 80 per cent by 2050. While renewables take on a larger slice of energy mix, a closure program for heavily polluting coal fired plants should help speed Australia down the league of top polluters.

In any cleaner generation future, solar power offers two advantages over other renewables. An analysis of electricity prices within a recent report for ASI by ROAM Consulting, Solar Generation Australian Market Monitoring, found that solar should prosper because its hours of peak generation coincide with peak demand. But CSP holds another ace in its ability to meet peak and baseload demand through storage.

Storing up baseload capacity

For now, in fact, concentrating photovoltaic (CPV) technology is making similar headway to CSP in Australia. Construction is underway on Solar Systems' 2 MW Mildura Solar pilot plant, where a 100 MW facility will be built if the demonstration project prospers. Yet basic economics could still favour solar thermal technology. "CSP without storage is twice as expensive as large-scale PV," says Lovegrove. "Why bother? The real reason is storage."

CSP technologies can feature thermal storage units. As heat can be stored far more efficiently than electricity, these plants open up a rare opportunity for renewables to provide baseload and peaking power. The value of CSP's capacity to meet demand could also rise over time. A future energy mix with more intermittent renewables such as wind would put a high premium on energy storage.

What's more, the ability to effectively time shift solar generation would also protect CSP revenues once more solar power comes on line, with additional PV capacity creating a bulge in daytime generation that would be expected to curb prices, cutting its premium. "Anything fixed in time of dispatch can cause a fall in pricing," says Lovegrove. "Storage means you can adapt to the new peak."

The "strategic" case for CSP

In addition, the ASI sees a strategic case for investing in CSP. "It suits Australia because we're sunny and have experience in power stations," says Lovegrove.

Solar Dawn would provide a showcase for home-grown compact linear Fresnel collector (CLFC) technology already in place at the coal-fired Liddell Power station and being installed at the Kogan Solar Boost. Areva Solar, which is driving both the Solar Dawn and Solar Boost projects, was formed by the purchase of Ausra Solar, a firm that originated in Sydney in 2002.

A lull in global CSP activity could also let Australia make its mark. "Nothing that Australia can do will affect the photovoltaic industry - which is now taken up by China - but one of our conclusions is that CSP offers an opportunity in a technology area that suits Australia," says Lovegrove.

In fact, rather than a crowded field, Australian CSP could emerge into a void. After driving the industry for many years, Spain's commitment to CSP could waver amid its on-going financial crisis. In the US, federal backing for CSP now looks uncertain. Increasingly, the industry is looking to India, where the Jawaharlal Nehru National Solar Mission aims for 20 GW of CSP and PV by 2022, as well as Middle East and North African states.

The prospects for Australian CSP technology in new markets such as India are buoyed by Areva's recent contract to set up two 125 MW CSP plants in Rajasthan. Areva will provide construction management services for the project, scheduled for commercial operation by May 2013.

CSP still too pricey

But one drawback outweighs the host of benefits that CSP could bring. ASI's report pegs the levelised cost of energy (LCOE) for utility-scale solar thermal at about A$250 (US$261)/MWh. Meanwhile, the maximum revenue in main grid-connected markets currently totals about A$120 (US$125)/MWh, including renewable certificates.

In fairness, the gap between CSP and fossil fuel is not as unbridgeable as these figures suggest. A complex study of potential revenue suggests CSP's ability to meet baseload and peak demand through being dispatchable doubles the value of its production. This "time value" means CST would have earned A$87 (US$91)/MWh over 2005-2010 while wholesale prices averaged only A$42 (US$44)/MWh.
But ASI Executive Director Mark Twidell identifies the gap between revenues on the market and the cost of technology as it moves from demonstration to commercialisation as "the critical issue facing CSP technologies".

"There is a range of market and policy drivers that will impact on the widespread, large-scale deployment of CSP but ultimately it is about bringing down cost and closing the cost-revenue gap, which is the responsibility of industry, government and the research sector," he says. An added challenge for CSP is the impact of Australia's commodity boom, which has pushed up the price of construction in the areas where new plants would go up.

Getting to the right price

The study projects that CSP will be competitive with Australia's grid at some point between 2018 and 2030. "There is a 90 per cent probability it will fall within that range," says Lovegrove. Rising demand and falling CSP capital costs would both drive this transformation. While real energy values are forecast to rise by between 1 per cent and 3 per cent per year, capital costs are predicted to drop by between 20 per cent and 50 per cent by 2020.

"CSP is right at the top of the cost curve," says Lovegrove. His optimism rests on the likely trajectory of global deployment as well as a SunShot Vision Study in the U.S., which found "heaps of opportunity to reduce the costs of various elements". In his view, the industry can reasonably expect costs to fall in line with those in the wind industry, giving a progress ratio (PR) of 0.8 or 0.9 with each doubling of installed capacity.

That said, the ASI hardly expects CSP to take off in Australia entirely on its own merits. The purpose of Realising the Potential of Solar Power in Australia is rather to alert authorities to the wider benefits of CSP so these can be rewarded.

A call for new policies

For now, wholesale electricity markets largely determine CSP plants' revenues, with renewable energy certificates adding about A$30-40 (US$31-41)/MWh. But Lovegrove argues plants' income should also reflect their specific advantages for networks.

As CSP plants are likely to be in rural or relatively remote locations, they could reduce high line losses. Installations could also earn additional revenues through reducing network costs by providing reliable generation at the end of near-capacity lines. Capacity value - the extent to which CSP can cut investment in other dispatchable systems - provides a further case for enhanced revenues. In addition, rising capacity of fluctuating renewables such as wind and solar PV could raise the value of ancillary services for balancing the grid, which CSP with storage is equipped to provide.
The ASI report advocates such technology-neutral incentives as one element in a four-pronged approach. Second, Lovegrove and his team suggest the sector aim to better communicate its value proposition to key organizations, retailers and financiers. They also call for "CSP-solar precincts" in areas of high solar resource, where connections for CSP would be provided to cut development costs. Finally, the report recommends a push in R&D to reduce costs and build confidence. Key areas where Australia could focus include deployments of less than 50 MW, fossil-fuelled hybridisation and advanced cooling technologies suited to water supply constraints.

Getting the message across

But will Australia's authorities heed the ASI's call? That may hinge on the next federal election, due by the end of 2013. The opposition led by the Liberal Party's Tony Abbott looks set to romp home. Which could be ominous for all renewables. Abbott has made a "pledge in blood" to repeal the Carbon Price. But Mark Twidell prefers to stress elements of consensus. "The independent Australian Renewable Energy Agency (ARENA), which has bipartisan support and funding legislated through to 2020, will make investments to develop renewable energy technologies and to help lower their costs, including meritorious CSP projects."

In his view, there is even hope for Solar Dawn. "The Australian government remains committed to the deployment of large-scale solar," he says.

Lovegrove seems more willing to acknowledges headwinds. "It's such an uncertain environment. If you ask most the key stakeholders, what they'd really like is some certainty, so that they can start planning. It's incredibly tricky to see what will happen." While "very, very optimistic" about the sector's global outlook, he is less sanguine about its future in his homeland.

"Whether Australia manages to shoot itself in the foot or not remains to be seen,' he says. On the upside, he sees potential for Australia to 'relatively easily" take a leadership role to become "a major, major player". But he admits that CSP's advocates have a complex message to get across."Everybody loves renewables in a motherhood sort of way, but very few people have cottoned onto the importance of matching demand throughout the day," he says.

Carbon Shift to Ease Scrapping of Tax: Coalition

THE Coalition says the linking of Australia's carbon price to Europe's will make it easier for Tony Abbott to axe the scheme, by giving firms a market to resell unnecessary forward-dated permits. 
 
The opposition's acting climate change spokesman Simon Birmingham said Australian firms buying emissions permits in the European carbon market would not be left holding worthless paper when the Coalition abolished the Australian scheme.

“They will have a safe and clear way to offload those permits back into the European scheme,” Mr Birmingham said.

“We've always made it clear that it was possible to abolish the carbon tax and this further demonstrates there is absolutely no impediment to doing so.”

Labor yesterday moved assuage business fears about the impact of the carbon tax by dumping the scheme's controversial $15 a tonne floor price, a change that could slash hundreds of millions of dollars from annual company costs.

The scheme will be linked to the European carbon price from July 1, 2015, allowing Australian firms to buy and sell permits on the world's biggest carbon market.

But the move exposes the government to a potential multi-billion dollar budget hit, with emissions permits in Europe currently trading at about $8 a tonne - far below the $29 a tonne figure the government is relying on to reap a forecast $9.2 billion in revenue in 2015-16.

Australian Industry Group chief executive Innes Willox said linking the scheme to Europe was a good move.

But he said it was difficult to see the European carbon price getting up to $29.

“It's fanciful,” Mr Willox told Sky News, although he added: “This is a positive move in the long term.”

Mr Willox said there were a “whole lot of balls in the air” with the Coalition's policy.
“Business needs long term certainty ... the certainty of a regulatory framework,” he said.

Climate Change Minister Greg Combet said the EU carbon price had been hit hard by the eurozone financial crisis, but it would recover.

“It is three years away,” Mr Combet said. “The treasury modelling is something we stand by.”

Credits Trader: Australia, EU ETS to Link in 2015

The Australian government today confirmed it will not enforce its carbon floor price when its emissions trading programme commences in 2015 as it moves to link with the EU Emissions Trading System (ETS).

Emitters in Australia are required to pay for every tonne of carbon dioxide they emit, currently at a fixed price of A$23 (US$23.87). It was originally proposed that from 1 July 2015, that price will be allowed to float within a band.

However, the Australian government and European Commission today announced that, from that date, Australian firms can use EU allowances (EUAs) for compliance and, by 1 July 2018, EU ETS participants will be permitted to use Australian allowances for compliance. To enable this linkage, the planned A$15 floor price will be scrapped.

And while Australian emitters can use international credits, such as EUAs, for 50% of their compliance from 2015, the cap on Kyoto credits – such as certified emission reductions (CERs) from Clean Development Mechanism projects – will be restricted to 12.5% of an emitter’s liability, said the government, from the previous 50%. “Linking the Australian and European Union systems reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions,” said Australia’s climate minister Greg Combet.

“Starting today, Australian liable entities can purchase [EUAs] for future compliance in Australia,” he added. “These arrangements provide Australian businesses with access to a larger market for cost-effective emission reductions and provide European market participants with enhanced business opportunities.”

“This would be a significant achievement for both Europe and Australia,” said the EU’s climate commissioner, Connie Hedegaard. “It is further evidence of strong international cooperation on climate change and will build further momentum towards establishing a robust international carbon market.”

“This is an impressive development – a first of its kind in having two major economies link their carbon pricing programmes,” said Dirk Forrister, Geneva-based president of lobby group the International Emissions Trading Association (IETA). “IETA members – and economists worldwide – have advocated the potential cost-savings benefits of linking for over a decade, so we are extremely pleased with this news, even as we continue studying the details.”

EUA prices were firmer this morning, up 2% at 8.30 GMT to €8.30 (US$10.42) for the benchmark December 2012 futures contract.

“It is a bit of much-needed positive news,” said one London-based trader.

“There might have been some knee-jerk buying this morning, but it’s too early in the day for the EU-Australia linkage to have a significant price impact,” countered Geoff Sinclair, head of carbon sales and trading at Standard Bank in London.

“If it remains in legislation, this might add around 100 million tonnes of demand to the EU scheme, although the extent to which it does will rely heavily on relative prices and exchange rates, so this doesn’t get the EU off the hook when it comes to the need for a set-aside [of EUAs to address massive oversupply in the EU ETS].

“At the same time, the linkage is likely to make the Australian scheme more palatable in terms of domestic politics, which is likely to boost investor confidence about its longevity,” he added.

“The removal of the floor price, the linking with the EU and the limit on the use of Kyoto units all impact the shape for the forward price curve from 2015 onwards,” said analysts at Westpac in Sydney. “Subject to the release of the actual legislation, the aggregate impact of these changes is that the EUA price will now become the primary influence on the [Australian carbon] price rather than the CER price.

“Further, the removal of the administrative complexity of hedging the price floor’s ‘top-up fee’ will presumably free up Australian liable entities to access cheap, cost-effective options in international markets sooner rather than later.”

The Australian government foresaw some kind of measure to require Australian emitters buying CERs below the floor price to pay a top-up fee – an administratively complex exercise, that is now unnecessary.

The Australian and EU authorities hope to agree on how to link their respective emissions registries, which track trades of allowances, by the middle of next year. However, the European Commission still needs to receive a mandate from member states to enter into negotiations for the two-way link.

Government to Scrap Carbon Floor Price

After weeks of secretive talks between the Gillard government and the Greens, Climate Change Minister Greg Combet has announced Labor will scrap the planned $15 floor price on carbon permits in a major overhaul of the carbon pricing scheme.

Following intense lobbying from business and threats by the independent MP Rob Oakeshott to block the floor price, the government will ditch the mechanism and instead restrict the purchase of cheap overseas permits from developing countries.

A limit on the amount of United Nations-backed permits that Australian companies can buy will effectively prop up the price at home.

Climate Change Minister Greg Combet plans to scrap the $15 carbon floor price. Photo: Alex Ellinghausen

Mr Combet also announced plans to link Australia's scheme to Europe's emissions trading scheme from 2015, which is likely to have the effect of matching the two prices.

 

The link with Europe means that Australian companies can start buying European permits - which are now trading at $9.80 - right away to meet their future liabilities.

This could make the carbon price cheaper overall for Australian businesses, though the European price is likely to rise by the end of the decade as the European Union moves to make restrictions of its own.

Australian companies will only be able to meet 12.5 per cent of their liability under the Australian carbon scheme with the UN-backed permits.

And from 2018 - or possibly sooner - Australian companies will be able to sell credits in Europe. This could be a boon for farmers, who can generate credits through changes to their land practices, such as tree planting, though Mr Combet said that aspect was still to be negotiated.

The carbon price, which came in on July 1, will initially be fixed at $23 and will rise slightly over the next two years, when it becomes a floating-price emissions trading scheme.

Europe has the largest emissions trading scheme in the world. A linkage means that carbon permits can be traded back and forth between Australia and Europe. The idea is that the free market then finds the cheapest possible way to reduce carbon. From an environmental viewpoint, it does not matter where the carbon cuts are made.

The floor price was intended to create certainty for potential investors in clean energy. But businesses complained it would be an administrative headache.

Without a restriction of the UN-backed international permits, the Australian price could crash to as low as $3 or $4. The Greens have been concerned that a very low carbon price would not be enough to drive investment in cleaner energy such as wind, solar and wave power.

Today's announcement is also likely to have an effect on negotiations between Energy Minister Martin Ferguson and electricity generators who could be paid billions of dollars to phase out their dirtiest power plants.

The likely price of carbon over the next decade is one factor in deciding the value of these power plants. They may argue that scrapping the floor price raises the value of their assets.
The Greens have already backed the changes.

Independent MP Rob Oakeshott said this afternoon he would also support the legislation.
He said the announcement would protect Australia's emissions trading scheme from some ''very difficult decisions into the future''.

Opposition Leader Tony Abbott said the changes showed the government was all at sea on the carbon tax.

''You can't fix it. You've just got to scrap it,'' Mr Abbott told reporters in Rockhampton.

''We haven't had the carbon tax for two months yet and they've admitted there is a fundamental flaw at the heart of the carbon tax.''

Mr Abbott said there would be a ''huge hole'' in the budget as a result of the decision.

''If you can't take the price for granted, you can't take the revenue for granted, and if you can't take the revenue for granted, you can't rely on the compensation,'' he said.

However Mr Combet said the government would not reduce household assistance payments and tax cuts set up to compensate for the price impacts of the carbon tax.

Asked if he was contemplating any further changes Mr Combet said: ‘‘no’’.

''We will not be cutting any household assistance,'' he said.

''We committed to it and you might recall that there are further tax cuts that have been legislated from 2015 as well.''


View Source

Carbon Tax Not Yet ‘Catastrophic’: Abbott

Opposition Leader Tony Abbott has conceded the introduction of the carbon tax has not immediately been “catastrophic”.

But he is adamant its long-term effects will eventually spell disaster for Australia’s economy.
Speaking at the Tasmanian state council of the Liberal Party, Mr Abbott restated his promise to abolish the controversial tax if he is elected prime minister at the election due next year.

“Yes, the initial impact of the carbon tax may not be absolutely catastrophic,” he told the council conference.

“But I ask you Tasmanians to understand the logic - if there is any - in a five-and-a-half per cent increase in your power prices because of the carbon tax, even though some 85 per cent of your electricity is hydro-generated.”

Mr Abbott said government modelling of the tax’s impact painted a dire picture for Australia’s future.

“I’m often accused of running a scare campaign about the carbon tax,” he said.
“I invite people who think I could be exaggerating the impact of the carbon tax to look at the government’s own modelling.”

He said it showed Australians would on average be $5000 worse off by 2050 and the country would miss out on $1 trillion.

“It’s as if our country were to shut down for a whole year because of the carbon tax,” he said.
“This is an unmitigated economic disaster for our country.”

Mr Abbott announced he had formed a working group of Liberal senators to examine how the struggling Tasmanian economy can be grown.

Australians Led The World in Home Solar Installs in 2011

Australian households installed more residential rooftop solar power systems last year than any other nation.

Approximately 392,500 new home solar systems were activated in 2011 according to data from the Clean Energy Regulator and the International Energy Agency.

A fact sheet released by REC Agents Association (RAA) based on data from the Clean Energy Regulator states Australians had installed nearly 1.5 million solar hot water and solar panel systems to the end of June.

As at 30 June, 2012, renewable energy certificates had been created for 753,844 solar panel systems; representing 1,671,489 kW capacity. A further 743,842 heat pump and solar hot water systems had been installed.

Close to 18 per cent of all Australian families now has one or the other or both installed – 9 per cent of households have solar electricity generation systems.

“Recognition must go to the Howard Government for having the vision to establish a world leading Renewable Energy Target, to the Rudd Government for increasing that target four-fold and to the Gillard Government for delivering on the promise of the Renewable Energy Target,” says Ric Brazzale, President of RAA.

“Whilst four million Australians now have solar on their roofs, many more Australians are keen to get on board. The Renewable Energy Target must be maintained, expanded and extended over time to help deliver solar to all Australians.”

Some corners of industry have called for the scrapping of the Renewable Energy Target due to the introduction of a carbon price. However, last month, Australia’s Minister for Climate Change and Energy Efficiency Greg Combet stated this would “fail to deliver the transformation needed in our energy sector and only increase the cost of that transformation in later years.”

REC Agents Association represents businesses creating and trading inRenewable Energy Certificates (RECs); the mechanism behind Australia’s Renewable Energy Target and the basis of the Solar Credits Scheme. Often referred to as a solar rebate, Solar Credits is an initiative that subsidises solar panel systems.

Low Income Earners Burnt As Cost Of Solar Subsidy Spirals

RENTERS, pensioners and other low-income earners are paying for their wealthier neighbours to enjoy cheaper power under the state's skyrocketing solar subsidy system. 
 
The Queensland Consumers Association says costs to subsidise solar are forecast to triple, as the state's bill to fund the scheme continues to grow.

More than 100,000 applications were received last month from homeowners wanting to profit from the state's generous 44c per kilowatt hour tariff - twice the retail power rate - which will continue for 16 years.

By installing solar systems up to 5kW, the mostly well-heeled applicants stand to earn $200-$300 a quarter from a subsidy that is costing their non-solar neighbours more each year.

One of those who applied was Algester resident Ron Ruys, who feels badly for his neighbours who are indirectly helping to pay for a $10,000 5kW system that will earn him extra income.

"I'm going to do it and I'm going to make money out of it," he said. "But it is unfair to other people because of the subsidy. I don't think people know what the 44c means to their bill."

Energy Minister Mark McArdle has estimated the tariff would cost $1.8 billion by 2028 if the scheme remained unchanged. The July 9 deadline limiting future payments at an 8c cent rate.

The Government projects that the annual cost of the subsidy will rise from $50 to $100 for each household from the surge in applications, and another $50 for upgrades to the power grid.

Whether the increases will become a reality depends on whether the Government is successful in cutting expenses elsewhere in the budgets of power suppliers, including "community services".

Queensland Consumers Association vice-president Ian Jarratt said the threat of a $100 annual hike should be a concern for many people trying to stretch their income.

"A dollar is always more for a pensioner," he said.

The association said it voiced concerns about the scheme's cost several years ago to state officials. "Things had been done far too quickly and not thought through enough, especially about the cost to consumers who could not afford to install solar systems," Mr Jarratt said.

The solar scheme has had some benefits: creating employment for thousands of installers, reducing the state's dependence on coal and lowering carbon emissions.

Prices of home solar systems have dropped 50 per cent.

Installer numbers have increased from 78 in 2008 to more than 1100 today. The number of customers has increased from 1200 to around 180,000.

On the downside, "all Queensland households and small businesses indirectly foot the bill", Mr McArdle said.

The Government said it was obliged by legislation to continue the 44c tariff for the next 16 years, and risked lawsuits if it reneged.

PM Julia Gillard Blames Electricity Bill Shock on The States

PRIME Minister Julia Gillard will launch an attack on the states today over soaring power prices, barely a month after her own price-inflating carbon tax began. 
 
And she will use the latest figures to back up her argument - which show household power bills have increased by a staggering 62.4 per cent in South Australia over the past four years, adding $1086 in expenses to the average bill before the carbon price even kicked in.

That equals the second highest jump along with Western Australia, but is less than the 69.2 per cent hike in New South Wales since 2008-09.

Ms Gillard will say the burden on households from her carbon price will add a comparatively small $115 to that pain this financial year.

In a bold square-up to state governments who she says have too often benefited from revenue increases from electricity prices, she will claim the states are doing very well out of the misery of households and declare it simply cannot continue.

"Power bills have become the new petrol prices: not just an essential of life that always seems to be going up, but a vital commodity, where what we consume each day, or pay every quarter, seems far beyond our control," she will say in the address to the Energy Policy Institute of Australia.

"Prices have gone up - have gone up far and fast."
Government figures show the conservative-run states of NSW, Queensland and WA, where network services remain state-owned, have experienced windfall gains in revenue including 60 per cent growth for NSW, 16 per cent for Queensland, and almost 200 per cent growth for WA since 2009-10.

"Following the recent round of price increases, revenue for enterprises wholly owned by State Governments is up 50 per cent over the previous five-year period," she will say.

"This was in a period when revenue for the rest of the market players grew less than 30 per cent  ... for too long, some state governments have been increasing their revenue at the expense of the family electricity bill - that has to stop.

Plugging in will cost up to 70 per cent more in NSW this winter. In Victoria it will cost just 10 per cent extra. Picture: Herald Sun

"Australia did not need nearly 50 per cent price increases for households over the last four years and Australians can't afford the same kinds of increases over the next four years.
"It's a huge cost to our economy and it's a threat to fairness in our society."

End of Australia's Mining Boom Inevitable: Hockey

Opposition treasury spokesman Joe Hockey has described the federal government's forecast budget surplus as smoke and mirrors after a new report tipping the end of the mining boom.

A Deloitte Access Economics report says Australia's mining boom is about to peak and an economic slowdown is inevitable.

Mr Hockey says the report confirms the coalition's criticism of the government's economic management.

"The government has built a budget that is wholly captive to the mining boom and the taxes to be collected from mining taxes," he told reporters in Sydney on Monday.

"Now it's apparent the budget is unravelling because it was built on smoke and mirrors."
The shadow treasurer said the government had failed to address the inevitable economic downturn that followed an economic peak.

"Every boom ends, otherwise it wouldn't be a boom," Mr Hockey said.

"When the mining boom sneezes, the budget gets pneumonia."

The coalition said the government now needed to explain how it would scramble back to a forecast $1.5 billion budget surplus for 2012/13.

"I'm calling on the government to come clean about what taxes and what levies it will introduce to try and make up for the budget black hole," Mr Hockey said.

Australia's Commodities Price Boom is Over: Ferguson

Australia blew the last mining boom and can no longer rely on high commodities prices, federal Resources Minister Martin Ferguson says, as China's economy continues to slow.

"From here on in, the premium prices are gone," Mr Ferguson told AAP at the opening of the new Australian Minerals Research Centre in Perth on Friday.

"We're not going to see iron ore at $US180-$US190 a tonne, we're not going to see thermal coal at about $US170 (a tonne), coking coal at about $US320 a tonne any more.

"The only way we will maintain our revenue stream as a country, at a state and federal level, is if we expand capacity."

While Australia was in the midst of the greatest mining boom in its history - with $270 billion committed to future projects and $230 billion more potentially on the way - it had failed to fully cash in on the previous boom of the mid-2000s, the resources minister said.

"Australia did not, as a nation, and nor did the companies, get the last resources boom right," he said.
"China grew quicker than expected - they failed to invest in capacity and we lost market share."

Mr Ferguson said Australia was already disadvantaged by its high labour costs and the resources sector needed to be more efficient.

"We are, in essence, a high-wage economy," he said.

"As grades fall and input costs rise, the Australian resources sector will only continue to prosper if more efficient mining and processing techniques are implemented.

"For Australia to remain competitive in a global market in which low-wage competitors are emerging every year, we must ensure that we develop and employ technology."

As mining profits were squeezed, the nation needed to transform itself into a major exporter of minerals and petroleum services and technology, Mr Ferguson said.

This sector was already vibrant, worth $8.9 billion in global sales in 2008/09, he said.

The minister's reality check came as Australia's main trading partner, China, reported that its economic growth had slowed to a three-year low of 7.6 per cent for the June quarter, down from 8.1 per cent in the previous quarter.

Solar Panel Firms ‘Mislead' Over Carbon

Two solar panel companies have been found to have made misleading comments about the impact of the carbon tax on electricity prices. 

POLARIS Solar and ACT Renewable Energy said in leaflets distributed in Western Australia and the ACT in late 2011 and early 2012 that customers should buy solar panels because electricity prices would increase by 20 per cent due to the carbon price.

The brochures also claimed the cost of power would rise by more than 400 per cent by 2019.
The Australian Competition and Consumer Commission found the information was "clearly misleading".

While the brochures said the figures were based on independent studies, they were in fact based on unverified claims in an energy industry association ad.

"There was no reasonable basis for these claims to be made," ACCC acting chairman Michael Schaper said in a statement.

Polaris Solar and ACT Renewable Energy gave an undertaking on Tuesday not to engage in similar conduct in the future and ensure all directors are trained in consumer law.

Assistant Treasurer David Bradbury said it was an important reminder to businesses they could not make false claims about the carbon price.

"This also underscores the fact that the reckless and negative scare campaign run by Tony Abbott and vested interests is putting businesses at risk of breaking the law," Mr Bradbury said.

Warning Issued Over Anti-Carbon Tax Posters

Labor is warning small businesses against displaying the Coalition's anti-carbon tax posters, saying they risk million-dollar fines if the information is found to be misleading.

The Coalition has sent the fliers to bakeries, butchers, dry cleaners and fruit shops just days before the carbon tax is due to take effect.

The tactic is a further sign that both sides of politics are preparing to ramp up their campaigning efforts surrounding the tax.

Opposition Leader Tony Abbott told a meeting of Coalition MPs that he and other senior party figures would be campaigning "across the country", warning people the tax would push up the cost of living and threaten jobs.

Labor is also preparing a coordinated campaign this weekend to reassure the community about the effects of the tax.

Special Minister of State Gary Gray plans to visit the South Australian city of Whyalla on Sunday - a community Mr Abbott said would be "wiped off the map" because of the carbon pricing scheme.

Earlier today, Mr Abbott visited an RSPCA compound in Canberra to point out that "thousands" of charities would be worse off under the tax despite Government reassurances.

The head of the RSPCA in the ACT, Michael Linke, estimates the cost of the carbon tax will be somewhere between $5,000 and $10,000 per year for the local organisation.

"At this stage we're not expecting job losses here in Canberra," Mr Linke told reporters at Mr Abbott's media conference.
"There is absolutely no way that I'm going to compromise animal welfare, so we are going to have to shave costs in other areas."

The Government says more than $300 million is available to councils, community groups and charities to help offset the costs of the carbon tax.

Prime Minister Julia Gillard used Question Time to ridicule Mr Abbott's visit to the animal welfare charity.
"I can assure the Leader of the Opposition (that) on July 1, cats will still purr, dogs will still bark and the Australian economy will continue to get stronger," Ms Gillard told Parliament.

"Presumably tomorrow he will be out trying to scare Skippy the bush kangaroo, and the day after he'll be out trying to scare Puff the Magic Dragon, and so it will go on."

Posters

And Labor is also warning businesses to be "very, very careful" about being part of Mr Abbott's campaign by displaying posters in their shop fronts.

"Don't allow him to drag you into his cynical scare campaign because the consequences of that are very serious," Assistant Treasurer David Bradbury told Parliament.

"If you do mislead your customers, then you could face fines of up to $1.1 million."

But the Coalition has rejected suggestions their small business posters are misleading.

"The fliers do nothing more than explain the Government own modelling and policy," Opposition small business spokesman Bruce Billson said.

"This is just another example of the Gillard Government trying to intimidate small business to not pass on or talk about the impact of the carbon tax."

The Australian Competition and Consumer Commission has set up a hotline for members of the public to make complaints about misleading carbon tax claims.

Firms 'Less Prepared' For Low-Carbon World

Just days before Labor's pollution price takes effect, a new survey suggests Australian firms are feeling less prepared now for a low-carbon future than they were 12 months ago.

The Economist Intelligence Unit (EIU) report, released on Tuesday, also finds only a third of respondents believe the opportunities created by imposing a carbon tax will outweigh the risks in the long term.
That's down from about 50 per cent in the inaugural survey in 2011.

The report says executives may have been overconfident before the details of Labor's scheme were announced in mid-2011.

Global uncertainty may also be behind the shift in sentiment, coupled with the fact that "corporate nervousness on the eve of the introduction of the carbon pricing scheme is bound to be at its peak".
But the Gillard government can take heart from other key findings.

About 85 per cent of directly affected businesses and two-thirds of all companies are already acting to reduce pollution.

"These findings indicate Australia's carbon pricing legislation has spurred firms to take action to reduce their carbon emissions," the report, commissioned by GE, states.

"This will ultimately reduce the country's overall carbon footprint."

GE ecomagination director Ben Waters is encouraged by the fact carbon pricing is already driving energy efficiency.

"We've been in the realm of opinion and policy advice but now we've got a law that's about to start," he told AAP.

"It's about getting into action, which is what business does best."

Almost three-quarters of the 136 senior executives surveyed by the EIU believe carbon pricing is here to stay - although almost half think a better regime will eventually replace Labor's current proposal.

That's partly because two-thirds believe the $23-a-tonne starting price is too high.

"It is likely that Australia, which is just about to take its first steps towards carbon pricing, will have to go through several years of discussion and trading before reaching equilibrium," the report states.

The Gillard government's carbon tax will transform into an emissions trading scheme in mid-2015.

The EIU analysis also suggests the corporate carbon agenda has shifted towards "cost reduction" in 2012.

Of the 300 biggest emitters that will pay the tax from July 1, more than half have set up dedicated roles or teams to identify greater carbon or energy efficiency measures internally.

Carbon is Key for Getting Algae to Pump Out More Oil

Overturning two long-held misconceptions about oil production in algae, scientists at the U.S. Department of Energy’s Brookhaven National Laboratory show that ramping up the microbes’ overall metabolism by feeding them more carbon increases oil production as the organisms continue to grow. The findings — published online in the journal Plant and Cell Physiology on May 28, 2012 — may point to new ways to turn photosynthetic green algae into tiny “green factories” for producing raw materials for alternative fuels.

“We are interested in algae because they grow very quickly and can efficiently convert carbon dioxide into carbon-chain molecules like starch and oils,” said Brookhaven biologist Changcheng Xu, the paper’s lead author. With eight times the energy density of starch, algal oil in particular could be an ideal raw material for making biodiesel and other renewable fuels.

But there have been some problems turning microscopic algae into oil producing factories.
For one thing, when the tiny microbes take in carbon dioxide for photosynthesis, they preferentially convert the carbon into starch rather than oils. “Normally, algae produce very little oil,” Xu said.

Before the current research, the only way scientists knew to tip the balance in favor of oil production was to starve the algae of certain key nutrients, like nitrogen. Oil output would increase, but the algae would stop growing — not ideal conditions for continuous production.

Another issue was that scientists didn’t know much about the details of oil biochemistry in algae. “Much of what we thought we knew was inferred from studies performed on higher plants,” said Brookhaven biochemist John Shanklin, a co-author who’s conducted extensive research on plant oil production. Recent studies have hinted at big differences between the microbial algae and their more complex photosynthetic relatives.

“Our goal was to learn all we could about the factors that contribute to oil production in algae, including those that control metabolic switching between starch and oil, to see if we could shift the balance to oil production without stopping algae growth,” Xu said.

The scientists grew cultures of Chlamydomonas reinhardtii — the “fruit fly” of algae — under a variety of nutrient conditions, with and without inhibitors that would limit specific biochemical pathways. They also studied a mutant Chlamydomonas that lacks the capacity to make starch. By comparing how much oil accumulated over time in the two strains across the various conditions, they were able to learn why carbon preferentially partitions into starch rather than oil, and how to affect the process.

The main finding was that feeding the algae more carbon (in the form of acetate) quickly maxed out the production of starch to the point that any additional carbon was channeled into high-gear oil production. And, most significantly, under the excess carbon condition and without nutrient deprivation, the microbes kept growing while producing oil.

“This overturns the previously held dogma that algae growth and increased oil production are mutually exclusive,” Xu said.

The detailed studies, conducted mainly by Brookhaven research associates Jilian Fan and Chengshi Yan, showed that the amount of carbon was the key factor determining how much oil was produced: more carbon resulted in more oil; less carbon limited production. This was another surprise because a lot of approaches for increasing oil production have focused on the role of enzymes involved in producing fatty acids and oils. In this study, inhibiting enzyme production had little effect on oil output.

“This is an example of a substantial difference between algae and higher plants,” said Shanklin.
In plants, the enzymes directly involved in the oil biosynthetic pathway are the limiting factors in oil production. In algae, the limiting step is not in the oil biosynthesis itself, but further back in central metabolism.

This is not all that different from what we see in human metabolism, Xu points out: Eating more carbon-rich carbohydrates pushes our metabolism to increase oil (fat) production and storage.

“It’s kind of surprising that, in some ways, we’re more like algae than higher plants are,” Xu said, noting that scientists in other fields may be interested in the details of metabolic switching uncovered by this research.

But the next step for the Brookhaven team will be to look more closely at the differences in carbon partitioning in algae and plants. This part of the work will be led by co-author Jorg Schwender, an expert in metabolic flux studies. The team will also work to translate what they’ve learned in a model algal species into information that can help increase the yield of commercial algal strains for the production of raw materials for biofuels.

Climate Change Envoy Warns Against Cutting Investment in Green Energy

The government's climate change envoy has warned that failure to take more action to invest in a low carbon economy is a threat to the future "prosperity and security" of the British people.

John Ashton, who has just stepped down from his post at the Foreign Office, told MPs that the UK was still considered an influential global player on climate change, but signalled that position was at risk as the country was falling behind on investment in energy efficiency and clean energy.

This in turn would make it harder to meet global targets to limit global warming to 2C - the level at which experts consider most countries will cope with the ensuing disruption to weather patterns.

"Failure to deal with climate change would amplify already dangerous stresses arising from food, water and energy insecurity," Ashton told the energy and climate change select committee. "This potentially unmanageable combination of stresses poses a systemic risk to the security and prosperity of our country."
In 2004 the government's then chief scientist, Professor Sir David King, made headlines around the world when he declared that climate change was "the most severe problem we are facing today, more serious even than the threat of terrorism".

However, the growing political consensus for tackling climate change, which culminated in the 2008 Climate Change Act committing the UK to binding emissions reductions, has appeared to be breaking down in the last two years as lack of economic growth and savage public spending cuts have eroded support for sometimes costly policies.

These issues came to a head in February when more than 100 Conservative MPs signed a letter to the prime minister, David Cameron, calling for an end to onshore windfarms.

Ashton, who left his six-year post two weeks ago, said he sympathised with concerns that UK efforts to combat climate change would be an expensive failure if other countries did not follow suit. However in a thinly-veiled warning about the damage done by draining political support for 'green' policies, he said the UK's diplomatic efforts to persuade other countries to reduce the world's reliance on oil and other fossil fuels "depends on what we are doing at home" and the "consensus across the political spectrum".

Ashton also told MPs that far from leading the world, the UK was falling behind important economic competitors such as Germany, Korea, China and Japan in some of the big future industries such as offshore wind energy and carbon capture and storage systems for gas and coal power stations.

"Internationally we must resolve the false choice, exacerbated by the current crisis, between economic security and climate security," said Ashton. "A rapid shift to low carbon growth is essential for security, competitiveness and prosperity, not an intolerable risk to competitiveness, jobs and growth."

"Politically we must address this not as a distraction from our current problems, but as part of the solution to them," he added.

Tory committee member Dr Phillip Lee challenged Ashton, however, suggesting that there were still hundreds of millions of people who wanted a better standard of living in developing countries like China, and in the UK during the recession, who would not support policies which pushed up the price of energy and so goods and services they wanted to buy.

"It's seen that going green is going to slow down the growth that we need," added Lee.

Harvey Norman Invests in Solar Panels

RETAILER Harvey Norman plans to be a market leader in the domestic solar industry after placing a substantial order for user-friendly solar panels. 

United States-based Westinghouse said today it had received an order for five megawatts of its Solar Instant Connect solar panel systems from Harvey Norman.

The order represents a significant investment in the green technology, which will result in Westinghouse's shipments in 2012 more than doubling from 2011.

Harvey Norman said the uptake of solar energy in Australia was stronger than in most other parts of the world, with over 830 megawatts sold in the local market in 2011.

"With Australian power pricing continuing to rise, we are continuing to see very strong demand for solar installations," Harvey Norman commercial division franchisee Alan Stephenson said in a statement.

"In addition to supplying kitchen, bathroom items, hot water and air conditioning systems, we have established a solar business, which we believe will be a market leader."

The newly ordered solar panels require Australian certification, and the first shipments to Harvey Norman are expected to begin in late-2012, Westinghouse said.

Solar Australia: Harvey Norman Invests in Solar Panels

The End of Clean Energy Subsidies?

The federal government has given generously to the clean energy industry over the last few years, funneling billions of dollars in grants, loans and tax breaks to renewable power sources like wind and solar, biofuels and electric vehicles. “Clean tech” has been good in return.

During the recession, it was one of the few sectors to add jobs. Costs of wind turbines and solar cells have fallen over the last five years, electricity from renewables has more than doubled, construction is under way on the country’s first new nuclear power plant in decades. And the United States remains an important player in the global clean energy market. 

 

Yet this productive relationship is in peril, mainly because federal funding is about to drop off a cliff and the Republican wrecking crew in the House remains generally hostile to programs that threaten the hegemony of the oil and gas interests. The clean energy incentives provided by President Obama’s 2009 stimulus bill are coming to an end, while other longer-standing subsidies are expiring.

If nothing changes, clean energy funding will drop from a peak of $44.3 billion in 2009 to $16 billion this year and $11 billion in 2014 — a 75 percent decline. 

This alarming news is contained in a new report from experts at the Brookings Institution, the World Resources Institute and the Breakthrough Institute. It is a timely effort to attach real numbers to an increasingly politicized debate over energy subsidies. While Mr. Obama is busily defending subsidies, the Republicans have used the costly market failure of one solar panel company, Solyndra, to indict the entire federal effort to encourage nascent technologies. 

The Republican assault obscures real successes that simply would not have been possible without government help. Wind power is a case in point. By spurring innovation and growth, a federal production tax credit for wind amounting to 2.2 cents per kilowatt-hour has brought the cost of electricity from wind power to a point where it is broadly competitive with natural gas, sustaining 75,000 jobs in manufacturing, installation and maintenance. 

But the tax credit is scheduled to expire at the end of this year, with potentially disastrous results: a 75 percent reduction in new investment and a significant drop in jobs. That is just about what happened the last time the credit was allowed to lapse, at the end of 2003. 

This is clearly the wrong time to step away from subsidies. But it may be the right time, the report says, to institute reforms, both to make the programs more effective and to make them more salable to budget hawks. One excellent proposal is to make the subsidies long term (ending the present boom or bust cycles) but rejigger them to reward lower costs and better performance. 

The idea is not to prop up clean tech industries forever. It is to get them to a point where they can stand on their own — an old-fashioned notion that, one would hope, might appeal even to House Republicans.

Swan Talks Up Carbon Tax Compensation

Treasurer Wayne Swan is talking up carbon tax compensation cheques for Australian households a month before the federal budget.

Mr Swan has defended the scheme to hand out carbon tax compensation even as the government faces a tough budget with declining revenues.

Pensioners and families with children eligible for family tax benefits will start to receive cheques in coming weeks.

"We raise revenue from the carbon price, and we use that revenue to assist with the price impacts which are relatively small," Mr Swan told ABC Radio on Monday.

"The fact is we've got to look our kids in the eye and say we did the right thing .... to reduce carbon pollution into the atmosphere, to combat dangerous climate change, but also to assist people with the price impacts of that."

He could not say how much an advertising blitz about the compensation package would cost because it was still under government consideration.

"We will have to advertise some of the important parts of this package so people know what they're getting and why they are getting it," Mr Swan said.

"There's nothing unusual about that at all, nothing unusual at all."
Mr Swan said restoring a budget surplus was entirely appropriate.

"It's very important given this global instability and uncertainty that Australia sends a message to the world that our financials are strong, but also giving the Reserve Bank room to move, should it wish to do so, in terms of interest rates at some stage in the future," he said.

Poll Shows Carbon Tax Needs Sale of the Century to Change Voters' Views

THE government's task of selling the carbon price to voters when it begins on July 1 remains difficult, with a poll showing entrenched negative attitudes towards the policy.

The latest Herald/Nielsen poll shows support for a price on carbon at 36 per cent, with 60 per cent opposed.

Just over half of voters - 52 per cent - believe they will be worse off, even though low- and middle-income earners will get $15 billion compensation to cover cost-of-living increases.

Another 39 per cent believe it will make no difference to their cost of living, while 5 per cent feel they will be better off.

The poll of 1400 voters was taken from Thursday night to Saturday night last week, after Labor's crushing defeat in the Queensland election.

The Opposition Leader, Tony Abbott, sought to implicate Julia Gillard's broken promise not to introduce a carbon tax as a factor in that defeat.

The numbers in the latest poll have barely changed in more than a year. Before Ms Gillard announced the carbon policy in February last year, the poll found support for putting a price on carbon evenly split. After the announcement - and opposition claims she had broken her promise - support fell to 35 per cent and opposition rose to 56 per cent. The levels have altered little since.

In July, the government revealed details of the household compensation, which will be worth $15 billion in the first four years. It would be paid as tax cuts and welfare and pension increases. In many cases, those on very low incomes would receive more in compensation than their increase in cost of living as estimated by Treasury.

The Herald poll taken then showed 53 per cent felt they would be worse off, 37 per cent felt there would be no change and 6 per cent felt they would be better off. These numbers are almost identical to the latest poll.

Ms Gillard has rejected calls from business to reduce the impact of the carbon price by cutting the fixed starting price of $23 a tonne roughly in half, to bring it in line with the carbon price in Europe.
Yesterday, she said voter anxiety with her government had been fuelled by the Coalition's ''hyper-partisanship''. She said it had ''force-fed for many months a diet of completely outlandish scare campaigns about what carbon pricing is going to mean''.

She repeated that employment would still grow, the cost-of-living impact would be less than 1 per cent and the compensation would be in place.

Mr Abbott has promised that, if elected, his first act as prime minister would be to unwind the price on carbon. Ms Gillard told Channel Ten's Meet the Press program this ''chest-beating'' would ''prove to be incredibly hollow''.

By next year, the carbon price would be a year old, the economy would have started to adjust and ''people would have got the money in their hands''.

''Mr Abbott, I think, will find it very difficult indeed to pretend to the Australian people that he is going to seriously dismantle all that,'' she said.

Outgoing Future Fund Chairman David Murray Says Carbon Tax Will be 'Very, Very Bad' for Economy

OUTGOING Future Fund chairman David Murray has condemned Labor's carbon tax as "the worst piece of economic reform I have ever seen in my life".   

Mr Murray, who has also lashed the Gillard government's mining tax, warned the tax would undermine the nation's competitiveness and damage the economy.

“If you want me to tell you my view, it is the worst piece of economic reform I have ever seen in my life in Australia,” he told ABC radio this morning.

“The consequence of introducing that tax at that level in Australia today is very, very bad for this economy, particularly in terms of international competitiveness.

“It raises costs further within Australia, it reduces our competitiveness for export of energy-related commodities, and it therefore renders us less competitive in the future.”

Mr Murray has previously questioned the dire warnings of climate scientists, telling the ABC's Lateline program last year there was insufficient evidence of environmental risks to warrant major policy impositions on the economy.

Today, he said the government should instead focus its efforts on improving energy efficiency.
“The sweet spot in dealing with a climate problem is to reduce reliance on energy and be more efficient in using it,” said Mr Murray, whose six-year term as head of the Future Fund ends on Monday.

“So anything that does that, improves the productivity of the economy and hedges the problem of a changing climate, if indeed it turns out to be as serious as some people think.”

In a wide-ranging interview, Mr Murray also criticised the process to select his replacement, saying measures should be put in place to make statutory appointments independent of government.
He said former treasurer Peter Costello, who founded the fund in government and was passed over for the chairman's job, could “above all” been expected to stand up for the fund.

But he said incoming chairman David Gonski was a “good appointment”, and he would have been “inclined to consider” the argument put by former federal Liberal politician Nick Minchin that an ex-politician should not be appointed to the post.

Mr Murray said Australia should look to Britain, which had introduced new rules to make statutory appointments more smooth and transparent.

“The issue with the selection process is it was not timely, which creates tensions,” he said.
“The key is some form of independence in the selection process, some timely approach in the selection process, a much more predictable process to make the appointment.”

Mr Murray also defended the Future Fund's earnings during his time at the helm, which have averaged 4.2 per cent - below the fund's target of 5 per cent plus inflation.

He said the fund had generated better returns than balanced superannuation funds, while still retaining a low risk profile.

“The portfolio is appropriately structured for the sort of world we are in today and I think those returns have been very good in the circumstances,” Mr Murray said.

He also called for further sovereign wealth funds like the Future Fund to be created to ensure mining revenues were not squandered.

“If a community depletes its resources - particularly in countries that have very significant resources relative to a smaller population - then those countries should consider whether the proceeds of that resource generation are set aside for future generations.”

He said this should apply not only to the federal government but also to the states.
Mr Murray also reiterated his criticism of the government's “jawboning” of the banks over interest rates, saying the banks had a role to play in the economy.

“By jawboning their interest rates down when the international cost of funds and the domestic cost of funds has been behaving the way it is, is to render the banks less able to perform their very important economic role,” he said.

A spokesman for Climate Change Minister Greg Combet said the government's climate change policies were based on scientific and economic advice.

“The scientific advice from organisations such as the CSIRO and the Bureau of Meteorology is that climate change is happening, that it poses risks to our environment and that carbon pollution is contributing,” he said.

“The economic advice from organisations like the Treasury, the Productivity Commission, the OECD and the International Monetary Fund, is that a price on carbon is the most economically-efficient way of reducing carbon emissions.”

Power Firms Face $4bn Carbon Slug

ELECTRICITY generators have warned that they face a cashflow crunch of hundreds of millions of dollars to buy carbon tax permits as the latest greenhouse gas emissions figures suggest almost $4 billion of the $7.7bn to be raised in the first year of the policy will come from power companies.

Data from the Climate Change Department yesterday shows the power generation sector accounted for about 170 million tonnes of carbon dioxide emissions in the 2010-11 financial year, which could mean a carbon tax bill of $3.9bn if repeated next year.

The Weekend Australian reported this month that InterGen - the operator of Queensland's black-coal power generator Millmerran - sought help from the federal government's Energy Security Council for loan support because the looming carbon tax had hit its $467 million refinancing.

Victoria's largest power plant, Loy Yang Power, has also had talks with the ESC as it has a $565m refinancing due in November.

The latest greenhouse emissions figures show the nation's top five carbon dioxide emitters in 2010-11 were all coal-fired power generators. But as the government assembled the carbon pricing package, emissions from the sector fell about six million tonnes over the previous 12 months.

The two NSW state-owned generators - Macquarie Generation and Delta Electricity - were the two biggest emitters in 2010-11, with 20.3 million tonnes and 19.8 million tonnes in CO2 emissions respectively.

If the same emissions levels were repeated next year, Macquarie would face a carbon tax bill of more than $466m and Delta would pay $455m, based on the government's starting carbon price of $23 a tonne from July.

The companies told The Australian yesterday they would try to recoup the cost through higher electricity prices, but because prices are set by bids in the national electricity market, they are uncertain how much they will be able to recover.

The government warns that the National Greenhouse and Energy Reporting figures, released yesterday, may not be an accurate guide to next year's carbon tax liability. This is because the reporting is for holding companies, and some of their emissions may not be subject to the carbon tax.

But The Australian confirmed with several of the big power companies that their reported NGER figures broadly represent emissions they would be liable for under the carbon tax.

The chief executive of the Electricity Supply Association of Australia, Matthew Warren, said some companies might have to pay hundreds of millions of dollars for permits in advance of when the electricity was generated and sold.

Mr Warren said the Investor Reference Group estimated that electricity generators would need to hold positions on $6bn worth of forward permits to maintain current levels of electricity contracts.

But a spokesman for Climate Change Minister Greg Combet said the government had announced it would make loans available to generators for the forward purchasing of carbon permits. This was in addition to $5.5bn in assistance for the emissions-intensive generators.

The mid-year budget update had shown the carbon price would raise $7.7bn in 2012-13, Mr Combet's spokesman said.

"Electricity generation is one of the most pollution-intensive sectors of our economy," he said.
"It is essential Australia begins to transform this sector so our economy remains competitive as the world moves to tackle climate change by reducing carbon emissions."

The government will put more than $4bn into household assistance this year to offset higher prices caused by the carbon tax.
Mr Combet's spokesman said there was substantial assistance for industry through the Jobs and Competitiveness Program, and for households through tax cuts, higher family payments and pension increases.

But Mr Warren said: "Without deferred settlement arrangements, allowing energy companies to pay for permits when they sell the energy and produce the emissions, they will need new lines of credit to finance their upfront purchase of forward vintages."

The opposition yesterday attacked the government over Virgin Australia's decision to introduce a carbon tax surcharge.
But Mr Combet's spokesman said Virgin had made the announcement on July 11 last year.

Power Firms Face $4bn Carbon Slug

Alumina Rejects Wagerup Carbon Tax Claim

Alumina Ltd says the high cost of construction in Western Australia rather than the carbon tax is a key reason that the expansion of its Wagerup alumina refinery has stalled.

WA's Environmental Protection Authority on Monday granted AWAC, Alumina and Alcoa's joint venture company, an extension until September 2016 to substantially commence the expansion that was first given environmental approval in 2006.

The Australian newspaper this week reported an Alcoa spokeswoman as saying the company would not revisit the expansion until it had a clearer picture of the full impact of the carbon tax, due to start on July 1.

The media report also cited the need to secure energy supplies, which Alumina chief executive John Bevan concurred with on Thursday.

But, Mr Bevan said, it was 'not the case' that the carbon tax was the key reason the project was not yet going ahead.

'The capital cost of building in WA is high, as seen with BHP's Worsley (refinery),' Mr Bevan told a conference call for analysts.

The cost of expanding BHP Billiton's Worsley alumina refinery in WA has blown out substantially due to factors including inflationary pressures and the stronger Australian dollar.

This had prompted analysts to speculate recently that the asset may be sold by the mining giant.

Alcoa last week announced that AWAC could close one of its two Australian aluminium smelters, Point Henry in Victoria, in the face of continuing difficult global economic conditions for the industry.

The company warned in January that it planned to close or curtail about 12 per cent of its global smelting capacity to improve its competitiveness amid falling aluminium prices and escalating raw materials costs.

The Point Henry announcement triggered a parliamentary furore, with federal Opposition Leader Tony Abbott blaming the possible closure on the government's carbon tax.

Prime Minister Julia Gillard labelled his comments a disgrace given that 600 jobs at the smelter hung in the balance.

'It (the potential Point Henry closure) is really not firm at this stage,' Mr Bevan said on Thursday, adding that Alcoa's global curtailments would occur in the next four or five months.

In delivering a near fourfold surge in full-year net profit on Thursday, Alumina said costs at Point Henry and its other aluminium smelter in Portland, Victoria, were last year pushed up by increased alumina and coke prices, and the rising Australian dollar.

Alumina booked a net profit for the 12 months to December 31 of $US127 million ($A119.16 million), up from $US35 million ($A32.84 million) for the 2010 calendar year.

Mr Bevan said margins rose after the company moved to price some of its alumina on an index/spot basis.

Morningstar analyst Mark Taylor said a 55 per cent rise in underlying earnings to $US128 million beat the investment research firm's forecast of $US113 million ($A106.02 million).

The company to maintain its full year dividend at six cents per share.

Mr Bevan said the company was cautious on the outlook for 2012, reflecting volatile pricing conditions, a strong Australian dollar and high input costs.

Conditions deteriorated towards the end of 2011, with prices for Alumina's products falling significantly.

Shares in Alumina closed up 1.5 cents, or 1.3 per cent, at $1.17.