The Federal Government's plan to link its renewable energy target legislation to the emissions trading scheme has been met by mixed responses from legal experts who spoke to Lawyers Weekly.
Paul Curnow, partner at Baker & McKenzie's global climate change practice, said Labor came to power with the election promise to legislate for a 20 per cent renewable target by 2020 and that linking the legislation may result in ongoing delays, which clients in the renewable sector do not want.
"Certainly I think there will need to be an agreement reached in the Senate to include something in there that is not linked, but obviously meets the concerns of the ETS [emissions trading scheme], so that the legislation can actually get passed, and, therefore, allow a lot of renewable energy companies and developers sitting on potential projects to actually get out there and start developing these projects," he said.
Louis Chiam, partner at Mallesons and an expert in climate change, said that while businesses want investment certainty, delays in legislation were viewed pragmatically.
"Entities, who are a large part of where the scheme is targeted, want to make sure that the scheme - whether it is the renewable energies scheme or the emissions trading scheme - is well designed and well thought through, so, from their perspective, a well designed scheme is as important as certainty," he said.
Brian Walters SC said he believed the legislation and scheme did not need to be interdependent.
"But at the moment the emissions trading scheme is so flawed that there is little point in supporting it. I think it will lock in failure," he said.
"First of all the targets are ridiculously low ... It's also paying not just millions but billions of dollars to the major polluters in circumstances where they've known for 20 years that this is coming and they should not be compensated. The dirty industries aren't being punished - they're being rewarded under this current scheme."
Walters said he believed the money would be better spent on supporting new technologies.
"We still have the huge subsidy of the coal industry being able to put CO2 into the atmosphere without any cost. So we're picking losers when we should be working to support these new industries which are crying out for some clear government policy which enables some long-term planning to occur," he said
Curnow said the original renewable energy target was met much faster than the former government led by John Howard had expected.
"Howard decided not to increase the targets, so what happened is you had a fully functioning market and you had the regulation there but there was no demand because the target wasn't increased. So [the renewable energy target] is really taking that existing framework and increasing the target up to 45 000 gigawatt hours by 2020 - which represents about 20 per cent of Australia's generating capacity," he said.
Curnow said he thought it would be interesting to see where the financing was going to come from for projects from the renewable space, such as solar, wind, geothermal and tidal.
"Banks have pulled out of that [renewable] market over a number of years because of regulatory uncertainty and are going to have to be coaxed back into that market, given their previous experience with the market dropping out when Howard didn't increase the target. And also, of course, in the current climate access to capital funds is much more difficult," he said.
"I think we will also see a lot of potential overseas interest in the Australian market as far as investment and financing goes in the renewable market, particularly if Australian banks and financiers can't meet the demand."
The Opposition and Greens are ready to move amendments so that industry assistance under the renewable energy plan is not contingent on passage of the emissions trading scheme legislation. The Greens want to stop emissions-intensive trade-exposed industries being exempted from the target.
However, Greens senator and deputy leader Christine Milne said the minor party would support the Government's RET legislation, even though it wanted a stronger target of 40 per cent of energy from renewable sources by 2020.
If the opposition decides to block the legislation, the Government will need the votes of independent senator Nick Xenophon and Family First senator Steve Fielding, as well as the Greens.
Curnow said all businesses must now wait for political wrangling over the different aspects of the legislation and targets.
"We can all sit around a crystal ball and imagine what will happen in the next few months, but, really, we are into the final throes of this process which is the pure politics of it and I guess we just have to wait and see how that plays out," he said.
- Sarah Sharples
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