Extract from ABC News
Updated
The Federal Government has awarded tens of millions
of dollars worth of new contracts to companies for emissions reduction
projects that have been running for years, raising concerns that some
businesses are double-dipping and that climate targets will not be met.
The
centrepiece of the Coalition's Direct Action plan is the reverse
auction, in which companies with projects designed to abate emissions
are awarded contracts through the Emissions Reduction Fund.Last month's reverse auction awarded $660 million worth of contracts that will deliver about 5.4 million tonnes per year of abatement towards the 2020 emissions reduction target.
Environment Minister Greg Hunt called it a "stunning result".
LMS Energy won contracts estimated to be worth in excess of $100 million for its landfill gas projects.
But Lateline understands that at least 25 out of 28 of the LMS projects were already established and some had been operational for more than a decade.
Analysts have questioned why landfill gas companies were given funding for something they were already doing.
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Dr Ian MacGill from the University of New South Wales Centre for Energy and Environmental Markets said more scrutiny was needed in relation to all landfill gas projects.
"Whether they should be able to participate in the Emissions Reduction Fund, well it's a really important question," he said.
How do landfill gas projects work?
- As rubbish decomposes in landfill it emits methane and other greenhouses gasses.
- Landfill gas projects capture that gas in a vertical well.
- The gas is then piped through to an on-site power station where it is turned into renewable energy.
"I think the key to it is under what circumstances can they participate, can they qualify?
"The burden of proof for existing projects and facilities should be pretty high and I'm not convinced we have that in the scheme as it's currently operating."
Nearly half of the abatements from last month's reverse auction were made up by contracts awarded to landfill gas projects.
Climate Spectator editor Tristan Eds said landfill projects are able to generate revenue streams from emissions abatement that other projects cannot.
"They generate electricity, they earn revenue off that electricity that also then enables them to create renewable energy certificates under the Renewable Energy Target, and then on top of that there are the carbon credits that they create by essentially preventing methane from going into the atmosphere," he said.
"So they create three revenue streams out of that one project.
"A number of other projects aren't allowed to participate in the Emissions Reduction Fund if they are receiving support through other Government programs like energy efficiency targets, or renewable energy certificates for that matter, so it's funny that this source of abatement is allowed to double dip."
Mr Edis said the Government needed 47 million tonnes of abatement a year if it wanted to reach its 2020 emissions reduction target.
He said the last reverse auction was meant to deliver 47 million tonnes of abatement over the next 10 years.
Mr Edis said once varying contract lengths were taken into account, it equated to 5.4 million tonnes per year.
"I don't think we could describe the result as stunning, except in the terms of stunningly bad," he said.
Lateline requested interviews with Mr Hunt, as well as energy companies LMS, AGL and EDL, who were some of the biggest winners in the reverse auction.
No one was available for interview.
However, Mr Hunt provided a statement, along with letters sent to him in the past week from LMS, AGL and ADL.
Each of the letters thanked Mr Hunt for the reverse auction funding that they say was crucial for the viability of their projects.
"The ERF has now given certainty to investments in both transitional and new greenhouse gas abatement projects by providing long-term fixed price contracts for the lowest cost abatement," the letter from EDL said.
The statement from Mr Hunt said abatements identified by the Clean Energy Regulator were done using science that was internationally recognised.
"As stated by ERF participants, including the major landfill contractors, the ERF is crucial for the viability of these abatement and emissions reduction projects," the statement said.
Video: Mark Butler speaks to Lateline (Lateline)
The Federal Opposition is calling for an evaluation of the guidelines to award new contracts under the Government's Direct Action plan.
Shadow environment Minister Mark Butler said there needed to be transparency about whether the funds were being used for new greener plants.
"At the end of the day there needs to be very strict guidelines that give taxpayers confidence that they are not paying businesses to do things they were doing anyway," he told Lateline.
"Now, that's a hypothetical, if there were new projects then there may well be some justification."
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