"Don’t even put Australia in your business plan."
That was the blunt assessment from Tim Cornelius, CEO of Atlantis Resources Corporation, a global leader in tidal power that has just managed to secure US$14 million in venture capital in the midst of a global financial crisis.
Cornelius was speaking to a large room of venture capitalists, investment advisors and technology start-ups at the fifth Australasian CleanTech Forum in Melbourne, a conference and trade fair for the local renewable energy and environmental technology sector.
The message for local innovators was clear: leave. "You have to establish yourself in jurisdictions overseas," Cornelius told the room. "Investment goes towards jurisdictions where there is strong government support."
While Australia has strong research and development (R+D) funding and lots of entrepreneurs, it also has incredibly cheap power, courtesy of our abundant dirty coal. In the absence of a price signal from governments that gives renewable energy a leg-up, Cornelius sees no future for renewable energy in Australia.
And he should know. Atlantis Resources Corporation began life 10 years ago in Australia as Atlantis Energy. It received early R+D funding from the Victorian Department of Sustainability and Environment, but in 2005 Atlantis moved to Singapore to be closer to mandated renewable energy markets in Asia and Europe.
While Atlantis developed and built its prototype plants in Australia, its first commercial plant is in Pentland Firth in Scotland, where it is constructing a ₤250 million tidal power plant to supply a large data centre. At 150MW, the plant is generating commercial-scale amounts of electricity (the average medium-sized coal-fired plant is 500MW). Atlantis has no plans to build commercial tidal plants in Australia; without a "feed-in" tariff — that is, one that pays renewable energy generators for power they feed into the grid — renewable energy in Australia can’t compete.
Cornelius was one of a long line of speakers at the forum to bemoan Australia’s lack of a feed-in tariff. In Spain, Germany and Denmark, renewable energy feed-in tariffs (REFITs) have spurred rapid investment in renewable energy, backed by government power-purchase agreements that typically run for 20 years.
With REFITs in place, renewable energy suppliers can compete with cheaper, dirtier forms of energy like coal. But in Australia, with no federal tariff and still no price for carbon, the playing field is decisively biased in favour of the big polluters.
As a result, investment in the sector remains at anaemic levels — only $210 million last year, according to the investment manager of CVC Sustainable Investments, Christian Jensen.
The delegates at the CleanTech Forum were well aware of the Rudd Government’s craven capitulation to the big polluters in the Carbon Pollution Reduction Scheme. "Oh, you mean the Carbon Pollution Reward Scheme," one renewable energy CEO put it to me in the coffee line. Start-ups in this sector can only dream of the kind of political clout enjoyed by big carbon companies like Woodside Petroleum, which will get most of its carbon pollution permits for free. "The more you pollute, the more we permit," my coffee friend quipped.
Meanwhile, Australia’s trading partners are leaving us behind. One of the conference’s keynote speakers was Californian Tom Soto. A clean tech venture capitalist, he is also an adviser to Barack Obama’s transition team. Soto wowed delegates with his presentation of Obama’s ambitious renewable energy plans, including US$120 billion in the US Government’s stimulus package for public transport, renewable energy tax credits, electricity grid modernisation and efficiency refits for public buildings. And that figure doesn’t even include the 10-year US$150 billion investment plan for clean energy announced in Obama’s budget proposal.
None of this matters to Australia’s major parties, apparently. The CleanTech Forum saw a depressing display of conservative lock-step from Environment Minister Peter Garrett and Opposition spokesman Greg Hunt.
Garrett’s presentation was chock full of figures detailing just how much the Rudd Government was spending on renewables. In reality, however, they’re pretty meagre compared to Obama’s bold plans: $500 million for the Renewable Energy Fund, which will mostly go to renewable energy demonstration plants, and a paltry $50 million for the so-called Clean Energy Program (but don’t forget the $1.3 billion Green Car Innovation Fund). In response to a question on the lack of mapping for Australia coastlines that is holding back tidal energy in this country, the Environment Minster promised to take it on advice. He also complained about the hold-up of the CPRS legislation in the Senate, even while acknowledging that "market failures will be likely to persist through the early years of the CPRS".
The failures of Labor’s emissions trading scheme have been well-documented. But perhaps the most depressing aspect of Garrett’s presentation was that he was speaking there at all – instead of Energy Minister Martin Ferguson. After all, Ferguson is currently developing an Energy White Paper.
As Bernard Keane observed, the advisory committee for that paper is stacked with some of the most notorious pro-carbon lobbyists in the country — like the ESAA‘s Brad Page, just to take one example. Also on the committee are executives from Shell, Woodside, Rio Tinto, Santos, BHP Billiton, Origin, AGL and Xstrata.
As Larvatus Prodeo blogger dk.au pointed out this week, there is no-one from the renewables sector on that committee. In fact, not even the Government’s own first assistant secretary for renewables and energy efficiency, Ross Carter, is on it — such is the grip of fossil fuels on Australia’s levers of government.
Liberal Environment spokseman Greg Hunt’s speech was, in some ways, even more disappointing. Hunt has a deep background in climate policy, having written his thesis on carbon taxes versus cap-and-trade schemes, and he displays obvious charisma and intelligence. He also seems to understand the vital importance of a feed-in tariff, arguing that a national tariff should be introduced — although he made sure to add the caveat that any REFIT should have a "modest" multiplier, so as not to upset fossil fuel electricity generators and state governments.
But Hunt’s presentation to the clean tech industry was more interested in politics than anything else — he very rarely strayed from the song sheet of Malcolm Turnbull’s policies. Hunt’s headline point was about irrigation pipes and water infrastructure for rural Australia ("a re-plumbing of rural Australia"). It’s an important issue, no doubt — but hardly an overwhelming market opportunity for clean technology. Hunt waxed lyrical on the merits of biochar, remains a believer in carbon capture and sequestration, and still appears to believe in the largely mythical danger of "carbon leakage".
Imposing a price for carbon on so-called "trade-exposed" companies, he said, created an "unlevel playing field". To illustrate, Hunt gave the astonishing example of paper company Visy, which had apparently told him would relocate its pulp and paper factories to China if not compensated with free permits to pollute.
When the Federal Opposition is complaining about the fate of a company responsible for one of the biggest price-fixing scams in Australian corporate history, it’s hard to believe the interests of the environment will ever trump the voice of money in Canberra.
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