Finkel’s Clean Energy Target offers spark of opportunity for domestic manufacturers

In June 27, 2017

Australia’s energy crisis is a real thing, impacting real businesses, especially in manufacturing. The impact of rapidly rising energy costs (electricity and gas) and supply insecurity, raises the prospect of facility closures over the next year to two years.

One element of Australia’s longer-term energy security and supply is the role of renewable and clean energy in supplying the future.

Australia’s Chief Scientist, Alan Finkel, conducting a review for the Australian Government, has proposed the establishment of a Clean Energy Target (CET) to replace the Renewable Energy Target when it expires in 2020.

The emphasis in the Review is to deliver an economy-wide emissions reduction strategy for the thirty years from 2020 to 2050. As the report points out, this is now urgently required and must include options to reduce emissions in an orderly manner. In short, make the changes required to a lower emissions economy, without breaking the economy along the way.

In addition to the CET, the report discusses options for an Emissions Intensity Scheme (EIS), under which less emissions intensive electricity and energy generation is rewarded, compared with those that create higher emissions per unit of energy output. EIS typically advantage renewable energy, over fossil fuels such as coal and oil.

Biomass energy – whether that is to create electricity, thermal heat for industrial processes or even biofuels – is entirely renewable and thus low emitting. More importantly, of all of the renewables, biomass is ahead of most because it is able to supply baseload or continuous electricity supply because it does not rely on the wind to blow or the sun to shine.

As the Australian Forest Products Association (AFPA) commented, including bioenergy and industrial renewable heat in Australia’s clean energy mix will have the additional benefit of supporting Australian manufacturing jobs at a time when the sector is being hit hard by huge increases in both gas and electricity prices.

“Affordable and secure energy supply is essential for the forest products industry, and the tens of thousands of associated regional jobs it supports. With the right policy settings, other industry sectors with bioenergy potential such as agriculture, landfill and waste-to-energy could play an important role in Australia’s clean energy future, while substantially reducing emissions and reusing waste by-products from industrial processes,” the CEO of AFPA, Ross Hampton said.

Under the ‘technology agnostic’ scenarios supplied by the report, the inclusion of biomass energy could be more significant than at any time in the past. This will be important for national baseload electricity production, but it is critical to the future of the domestic supply-chain that includes wood processing businesses and pulp and paper manufacturers.

If secure, long-term, low-emissions and cost competitive energy can be created anywhere in a supply chain, the value from that is available for the entire supply chain to extract. That is an enticing prospect.

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