Oz wants to auction off clean tech projects

AU Times reports.

The Graham Institute report sought the use of funding from the $10 billion clean energy finance corporation in which the government would guarantee financial returns from firms that would pursue large, but risky investments in clean energy.

Under the Grattan model, the government would hold separate auctions offering contracts to projects that could produce the cheapest electricity using a range of large-scale technologies: arrays of solar photovoltaic panels, concentrated solar thermal power, wind farms and carbon capture and storage, Eco Business writes.

Auctions would be held every six months for 10 years, giving companies many chances to invest.

In each case, the cheapest bid would win contracts lasting up to 20 years. Contracts would only be paid out once companies delivered low-emissions power, and would become void if deadlines were not met.

The current Federal Opposition has indicated that, if elected to government, they would implement a direct action plan to draw out lowest cost greenhouse gas abatement to meet climate change objectives generally consistent with those of the Labour government, Business Spectator notes.

While this approach will establish a carbon price, albeit indirectly, it is not clear how lowest cost technologies would be deployed if they were still in early stages of commercial development. The reverse auction proposal of this current Grattan report could supply such a mechanism.

Driving towards the lowest cost solution to climate change requires market mechanisms such as emissions trading. It also requires complementary policies to deliver technology solutions over the long haul. The proposal described in Grattan's report provides such a policy.