Greenwashing the property market: why ‘green star’ ratings don’t guarantee more sustainable buildings

Igor Martek, Deakin University and M. Reza Hosseini, Deakin University

Nothing uses more resources or produces more waste than the buildings we live and work in. Our built environment is responsible for half of all global energy use and half of all greenhouse gas emissions. Buildings consume one-sixth of all freshwater, one-quarter of world wood harvests and four-tenths of all other raw materials. The construction and later demolition of buildings produces 40% of all waste.

The sustainability of our buildings is coming under scrutiny, and “green” rating tools are the key method for measuring this. Deakin University’s School of Architecture and Built Environment recently reviewed these certification schemes. Focus group discussions were held in Sydney and Melbourne with representatives in the field of sustainability – including government, green consultancies and rating tool providers.

Two main concerns emerged from our review:

  1. Sustainability ratings tools are not audited. Most ratings tools are predictive, while those few that take measurements use paid third parties. Government plays no active part.

  2. The sustainability parameters measured only loosely intersect with the building occupants’ sustainability concerns. Considerations such as access to transport and amenities are not included.

Focus group sessions run by Deakin University helped identify problems with current sustainability ratings.
Author provided

Read more:
Construction industry loophole leaves home buyers facing higher energy bills

That’s the backdrop to the sustainability targets now being adopted across Australia. Australia has the highest rate of population growth of any developed country. The population now is 24.8 million. It is expected to reach between 30.9 and 42.5 million people by 2056.

More buildings will be needed for these people to live and work in. And we will have to find ways to ensure these buildings are more sustainable if the targets now being adopted are to be achieved.

Over 80% of local governments have zero-emissions targets. Sydney and Canberra have committed to zero-carbon emissions by 2050. Melbourne has pledged to be carbon-neutral by 2020.

So how do green ratings work?

Each green rating tool works by identifying a range of sustainability parameters – such as water and energy use, waste production, etc. The list of things to be measured runs into the dozens. Tools differ on the parameters measured, method of measurement, weightings given and the thresholds that determine a given sustainability rating.

There are over 600 such rating tools worldwide. Each competes in the marketplace by looking to reconcile the credibility of its ratings with the disinclination of developers to submit to an assessment that will rate them poorly. Rating tools found in Australia include Green Star, NABERS, NatHERS, Circles of Sustainability, EnviroDevelopment, Living Community Challenge and One Planet Communities.

So, it is easy enough to find landmark developments labelled with green accreditations. It is harder to quantify what these actually mean.

Read more:
Green building revolution? Only in high-end new CBD offices

Ratings must be independently audited

Government practice, historically, has been to assure building quality through permits. Planning permits ensure a development conforms with city schemes. Building permits assess structural load-bearing capacity, health and fire safety.

All this is done off the plan. Site inspections take place to verify that the building is built to plan. But once a certificate of occupancy is issued, the government steps aside.

The sustainability agenda promoted by government has been grafted onto this regime. Energy efficiency was introduced into the residential building code in 2005, and then into the commercial building code in 2006. At first, this was limited to new buildings, but then broadened to include refurbishment of existing structures.

Again, sustainability credentials are assessed off the plan and certification issued once the building is up and running. Thereafter, government walks away.

We know of only one longitudinal energy performance study carried out on domestic residences in Australia. It is an as-yet-unpublished project conducted by a retiree from the CSIRO, working with Indigenous communities in Far North Queensland.

The findings corroborate a recent study by Gertrud Hatvani-Kovacs and colleagues from the University of South Australia. This study found that so-called “energy-inefficient” houses, following traditional design, managed under certain conditions to outperform 6- and 8-star buildings.

Sustainability tools must measure what matters

Energy usage is but the tip of the iceberg. Genuine sustainability is about delivering our children into a future in which they have all that we have today.

Home owners, on average, turn their property around every eight years. They are less concerned with energy efficiency than with real estate prices. And these prices depend on the appeal of the property, which involves access to transport, schools, parks and amenities, and freedom from crime.

Commercial property owners, too, are concerned about infrastructure, and they care about creating work environments that retain valued employees.

These are all core sustainability issues, yet do not come up in the rating systems we use.

The ConversationIf government is serious about creating sustainable cities, it needs to let go of its limited, narrow criteria and embrace these larger concerns of “liveability”. It must embody these broader criteria in the rating systems it uses to endorse developments. And it needs an auditing and enforcement regime in place to make it happen.

Igor Martek, Lecturer In Construction, Deakin University and M. Reza Hosseini, Lecturer in Construction, Deakin University

This article was originally published on The Conversation. Read the original article.


The other 99%: retrofitting is the key to putting more Australians into eco-homes

Ralph Horne, RMIT University; Emma Baker, University of Adelaide; Francisco Azpitarte, University of Melbourne; Gordon Walker, Lancaster University; Nicola Willand, RMIT University, and Trivess Moore, RMIT University

Energy efficiency in Australian homes is an increasingly hot topic. Spiralling power bills and the growing problem of energy poverty are set against a backdrop of falling housing affordability, contested carbon commitments and energy security concerns.

Most people agree we need modern, comfortable, eco-efficient homes. This article is not about the relatively few, new, demonstration “eco-homes” dotted around Australia. It is about the rest of our housing.

These mainly ageing homes might have had energy efficiency improvements done over the years, but invariably are in need of upgrading to meet modern standards of efficiency and comfort.

Read more:
Thinking about a sustainable retrofit? Here are three things to consider

Since 2006, all new-build housing must meet higher energy efficiency standards. But we add only around 1% to the new housing stock each year.

Policies to improve energy efficiency in the other 99% are more fragmented. The focus is almost entirely on market-based incentives to “retrofit”. By this we mean material upgrades to improve housing energy and carbon performance.

The transition has begun

Nevertheless, a major retrofit transition is under way. In the last decade, around one in five Australian households has installed solar panels. More than three million upgrades have been carried out through the Victorian Energy Efficiency Target (now Victorian Energy Upgrades) initiative.

These impressive numbers describe a nationally important intervention. But does this mean we will soon all get to live in eco-homes, rather than just a lucky few?

Current retrofitting activity has occurred unevenly and may contribute to longer-term inequalities.

For example, rebates for deeper retrofits often are more accessible to the better-off home owners. They have matching cash and also rights to make major upgrades (as opposed to renters). This entrenches the existing reality that low-income renters tend to live in less energy-efficient homes.

Similarly, in the UK, retrofit incentives haven’t always successfully targeted those most in need. The distribution of costs has contributed to pushing up energy prices for those already in energy poverty. In Australia, up to 20% of households were already in energy poverty before recent price rises.

Thus, if poorly targeted and funded, energy efficiency initiatives might make existing dynamics worse and add to the cumulative vulnerabilities of housing affordability stress.

Read more:
Housing stress and energy poverty – a deadly mix?

Keeping track of how homes rate

We cannot effectively monitor this. This is because Australia has no robust, longitudinal national database of property condition. There is no established, widespread practice of property owners obtaining property condition reports that set out the energy-efficiency performance and the most viable improvements that could be made.

This means we do not have a systematic way of knowing what we should do next to our homes, even if we are lucky enough to own them and have some cash available, as well as the time and motivation to retrofit.

To the rescue, at least in Victoria, is the new Victorian Residential Efficiency Scorecard. This is an advance on previous attempts (as in the ACT and Queensland) to develop comparable assessments of the energy efficiency and comfort levels of your home. Although voluntary, the scorecard will provide owners with a report on their home and a list of measures they can consider to transform it “eco-homewards”.

So, is the scorecard the answer to our problems? Will it bring forward the date when we can all live in comfy eco-homes? It will certainly help.

Since 2010, the European Union has mandated ratings of how a building performs for energy efficiency and CO₂ emissions.

The European Union has had a mandatory system since the Energy Performance in Buildings Directive. The evidence suggests this has raised awareness of energy efficiency by literally putting labels of buildings in your face when you are deciding where to buy. It’s much like Australians have become used to energy efficiency labels on fridges and other appliances. However, evidence of this awareness actually leading to upgrade activity is more mixed and, in some cases, disappointing.

In short, we need the scorecard and should welcome it. However, we also need a set of other measures if we are to make the transformations to match our national policy objectives and our desires for a comfy eco-home.

What else needs to be done?

The research agenda is also shifting to explore the social and equity dimensions of the retrofit transition.

In areas where installation work on energy-efficiency/low-carbon retrofits is increasing, how is this working in households? Who makes decisions? How do they decide and with what resources? What or who do they call upon? And, more broadly, what are the positive or problematic consequences for equity and, therefore, for policy?

Read more:
What about the people missing out on renewables? Here’s what planners can do about energy justice

Emerging retrofit technologies and behaviours have broader social and economic contexts. This means we need to understand the wider meanings and practices of homemaking, the uneven social and income structures of households, and the home improvement service industry.

While the retrofit transition is arguably under way, its consequences and dynamics are still largely unknown. We need to refocus away from simply counting solar systems towards understanding retrofitting better. This depends on understanding both the households that are retrofitting their homes and the industries and organisations that supply them.

The ConversationTo get energy policies right and overcome energy poverty, we need to bring together studies and initiatives in material consumption, sustainability and social justice.

Ralph Horne, Deputy Pro Vice Chancellor, Research & Innovation; Director of UNGC Cities Programme; Professor, RMIT University; Emma Baker, Associate Professor, School of Architecture and Built Environment, University of Adelaide; Francisco Azpitarte, Ronald Henderson Research Fellow Melbourne Institute of Applied Economic and Social Research & Brotherhood of St Laurence, University of Melbourne; Gordon Walker, Professor at the DEMAND Centre and Lancaster Environment Centre, Lancaster University; Nicola Willand, Research Consultant, Sustainable Building Innovation Laboratory, RMIT University, and Trivess Moore, Research Fellow, RMIT University

This article was originally published on The Conversation. Read the original article.

Semitransparent solar cells: a window to the future?

File 20180215 124886 1cij0t2.jpg?ixlib=rb 1.1
Looking through semitransparent cells – one day these could be big enough to make windows.
UNSW, Author provided

Matthew Wright, UNSW and Mushfika Baishakhi Upama, UNSW

Can you see a window as you are reading this article?

Windows have been ubiquitous in society for centuries, filling our homes and workplaces with natural light. But what if they could also generate electricity? What if your humble window could help charge your phone, or boil your kettle?

With between 5 billion and 7 billion square metres of glass surface in the United States alone, solar windows would offer a great way to harness the Sun’s energy. Our research represents a step toward this goal, by showing how to make solar panels that still let through enough light to function as a window.

Read more:
Solar is now the most popular form of new electricity generation worldwide

The economics of renewable energy are becoming increasingly favourable. In Australia, and many other parts of the world, silicon solar cells already dominate the rooftop market.
Rooftop solar power offers an increasingly cheap and efficient way to generate electricity.

But while great for roofs, these silicon modules are opaque and bulky. To design a solar cell suitable for windows, we have to think outside the box.

When we put a solar panel on a roof, we want it to absorb as much sunlight as possible, so that it can generate the maximum amount of power. For a window, there is inevitably a trade-off between absorbing light to turn into electricity, and transmitting light so we can still see through the window.

When thinking about a cell that could be fitted to a window, one of the key parameters is known as the average visible transmittance (AVT). This is the percentage of visible light (as opposed to other wavelengths, like infrared or ultraviolet) hitting the window that travels through it and emerges on the other side.

Semitransparent solar cells convert some sunlight into electricity, while also allowing some light to pass through.
Author provided

Of course we don’t want the solar window to absorb so much light that we can longer see out of it. Nor do we want it to let so much light through that it hardly generates any solar power. So scientists have been trying to find a happy medium between high electrical efficiency and a high AVT.

A matter of voltage

An AVT of 25% is generally considered a benchmark for solar windows. But letting a quarter of the light travel through the solar cell makes it hard to generate a lot of current, which is why the efficiency of semitransparent cells has so far been low.

But note that electrical power depends on two factors: current and voltage. In our recent research, we decided to focus on upping the voltage. We carefully selected new organic absorber materials that have been shown to produce high voltage in non-transparent cells.

When placed in a semitransparent solar cell, the voltage was also high, as it was not significantly lowered by the large amount of transmitted light. And so, although the current was lowered, compared to opaque cells, the higher voltage allowed us to achieve a higher efficiency than previous semitransparent cells.

Having got this far, the key question is: what would windows look like if they were made of our new semitransparent cells?

Do you see what I see?

If your friend is wearing a red shirt, when you view them through a window, their shirt should appear red. That seems obvious, as it will definitely be the case for a glass window.

But because semitransparent solar cells absorb some of the light we see in the visible spectrum, we need to think more carefully about this colour-rendering property. We can measure how well the cell can accurately present an image by calculating what’s called the colour rendering index, or CRI. Our investigation showed that changing the thickness of the absorbing layer can not only affect the electrical power the cell can produce, but also changes its ability to depict colours accurately.

A different prospective approach, which can lead to excellent CRIs, is to replace the organic absorber material with one that absorbs energy from the sun outside the visible range. This means the cell will appear as normal glass to the human eye, as the solar conversion is happening in the infrared range.

However, this places limitations on the efficiency the cells can achieve as it severely limits the amount of power from the sun that can be converted to electricity.

What next?

So far we have created our cells only at a small, prototype scale. There are still several hurdles in the way before we can make large, efficient solar windows. In particular, the transparent electrodes used to collect charge from these cells can be brittle and contain rare elements, such as indium.

Read more:
Solar power alone won’t solve energy or climate needs

If science can solve these issues, the large-scale deployment of solar-powered windows could help to bolster the amount of electricity being produced by renewable technologies.

The ConversationSo while solar windows are not yet in full view, we are getting close enough to glimpse them.

Matthew Wright, Postdoctoral Researcher in Photovoltaic Engineering, UNSW and Mushfika Baishakhi Upama, PhD student [Photovoltaics & Renewable Energy Engineering], UNSW

This article was originally published on The Conversation. Read the original article.

Forget turning straw into gold, farmers can turn trash into energy

Bernadette McCabe, University of Southern Queensland and Craig Baillie, University of Southern Queensland

Mention agriculture to many Australians and it conjures up images of mobs of cattle in the dusty outback, or harvesters gobbling up expanses of golden wheat. In reality, much of our high-value agriculture is near the coast, and close to capital cities. Think of the Adelaide Hills, the Lockyer Valley west of Brisbane, Victoria’s Gippsland region and Goulburn Valley, and Sydney’s Hawkesbury Valley.

These centres are where a lot of our agricultural processing happens – near big, eco-conscious populations ready to put their hands in their pockets for quality products.

Read more: Why consumers need help to shift to sustainable diets

But besides feeding us, farming can also potentially help us with the move towards cleaner energy. While it’s unclear how agriculture will factor into the federal government’s proposed National Energy Guarantee, it’s obvious that the farming sector can do plenty to reduce Australia’s emissions. An Industry Roadmap released this week by the Carbon Market Institute forecasts that by 2030 carbon farming will save the equivalent of 360-480 tonnes of carbon emissions, generate between A$10.8 billion and A$24 billion in revenue, and create 10,500-21,000 jobs.

One extremely promising area is turning agricultural waste and by-products into energy. This reduces emissions, makes farmers less vulnerable to variable energy prices, and adds value for consumers.

Using waste for energy

In Queensland and northern New South Wales, some sugar mills are making electricity by burning bagasse (sugarcane waste) as a biomass energy source. Other plants in Victoria, like Warrnambool Butter & Cheese, are using whey to produce biogas, thus reducing their spending on natural gas.

Other kinds of waste from viticulture and horticulture are also potentially useful. Even the trash produced when cotton lint fibres are removed from the seed is a largely untapped source of environmentally friendly energy.

Read more: Explainer: why we should be turning waste into fuel

The agricultural sector should be aiming to close the loop: to reclassify waste as a resource. Turning trash into treasure is a step towards energy independence, an idea that is gaining momentum overseas. An energy-independent farm seeks to cater for its own energy needs, creating a self-sustaining environment that buffers against fluctuating energy prices.

Australian farms should largely be able to achieve this. The trend towards renewable energy sources, and equipment that can run on biofuels, demonstrates an appetite for sensible, sustainable technology.

Biodiesel, wind and solar energy, and electricity and gas generated from biogas are being implemented globally. From an international perspective, farmers’ consideration for using or increasing renewable energy seems to be independent of the size of their operations but rather stem from their desire for farms to be energy-independent.

Read more: Biogas: smells like a solution to our energy and waste problems

La Bellotta farm in Italy, a mixed-energy farm, is a prime example. It’s using a concept tractor powered by methane generated from on-farm waste.

Closer to home, Westpork, WA’s largest pork producer, is about to add wind power and battery storage to its existing solar arrays, and possibly biogas too, as part of a plan to go 100% renewable energy and slash production costs.

The right policy settings

Agriculture was responsible for about 16% of Australia’s greenhouse gas emissions in 2013, trending down to 13% in 2015.

The National Farmers Federation is looking to the Government’s 2017 Review of Climate Policy to deliver policy settings that will enable the sector to remain competitive and grow production at the same time as meeting international obligations.

We particularly need policy to encourage investment in agriculture research. Climate-smart practices and technologies can simultaneously reduce emissions and improve productivity and profitability.

Meanwhile, improving the design of carbon-offset markets (like the federal government’s Emissions Reduction Fund) to make them more accessible to farmers could unlock the full carbon potential of Australian farms.

Read more: Farming in 2050: storing carbon could help meet Australia’s climate goals

A recent report from Powering Agriculture, produced with international backing, showed that while food production across the world is increasing, the energy required for each unit of food is falling.

With Australia’s relatively small population, huge area and extreme temperatures, it’s hard to compare apples with apples, but the adoption of renewable energy in Australian agriculture is helping to make us look like more efficient food producers too.

Mixing renewable energy sources gives farmers a plausible path to becoming energy independent. Bioenergy, such as biogas, gives flexibility to intermittent power like solar and wind, while reducing waste and creating a home source of biofertiliser.

When you boil it down to basic science, food and fibre are just stored energy. Beyond the animals and crops farmers bring to market, the Australian agricultural sector produces massive amounts of energy – they just need the tools to monetise it.

The ConversationThe topic of Farm Energy Independence will be discussed at the upcoming TropAg Symposium.

Bernadette McCabe, Associate Professor and Principal Scientist, University of Southern Queensland and Craig Baillie, Director (National Centre for Engineering in Agriculture), University of Southern Queensland

This article was originally published on The Conversation. Read the original article.

After the storm: how political attacks on renewables elevates attention paid to climate change

File 20171008 25764 1l2bb7h

AAP/David Mariuz

David Holmes, Monash University

This time last year, Australia was getting over a media storm about renewables, energy policy and climate change. The media storm was caused by a physical storm: a mid-latitude cyclone that hit South Australia on September 29 and set in train a series of events that is still playing itself out.

The events include:

In one sense, the Finkel Review was a response to the government’s concerns about “energy security”. But it also managed to successfully respond to the way energy policy had become a political plaything, as exemplified by the attacks on South Australia.

New research on the media coverage that framed the energy debate that has ensued over the past year reveals some interesting turning points in how Australia’s media report on climate change.

While extreme weather events are the best time to communicate climate change – the additional energy humans are adding to the climate is on full display – the South Australian event was used to attack renewables rather than the carbonisation of the atmosphere. Federal MPs hijacked people’s need to understand the reason for the blackout “by simply swapping climate change with renewables”.

However, the research shows that, ironically, MPs who invited us to “look over here” at the recalcitrant renewables – and not at climate-change-fuelled super-storms – managed to make climate change reappear.

The study searched for all Australian newspaper articles that mentioned either a storm or a cyclone in relation to South Australia that had been published in the ten days either side of the event. This returned 591 articles. Most of the relevant articles were published after the storm, with warnings of the cyclone beforehand.

Some of the standout findings include:

  • 51% of articles were about the power outage and 38% were about renewables, but 12% of all articles connected these two.

  • 20% of articles focused on the event being politicised by politicians.

  • 9% of articles raised climate change as a force in the event and the blackouts.

  • 10% of articles blamed the blackouts on renewables.

  • Of all of the articles linking power outages to renewables 46% were published in News Corp and 14% were published in Fairfax.

  • Narratives that typically substituted any possibility of a link to climate change, included the “unstoppable power of nature” (18%), failure of planning (5.25%), and triumph of humanity (5.6%).

Only 9% of articles discussed climate change. Of these, 73% presented climate change positively, 21% were neutral, and 6% negative. But, for the most part, climate change was linked to the conversation around renewables: there was a 74% overlap. 36% of articles discussing climate change linked it to the intensification of extreme weather events.

There was also a strong correlation between the positive and negative discussion of climate change and the ownership of newspapers.

The starkest contrast was between the two largest Australian newspaper groups. Of all the sampled articles that mentioned climate change, News Corp was the only group to has a negative stance on climate change (at 50% of articles), but still with 38% positive. Fairfax was 90% positive and 10% neutral about climate change.

Positive/negative stance of articles covering climate change by percentage.

Given that more than half of all articles discussed power outages, the cyclone in a sense competed with renewables as a news item. Both have a bearing on power supply and distribution. But, ironically, it was renewables that put climate change on the news agenda – not the cyclone.

Of the articles discussing renewables, 67% were positive about renewables with only 33% “negative” and blaming them for the power outages.

In this way, the negative frame that politicians put on renewable energy may have sparked debate that was used to highlight the positives of renewable energy and what’s driving it: reduced emissions.

But perhaps the most interesting finding is the backlash by news media against MPs’ attempts to politicise renewables.

19.63% of all articles in the sample had called out (mainly federal) MPs for politicising the issue and using South Australians’ misfortune as a political opportunity. This in turn was related to the fact that, of all the articles discussing renewables, 67% were positive about renewables with only 33% supporting MPs’ attempts to blame them for the power outages.

In this way, while many MPs had put renewables on the agenda by denigrating them, most journalists were eager to cover the positive side of renewables.

Nevertheless, the way MPs sought to dominate the news agenda over the storm did take away from discussion of climate science and the causes of the cyclone. Less than 4% of articles referred to extreme weather intensifying as a trend.

This is problematic. It means that, with a few exceptions, Australia’s climate scientists are not able to engage with the public in key periods after extreme weather events.

When MPs, with co-ordinated media campaigns, enjoy monopoly holdings in the attention economy of news cycles, science communication and the stories of climate that could be told are often relegated to other media.

The ConversationWith thanks to Tahnee Burgess for research assistance on this article.

David Holmes, Director, Climate Change Communication Research Hub, Monash University

This article was originally published on The Conversation. Read the original article.

Can two clean energy targets break the deadlock of energy and climate policy?

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Climate policy has become bogged down in the debate over a clean energy target.

Bruce Mountain, Victoria University

Malcolm Turnbull’s government has been wrestling with the prospect of a clean energy target ever since Chief Scientist Alan Finkel recommended it in his review of Australia’s energy system. But economist Ross Garnaut has proposed a path out of the political quagmire: two clean energy targets instead of one.

Garnaut’s proposal is essentially a flexible emissions target that can be adapted to conditions in the electricity market. If electricity prices fail to fall as expected, a more lenient emissions trajectory would likely be pursued.

This proposal is an exercise in political pragmatism. If it can reassure both those who fear that rapid decarbonisation will increase energy prices, and those who argue we must reduce emissions at all costs, it represents a substantial improvement over the current state of deadlock.

Ross Garnaut/Yann Robiou DuPont, Author provided

Will two targets increase investor certainty?

At a recent Melbourne Economic Forum, Finkel pointed out that investors do not require absolute certainty to invest. After all, it is for accepting risks that they earn returns. If there was no risk to accept there would be no legitimate right to a return.

But Finkel also pointed out that investors value policy certainty and predictability. Without it, they require more handsome returns to compensate for the higher policy risks they have to absorb.

Read more: Turnbull is pursuing ‘energy certainty’ but what does that actually mean?

At first sight, having two possible emissions targets introduces yet another uncertainty (the emissions trajectory). But is that really the case? The industry is keenly aware of the political pressures that affect emissions reduction policy. If heavy reductions cause prices to rise further, there will be pressure to soften the trajectory.

Garnaut’s suggested approach anticipates this political reality and codifies it in a mechanism to determine how emissions trajectories will adjust to future prices. Contrary to first impressions, it increases policy certainty by providing clarity on how emissions policy should respond to conditions in the electricity market. This will promote the sort of policy certainty that the Finkel Review has sought to engender.

Could policymakers accept it?

Speaking of political realities, could this double target possibly accrue bipartisan support in a hopelessly divided parliament? Given Tony Abbott’s recent threat to cross the floor to vote against a clean energy target (bringing an unknown number of friends with him), the Coalition government has a strong incentive to find a compromise that both major parties can live with.

Read more: Abbott’s disruption is raising the question: where will it end?

Turnbull and his energy minister, Josh Frydenberg, who we understand are keen to see Finkel’s proposals taken up, could do worse than put this new idea on the table. They have to negotiate with parliamentary colleagues whose primary concern is the impact of household electricity bills on voters, as well as those who won’t accept winding back our emissions targets.

Reassuringly, the government can point to some precedent. Garnaut’s proposal is novel in Australia’s climate policy debate, but is reasonably similar to excise taxes on fuel, which in some countries vary as a function of fuel prices. If fuel prices decline, excise taxes rise, and vice versa. In this way, governments can achieve policy objectives while protecting consumers from the price impacts of those objectives.

The devil’s in the detail

Of course, even without the various ideologies and vested interests in this debate, many details would remain to be worked out. How should baseline prices be established? What is the hurdle to justify a more rapid carbon-reduction trajectory? What if prices tick up again, after a more rapid decarbonisation trajectory has been adopted? And what if prices don’t decline from current levels: are we locking ourselves into a low-carbon-reduction trajectory?

These issues will need to be worked through progressively, but there is no obvious flaw that should deter further consideration. The fundamental idea is attractive, and it looks capable of ameliorating concerns that rapid cuts in emissions will lock in higher electricity prices.

The ConversationFor mine, I would not be at all surprised if prices decline sharply as we begin to decarbonise, such is the staggering rate of technology development and cost reductions in renewable energy. But I may of course be wrong. Garnaut’s proposal provides a mechanism to protect consumers if this turns out to be the case.

Bruce Mountain, Director, Carbon and Energy Markets., Victoria University

This article was originally published on The Conversation. Read the original article.

A cleanish energy target gets us nowhere

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Alan Pears, RMIT University

It seems that the one certainty about any clean energy target set by the present government is that it will not drive sufficient progress towards a clean, affordable, reliable energy future. At best, it will provide a safety net to ensure that some cleanish energy supply capacity is built.

Future federal governments will have to expand or complement any target set by this government, which is compromised by its need to pander to its rump. So a cleanish energy target will not provide investment certainty for a carbon-emitting power station unless extraordinary guarantees are provided. These would inevitably be challenged in parliament and in the courts.

Read more: Turnbull is pursuing ‘energy certainty’ but what does that actually mean?

Even then, the unstoppable evolution of our energy system would leave an inflexible baseload power station without a market for much of the electricity it could generate. Instead, we must rely on a cluster of other strategies to do the heavy lifting of driving our energy market forward.

The path forward

It’s clear that consumers large and small are increasingly investing “behind the meter” in renewable energy technology, smart management systems, energy efficiency and energy storage. In so doing, they are buying insurance against future uncertainty, capturing financial benefits, and reducing their climate impacts. They are being helped by a wide range of emerging businesses and new business models, and existing energy businesses that want to survive as the energy revolution rolls on.

The Australian Energy Market Operator (AEMO) is providing critically important information on what’s needed to deliver energy objectives. The recently established Energy Security Board will work to make sure that what’s needed is done – in one way or another. Other recommendations from the Finkel Review are also helping to stabilise the electricity situation.

The recent AEMO/ARENA demand response project and various state-level energy efficiency retailer obligation schemes and renewable energy targets are examples of how important energy solutions can be driven outside the formal National Energy Market. They can bypass the snail-paced progress of reforming the NEM.

States will play a key role

State governments are setting their own renewable energy targets, based on the successful ACT government “contracts for difference” approach, discussed below. Victoria has even employed the architect of the ACT scheme, Simon Corbell. Local governments, groups of businesses and communities are developing consortia to invest in clean energy solutions using similar models.

Some see state-level actions as undermining the national approach and increasing uncertainty. I see them as examples of our multi-layered democratic system at work. Failure at one level provokes action at another.

State-level actions also reflect increasing energy diversity, and the increasing focus on distributed energy solutions. States recognise that they carry responsibilities for energy: indeed, the federal government often tries to blame states for energy failures.

There is increasing action at the network, retail and behind-the-meter levels, driven by business and communities. While national coordination is often desirable, mechanisms other than national government leadership can work to complement national action, to the extent it occurs.

Broader application of the ACT financing model

A key tool will be a shift away from the current RET model to the broader use of variations of the ACT’s contract for difference approach. The present RET model means that project developers depend on both the wholesale electricity price and the price of Large Generation Certificates (LGCs) for revenue. These are increasingly volatile and, over the long term, uncertain. In the past we have seen political interference and low RET targets drive “boom and bust” outcomes.

So, under the present RET model, any project developer faces significant risk, which makes financing more difficult and costly.

The ACT contract for difference approach applies a “market” approach by using a reverse auction, in which rival bidders compete to offer the desired service at lowest cost. It then locks in a stable price for the winners over an agreed period of time.

The approach reduces risk for the project developer, which cuts financing costs. It shifts cost risk (and opportunity) to whoever commits to buy the electricity or other service. The downside risk is fairly small when compared with the insurance of a long-term contract and the opportunity to capture savings if wholesale electricity prices increase.

The ACT government has benefited from this scheme as wholesale prices have risen. It also includes other requirements such as the creation of local jobs. This approach can be applied by agents other than governments, such as the consortium set up by the City of Melbourne.

For business and public sector consumers, the prospect of reasonably stable energy prices, with scope to benefit if wholesale prices rise and limited downside risk, is attractive in a time of uncertainty. For project developers, a stable long-term revenue stream improves project viability.

The approach can also potentially be applied to other aspects of energy service provision, such as demand response, grid stabilisation or energy efficiency. It can also be combined with the traditional “power purchase agreement” model, where the buyer of the energy guarantees a fixed price but the project developer carries the risk and opportunity of market price variations. It can also apply to part of a project’s output, to underpin it.

The ConversationWhile sorting out wholesale markets is important, we need to remember that this is just part of the energy bill. Energy waste, network operations, retailing and pricing structures such as high fixed charges must also be addressed. Some useful steps are being taken, but much more work is needed.

Alan Pears, Senior Industry Fellow, RMIT University

This article was originally published on The Conversation. Read the original article.