Climate Change Authority

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Appendix A: Recommendations

Key recommendations

  • The frequency of scheduled scheme reviews should be amended from every two years to every four years, so that the next scheduled review would be in 2016 (R.1).
  • The form of the Large-scale Renewable Energy Target should continue to be expressed in legislation in terms of a fixed gigawatt hour level (R.2) and the existing Large-scale Renewable Energy Target of 41 000 GWh and interim targets should be maintained in their current form (R.3).
  • Given the uncertainty currently surrounding a number of policy issues - which, hopefully, will be clarified somewhat over the next few years - the Renewable Energy Target review in 2016 would be an appropriate time to consider adjustments to the targets beyond 2020 (R.4).
  • The Small-scale Renewable Energy Scheme should remain separate from the Large-scale Renewable Energy Target (R.5), but be amended in the following ways:
  • The threshold for solar photovoltaic units in the Small-scale Renewable Energy Scheme be reduced from 100 kilowatts to, say, 10 kilowatts. The Authority recommends the Commonwealth Government conduct further consultations with stakeholders to determine an appropriate threshold. Units over the small-scale threshold would be included in the Large-scale Renewable Energy Target, with five year certificate deeming (R.6);
  • The Ministerial power to lower the price cap should be retained to provide an appropriate cost containment mechanism should installations of small-scale systems accelerate unsustainability (R.7);
  • The Small-scale Renewable Energy Scheme should be phased out by reducing deeming so that renewable energy generation from small-scale systems is not rewarded after 2030 (R.8); and
  • The clearing house should be amended to a 'deficit sales facility' whereby new certificates would only be placed in the clearing house when it is in deficit (R.9).
  • Large electricity consumers should be permitted to opt-in to assume direct liability for Renewable Energy Target obligations. The Commonwealth Government should consult further with stakeholders to develop a detailed approach to opt-in that is efficient for both large electricity users and retailers. The Authority considers that the New South Wales Greenhouse Gas Reduction Scheme opt-in model would be an appropriate starting point for this detailed design work (R.13).
  • In cases where the Renewable Energy Target costs are passed through to emissions-intensive, trade-exposed businesses, partial exemption certificates should be tradeable, and thereby able to be used by any liable entity to reduce liable electricity acquisitions (R.21).

Other recommendations

  • To better manage liability, the relevant renewable power percentage and small-scale technology percentage should be set prior to a compliance year, and preferably by 1 December of the preceding year (R.15).
  • In regard to the arrangements for emissions-intensive, trade-exposed entities:
  • the level of the exemption for these entities under the Renewable Energy Target should be considered by the Productivity Commission as part of its broader review of the Jobs and Competitiveness Program (R.19);
  • the Commonwealth Government should consider the impact of the Renewable Energy Target on the competitiveness of an emissions-intensive, trade-exposed industry in any requests to the Productivity Commission's review of the level of industry assistance under the carbon pricing mechanism and the Renewable Energy Target (R.20); and
  • the Commonwealth Government should consider opportunities for efficiencies through the alignment of application processes and data requirements for emissions-intensive trade-exposed industries under the Jobs and Competitiveness Program and Renewable Energy Target (R.22).
  • The Commonwealth Government should explore whether the Renewable Energy Target eligibility for native forest wood waste is likely to increase the rate of logging of native forests. If it is not, then wood waste eligibility should be reinstated, subject to appropriate accreditation processes designed to ensure that no additional logging occurs as a result (R.28).
  • The Clean Energy Regulator should be able to refund over-surrendered certificates to a liable entity that ceases to trade, or to transfer over-surrendered certificates if a liable entity is acquired by another entity which takes on a Renewable Energy Target liability (R.17).
  • The requirement to submit a solar water heater and small generation unit return (R.10) and the requirement to provide the out-of-pocket expense data for a small generation unit installation (R.11) should be removed from the Renewable Energy (Electricity) Regulations 2001 (Cth).

Recommendations to maintain existing arrangements

  • In the Authority's judgement many aspects of the existing arrangements are operating satisfactorily and no changes are recommended in respect of the following:
  • the primary point of liability or the size threshold for coverage of grids (R.12) or the process for calculating individual liability (R.14);
  • the current arrangements for surrender of certificates (annual surrender for the Large-scale Renewable Energy Target; quarterly surrender for the Small‑scale Renewable Energy Scheme) (R.16);
  • the current settings for the shortfall charges (the level of the shortfall charge should be reconsidered by the Authority as part of its 2016 review of targets beyond 2020, or earlier if circumstances warrant (R.18));
  • the self-generation exemption (R.23) (but it is proposed that arrangements be developed to allow for incidental electricity offtakes under the self-generation exemption which provide community benefits in remote locations (R.24));
  • the list of eligible sources or the accreditation process for the Large-scale Renewable Energy Target (R.25);
  • the present eligibility arrangements for existing waste coal mine gas (R.26) and new waste coal mine gas (R.27);
  • the existing arrangements for displacement technologies (R.32) or to allow additional displacement technologies in the Renewable Energy Target (R.33); or
  • to promote diversity (R.34).
  • The Clean Energy Council should be maintained as the sole accreditation body for installers under the Small-scale Renewable Energy Scheme (R.29).
  • New small-scale technologies should be considered on a case by case basis for inclusion in the
    Small-scale Renewable Energy Scheme (R.30). No additional new small-scale technologies should be made eligible in the Small-scale Renewable Energy Scheme at this time (R.31).