As government’s manage the transition to greener economies, a balance has to be struck between encouraging investment in renewable energy and ensuring the economic, as well as the environmental, sustainibility of domestic industries. Considering the significant lobbying from all sides, it is hardly suprising that the implementation of carbon pricing mechanisms is rarely smooth. To learn more about how the steel industry will be affected by developments globally, see SBB’s third annual Green Steel Strategies conference in Berlin on 19-20 April.
SBB 10 February Low wholesale electricity pricing, coupled with low Renewable Energy Credits (RECs) prices, places Australia at risk of missing its renewable energy target, carbon analytics research firm RepuTex tells Steel Business Briefing.
“We believe that wholesale electricity prices would need to at least double to encourage further investment in the wind sector in order for Australia to meet its renewable energy target, even allowing for the introduction of carbon pricing,” RepuTex executive director Hugh Grossman says.
Australia’s carbon tax will be implemented in July at a fixed rate of $23/tonne and increase 2.5% annually until 2015 when it will move to an emissions trading scheme.
The government intends to assist steelmakers in Australia, likely to be one of the hardest hit industries, with the introduction of its Steel Transformation Plan. The STP is expected to protect the sector from around 94.5% of the carbon price, but it is not yet known how this will change if the price increases.
Melbourne-based RepuTex believes Australia is at risk of missing its renewable energy target, which calls for 20% of electricity to be generated from renewable sources by the year 2020. It forecasts the actual figure is likely to be closer to 16-17%.
Currently just under 10% of electricity demand in Australia is met by renewable sources, mostly through wind and hydroelectric generators.
“Wind generators create RECs to encourage generation from the sector, but the Office of the Renewable Energy Regulator is forecasting an average 2012 price for RECs of just under $35.24/MW/hour, significantly lower than in recent years,” RepuTex said.