Clean energy

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Clean energy Cost or opportunity? CEPSI, October
2008
Richard Bolt Secretary, Department of Primary
Industries Victoria, Australia
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Australia has ambitious clean energy goals
Kyoto Protocol ratified in December
2007 Greenhouse emissions to be reduced by 60 by
2050 A national emissions trading law to begin
in 2010 20 per cent of electricity to be
renewable by 2020 National renewable law (MRET)
to be expanded A1 billion of Federal technology
funding
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Victoria has been preparing for large CO2 cuts

• 2004 Greenhouse Challenge for Energy policy
• competitive funding of technology innovation
• deployment through market mechanisms
• strong focus on least cost approaches
• 2005 CO2 reduction target of 60 by 2050
• Energy technology innovation strategy ETIS
• 2007 Renewable electricity law (10 by 2016)
  VRET
• Smart meter roll-out law (from 2009)
• 2008 Carbon storage roadmap and law
• Energy Efficiency Target law VEET
• 2004-8 Lead role in designing emissions trading
  scheme

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Victorias emissions we have a lot at stake
Source Australias National Greenhouse Accounts,
2005
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Victorias electricity system must be rebuilt
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There will be costs and opportunities

• Victoria played a lead role on a National
  Emissions Trading Task Force (NETT) which did
  the original ETS design
• NETT modelling of emission cuts showed
• A modest overall cost to State and national
  growth
• Variable regional and sectoral impacts positive
  and negative
• The Federal Government plans to reduce costs by
• Careful scheme design (eg cap trajectory,
  treatment of vulnerable sectors EITEs and
  coal-fired generators)
• Targeted use of permit revenue (eg for
  low-income households and technology innovation)

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Clearly, the challenge is to minimise the costs
and maximise the opportunities.There is no
recipe. How is Victoria going about it?
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A strong investment environment
Population 5 million (Melbourne, 3.5
million) 25 of Australias population GDP
(A45,000 / person) Hub for innovation and
technology Excellent infrastructure and
transport Multicultural, multilingual
workforce Strategic link to Asia-Pacific Conservat
ive and successful fiscal management Stable
political system (national and State) A strong
national financial system
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An attractive energy market

• Privatised in the 1990s
• Worlds most competitive retail market
• retail price regulation has ceased
• Large international and national owners
  attracted by low sovereign risk
• Integrated national energy market (electricity
  and gas) is being finalised
• covering 90 of Australias population

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An ambitious technology program ETIS

• ETIS 1 was run in 2005
• A180 million awarded to large scale
  demonstration and RD projects
• Leveraged A1.6 billion of private funds,
  A200 million of Federal funds
• ETIS 2 starts soon for large-scale,
  pre-commercial demonstration projects
• A72m for sustainable energy projects
• A110m for carbon capture and storage
  projects
• ETIS 2 is expected to leverage
• A share of A1 billion of Federal funds for
  clean energy technologies
• Substantial private capital
• What projects do we support?
• Large-scale demonstration of technologies ready
  for scale-up, which will make Victorias energy
  resources competitive under a CO2 cap

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Progress on large-scale demonstration
Large scale photovoltaic power station Developer
Solar Systems with TRUenergy (China Light
Power) Heliostat technology 154MW for A420
million ETIS 1 funding A50m Federal funding
A80m Large-scale clean coal (IDGCC) power
plant Developer HRL with Harbin Engineering
400MW for A750m Integrated drying and
gasification of high-moisture lignite ETIS 1
funding A50m Federal funding A100m CO2
storage demonstration project Developer CRC for
Greenhouse Gas Technologies (CO2CRC) 100,000
tonnes being injected into Otway Basin A40m
total cost ETIS 1 funding A6m
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Progress on RD
ETIS projects (grants to universities and
companies) Organic solar cells Carbon capture
(three projects) Lignite drying Hydrogen in
cars In-house RD Carbon storage potential of
Victorian basins DPI Geosciences Second-generat
ion bioenergy crop DPI Biosciences
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An effective technology funding model

• Diverse and complementary funding sources
• Sales revenue from a mix of
• Energy
• Carbon permits
• Renewable Energy Certificates
• Grants from
• Victorian Governments ETIS
• Federal Government clean coal and renewable
  energy funds
• Good risk profile (better than feed-in tariffs)
• Grants are paid up-front as construction proceeds
  
• binding contract between developer and
  government
• not contingent on outcome of demonstration
• Intellectual property and equity stays with
  developers

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A rigorous and efficient selection process

• Detailed business case required
• Assessment process independent of Government
• Technical and commercial evaluation
• Independent expert panel to make
• funding recommendations
• Strong probity guidelines and oversight
• Coordinated State and Federal timelines
• Proposals will be invited in Dec 08
• Due second half of 2009
• Decisions in early 2010

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A focus on all sustainable energy resources
Solar
Wind
Wave
Biomass
Geothermal
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Development of large coal and carbon storage
resources

• Brown coal
• The Latrobe Valley in south-east Victoria is the
  brown coal hub
• 33 billion tonnes easily accessible 400 billion
  tonnes in reserve
• 500 years of supply at current rates
• Low in ash, sulphur, nitrogen and heavy metals
  but high moisture
• A future global resource producing electricity,
  liquid and solid export fuels, and chemicals
• Geosequestration / carbon storage
• Potential capacity of Gippsland Basin deep saline
  aquifers 33,300 MT (630 TCF or 275 years of
  Victorian emissions)
• A A5.2m program to research storage potential
  close to Latrobe Valley coal fields and power
  stations

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Exploitation of short CO2 transport distances
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Innovative regulation of CCS

• Carbon storage
• Offshore storage will be in either Victorian or
  Commonwealth waters
• Regulatory regimes to allocate injection rights
  well advanced
• A balanced allocation of liability has been
  achieved to encourage private investment
• Carbon transport
• Victoria has gas pipeline links with three other
  states developed by the private sector
• Investment in CO2 pipelines will go through
  similar approval processes

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Conclusion

• The Victorian public wants CO2 cuts
• but also a reliable energy supply with cost
  rises limited
• Costs are inevitable energy bills will rise
• Sectoral and regional impacts can be mitigated,
  and benefits are available
• with the right policies, to drive the right
  investments

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Contacts and further information for ETIS

• Anyone interested in developing an ETIS proposal
  may contact
• Brian Davey for Carbon Capture and Storage
• Manager Large Scale Demonstration Projects
• brian.davey_at_dpi.vic.gov.au phone [phone]
  4476
• Mark Hull for Renewables
• Manager Sustainable Technology Development
• mark.hull_at_dpi.vic.gov.au phone [phone]
• Visit www.dpi.vic.gov.au
• Contact your Victorian Government Business Office
• Invest Victoria - www.investvictoria.com