Category: Energy Matters

  • NSW govt does hybrid tax backflip

    (NB) Carefully read last line re “Fully Funded”.

    NSW govt does hybrid tax backflip

    By Adam Bennett, Leah McLennan and Lisa Martin, AAP February 24, 2010, 6:30PM

     

    The NSW government is being accused of incompetence over a decision to exempt hybrid vehicles from an increased weight tax just days after the release of its transport blueprint.

    The vehicle weight tax changes were announced as part of the blueprint, released on Sunday, with motorists slugged up to $30 a year more to help pay for the $51.2 billion plan.

    The policy targets large cars over 975kg, but because it was based solely on weight, it also hit hybrid cars such as the Toyota Prius.

    On Tuesday, Premier Kristina Keneally announced hybrids were to be exempted from the tax increase, a belated change seized on by the opposition.

    Opposition Leader Barry O’Farrell accused the government of “making it up as it goes”, while opposition transport spokeswoman Gladys Berejiklian said Ms Keneally was guilty of “mistake after mistake”.

    The opposition has described the tax change as unfair on regional motorists, who will get no benefit out of improved Sydney transport.

    “She can’t tell us why she keeps making exemptions to the $30 tax on cars because they got that so wrong,” Ms Berejiklian told reporters on Wednesday.

    “They make an announcement and then try to fix it up.”

    Ms Keneally said the government decided to exempt hybrid cars after “listening to the community and responding”.

    “I would have thought the opposition would have welcomed that hybrids were exempted from this scheme,” she said.

    “We recognise that people who buy hybrid vehicles are already very mindful of carbon emissions.”

    The transport blueprint again dominated question time, with Ms Berejiklian calling for Mr Campbell to resign over the hundreds of millions in taxpayer dollars spent on the scrapped CBD Metro.

    “If this was the private sector the person would have been sacked long ago,” she said.

    The premier was also grilled over the funding details of the blueprint, and proposals such as the $6.7 billion northwest rail link.

    “It’s a $50 billion plan, fully funded, written into our budget, written into the state infrastructure strategy,” Ms Keneally repeated.

    “It is the reallocation of the money we would have spent on the CBD Metro, and we are allocating money from the forward estimates.”

    The stock response prompted an exasperated shadow Leader of the House, Andrew Piccoli, to his feet.

    “The question was about detail. Just saying it is fully funded doesn’t mean it is fully funded,” he said

  • It’s time for a solar revolution

     

    That is why I was joined by 10 of my colleagues (Senators Whitehouse, Cardin, Gillibrand, Merkley, Lautenberg, Leahy, Boxer, Menendez, Specter, and Harkin) in introducing the Ten Million Solar Roofs Act. The bill is all of 9 pages and is pretty straightforward. It calls for 10 million new solar rooftop systems and 200,000 new solar water heating systems over the next 10 years. When fully implemented, this legislation would lead to 30,000 megawatts of new photovoltaic energy, triple our total current U.S. solar energy capacity. It will increase by almost 20 times our current energy output from photovoltaic panels. The legislation will rapidly increase production of solar panels, driving down the price of photovoltaic systems. It also would mean the creation of over a million new jobs. The passage of this bill would dramatically reorient our energy priorities and would be a major step forward toward a clean energy future for the United States.

    What the Ten Million Solar Roofs Act does is provide consumer rebates for the purchase and installation of solar systems. Here is how it works: Take the example of a homeowner who decides to install a 5 kilowatt solar system which, depending on location, would produce enough electricity to cover most, if not all, of an average electric bill (the solar panels would produce excess power during the day which can be sold back to the utility, covering some or all of the cost of electricity when the sun is not shining). That system today costs roughly $35,000 to purchase and install. The federal tax credit of 30 percent reduces the system cost to $24,500. Many states offer additional incentives. In Vermont, for example, a homeowner could get an additional rebate of $1.75 per watt, which would further reduce the system cost to $15,750. Our bill would provide an additional rebate of as much as $1.75 per watt, covering up to 50 percent of the remaining cost. The result: the consumer now pays $7,875 for the solar system.

    This is a pretty good deal for a family that plans to stay in their home or wants to increase their home value, or a small business looking to stabilize its energy costs. It’s also a good deal for the nation because we save money by preventing the expensive construction of new power plants, we eliminate large health care and other costs associated with air and water pollution, and we take a big step to address global warming.

    We know this concept works because it is already being implemented on a smaller scale in California. This legislation extends nationally the California Million Solar Roofs initiative, started by Gov.  Arnold Schwarzenegger, a Republican. Now several years into the program, California is on track to meet its goal of installing 3,000 megawatts of new solar by 2016.

    Interestingly, while solar has a great deal of public support, you might not know that from listening to energy debates in Congress. As a member of both the energy and environment committees, I am constantly astounded by how many of my colleagues prefer to focus on what the government can do for the nuclear or coal industries, rather than why the government should support clean and sustainable energy. In fact, many senators and congressmen are fighting for a “nuclear renaissance” and want the federal government to offer loan guarantees covering the cost to build 100 new nuclear plants.  This could place at risk up to $1 trillion in taxpayer money.

    In my view, this is an absurd proposal. First, it is enormously expensive and financially risky. Second, if we don’t know how to safely dispose of the highly toxic nuclear waster we currently have, what are we going to do with the new waste generated by 100 additional plants?

    You may not hear much discussion of this in Congress, but the construction of new nuclear power plants is the most costly approach to producing new energy. Each new plant costs $10 to $17 billion to construct, and the nonpartisan Congressional Budget Office has determined that the risk of default on taxpayer supported loan guarantees is more than 50 percent. The simple truth is that building new solar capacity is a lot cheaper than building new nuclear plants. The cost to produce electricity from new nuclear plants is estimated to be 25 to 30 cents per kilowatt hour. Compare this to the cost of producing electricity from solar photovoltaic panels at 13 to 19 cents per kilowatt hour. Also, importantly, the price of solar is coming down, whereas the price for new nuclear keeps going up. You do not have to be a financial wizard to figure this one out.

    The time is now to reorder our energy priorities. Between 2002 and 2008 we put $70 billion of federal tax dollars towards fossil fuels, and just $1.2 billion towards solar power. New nuclear plants get more than triple the government subsidy that new solar plants get (and this does not fully account for the huge subsidy nuclear plants get through the Price-Anderson Act, which caps their liability in the event of a catastrophic event at a nuclear plant). This is not right. 

    If we are serious about moving toward energy independence in a cost-effective way, we should invest in solar energy.  If we are serious about cutting air and water pollution and reducing greenhouse gas emissions, we should invest in solar energy. If we are serious about creating a significant number of good paying jobs and making the United States a world leader in the production of sustainable energy, we should invest in solar energy. And, as we move forward in the solar revolution, a very good step forward would be the passage of the Ten Million Solar Roofs Act.

  • Bigger engines, two car households and school runs on rise

    At the same time there has been continued growth in the number of households with access to two or more cars, from around 2 per cent in the 1950s to more than 30 per cent in 2008.



    The number of journeys made by public transport has risen slightly since the 1990s from around six to seven billion, but is still well below the 12 billion figure of the 1960s.

    Richard George, from the Campaign for Better Transport, said the rising trend towards bigger engines showed improved engine efficiency was not persuading people to slim down in their choice of car.

    ‘The style of vehicle people are buying does not reflect the type of journeys they are making. You might need a bigger engine if you are towing a caravan but not for driving to Tesco,’ said George.

    He said only by increasing the cost of motoring (which the ONS statistics revealed had fallen over the past decade) and making cars a less attractive alternative to public transport and walking could you tackle the trend.

    The statistics also revealed that the number of primary school children walking to school had fallen below 50 per cent.

  • EU biofuels significantly harming food production in developing countries

     

    The report says the 2008 decision by EU countries to obtain 10% of all transport fuels from biofuels by 2020 is proving disastrous for poor countries. Developing countries are expected to grow nearly two-thirds of the jatropha, sugar cane and palm oil crops that are mostly used for biofuels.

    “To meet the EU 10% target, the total land area directly required to grow industrial biofuels in developing countries could reach 17.5m hectares, over half the size of Italy. Additional land will also be required in developed nations, displacing food and animal feed crops onto land in new areas, often in developing countries,” says the report.

    Biofuels are estimated by the IMF to have been responsible for 20-30% of the global food price spike in 2008 when 125m tonnes of cereals were diverted into biofuel production. The amount of biofuels in Europe’s car fuels is expected to quadruple in the next decade.

    The report attributes the massive growth in biofuel production to generous subsidies. It estimates that the EU biofuel industry has already received €4.4bn (£3.82bn) in incentives, subsidies and tax relief and that this could triple to over €13.7bn if the EU meets its 2020 target.

    The greatest support to the industry is exemption from excise duties. Duty at the pump is 20 pence less per litre compared to conventional fuels although this exemption due to end in 2010, a change which supermarket Morrisons cited last week as the reason for dropping one of its biodiesel blends. In 2009, the duty on low- sulphur petrol and diesel in the UK was 54.19 pence per litre; for biodiesel and ethanol it was 34.19 pence per litre.

    “Biofuels are driving a global human tragedy. Local food prices have already risen massively. As biofuel production gains pace, this can only accelerate,” said report author Tim Rice. He added thatbiofuels are not even an answer to climate change: “Most biofuels are worse than the fossil fuels they are supposed to replace.” . Large scale biofuel plantations can increase carbon dioxide emissions, either directly by cutting down forests or ploughing up other carbon rich habitats, or indirectly by forcing farmers to move into these areas. Separately, the UK Nuffield Council on Bioethics is currently consulting on the ethics of biofuels – how to ensure a new generation of biofuels don’t increase greenhouse gas emissions and take food from the poor to fuel cars.

    The ActionAid report says Europe is just one region now greatly increasing the amount of biofuels in transport fuel. Analysis of US farm data last month by the Earth Policy Institute in Washington showed that one-quarter of all the maize and other grain crops grown in the US now ends up as biofuel in cars. The grain grown to produce the fuel in the US in 2009 was enough to feed 330 million people for one year at average world consumption levels.

    If all global biofuel government targets are met, says ActionAid, food prices could rise by up to an additional 76% by 2020 with an extra 600 million extra people going hungry – six times as much as European policies alone.

  • Garrett’s not the only one one with bloody hands

     

    I’m a fan of Hunt’s. He’s a smart bloke who has done great work to pursue this issue from the outset. And, unlike pretty much anyone else in his party other than Malcolm Turnbull, he actually gives a rat’s about environmental issues.

    But come off it Greg – a member of the Howard Government talking about accountability under the Westminster system?  Are you kidding?

    There’s a more perverse logic at work, though, than the usual political hypocrisy (and the now well-worn cliché about Garrett — who apparently used to be a rockstar — struggling in politics. Because what we need is more party hacks).

    The crazy logic of the pursuit of Garrett is that he must take responsibility for the actions of everyone who has received Government funding, no matter how irresponsible they are in their own actions or their oversight of those for whom they’re responsible.

    To take up Greg Hunt’s point about Westminster accountability, in the days when such principles meant something, a program like the insulation program would have been implemented by bureaucrats. That is, Government employees would have fanned out across the country, entering homes, climbing into ceilings and installing the stuff. It would have been done with remorseless bureaucratic efficiency, house by house, street by street.

    Fortunately, Governments don’t work that way any more. There are no standing armies of road builders or PMG workers or engineers. Programs are outsourced so that the private sector can do them, ostensibly more efficiently, certainly for lower cost.

    Somehow, though, Garrett is apparently responsible just as if an army of his bureaucrats were crawling through ceilings across the land. We’ve changed how we build infrastructure, but the political and media rhetoric is of another age. Responsibility has been transferred to the private sector, but not the political risk.

    This is another symptom of the great Australian conviction that governments are responsible for making their lives risk-free, that if something, somewhere goes wrong, regardless of whose fault it actually is, the Government is to blame. Done your money in a too-good-to-be-true investment scheme?  Blame the regulator and the bank that lent you money.  Mortgaged yourself to the hilt only to discover interest rates are going up? Blame the Government. Kids overweight?  Blame the Government and the advertisers.

    Kevin Rudd has been a beneficiary of this obsessive belief in the power of governments to negate risk, because he ruthlessly exploited it to make the Howard Government look out of touch with voters’ concerns. Now it has returned to bite him, and hard.

    Perhaps we should apply the foil insulation logic to every Government program. What about road accidents? Roads might have been designed to the highest safety standards, but people still die on them. Ministers responsible for roads should resign. Health ministers should resign whenever there’s a medical error in a taxpayer-funded hospital. To say nothing of Defence Ministers, who should resign whenever there’s a death in the ADF. Because you can always argue that somehow, a responsible Minister could have done something that might have prevented deaths from occurring.

    The four deaths that have occurred are all tragedies and have been or are being investigated by the appropriate OH&S authorities in Queensland and NSW. These men died at work, like over 100 other workplace fatalities every year. In the foil insulation logic, bank executives should resign for approving property loans for sites where construction workers are killed.

    What’s ironic is that the Coalition’s “direct action” climate plan is foil insulation on a massive scale, with $10b for private sector activities for energy efficiency, carbon sequestration and renewable energy. Presumably Climate Action Minister Greg Hunt would resign if a farmer died while spreading taxpayer-subsidised black carbon, or a worker was killed during the construction of a new gas-fired power station built with government handouts, or a sparky fell from a roof installing new solar panels funded by a government program.

    But our programs would be better managed, the Coalition would maintain. Undoubtedly, especially with the cuts in public service numbers Barnaby Joyce wants.

    While we focus on four deaths – each as tragic and unnecessary as any other workplace death – the absolute debacle of the Environment Department’s Green Loans program has been lost from sight. This is a program where the Department knew the risks associated with massive government subsidization of a small-scale industry, poorly designed the program and then exacerbated things by what looks at the very least like blatant favouritism to one provider over others. Garrett should be under the hammer on that, not foil insulation.

    It’s a textbook case of what happens when Governments start pumping money into new industries without the disciplines of the market place present.

    Which of course is exactly what the Coalition wants to do, on a $10b scale.

  • And That’s Strike Three For Garrett

     

    All three programs point to serious shortcomings in the ability of the federal Environment Department to manage large-scale public policy roll-outs — for which it historically has had little responsibility.

    Another issue seems to have been a catastrophic failure on behalf of the department to forecast demand. All three schemes in question have been wildly popular: so popular in fact that they quickly soaked up all the available contractors in their industries. Financed by government incentives, this massive new demand then began to suck in fly-by-night contractors and opportunists keen for a piece of the action. Unskilled, untrained workers were employed in their thousands, many of them students and young people looking for holiday work or some extra cash. The results have been tragic.

    Why the Environment Department got its forecasts so wrong is somewhat of a mystery. An elementary grasp of economics and public administration should have been all that was required to realise that consumers respond to incentives. Just look at the Australian housing market, which has proved itself highly sensitive to government incentives like the First Home Owners Grant. It should have been obvious that injecting hundreds of millions into previously small industries would cause major structural dislocations.

    This was exactly what happened with Garrett’s $8,000 solar rebate last year, which proved so popular with householders that it eventually ran $850 million over budget. Garrett had to pull the plug three weeks early, with only 24 hours notice. In this week’s Senate Estimates testimony, it emerged that some solar contractors have still not been paid by the Environment Department.

    The multi-billion dollar insulation roll-out proved equally popular. Created as part of the Government’s economic stimulus package, the program was specifically designed to quickly shovel billions of dollars out of Treasury coffers in order to combat the global financial crisis. Speed was of the essence: an Environment Department media release from early 2009 proudly announces that Garrett was “fast-tracking” the insulation scheme. Little thought appears to have been given to whether the Australian home insulation industry had the capacity or the workforce to deliver such a massive program.

    This is where Garrett’s protestations that the blame must rest with shoddy contractors runs aground. Almost as soon as the stimulus measure was announced, a sudden boom began to sweep the industry. And soon after that, accidents started to happen. Houses burnt down. Contractors died.

    For instance, in November alone two young Queensland installers died as a result of shoddy work practices. One particularly distressing death occurred outside Rockhampton, where 16-year-old Rueben Barnes died after being electrocuted while installing foil insulation.

    But electrocution is just one of the risks faced by untrained subcontractors looking for extra cash. Reports have reached newmatilda.com of endemic unreported workplace accidents, like contractors falling through ceilings because they weren’t standing on roof beams. On 24 November, a man died of heatstroke while installing insulation in Western Sydney. As the Sydney Morning Herald reported at the time, “the man had been employed by a subcontractor as a casual worker and … he was not adequately qualified to install insulation”.

    It has since emerged that Master Electricians had warned the Environment Department of these risks well before November. In October, the CEO of the Master Electricians, Malcolm Richards, called for an end to the insulation rebate because of the electrocution and fire risk. It now seems as though hundreds and perhaps even thousands of homes may be “live” — in other words: potential death-traps. The Federal Government will now pay to inspect more than 48,000 homes to check for problems, potentially costing as much as $50 million.

    And yet despite the warnings, Garrett acted cautiously and incrementally. Last year, he worked to introduce mandatory training requirements for insulation installers. After the electrocution deaths last November, he banned the use of metal staples (which you would have thought posed an obvious risk). But it has taken until now for the Environment Minister to decisively end the program.

    Despite a terrible week, the Government is so far standing by its troubled Environment Minister. Senior front-benchers, including Chris Bowen and Julia Gillard, have been given the task of publicly defending Garrett. Labor’s strategists have clearly decided that Garrett remains an asset, rather than a liability, but his accident-prone performance in the job must also have disappointed those who touted the former rock star as a future leader.

    In some respects, of course, Garrett is not to blame. Clearly, his department has shown itself woefully incapable of carrying out the ambitious new responsibilities given to it under Rudd. But in politics, what matters is what happens on your watch, no matter whether you personally knew about it. Garrett has taken a significant hit in this scandal. Another scandal before the election could finish his ministerial career.