Greens' Electoral Gains Spur Hopes for Australian Clean Energy Initiatives

A surge in voter support for the Australian Greens spurred optimism that the government may increase funding to renewable energy projects and impose a price on carbon emissions to combat climate change.

“Any government would ignore that at their peril,” Michael Ottaviano, managing director of Perth-based Carnegie Wave Energy Ltd., said by phone yesterday. “This should send a very clear message to both sides of the political spectrum that the Australian people want action on climate change.”

The Greens garnered a record number of votes in the general election Aug. 21 after Australia’s ruling Labor Party delayed plans to start an emissions trading system until after 2012. Prime Minister Julia Gillard and opposition leader Tony Abbott are both fighting to form the next government because neither of their parties won a clear majority.

The rush in popular support for the Greens may prompt whoever forms government to spend more on developing renewable energy projects and to disburse the money faster, according to executives in the industry. Almost none of the A$5 billion ($4.4 billion) to A$6 billion promised by the government over the past five years has reached companies so far, Ottaviano said.

“It has to be good for us, whichever way you look at the election,” said Terry Kallis, managing director of geothermal company Petratherm Ltd. in Adelaide. “The Greens may have a lot of opportunity to influence legislation.”

Carbon Trading

A cap-and-trade system is a possibility if Gillard remains prime minister, even though the Labor Party has postponed the proposal, Kallis said. A carbon-trading regime is less likely with Abbott, who leads the more conservative Liberal Party. Funding to connect renewable energy sources to the national grid is also critical for the industry, Kallis said.

Gillard has said Labor would set up a citizens’ group of 150 “ordinary Australians” to help decide on a policy to curb emissions and promises to spend A$1 billion for renewable energy transmission. Abbott has opposed a carbon price, saying it would hurt the economy, and advocated a A$2.5 billion program to pay businesses to cut pollution and fund clean-energy development. Both parties target a 5 percent cut in emissions by 2020.

The Greens have said they want a carbon price of A$23 a ton in Australia, where 80 percent of power generated comes from coal-fired plants, and a 40 percent cut in emissions by 2020.

The Labor government has pledged to spend A$5.1 billion on clean energy, including A$1.5 billion for solar technology. While the government may increase that funding, it’s unlikely an emissions-trading system would be put into place in the next three years, Ottaviano said.

Dead Heat

The Labor Party had 71 seats and Abbott’s Liberal-National coalition had 72 in the 150-member House of Representatives, according to the Australian Electoral Commission’s website at 12:22 p.m. Canberra time. Four seats were undecided, with two independents and one Greens member elected.

“If Labor, with a majority government and the mandate they had at the last election, couldn’t prosecute the case for a carbon price, I can’t see how a minority government is going to be able to do that successfully,” Ottaviano said.

The Greens party won its first lower house seat in a general election, with lawyer Adam Bandt taking Melbourne from Labor. The party will also hold the balance of power in the upper house, Greens leader Bob Brown said late on election night. The Greens gained 11.4 percent of the national vote, the Australian Electoral Commission’s website showed. That compared with 7.8 percent in 2007, the Australian Broadcasting Corp. said.

Shares Slump

Shares of Australian clean energy companies slumped 31 percent in the year that ended July 30 as investors avoided the industry, unsure of government policy on carbon emissions, according to the ACT Australian Cleantech Index of 78 stocks. The benchmark S&P/ASX 200 rose 6 percent over the year.

The election result is “a potential positive because the Greens have a strong commitment to introducing a carbon price and driving the development and deployment of renewable technologies,” Matthew Warren, chief executive officer of Australia’s Clean Energy Council, said in a phone interview yesterday. “But it’s qualified by the fact there are independents elected with different interests. So it’s really uncertain.”

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

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