It goes without saying that obtaining approvals for major renewable energy projects in a timely fashion is critical to the commercial success of a project and indeed the reduction of emissions more broadly. So why are so many developers getting it wrong? To minimise risk on projects timing is a critical factor that needs to be better coordinated both by:

1. Governments, through more streamlined, better co-ordinated statutory planning and environmental approval processes.

2. Project applicants by taking responsibility in the preparation of the application and the dissemination of information through a coordinated stakeholder engagement strategy.

This article discusses these matters in the context of the current economic climate and the advantages to ALL if these projects can be delivered in a more timely manner.

The global context

Since the Earth Summit in Rio in 1992, a large number of countries signed the United Nations Framework Convention on Climate Change (FCCC). This global treaty, like the Kyoto protocol and the less significant Copenhagen Accord, has the ultimate objective to stabilise greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous human interference with the climate system. [1] The achievement of this ultimate objective is vital.

According to many scientists, if humanity wishes to preserve a planet similar to that on which civilization has developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggests that CO2 will need to be reduced from its current 385 parts per million to at most 350 parts per million. If the present overshoot of this target CO2 is not brief, there is a possibility of seeding irreversible catastrophic effects.[2] We need to do everything within our power to met the 350 parts per million target. This includes the development of cleaner energies such as wind, solar and biomass to name a few.

Australia’s response to the global context

Collectively, the Australian government responded to the Rio Summit with the Inter-governmental Agreement on the Environment (IGAE)[3] This agreement recognised the need for “…integration of environmental and economic considerations in decision making for balancing the interests of current and future generations.”[4] Also in 1992, all Ministers of the Australian Cabinet endorsed the National Strategy for Ecologically Sustainable Development (NSESD), which stated as a primary goal to endorse “…development that improves the total quality of life, both now and in the future, in a way that maintains the ecological processes on which life depends”[5]. NSESD also provided a framework for the implementation of Agenda 21 in accordance with the obligations entered into at Rio.

The summary report on NSESD in 1993-1995 confirmed that the attainment of sustainable development involves partnerships between government, industry and community groups particularly in agriculture and some areas of mining and manufacture.[6] Given the role of renewable energy projects in cutting emissions, there approval and development in Australia is critical to Australia’s national response to the Rio Summit and indeed achieving a reduction in CO2 emissions to 350 parts per million.

On 17 July 2006, Victoria become the first Australian state to announce its own mandatory renewable energy target and supporting scheme, reducing the need to use fossil fuels to produce electricity in the future. [7] The intention of the scheme was to reduce reliance on coal fired power stations with the view of investing more heavily in renewable energies.

More recently, on 13 September 2012, the Australian Government developed a comprehensive plan to move to a clean energy future. Central to that plan was the introduction of a carbon price, which intends to cut pollution in the cheapest and most effective way and drive investment in clean energy sources such as solar, gas and wind.

The Australian continent is uniquely positioned in the global market and has the opportunity to entice investors to harness renewable energies in the natural environment in a manner that will deliver on the Australian Government’s commitment to ensure that the equivalent of at least 20 per cent of Australia’s electricity comes from renewable sources by 2020 as well as speed up the adoption of renewable energy technologies and help smooth the transition to a clean energy future.

The Federal Government announced a number of initiatives to facilitate a critical mass of renewable energy, energy efficiency and low-pollution energy projects across Australia. This has included a new $10 billion Clean Energy Finance Corporation (CEFC) to invest in the commercialisation and deployment of renewable energy, energy efficiency and low pollution energy technologies; the introduction of the independent Australian Renewable Energy Agency (ARENA) to streamline and coordinate the administration of $3.2 billion in existing support for research and development, demonstration and commercialisation of renewable energy technologies; and an additional $200 million over five years to support innovation through grants for business investment in renewable energy, low emissions technology and energy efficiency under the Clean Technology Innovation Program.

The cost of development approvals

Despite the Government’s clean energy initiatives, the development approvals process continues to prove quite cumbersome and time costly for most project applicants of renewable energy projects. Why is this? Is it because Federal and State Governments are working independently of one another? Is it because project applicants are not proactively strategising for possible conflicts?

Australia’s current market conditions, are costing developers significant amounts of money in holding costs and in some cases stopping the sustainable development of renewable energy projects. These local market conditions are forcing financiers and global investors to take their business to other markets such as China, the United States, Germany, Italy and India as outlined in the Ren 21 Global Status Report on Renewable for 2012.[8]

Global new investment in renewables rose 17% to a record USD 257 billion in 2011. This increase has taken place at a time when the cost of renewable power equipment fell rapidly and there was substantive uncertainty over economic growth and policy priorities in developed countries. One of the highlights of 2011 was the strong performance of solar power, which surpassed wind power, the biggest singe sector investment in recent years. [9] If Australia wants to share in this pie it needs to position itself in the global market in a manner that attracts investors. There’s no denying that Australia’s natural environment makes it attractive to renewable energy investors. We just have to streamline some of our processes so that certainty around development approval processes are quick and easy.

Recognising the importance of coordination amongst the tiers of Government

Despite the Government’s policy and legislative reforms, there has been considerable criticism of Australia’s commitment to sustainable development given the lack of coordination across the tiers of government in the statutory development approval processes required for each major renewable energy projects. Have Australian policy makers over the years been more concerned with broader visionary statements and the carbon tax rather than the method of approvals required before renewable energy projects can be delivered? Are our current statutory processes bogging us down in assessment of projects rather than their delivery to the market?

At the 33rd meeting of the Council of Australian Governments (COAG) in Canberra on 25 July 2012, the Prime Minister, Premiers, Chief Ministers and the President of the Australian Local Government Association (ALGA) discussed a number of matters including future competition and regulatory reform and construction industry costs and productivity.

At the request and lobby of the Victorian Regional Cities Business and Industry Forum, who met in April 2012, current challenges and opportunities for growth in Victoria’s regional cities, and the importance of building partnerships to support economic growth were thrown into the lime light. Amongst various matters noted at the forum, it was agreed by all that “…statutory planning and environmental approval processes can, at times, delay or obstruct major projects.” It was agreed that “…Government action to reduce red tape and facilitate productivity could assist this issue.”[10]

Recognising that prosperity is a shared responsibility, delegates emphasised the importance of regional cooperation between the various tiers of government and business and regional leaders, COAG agreed to establish an independent review panel to conduct a broad ranging investigation into cost, competitiveness and productivity challenges in the commercial, civil and large scale residential construction industry.

COAG also reiterated its commitment to reducing duplication and double-handling of environmental assessment and approval processes while maintaining high environmental standards that are risk- and outcomes-based. In line with the timing agreed at the COAG meeting in April, consultations are underway and negotiations for bilateral agreements are about to commence.

As we get closer to the end of 2012, industry and the development sector eagerly await the discussion paper and its recommended actions being prepared ahead of the next COAG meeting in late 2012.

The Terms of Reference tabled at the July COAG meeting attached the following timeline for the proposed cutting red tape reforms.[11]

July to August 2012 -COAG determines terms of reference and panel appointments.

September 2012 -Panel and secretariat in place.

November to
December 2012 -Discussion paper prepared and issued publicly to construction industry stakeholders.

April 2013 -Submissions received from States and Territories and construction industry stakeholders. Panel conducts meetings with key construction industry stakeholders.

May to June 2013 -Final report prepared.

31 July 2013 -Final report delivered to COAG for public release.

Submissions to the discussion paper by industry stakeholders are encouraged given the implications to the sector.

Clean, greenhouse friendly energy such as wind, solar and biomass are critical in the fight against climate change. Whilst the proposed COAG reforms in streamlining development approvals for major projects are important in addressing the need for sustainable development in a coordinated manner, it will be some time until the final report is delivered and recommendations actioned.

Whilst the industry can speculate over whether the work to develop best-practice approaches to lift regulatory performance and policy initiatives to meet the red tape challenge will better facilitate development of major projects across the country; a key issue remains. Approvals for renewable energy projects are critical and are required immediately. We need to act now if we are to facilitate the development of these projects and in turn stand any chance in reducing our emissions and achieve our renewable energy targets.

Tailoring the process to suit the project needs

Often major projects can take around 2 years to obtain the relevant planning and environmental approval in Victoria by the time the community is consulted, Planning Permits are granted and the relevant environmental approvals obtained through the EES process. However, through personal experience with the Mildura Solar Concentrator Power Station, which was approved in Victoria a few years ago through a process that saw the project fast-tracked through the system; it all depends on the approach by the project applicant. This $420 million project will see the generation of 270,000 MWh per year, enough for 45,000 homes and reduce greenhouse gas emissions by approximately 400,000 tonnes per year. Before the formal application for the solar energy project was lodged with the department, the community had been consulted, key stakeholders informed and significant environmental assessment done.

So until current statutory processes are streamlined, proponents will need to work their way through the statutory planning and environmental system. It is advised that proponents plan for the planning and environment approvals process in an integrated manner that elevates these projects to a status of ‘State Significance’ and includes coordinated consultation across key stakeholders, community groups and decision makers prior to the formal commencement of the statutory application process. This includes discussions with the relevant authorities to ensure timely connection to the grid.

There’s is no doubt Governments at both State and Federal levels will need to address the need for a more coordinated approach to major projects that will see a more streamlined statutory approvals system however, if project proponents and investors play their cards right, there is no reason why they cannot minimise risk and proposals cannot get the green light quickly.

Gregoria Todaro, Director

Integrated Planning Solutions

gregoria@integratedplanningsolutions.com.au

www.integratedplanningsolutions.com.au

[1] UNFCCC | Framework Convention on Climate Change: Article 2

[2] Columbia University “Target atmospheric CO2: Where should humanity aim?” Stockholm University “Exploring the safe operating space for humanity”

[3] Australian Government, Department of Environment and Heritage, Intergovernmental Agreement on the Environment (1992).

[4] Australian Government, Department of Environment and Heritage, Intergovernmental Agreement on the Environment (1992).

[5] Australian Government, Department of Environment and Heritage, National Strategy for Ecologically Sustainable Development – Part 1 – Introduction 22/3/04.

[6] Australian Government, Department of Environment and Heritage Summary Report on the Implementation of the National Strategy for Ecologically Sustainable Development 1993 – 1995.

[7] 17 July 2006 Victorian State Government Media Release “Victoria Leads Nation on Renewable Energy Target”.

[8] Renewable Energy Network for the 21st Century. ‘Renewable 2012: Global Status Report – Key Findings’.

[9] Renewable Energy Network for the 21st Century. ‘Renewable 2012: Global Status Report – Key Findings’.

[10] Thee Regional Cities Business and Industry Forum, April 2012

[11] 33rd COAG Meeting Canberra on 25 July 2012, Terms of Reference: Cutting Red Tape Reforms