Australia has some of the most abundant renewable energy resources in the world.
We have the highest average solar radiation levels of any continent. Wind power is also a substantial resource.
And there is significant potential in the geothermal energy from hot rocks underground and the wave and tidal power of the oceans surrounding our continent.
Yet, until recently, these renewable resources have been largely untapped.
Historically Australia has relied upon coal to fuel its electricity generation sector.
As a result we have one of the most carbon-intensive electricity generation sectors in the developed world.
But with growing concern about climate change, a transformation is starting to unfold in this country’s electricity sector.
The Australian Government has accepted the scientific advice that unmitigated climate change poses risks to our environment and our economy.
We are implementing policies to lower Australia’s emissions of greenhouse gases – and the energy sector is central.
The Government has two main policy tools which will drive the innovation and investment needed to lower pollution from our energy sector.
Firstly, there is an expanded Renewable Energy Target, which commenced in January 2010.
This legislated target will ensure that 20 per cent of Australia’s electricity supply comes from renewable sources by 2020.
It means that by the early 2020s the amount of electricity from sources like solar, wind and geothermal power will be nearly as large as all of Australia’s current household electricity use.
Secondly, on 10 July this year, the Government announced a comprehensive plan for a clean energy future.
This plan will introduce a carbon price into Australia’s economy from July 2012.
The carbon price will apply to around 500 of the country’s largest emitters of greenhouse gases, including the major electricity generators.
For the first three years, these emitters will pay a fixed price per tonne of carbon pollution.
Then, from July 2015, a “cap and trade” emissions trading scheme will commence where the price of carbon will be determined by the market.
The carbon price will reduce carbon pollution at the lowest cost to our economy and will provide a powerful incentive for investment in cleaner energy technologies.
In addition to a carbon price, the Government’s clean energy future plan will deliver significant financial support for innovation and commercialisation of renewable energy.
A new Clean Energy Finance Corporation will invest $A10 billion in renewable energy, low pollution and energy efficiency technologies. And a new Australian Renewable Energy Agency will administer $A3.2 billion in Government support for research and development, demonstration and commercialisation of renewable energy.
These policies will drive a long-term shift to renewable energy in Australia.
Modelling by the Australian Treasury shows with a carbon price there will be $A100 billion of investment in renewable energy to 2050. This will see renewable sources accounting for around 40 per cent of Australia’s electricity generation by 2050, compared to around 10 per cent today.
This transformation of the energy sector will allow Australia to break the link between growth in our economy and growth in carbon pollution.