Australia has today passed laws that will require 20 per cent of the nation's power to come from renewable sources by 2020, a move that is expected to generate over A$28bn (US$23bn, £13.9bn) of investment in clean energy capacity.
The laws, set to come into effect on 1 January 2010, were approved today by the Senate, which last week rejected a comprehensive carbon emissions trading scheme proposed by prime minister Kevin Rudd.
Originally part of the failed scheme, the renewable energy bill was split into a separate law to improve its chances of being passed by the Senate. Clean energy firms had claimed that confusion over whether or not a renewables target would be passed was stalling investments worth A$2m per week.
The Clean Energy Council – an alliance of the Australian Wind Energy Industry Association and the Australian Business Council for Sustainable Energy – predicts that the legislation could result in A$28bn of investment in new generation capacity over the next decade.
However, a Merrill Lynch report released in January put the figure higher still, estimating that the renewables target could generate about A$28bn in wind energy developments alone.
The legislation mandates utility companies to purchase a certain portion of power from renewable sources – such as wind, solar, hydro and geothermal – which currently account for only five per cent of Australia's electricity mix.
The 20 per cent target equates to 45 terawatt hours of clean energy over a decade. "This will be the largest increase in renewables in the nation's history," said climate change minister Penny Wong. "We will see a fourfold increase in renewable energy by 2020."
The cost will be passed on to households and businesses, which are expected to face higher electricity bills. Households will pay a greater proportion, af ter the Liberal-led coalition secured greater government assistance for industries that are heavy power users.
Rudd's Labor Party is now planning to reintroduce an amended version of its carbon emissions trading plan to Parliament in November, just prior to the UN climate change talks in Copenhagen in December.
In the meantime, Australia hopes to harmonise its greenhouse gas reduction efforts with neighbouring New Zealand, which earlier this month announced plans to cut carbon emissions between 10 and 20 per cent below 1990 levels by 2020.
New Zealand prime minister John Key said it did not make sense to have a different emissions scheme from Australia.
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