Exodus for a place in the sun
When it comes to renewable energy, Australia is losing some of its best researchers and ideas, writes Judy Friedlander.
by Judy Friedlander
Source: Sydney Morning Herald /September 19, 2007
http://www.smh.com.au/news/environment/exodus-for-a-place-in-the-sun/
2007/09/18/1189881513715.html
In an Ernst & Young 2006 survey that ranked international markets by their attractiveness to renewable energy investors, Australia ranked 16th – fourth from the bottom. So it should come as no surprise that a significant number of Australians, well known in the sustainable energy industry, have been tempted by greener pastures. Those names include David Hogg (see story right), David Mills from the University of Sydney, whose solar thermal technology is being funded in Silicon Valley, California, and the Australian citizen Zhengrong Shi, a PhD student from the University of NSW’s groundbreaking photovoltaics laboratory, who is now one of the richest men in mainland China.
Shi’s Suntech Power Holdings floated on the New York Stock Exchange in December, the first non-government Chinese company to list there. Shi was attracted back to China after representatives of the Wuxi region approached him with an offer of $US6 million ($7 million) to establish a solar cell manufacturing plant.
Australian innovation is also energising industries and employment overseas. The University of NSW’s buried grid solar cell technology was licensed to BP Solar in Spain. Key technologies for solar hot water such as selective coating and evacuated tubes, developed by Sydney University and local industry, are being used in manufacturing in China.
Mills says three-quarters of the world’s solar collectors are made in China and 80 per cent of those use University of Sydney technology. While stronger venture capital markets are part of the attraction overseas, some push factors are assisting the flow of expertise and innovation offshore.
The Federal Government may have introduced a range of renewable incentives recently, but they pale in comparison to the deeper green of overseas initiatives, say key renewable industry players and environmental groups. This has been attributed to the Federal Government’s decision not to extend and increase the mandatory renewable energy target, despite those recommendations from an independent review.
Other disincentives cited as leading to movement offshore include subsidies that favour the coal industry, a reduction in funding to academia and a lack of clear and binding medium-term targets for carbon trading. Incentives that have attracted some of our brightest include Germany’s and France’s so-called feed-in tariffs, which subsidise sustainable industries by paying a higher price for solar electricity that is fed into the grid; many European countries’ substantial renewable energy targets over 10 to 15 years; America’s production tax credit and binding renewable portfolio standards in many states; and generous manufacturing incentives in China.
The global research company New Energy Finance, based in Britain, says green electricity targets include: Britain – 20 per cent by 2020; Germany – 21 per cent by 2012; France – 21 per cent by 2010; Spain – 29.4 per cent by 2010; Italy – 25 per cent by 2010; and China – 16 per cent of total primary energy supply by 2020.
Mark Wakeham, the energy campaigner for Greenpeace Australia Pacific, believes we might miss the clean energy revolution by “hitching our economic prosperity to fossil fuels which will have to be phased out in the 21st century”. “The [mandatory renewable energy target] is one of the best things the Federal Government has done on climate change, delivering billions of dollars worth of investment in renewable energy and meeting its target three years ahead of schedule,” he says. “It has worked so well, in fact, that the Federal Government is trying to kill it off as it provides the coal industry with competition that they don’t want.”
An Australian Coal Association spokesman, Doug Holden, says the coal industry’s spending on low emission technology is incorporated in the $1 billion-plus COAL21 Fund, being raised by the industry with a voluntary levy on coal production. “We need increased energy efficiency, more renewables, clean gas and coal, nuclear to address the need for major emission reductions,” Holden says.
Australia was one of the first nations to have a legislated renewable energy target. The mandatory renewable energy target guaranteed 9500 gigawatt hours of new renewable energy generation by 2010 but the growth in national electricity consumption means this is effectively a “standstill” target. In 1997 Australia generated 10.5 per cent of electricity from renewable energy; it is estimated that figure will be the same in 2010.
Wakeham says NSW and Victorian policies to increase renewable energy targets – Victoria from a current 3 per cent to 10 per cent by 2016, and NSW from 8 per cent to 15 per cent by 2020 – will produce $6 billion worth of initiatives and will assist with the spiralling growth in electricity . “But many companies have said it would be better if there was a federal target. Most companies that operate in this country, operate in all states.”
He says long-term targets are necessary to ensure that power station investors in renewables are guaranteed adequate returns. “We think that all parties should be looking at a strong renewable energy target like 25 per cent of Australia’s electricity coming from renewable sources by 2020.”
The federal Labor Party is yet to announce its position on the mandatory renewable energy target but promises “a substantial increase”. Research on energy and transport subsidies by the Institute for Sustainable Futures at the University of Technology, Sydney found that in 2005-06 the coal industry received between $767 million and $878 million in subsidies from state and federal governments while renewable energy and energy efficiency subsidies were between $392 million and $409 million.
A UTS report on the subject concluded: “This effectively creates an uneven playing field for renewable energy, making it much more difficult to respond to climate change in the energy and transport sectors.” The report’s author, Chris Riedy, says five of the Australian Government’s low emissions technology demonstration fund projects are “clean coal” or “clean gas” projects involving carbon capture and storage. “These get a total of $335 million. The remaining project is a solar power station, which gets $75 million.”
The Federal Government’s recent announcements of millions of dollars of funding to projects, such as the green voucher program to schools and solar hot water rebates, will stimulate renewable energy investment but detractors argue the net changes are still not significant enough.
There is also a gap in research funding for innovation in renewable energy technologies. The university’s report says that for 2004 to 2005, “taking the average of the proportion of funding allocated to fossil fuels and renewable energy by the [Co-operative Research Centre] program and CSIRO, the respective subsidies would be $226 million and $27 million”.
Wakeham says: “You can either get a very small amount of money under Australian Research Council grants, or alternatively you can get commercialisation grants, but there is nothing in between to fund further development.”
Many academics interviewed for this article did not want to go on the record, saying they did not want to further compromise any funding they received. However, many are alarmed, calling for much greater support and commitment. Many academics are scrambling for money after the Federal Government closed the Energy Research and Development Corporation in 1996, the ERDC closed a few years later and funding was not renewed for the Australian CRC for Renewable Energy in 2004.
“Very few OECD countries do not have national energy research and development corporations or laboratories,” says Muriel Watt, of the University of NSW’s School of Photovoltaic and Renewable Energy Engineering. “Once we had a situation where we did a lot of research and little was being commercialised. Now, we have a situation where government funding is at the commercialisation and industry end,” she says. “We should have all the stages.
“I think in an era where energy is such a key issue, not to support and focus on this is short-sighted, especially since we did have the lead in so many areas in the past.”
Richard Corkish,the head of the University of NSW’s School of Photovoltaic and Renewable Energy Engineering, takes a pragmatic view and says the fact many of the university’s PhD graduates are working overseas and many Australian solar technologies are being manufactured offshore is “environmentally positive”.
He says photovoltaics at the university has been funded consistently by the Federal Government because of demonstrated research excellence. As a “centre of excellence” it is funded through the Australian Research Council.
However, some academics point out that as a centre of excellence, there is an implication that there can not be another one. It is estimated that $7.5 million was given to photovoltaic research, development and demonstration in 2006 from federal and state governments. Of that, approximately $2.6 million was awarded to the University of NSW’s centre of excellence.
“The technology is being utilised and we have had and expect to continue with a strong royalty stream,” Corkish says, citing the examples of agreements with Suntech, JA Solar and Nanjing PV Tech in China, and a company in Taiwan. However, Corkish would like to see a more vibrant market “that would attract students and raise the profile in Australia”.
He would also like to see effective carbon pricing, feed-in tariffs and an increased renewable energy target.
Matthew Warnken, a consultant with Crucible Carbon, which advises blue chip companies and governments in project and technology development, is another advocate of strong renewable energy targets, mid-term and long-term carbon reduction targets and other carbon abatement innovation infrastructure.
“If there are strong targets over long periods, entrepreneurs are encouraged to get up and running. They also encourage academics to spend the required three or more years chasing the breakthrough innovation, developing and demonstrating.”
NOT JUST HERE FOR THE BEER
David Hogg jokes that it was the beer that took him to Germany to help set up the solar technology company CSG Solar AG. However, he quickly counters with what he regards as the real reasons: “The market, the investment environment, the skilled workforce and a supportive administration.”
In 2005 Hogg, an engineer, and a compatriot, Paul Basore, relocated from Sydney to Thalheim. They moved after it became apparent that ground-breaking Australian research in the field of thin film crystalline solar cell technology was not going to achieve domestic commercial success. The crystalline silicon on glass technology is the result of a 10-year research and development effort by the University of NSW and was initially commercialised with the state electricity company Pacific Power.
Hogg says that renewables in Germany mean “things like solar and wind energy”, while in Australia it means “clean coal, something about deforestation, more recently uranium mining and, oh, wind and solar energy”.
“Less facetiously, in Germany the support for renewables is delivered through a rate-based incentive scheme,” he adds. “Specifically, the electricity utilities enter into contracts with the owners of renewable systems to purchase any and all renewable electricity produced at a premium. This enables one to invest in such systems and get a positive return on investment.” Subsidies are also given to companies willing to move into renewable areas and employ significant numbers.