Source: Clean Energy Council
Australia's New Government Takes a Leading Role to Address Climate Change
I spent the past four weeks travelling in Australia and while the trip was for fun not business, it gave me a chance to follow some of the current energy related discussions while I was there. I’m going to try and do several posts that recap some of what I saw, read and discussed during my travels.
The starting point to this journey has to be Australia’s new found commitment to addressing climate change.
Elected late last year, the country’s new Labour government, under Kevin Rudd, committed itself to adopting the Kyoto targets a previous government negotiated in 1997. And then it went further and promised to reduce the country’s emissions by 60% by 2050.
Even before the election, the then opposition Labour Party together with the State & Territorial governments had asked Ross Garnaut, an economist, to look at Australia’s climate change related challenges and opportunities. In a February 25th article, the Economist suggested that Mr. Garnaut’s findings, which recommend that Australia should really be adopting a 90% reduction target for 2050, were causing the government some embarrassment (see Money Meets Mouth: How Green is Australia Prepared to Get?).
Even before Mr. Garnaut gave his report, as part of its election promises, the new government announced an increase in the country’s Mandatory Renewable Energy Target (MRET) to 45,000 GWh per annum by 2020 (i.e. 20% of the forecast electricity demand in 2020).
Together with existing renewables generation, the Victoria RET program and NSW’s Greenhouse Gas Reduction Scheme, Australia expects to see 60,000 GWh’s per annum in total by 2020.
JPMorgan looked at the target as well as state programs in Victoria and New South Wales (see JPM Renewable Energy Day, February 6th, 2008). Their focus, as may be expected, was on the utility scale renewables developers and how the targets were likely to affect them. JPMorgan’s review looked at three companies, each of which appear to have substantial project pipelines in place (primarily wind):
· AGL Energy (ASX:AGK)
Australia Gas Light Company, is Australia’s largest gas and electricity retailer and has recently invested in windfarms and a Victoria state based hydroelectric generator. AGL Energy has been operating in Australia for 170 years and was one of the country’s first listed companies. JPMorgan identifies 496 MW of wind capacity under development by the company.
· Origin Energy (ASX:ORG)
Created in 2000 from the energy assets of Boral Limited, an Australian materials and energy company, Origin is involved in oil & gas exploration, retail electricity sales, electricity generation and gas transportation and distribution. The company has assets involved in renewable energy generation (wind farms and geothermal) and manufacture of solar systems and is currently developing a further 590 MW of wind capacity according to JPMorgan.
· Babcock & Brown Wind Partners (ASX: BBW)
Babcock & Brown Wind Partners is a subsidiary of Babcock & Brown, a specialty investment advisor and asset management firm founded in 1977. The Company owns and operates 76 wind power facilities totalling 3,187 MW capacity in six countries including Australia, France, Germany, Portugul, Spain and the U.S.
Driving along the country’s west coast, small wind power developments were frequently seen near the not too numerous small communities, suggesting the country has a variety of wind power developers that fall outside the scrutiny of JPMorgan. More on those later.
