Australia parliament debates amended green power laws

CANBERRA/SYDNEY (Reuters) - Laws to overhaul Australia's renewable energy scheme were introduced into parliament on Wednesday in a move that should reassure industry and underpin billions of dollars in investments.

The laws are expected to pass a vote in the Senate in the coming weeks, a step that would be a rare victory for Prime Minister Kevin Rudd's otherwise stalled efforts to fight climate change and a boost ahead of elections later this year.

Australia has laws to ensure 20 percent of electricity comes from renewable energy by 2020 and the three bills introduced into the lower house of parliament will refine this by splitting the scheme to separate the small-scale household market from larger renewable energy projects.

The new arrangements will start in January 2011.

"The enhanced renewable energy target will help fight climate change, it will allow Australia to harness its vast renewable energy resources, and it will drive the deployment of renewable energy technologies, industries and jobs," Parliamentary Secretary Gary Gray told parliament.

The new laws have widespread bipartisan support and should pass through parliament by the end of June, giving more certainty to industry and the market for tradable Renewable Energy Certificates, or RECs.

Under the scheme, major polluting energy firms are required to buy RECs created from clean-energy projects for each megawatt/hour of electricity generated.

The trade in these instruments helps reward investors in wind farms, solar power stations and other renewables and there is about A$22 billion ($19.5 billion) worth of planned large-scale renewable energy projects.

The Australian Greens had called for changes to the scheme as has the opposition coalition and both told Reuters they will examine the amendments, although a vote against the changes seems unlikely since both backed the original scheme last year.

But the Greens and opposition remain strongly opposed to the government's emissions trading scheme, which was put on hold last month till 2013.

The government is seven votes short in the Senate but is likely to garner five Greens votes as well as Opposition support for the green energy scheme amendments.

WEALTH OF RESOURCES

In its 2010-11 budget on Tuesday, the government also committed an extra A$652.5 million ($568 million) over four years for a renewable energy fund to help support large and small-scale renewable energy projects.

"Australia has a wealth of renewable resources. We have some of the world's best wind resources, and the highest average solar radiation per square meter of any continent. We also have huge potential in geothermal and wave energy," Gray said.

Australia, one of the largest per-capita emitters of greenhouse gases, last year introduced a scheme to lower reliance on coal-fired electricity and set a target 45,000 gigawatt hours of clean power, or 20 percent of energy, over the next decade. But the value of RECs had plummeted because the government used the scheme to reward households that installed solar hot water panels and heat pumps, flooding the market with cheap certificates and reducing their worth to large-scale projects.

Growth in Australia's renewable energy sector has slowed to a snail's pace as the project developers wait for certainty.

One of the country's biggest proposed windfarm projects, an A$800 million development planned by the country's largest energy retailer, AGL Energy, has been put on hold until the changes to the country's renewable energy laws are stamped by parliament.

"We're holding stuff up and probably other companies are doing the same," a AGL spokesman said.

AGL is planning to spend around A$800 million developing its Macarthur windfarm in the south-eastern state of Victoria, in a joint venture with New Zealand's Meridian Energy.

"There is a lot of investment held up because there is no certainty -- things have been changed so often up to now so there's a lack of confidence," said Andrew Durran, an executive director of the Australian arm of German wind-farm developer Epuron GmbH.

(Editing by David Fogarty and Ed Lane)