Will the Carbon Tax Boost Large-Scale Solar Projects?

The debate over whether or not a carbon tax will be effective has split families, pitched neighbour against neighbour, divided loyalties and torn our nation asunder.

Well not exactly, but a real blockbusting start to this week’s column you have to admit!

On a serious note, the question many SolarQuotes readers would like answered about the carbon tax goes something like the following. Will the carbon tax (assuming the legislation is passed) bring any benefit to the solar power industry in Australia?

The answer is not as straightforward as you may think with many experts considering the level of the proposed carbon tax ($23 per tonne) to be too low to really make any difference either on the climate or in encouraging a switch to renewables.

Mark Diesendorf, deputy director of the Institute of Environmental Studies at University of New South Wales, said in an instructive May 21 article for The Conversation that the carbon tax “…will be too low for at least a decade to assist significantly.”
He goes on to say neither the carbon tax nor the federal government’s Solar Flagships program will meet the real development needs of large scale solar industry in Australia. Diesendorf says that feed-in tariffs are needed (you know the schemes the states are busy trying to out do each other in dismantling) to encourage growth in the market.

“…they [feed-in tariffs] are needed to build the market for second-generation CST power stations with thermal storage, bring down costs and open up the doorway to a sustainable energy future,” he said.

Further research finds opinions that back Diesendorf’s (and others) theory that the carbon tax is set too low to have any effect on the large cost advantage of fossil fuel priced electricity.

According to a 13 Sept. article publishedby journalist ,economist and advisor Tim Curtin in Online Opinion  the carbon tax will have a “minimal” climatic effect and virtually no influence on the take up of renewable energy in preference to fossil fuel energy.

“The so-called Carbon Tax due to become effective next July is at a level that will have minimal climatic and probably detrimental economic effects. First, at $23 per tonne of carbon dioxide emitted, the tax is set too low to induce a switch in energy sourcing by any existing power generation plant from coal to “cleaner” gas, or even less plausibly, renewables like wind and solar, given the very large cost advantage of coal-fired electricity,” says Curtin.

So, from a solar energy point of view, what’s the advantage of the carbon tax we are currently fighting over?

This article appears to infer that the recently announced large-scale solar agreement signed between GE Energy Financial Services and US-owned First Solar and Western Australian-owned Verve Energy was boosted by the passing [sic] of the carbon tax.

However it may not have been the carbon tax (currently being debated, not passed) that encouraged the US energy giant to put its hands in its pockets and bankroll the large-scale solar energy scheme. As the article suggests, new legislation from the W.A. state government, which requires desalination plants in the state to draw their energy from renewable sources may have been enough to tip the scale. Seehere for details.

So will the $23 dollars per tonne carbon tax be enough to stimulate the boom and bust solar sector in Australia? The conclusion must be probably not, according to experts such as Diesendorf who blame the overwhelming lobbying power of the fossil fuel industry and big polluters for the low, low bargain basement price on carbon.