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The sun sets on Rudd’s climate change credibility

Matthew Warren, The Australian
KEVIN Rudd’s climate change honeymoon ended last week. The hero of Bali received a public relations belting over what were relatively modest indiscretions in the environment section of Tuesday night’s budget.

… Labor went to the election saying it would means-test the Coalition’s solar hot water rebate, limiting it to households earning less than $100,000 as part of a broader economic platform to rein in middle-class welfare.

It seemed logical for the Government to extend that to the solar panel rebate, while increasing the number of rebates available. But perhaps they should have consulted the industry first.

Most households who are paying a mortgage and can spare $5000 for solar panels are earning more than $100,000 a year. In the following three days solar installers reported up to 70 per cent of their orders had been cancelled. The hostile reaction on talkback radio revealed outrage from a community that appeared to take vicarious ownership of the generous scheme, even if only a handful actually signed up.

In reality it’s a clumsy intervention that will deliver a sudden bust to the boom enjoyed by a small section of the popular renewable energy industry.

… The Government’s political vulnerability over whether it can live up to its hype on clean energy rhetoric is only a small skirmish compared to the backlash that awaits them in July. That’s when Climate Change Minister Penny Wong, armed with the draft Garnaut review and Treasury modelling, will release the Government’s green paper setting the terms of a national emissions trading scheme.

It will be the most delicate of balancing acts, trying to preserve the engine room of the economy and the million jobs in trade-exposed, energy-intense industries while being seen to act decisively on climate change.

It’s a contest of high petrol prices and inflation versus environmental reputation and credibility.
(18 May 2008)

Rebate rules ‘disaster’ for solar power industry

Flip Prior and Chris Johnson, The West Australian.
WA’s fledging solar energy industry fears it could collapse following the Federal Government’s surprise Budget decision to restrict an $8000 rebate for installation of solar roof panels to households earning less than $100,000 a year.

WA Sustainable Energy Association chief executive Ray Wills yesterday described the move as a disaster.

“Most of our businesses are saying that at least two-thirds of their customers are over the $100,000 bracket, so it means that they’ve just lost over 70 per cent of their business overnight,” Dr Wills said.
(19 May 2008)

Solar means-test is necessary: Swan

AAP, The Age
The rebate for solar panels has to be means-tested because the program is full, Treasurer Wayne Swan says.

The $8,000 rebate for domestic solar panels used to generate electricity will now only be available to households earning less than $100,000.

Mr Swan defended the budget change in the face of criticism that it will reduce the take-up of solar power, and will hurt the solar installation industry.

“This (rebate) program was fully subscribed, one way of actually making it work responsibly was to means-test it,” he told Network Ten.
(18 May 2008)

Budget’s timely $40bn war chest

Kenneth Davidson, The Age
WITHIN two years, the Rudd Government will have a massive Keynesian insurance policy worth some $40 billion – equal to almost 4% of gross domestic product – available to “pump-prime” the economy if Australia gets caught by the subprime financial squeeze now affecting the US and European economies.

… The infrastructure spending should be designed against the background of rising foreign debt, climate warming, peak oil and water shortages.

For Australia, interest rates and the environment are related. It is difficult to see how the strong world demand for commodities like coal and iron ore can be maintained at the same time as global carbon dioxide emissions are reduced sufficiently to avoid the risk of catastrophic global warming.

It is possible for China, India and other rapidly developing countries to maintain high growth rates and contain greenhouse emissions consistent with global targets, but only if they skip most of the energy and raw-material-intensive growth of the older industrialised countries.

The implications for Australia are obvious. Perceptions of the Australian dollar as a commodity currency will become a weakness rather than a strength unless Australia can take advantage of the looming food shortages associated with climate change.

… The more rapidly Australia can produce its own electricity via renewable techniques, the better the chance of developing a competitive edge for these products in the markets that now rely on our coal.

The Government’s decision to subject the solar rebate to an income test means that, for most families, the payback period for installation of solar power will doubleto 20 years. This is unbelievably stupid.

Sustainability, respect for the environment and economical use of water will be the major factors in international competitiveness in the future. Infrastructure, including human capital in the form of highly educated and healthy populations, reinforced by leading-edge environmental regulations that anticipate the standards demanded in export markets are the means by which comparative advantage is achieved and sustained.
(19 May 2008)