Industrial heat credits and the Renewable Energy Target
PROJECT NUMBER: PRA399-1516
As a result of the Paris Agreement in December 2015 to limit global warming to 2°C, Australia has committed to reducing emissions from 2005 levels by 26–28% by 2030. Australia’s Renewable Energy Target (RET) is currently targeted at achieving 33 terawatt-hours (TWh) of renewable electricity by 2020 but does not cover heat generated from renewable sources.
This recently published FWPA report has revealed that Australia could significantly increase its renewable energy outputs by including renewable industrial heat as well as electricity in its definition of energy. This energy can include wood waste sourced from plantation forestry.
The research shows that in Europe wood use of waste and biomass for electricity generation, heating and cooling contributes an estimated 45% of the EU renewable energy target, and in 2012 had a total turnover of 33 billion Euros and employed over 374,800 people. The EU estimates that by 2020, 1,046 TWh of biomass energy will be used to generate heating in Europe.
In contrast the Australian bioenergy sector employs 2,500 people and contributes just 2.4 TWh of electricity. Currently only 0.9% of electricity in Australia is sourced from bioenergy compared to 2.4% across the OECD.
The inclusion of industrial heat within Australia’s RET is consistent with the stated aims of the RET ‘to encourage the additional generation of electricity from renewable sources’ and ‘to reduce emissions of greenhouse gases in the electricity sector’. There is international precedence for the inclusion of large scale heat credits from biomass in jurisdictions including US, UK, Sweden, Norway, Finland, France and Italy.
This new report also suggests that meeting any target in the future larger than the current 33 terawatt-hours of additional renewable electricity generation will be more difficult without the inclusion of renewable industrial heat.
The Australian Clean Energy Finance Corporation (CEFC) sees significant opportunities for investment in bioenergy in Australia including in energy from plantation forest residues. The CEFC estimates that the Australian bioenergy and energy from waste investment opportunity to 2020 is between $3.5 billion and $5 billion.
