RENEWABLE ENERGY CERTIFICATES
The Renewable Energy (Electricity) Act 2000, the Renewable Energy (Electricity) (Large-scale Generation Shortfall Charge) Act 2000, the Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010, and the Renewable Energy (Electricity) Regulations 2001 define the requirements of the Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme. The Renewable Energy Target scheme legislation requires purchasers of wholesale electricity to buy a certain amount of electricity from renewable sources such as wind, solar or hydro power.
The legislation creates a market framework in which tradeable certificates may be created by accredited renewable energy generators, which can include businesses (generally through the Large-scale generation certificates) or households (generally through Small-scale technology certificates). Demand for the certificates is via legislated obligations on wholesale purchasers of electricity (mainly electricity retailers) to contribute proportionately to legislated annual renewable energy targets. The certificates may be purchased and surrendered to demonstrate compliance, thus avoiding a shortfall charge, imposed under the RET legislation.
The surrendering of these certificates is interpreted as a tax on production within the ASNA which is consistent with the treatment recommended by the SNA. The SEEA (whose concepts are underpinned by the SNA) includes taxes on the production of electricity as an environmental tax.
It is worth highlighting that the number of certificates is increasing, with a value close to $1.5 billion in 2011-12 (seen in Figure 6.6 below). At this point in time it refers to the increasing generation of electricity from renewable resources (cat. no. 4628.0.55.001).
The Electricity industry surrenders close to 98% of all certificates, but the Mining and Manufacturing industries are increasingly buying, and surrendering more certificates.
6.6 Growth of renewable energy certificates 2006-07 to 2011-12 - Index: 2006-07=100
On the receiving end, subsidies on production to businesses under the REC scheme have risen from $44m in 2001-02 to $323m in 2010-11. In 2010-11, households received capital transfers just above $1.7 billion from installing renewable energy sources, up from an initial $11m in 2001-02.
It should be noted that there have been updates to the data since the extraction in July 2012 described in this chapter. These changes are minor and will be incorporated in future releases. Despite new technologies, the reduction of fuel use in vehicles, and limited substitution of fossil based fuels with renewable fuels, the demand is still high for fossil based fuels. Tax rebates on fossil fuels are widespread across the economy, and little impact is seen in the statistics of any change in the composition of fuel consumption. In Australia, taxes on energy are placed on fossil fuels for transport, but fossil energy used in products and production processes are exempt from taxation.