Bradbrook, Adrian --- "Green Power Schemes: The Need for a Legislative Base'" [2002] MelbULawRw 2; (2002) 26(1) Melbourne University Law Review 15

Green Power Schemes: The Need For A Legislative Base

ADRIAN BRADBROOK[*]

[The gradual substitution of fossil fuels by renewable energy resources for electricity generation is one of the most effective means of reducing atmospheric carbon emissions and resolving the climate change issue. While compulsory measures would be the most effective, considerable interest has been generated in voluntary ‘green power’ schemes, whereby electricity consumers pay an additional premium on their electricity supplies which is used to purchase electricity from renewable energy suppliers. Such schemes originated in the United States and are now widespread in Australia. This article examines the advantages and disadvantages of such schemes from a consumer perspective and considers various legislative options to overcome the major identified problems. The principal reform proposed is the introduction of legislation that would codify green power schemes. This could be achieved by the addition of a new part to the recently enacted Renewable Energy (Electricity) Act 2000 (Cth).]

CONTENTS

INTRODUCTION

Renewable energy includes a multitude of different energy resources and technologies.[1] The best-known amongst these include hydro-electricity, solar energy, wind energy, biomass and geothermal energy.[2] Hydro-electricity is produced both from large-scale plants constructed with dams and artificial lakes, and from small-scale ‘run-of-the-river’ plants. Solar energy is a generic term which includes the direct generation of electricity from photovoltaic cells[3] and active and passive systems of space heating and cooling.[4] Wind energy is produced from single, stand-alone generators or from a collection of generators at a single site, commonly referred to as a ‘wind farm’.[5] Such generators are usually sited in exposed positions close to the seashore or in mountain passes, although the technology also exists to construct offshore plants.[6] Biomass includes a range of energy resources arising from organic material, including bagasse, fuel wood, energy crops, food and agricultural wet waste, landfill gas, municipal solid waste combustion and sewage gas.[7] Geothermal energy includes both the direct generation of electricity by steam, and space heating by the circulation of heated water.[8]

These renewable energy resources have a long history worldwide. Solar heating was utilised in the Roman era, where houses and villas were constructed so as to attract heating by the winter sun and to exclude the sun in summer.[9] Wind energy has been used since ancient times for milling and for sea transport. The use of wood for heating goes back to the origins of humankind. Even geothermal energy use goes back to the beginning of the 20th century, when it was first exploited at a commercial level at Larderello, Italy, from 1904.[10] The use of renewable energy resources thus predates the use of fossil fuels such as coal, oil and natural gas for electricity generation.

Despite its lengthy history, apart from hydro-electricity plants, renewable energy has been slow in gaining market penetration in all the developed countries.[11] The reasons for this differ slightly from country to country, but tend to centre on the following factors: the artificially low price of fossil fuels as a result of government subsidies; the lack of similar government subsidies for the research, development and demonstration of renewable energy resources; the high cost of research into renewable energy; economic risks; lack of investment; regulatory obstacles; the limited availability of products and information; and the political muscle of multinational companies and groups with a vested interest in maintaining the status quo.[12]

In the past decade, the need to ensure a greater utilisation of renewable energy resources has assumed a much greater urgency, both in Australia and other developed countries, as a result of the climate change issue. Research has shown that between 57 and 75 per cent of all anthropogenic atmospheric carbon emissions (depending on each country’s energy mix) is due to the burning of fossil fuels for electricity generation.[13] In contrast, apart from a very minor carbon release associated with the construction of renewable energy plants, the use of renewable energy entirely eliminates carbon emissions. Thus, for all effective purposes, there can be no final resolution of global warming unless the energy issue associated with electricity is addressed both nationally and internationally. Renewable energy development is also vital from the standpoint of sustainable development, particularly in developing countries. This issue was addressed by the United Nations in its recent report, World Energy Assessment. The report found that the deployment of renewable energy resources is essential to ensure long-term availability of energy services, to reduce poverty, to expand access to modern energy services and to ensure rural electrification.[14]

It is still too early to assess the impact that the recent publication of the World Energy Assessment will have on the development of renewable energy resources. Sadly, the climate change debate appears to have had very little impact. The United Nations Framework Convention on Climate Change[15] makes no mention of the need to encourage renewable energy resources. Apart from art 2.1(a), which states the need for each country to enhance energy efficiency and to research, promote and develop new and renewable forms of energy, the Kyoto Protocol to the United Nations Framework Convention on Climate Change[16] also shuns the issue. The drafting of chapter 9 of Agenda 21: Earth’s Action Plan,[17] which relates to energy, was beset by political differences and in its final version gives very little weight to the need to develop renewable energy resources. At the national level, some countries, including Australia,[18] have achieved more, although the results are patchy and far more remains to be done.

Under these circumstances it is not surprising that many enthusiasts of renewable energy have felt frustrated by government and industry inaction and have sought ways and means of changing the status quo. This has led to the realisation that most of the opposition to change is based on the presumed compulsory nature of any change, and the realisation that if voluntary change was introduced most, if not all, opposition would vanish. The idea of voluntary change first arose in the United States and took the form of ‘green power schemes’. These were initially proposed by environmental organisations and later adopted by privatised electricity companies. In the past four years, the change has been adopted in Australia, where it is commonly known as either ‘green power’ or ‘green electricity’.

II WHAT IS GREEN POWER?

Green power schemes are designed to enhance the use of renewable energy resources in the production of electricity in order to improve the environment and to reduce atmospheric carbon emissions. The schemes involve the payment of an additional premium by electricity consumers to their electricity supply company. This premium may take the form of an annual fixed payment or, more commonly, may involve an increase in the amount paid for electricity consumption per kilowatt hour (kWh). The premium is payable because the cost of generating electricity from renewable energy resources is currently higher than that of electricity produced from fossil fuel combustion. The premium gives the electricity supply company an additional income stream to offset the increased cost of producing electricity from renewable energy and acts as a form of sponsorship for such energy resources. In return for the premium, the electricity supply company undertakes to purchase additional electricity from a local producer of renewable energy to match the agreed amount of electricity in respect of which the premium was paid.

Green power is a logical extension of the system of ‘eco-labelling’, which has been in existence for many years.[19] Eco-labelling involves the creation of a set of requirements that products may or must satisfy, and the establishment of a certification or testing procedure whereby manufacturers and retailers can prove compliance with the relevant standards by displaying an approved label provided by a testing laboratory or other organisation.[20] The purpose of eco-labelling is to enable consumers to make an informed choice on environmental grounds between competing products, to provide an incentive to manufacturers to design more energy-efficient products, and to promote environmental awareness generally. While the various eco-labelling programs tend to differ, they normally have the following four elements in common:

• a government department or other authorised body selects and defines a product category;
• environmental guidelines are prepared for each product as to the minimum performance and design characteristics to entitle the product to display an eco-label;
• manufacturers who comply with the performance and design characteristics are licensed for a fee to use the eco-label for a specified period of time; and
• licence-holders are monitored at intervals to ensure continued compliance with the terms of the licence.[21]

While eco-labelling was developed outside the energy context, it has been adopted in recent years in Australia by State legislation which prescribes compulsory labelling for energy consumption for a variety of electrical white goods, including refrigerators, freezers, washing machines, clothes dryers, dishwashers and air-conditioners (with less than 7.5 kilowatts (kW) output cooling capacity).[22] Green power schemes are consistent with this development.

Green power schemes currently exist in Australia, the United States, the Netherlands, Germany and the United Kingdom, although they have not yet found favour in any developing country.[23] Such schemes have emerged as a result of various studies which have shown that customers prefer cleaner energy and are prepared to pay more, if necessary, for energy produced from renewable resources.[24] The success of the program in attracting customer participation will, of course, depend on issues such as customer education, customer awareness and the marketing effort of the utility concerned.

Green power schemes have mushroomed and developed surprisingly quickly in Australia. Accredited programs exist in every State, and are available to 73 per cent of the Australian population.[25] There is a range of different schemes which are offered to consumers. Each electricity supply company offers its own terms, which necessarily vary due to the existing power supplies used by the company and the cost and local availability of renewable sources of electricity. Some schemes are fixed and inflexible. An example of this is the scheme offered by Australian Inland Energy, where customers contribute $40 per year to a fund which is used to install new solar photovoltaic electricity stations.[26] Integral Energy’s SunPower Program involves customers paying a regular contribution by rounding their bill up to the nearest dollar or by nominating a fixed amount per bill. Contributions are used to install solar photovoltaic systems on schools and other community buildings.[27] These schemes can be contrasted with that offered by Energy Australia. Under this scheme customers may purchase 25 per cent, 50 per cent, 75 per cent or 100 per cent of their electricity (excluding off-peak hot water) from renewable resources, including solar, wind, hydro and biomass generators. Customers pay a premium of between 0.94 and 3.6 cents per kWh for all ‘green’ energy purchased. Those customers who commit to 100 per cent electricity from renewable resources pay a reduced premium of 3.35 cents per kWh, and those who commit to 100 per cent from renewable resources for a three-year period pay a premium of only 3.05 cents per kWh.[28] Similarly, under the green power scheme of the Australian Gas Light Company (AGL), the current advertised premiums are 0.55 cents per kWh for 10 per cent green power, 1.1 cents per kWh for 25 per cent green power, 2.2 cents per kWh for 50 per cent green power, and 4.4 cents per kWh for 100 per cent green power. AGL has calculated that the average household would pay between 62 cents extra per week for 10 per cent green energy and $4.96 extra per week for 100 per cent green energy.[29]

In Australia, consumers are safeguarded by the existence of independent green power accreditors, which ensure that the electricity purchased by the electricity supply company with the premium is truly ‘green’. In New South Wales, a further safeguard is provided by the State’s Sustainable Energy Development Authority (SEDA),[30] which accredits schemes offered by electricity supply companies and authorises approved suppliers to display the ‘Green Power’ logo.[31] This logo consists of a green tick coupled with the wording ‘green power’ and ‘government approved’. This scheme was launched in 1997 and now extends nationally due to joint collaboration with State and Territory government agencies in New South Wales, Queensland, Victoria, South Australia and the Australian Capital Territory. Collectively, these agencies are known as the National Green Power Accreditation Steering Group (NGPASG), with SEDA in New South Wales acting as project manager.

The current development of green power programs in Australia compares favourably with that in the United States, where the idea first originated.[32] In August 2000, 80 electricity companies located in 28 states had offered or announced their intention to develop green pricing programs for their customers, amounting to just over one-third of all American consumers.[33] This has led, by the end of 1999, to the installation of 72.43 megawatts (MW) of new renewable energy capacity, with proposals for a further 120 MW.[34] Of the newly-installed electricity, by far the largest contribution came from wind energy (74.6 per cent), followed by biomass (20.6 per cent) and solar energy (4.2 per cent). A negligible quantity came from small hydro-power plants.[35] Price premiums vary between 0.4 cents to 20 cents per kWh for new renewable energy plants, with a median of 2.5 cents per kWh. The actual premium charged will vary based on a number of different criteria: the renewable energy resource used; the quality of the renewable energy resource; the scale of the project; the financial position of the company; the availability of government subsidies or incentives; administrative and marketing costs; the electricity company’s avoided cost of energy; the amount of renewables already used by the company; and whether participating customers assume the full cost of the program.[36] Customer participation has been generally 1 per cent or less, although occasionally as high as 4 per cent. The greatest market penetration has been in California and Pennsylvania, where the level of participation is about 2 per cent.[37]

III A CRITIQUE OF THE CURRENT SCHEMES

A Advantages

In many ways green power schemes represent a considerable success in the promotion of sustainable development. The majority of proposed responses to sustainable development have involved complex national and international agreements, many of which have floundered or have been emasculated for political reasons. The most obvious of these is the international response to climate change, where the initial euphoria over the negotiation of the Kyoto Protocol has given way to despondency as a result of the difficulties experienced by the parties in agreeing on the modalities of the protocol and the unwillingness of some developed countries, notably the United States, to ratify it.[38]

In contrast, green power schemes have been introduced without legislation and political controversy. Such schemes have empowered proponents of sustainable energy development by enabling them to make a personal contribution to further the cause. They have also enabled industries and businesses that enter into a scheme to promote themselves in their publicity as environmentally friendly. Such schemes have proved to be popular where they have been introduced and have met or even exceeded the initial expectations of their proponents.[39] Green power schemes are seen to be consistent with and a natural extension of other ‘green’ schemes introduced in the field of product labelling, packaging and advertising.[40] Being voluntary in nature, such schemes are also consistent with the general approach in a number of developed countries, including Australia, of ‘light-handed regulation’ in environmental management and with the preferred approach of seeking voluntary agreements to resolve environmental problems.[41] This preference for voluntary agreements appears to be particularly true in the energy context. The most recent illustration is the 1999 agreement with the building industry, represented by the Australian Building Energy Council, to encourage voluntary best practices in energy efficient building design, construction and operation by way of a code of practice.[42] This approach can be contrasted with that in the United States, where environmental solutions are almost invariably imposed by legislation.[43]

Green power schemes can also be justified as a logical extension to privatisation of the electricity industry. Privatisation is being pursued worldwide in the majority of developed countries, and Australia has been at the forefront of this movement.[44] The major purpose of privatisation in the electricity industry is to provide a choice of electricity suppliers to customers in order to increase competition. The introduction of green power schemes goes one stage further and gives customers a choice as to how their electricity is generated. It also reduces the monopoly power of electricity companies to control the development of renewable energy resources by determining how much (if anything) to invest in these resources on behalf of all their customers.

The other main advantage of the current voluntary green power schemes is that it enables considerable progress to be made and support to be given to the fledgling renewable energy industries on an issue where it would be politically difficult to obtain a consensus on the introduction of a compulsory scheme for promoting renewable energy resources. The current scheme can thus be viewed as a ‘beachhead’ for other possible measures supporting renewable energy resources in the future. Such measures may become more politically acceptable once the renewable energy industries become larger and more politically influential and once both governments and society in general become accustomed to the use of renewable energy resources. They are thus a good first step towards sustainable energy development and are useful for building momentum towards more radical and fundamental change in the future.

B Disadvantages

Despite these clear advantages and the universal, non-critical acceptance of green power schemes both in Australia and the United States, it is submitted that there are some fundamental problems and difficulties associated with the current arrangements which need to be appropriately addressed.

The current schemes can be criticised conceptually in that they do not adequately recognise the ‘public interest’ associated with the introduction and promotion of sustainable energy solutions. The ‘public interest’ arises from the benefit to society as a whole which arises from the saving of the remaining reserves of fossil fuels for future generations, the reduction of global atmospheric pollution caused by the burning of fossil fuels that leads to climate change and acid rain, and reducing localised air pollution in cities caused by industry and motor vehicle exhausts.[45] The existence of a public interest in this context cannot be denied as there already exist international obligations[46] and Commonwealth legislation[47] requiring action to be taken in favour of sustainable energy. Once the notion of ‘public interest’ is accepted, it follows as a matter of equity and logic that all members of society should make a contribution, not simply those who are prepared to act voluntarily. The current situation enables the majority of persons and industries that do not subscribe to green power schemes to avoid making their fair contribution to resolving environmental problems and to ‘pass the buck’. As every person gains from the adoption of sustainable energy solutions, it follows that everyone should make an effective and fair contribution.

Another major objection to green power schemes is that they do nothing to discourage the current wasteful patterns of electricity consumption. Many individuals and industries that currently participate in green power schemes continue to consume excessive quantities of electricity while feeling good about their contribution to sustainable energy solutions. While it is obviously preferable that renewable energy resources rather than finite reserves of fossil fuels are consumed, a better solution would be to focus on energy conservation and energy efficiency in order to reduce overall consumption.[48] This solution is not promoted by green power schemes.

A further problem is that the priority of the green power schemes appears to be misplaced. While the replacement of fossil fuel-based power generators by renewable energy resources is of considerable importance, energy experts are in agreement that in the Australian context the most urgent goal — and the area where renewable energy resources can make the greatest contribution — is in remote area power generation.[49] The areas to which the electricity grid does not extend constitute approximately 75 per cent of the land surface of Australia. In these areas residents are forced to rely primarily on diesel fuel, which is very expensive and environmentally polluting. Renewable energy resources, in particular wind energy generators and photovoltaic solar energy systems, are capable of providing the vast bulk of electricity supplies needed in outback areas and minimising the future use of diesel fuel. Green electricity schemes do nothing to further this goal.

A wide range of more minor difficulties must be added to these three major objections to green power schemes. In light of the primary obligation of all businesses to maximise their profits for the benefit of shareholders, it is surely unreasonable and unrealistic to expect them voluntarily to reduce their competitiveness by agreeing to pay additional amounts for green electricity. What industries require is an assurance that they can compete on an equal footing, and this can only occur if there is a compulsory scheme for all.

The current schemes create a ‘ghetto mentality’ for renewable energy resources in that they suggest that all such resources are uncompetitive and expensive in comparison with traditional fossil fuels. While this was largely true during the 1980s, and still applies to some of the more experimental types of renewables,[50] this is no longer the case in relation to some of the resources. The cost of wind energy, for example, is highly competitive with fossil fuel alternatives in many areas of the world, and also in many parts of Australia where the climatic conditions are favourable.[51] This negative economic image of renewables, which appears to be very pervasive in society, is deleterious to their rapid adoption as a major source of electricity production. The other unfavourable aspect of the image of renewables is that they are still seen as largely experimental and unproved. The fact that they are supported only by a voluntary green power scheme rather than by a comprehensive legal management regime, as exists in the case of all fossil fuel resources,[52] tends to reinforce this negative image.

The existence of green power schemes places the onus of action in support of sustainable energy solutions on concerned individuals and industries rather than on the government and electricity companies. This onus is misplaced. The onus should more appropriately be on the government, as the guardian of the public interest, and on the power companies, which have historically profited from the use of polluting and finite energy resources.

One of the major impediments in recent years in Australia to speeding up the wide-scale introduction of renewable energy resources has been the lack of adequate federal and State government funding for research, demonstration and development. The emergence of green power schemes has taken the pressure off governments to increase funding levels by giving the impression that effective action in support of renewable energy resources already exists.

From the standpoint of the actual and potential voluntary participants in green power schemes, a weakness in the current system is the lack of consumer consultation or protection.[53] An electricity supply company which accepted money under a green power scheme from a customer and did not use the money for the agreed purpose would infringe either s 52 of the Trade Practices Act 1974 (Cth), which penalises misleading or deceptive conduct, or s 53 of the same legislation, which declares illegal all false or misleading representations. Any doubt as to the application of the Act in this context is dispelled by s 4 which defines ‘goods’ as including electricity. Despite this safeguard, the customer has no say as to what counts as ‘green energy’ or which fossil fuels must be avoided by the schemes. While fact sheets and information are usually given to users of the schemes, in the absence of legislation underlying the schemes, there is no effective way that the actual use of the funds by the electricity companies can be challenged.

Another way to approach the equity of the current situation is to compare societal and governmental responses to other comparable major national environmental issues. In the Australian context, appropriate comparisons can be made with issues of biodiversity, water quality, salinity and native vegetation preservation. In all these cases, environmental solutions have been imposed by legislation and made applicable to all individuals and industries.[54] No other comparable environmental issue has been tackled solely by voluntary measures which individuals and industries are able to ignore at their discretion. In light of the international obligations imposed on Australia to control and reduce carbon emissions and the other environmental issues associated with the burning of fossil fuels, renewable energy solutions are clearly among the most important environmental issues affecting this country.

The current green power schemes may be likened to a levy, whereby additional funds are raised for a particular purpose. Levies are not uncommon in Australian society, and are often legislated into effect by the government to raise money for worthy projects deemed to be in the national interest. Some levies are ongoing, such as the Medicare levy[55] or (in South Australia) the emergency services levy,[56] while others, such as the gun buy-back levy[57] and the airline ticket surcharge levy,[58] are temporary measures. All these levies are compulsory and of universal application. No objection is traditionally made against the compulsory nature of a levy where it is perceived to be in the public interest. The voluntary nature of the green power schemes seems to be peculiarly unwarranted in light of these precedents.

It is sometimes argued that green power schemes are worthwhile in that no other effective system exists for encouraging the development and application of renewable energy resources. This may be true if we are talking about encouraging consumers, but as a general proposition it is false. Various schemes, whereby the onus to take action is placed on the electricity industry rather than consumers, exist in a variety of developed countries to ensure the rapid development and application of renewables. Such schemes include the establishment of renewable energy portfolio standards or renewables obligations, whereby electricity companies are required to purchase a minimum specified percentage of their electricity from renewable resources.[59] All such schemes are compulsory and sanctioned by legislation.

IV SOLUTIONS

The general conclusion to be drawn from the above discussion is that green power schemes, while playing an important role in promoting the development and use of renewable energy resources, need to be revised to take account of the objections listed above. It is submitted that it is now appropriate for legislation to be introduced to support and expand the current schemes. For reasons discussed above, in the fullness of time, legislation should replace green power schemes with universally-applicable schemes to support renewable energy resources. At present, this would likely be regarded as a radical measure which would have insufficient political support to guarantee its passage into law. This should be viewed as the long-term goal. In the short- and medium-term, legislative change should focus on improving the current voluntary systems.

Appropriately formulated and drafted legislation could overcome three of the most important aspects of the scheme that need to be rethought: the failure of the current schemes to take account of the public interest in promoting renewable energy resources; the lack of consumer safeguards; and the patchy nature of both the existence and the terms of the schemes, in that the schemes are not available to the public in all areas of Australia and that the terms of such schemes depend on each electricity supply company.

As a preliminary consideration, issues arise as to whether such legislation is within the constitutional competence of the States or the Commonwealth, and whether any legislation concerning green power schemes should be introduced as an amendment to existing legislation or should be the subject of new legislation.[60] Electricity generation and supply has traditionally been within the legislative competence of the States in the sense that this issue is not within the enumerated legislative powers of the Commonwealth under s 51 of the Constitution. This situation has changed in recent years as a result of the introduction of the national electricity grid, which has led to interstate trading of electricity and so has attracted Commonwealth legislative power under s 51(i) of the Constitution. Federal intervention in this area also appears to be possible as a result of the obligations assumed by the Commonwealth under the UN Climate Change Convention[61] to curb its atmospheric anthropogenic carbon emissions. This can only be achieved by altering the current energy mix for electricity production, and would attract Commonwealth jurisdiction under the external affairs provision.[62] The justification for federal intervention in this area would appear to be on par with that in Commonwealth v Tasmania,[63] where the constitutional arguments of the Commonwealth were accepted by the majority of the High Court of Australia. It is noteworthy that the Commonwealth has already enacted related legislation, the Renewable Energy (Electricity) Act 2000 (Cth) and the Renewable Energy (Electricity) (Charge) Act 2000 (Cth).

Based on this, there appears to be little doubt that the Commonwealth could enact legislation to regulate green power schemes, if it so wished. It is submitted that this is the preferred approach as the issue of renewable energy utilisation transcends State boundaries and is of equal concern to all regions of the country. There would appear to be no reason why such legal controls should not apply equally to everyone. The alternative would be uniform State and Territory legislation negotiated through the Council of Australian Governments (COAG).

The principal reform I propose is the introduction of legislation that would codify green power schemes. The patchy nature of the availability of existing schemes could be remedied by creating a mandatory obligation on all electricity supply companies to introduce a green power scheme. The legislation would need to specify the minimum acceptable terms and standards for the scheme. It would, of course, be open to each electricity supply company to exceed the minimum legislative standards if it so wished. The creation of a mandatory scheme would be coupled with a legislative requirement that every electricity supply company disclose its electricity sources to its customers by printed or electronic means, at least on a quarterly basis.[64] This measure would not only apply to the electricity generated as a consequence of the green power scheme, but also to the normal operations of the company. This would be of great benefit for improving consumer information and consumer protection and for lifting the profile of renewable energy resources.

These proposals could be the subject of new legislation, but it is submitted that the better approach would be to create a new part to the Renewable Energy (Electricity) Act 2000 (Cth). The advantage of using this legislation lies in enforcement and control. This Act creates the office of the Renewable Energy Regulator,[65] a person appointed by the relevant Commonwealth Minister.[66] While the primary purpose of the Regulator is to control the system of renewable energy certificates and renewable energy shortfall charges imposed on power stations by this Act, it would be possible to extend the powers and responsibilities of the Regulator so as to require all electricity supply companies to submit proposals for green power schemes to the Regulator to ensure they comply with the terms of the legislation. Such a scheme would avoid the creation of a new bureaucracy and additional public expenditure.

The alternatives to the introduction of legislation regulating green power schemes would appear to be limited. One possibility is the negotiation by the Commonwealth government with the electricity supply industry of a voluntary agreement. While such an approach would be consistent with the ‘light-handed approach’ to regulation, I argue that the results that could be achieved would inevitably be less than legislation would achieve. In addition, of course, there is no guarantee that such negotiation would lead to a concrete agreement within a reasonable time frame. In this regard it is worth noting that the current negotiations between the Commonwealth government and motor vehicle manufacturers over the introduction of national average fuel consumption targets, to reduce fuel consumption for passenger vehicles, have already continued for over three years without producing a final outcome.[67]

An alternative, non-legislative approach would be for the Commonwealth government to offer matching funds to electricity supply companies to purchase new renewable energy resources in proportion to the amount contributed by subscribers to green power schemes. This would double the amount of money available to purchase renewable energy resources and would amount to a very significant boost to the fledgling renewable energy industry. A useful precedent for this exists in Western Australia, which encourages the development of renewable energy by paying matching funds for premiums collected from green power schemes. The matching funds are paid on a dollar-for-dollar basis up to 3 cents per kWh, to a maximum of one million dollars per annum.[68]

An offer of this nature made by the government would partially counter the argument that green power schemes do not recognise the public interest associated with the introduction and promotion of sustainable energy solutions. This is due to the fact that the government funds amount to a contribution from all members of society. However, the argument as to the equity and logic of equal contributions remains and, in any event, shortage of government funds makes it unlikely that the Commonwealth government would agree to provide financing of this nature.

A further alternative is to encourage public participation in green power schemes by amending the income tax legislation so as to give a full or partial tax deduction to electricity consumers for amounts voluntarily paid under green power schemes. This could be achieved by the addition of a new section to part 13 of the Income Tax Assessment Act 1997 (Cth) relating to tax deductions. Various comparable income tax incentives have been offered by the Commonwealth government in the past, including a tax deduction for the cost of installing energy efficient insulation in buildings and for the cost of converting oil-fired power plants.[69]

V CONCLUSION

Consumer organisations, aided by the law, can make a strong contribution to sustainable energy development. Green power schemes should be viewed not as an isolated consumer initiative, but as part of an ongoing movement by individuals concerned about the environmental future of the world. In many developed and developing countries this movement has already formed itself into non-government organisations (NGOs) and gained a powerful political voice. Illustrations of this are the Asia-Pacific NGO Forum on Effective Consumer Information for Sustainable Energy Use, held in May 1999 in Seoul, and the North-East Asia Forum on Effective Consumer Information for Sustainable Energy Use, held in March 2001 in Beijing. Both conferences were co-sponsored and organised by the United Nations Economic and Social Council for Asia and the Pacific, and the Citizens’ Alliance for Consumer Protection Korea.[70]

Properly controlled and managed, green power schemes have an important role to play in the furtherance of sustainable energy. While the future of renewable energy resources depends principally on advances in science, engineering and technology, the social sciences are also important. Green power schemes are an excellent illustration of this. The general public, in the form of electricity consumers, are the driving force behind such schemes through their purchasing power and their decision-making.[71] The role of the law is to enhance this consumer drive by mandating policies most conducive to the rapid development of the schemes. The solutions proposed above aim to achieve this objective.

The establishment of an appropriate legislative base, as proposed above, would give greater impetus to green power schemes and would be likely to lead to a much higher degree of market penetration of renewable energy resources. Such a legislative base would also add important legal safeguards for consumers and would increase the equity and fairness of green power schemes by recognising the public interest associated with the development and expansion of renewable energy resources.

In summary, green power schemes should be viewed as a small but significant step towards a sustainable energy future. This future is sufficiently important to merit the full support of the legislators and the legal profession.

[*] MA, PhD (Camb), LLM (Osgoode Hall), PhD, LLD (Melb); Bonython Professor of Law, Faculty of Law, University of Adelaide.

[1] For a general description of renewable energy resources, see Wim Turkenburg, ‘Renewable Energy Sources’ in United Nations Department of Economic and Social Affairs and World Energy Council, World Energy Assessment: Energy and the Challenge of Sustainability (2000) 220–73 (‘World Energy Assessment’).

[2] Other proven sources of renewable energy include fuel cells, wave energy, tidal energy and ocean thermal energy conversion (‘OTEC’). OTEC involves the exploitation of the temperature differential between the warm water at the ocean surface at tropical latitudes and the cold water of the deep ocean: see David Hurwood, ‘Ocean Thermal Energy: Potential and Pitfalls’ (1981) 10 Ocean Development and International Law 13; Kent Keith, ‘Laws Affecting the Development of Ocean Thermal Energy Conversion in the United States’ (1981) 43 University of Pittsburgh Law Review 1; Martin Tsamenyi and Max Herriman, ‘Ocean Energy and the Law of the Sea’ (1998) 29 Ocean Development and International Law 3.

[3] Photovoltaic solar energy is the direct conversion of sunlight into electricity by the use of solar cells. This is achieved by generating free electrons using the energy of light particles: United Nations Department of Economic and Social Affairs and World Energy Council, above n 1, 235–6.

[4] For a discussion of the different solar technologies, see United Nations Department of Economic and Social Affairs and World Energy Council, above n 1, 235–51; World Energy Council, New Renewable Energy Resources (1994); Adrian Bradbrook, Solar Energy and the Law (1984) ch 1. For a discussion of associated legal issues, see Terry Williamson, ‘Solar Access’ (1985) 2 Environmental and Planning Law Journal 143; John Lungren, ‘Solar Entitlement: A Proposed Legislative Model’ (1983) 4 Journal of Energy Law and Policy 171; Adrian Bradbrook, ‘Future Directions in Solar Access Protection’ (1988) 19 Environmental Law 167; Melvin Eisenstadt, ‘Access to Solar Energy: The Problem and Its Current Status’ (1982) 22 Natural Resources Journal 21.

[5] See generally Adrian Bradbrook, ‘The Access of Wind to Wind Generators’ [1984] Australian Mining and Petroleum Law Association Yearbook 433; H Wilkinson, ‘Wind Farms’ (1994) 144 New Law Journal 314; Rita Taubenfeld and Howard Taubenfeld, ‘Wind Energy: Legal Issues and Legal Barriers’ (1977) 31 Southwestern Law Journal 1053; Lynde Coit, Wind Energy: Legal Issues and Institutional Barriers (1979).

[6] Offshore wind plants have already been constructed in Denmark and Germany, and are planned in the Netherlands and the United Kingdom. See K Tong, ‘Technical and Economic Aspects of a Floating Offshore Wind Farm’ (1998) 74 Journal of Wind Engineering and Industrial Aerodynamics 399; Adrian Bradbrook and Alexandra Wawryk, ‘The Legal Regime Governing the Establishment of Offshore Wind Energy Farms in Australia’ (2001) 18 Environmental and Planning Law Journal 30; Adrian Bradbrook and Alexandra Wawryk, ‘Legal Issues Relating to Electricity Production by Offshore Wind Turbines’ in Peter Catania, Brian Golchert and Chenn Zhou (eds), Energy 2000: The Beginning of a New Millennium (2000) 1069–80.

[7] Biomass is perhaps best known for its production of ethanol, an alternative motor fuel. For a discussion of ethanol, see United Nations Department of Economic and Social Affairs and World Energy Council, above n 1, 293–5; Adrian Bradbrook and Alexandra Wawryk, ‘Energy, Sustainable Development and Motor Fuels: Legal Barriers to the Use of Ethanol’ (1999) 16 Environmental and Planning Law Journal 196.

[8] For a discussion of the associated legal issues, see Adrian Bradbrook, ‘The Contents of New Geothermal Legislation’ (1987) 5 Journal of Energy and Natural Resources Law 81; John Brooks Jr, ‘Legal Problems of the Geothermal Industry’ (1966) 6 Natural Resources Law 511; Steven Naumann, ‘Form over Function: The Law of Hot Water’ (1983) 4 Journal of Energy Law and Policy 205.

[9] Borimir Jordan and John Perlin, ‘Solar Energy Use and Litigation in Ancient Times’ (1979) 1 Solar Law Reporter 583.

[10] Owen Olpin, ‘The Law of Geothermal Resources’ (1968) 14 Rocky Mountain Mineral Law Institute 123, 124; Kenneth Bjorge, ‘The Development of Geothermal Resources and the 1970 Geothermal Steam Act: Law in Search of Definition’ (1974) 46 University of Colorado Law Review 1, 3.

[11] Excluding large-scale hydropower, renewable energy resources contributed 2 per cent of the world’s energy consumption in 1998: United Nations Department of Economic and Social Affairs and World Energy Council, above n 1, 14.

[12] Ibid. See also Richard Ottinger et al, Environmental Costs of Electricity (1990).

[13] Department of Primary Industry and Energy, Commonwealth, Green Paper on Sustainable Energy Policy for Australia (1996) 20. See also Robert Fowler, ‘International Policy Responses to the Greenhouse Effect and Their Implications for Energy Policy in Australia’ in Dalway Swaine (ed), Greenhouse and Energy (1990) 462; Daniel Lashof and Dennis Tirpak, Policy Options for Stabilizing Global Climate (1990).

[14] United Nations Department of Economic and Social Affairs and World Energy Council, above n 1, ch 10.

[15] Opened for signature 20 June 1996, 1771 UNTS 107 (entered into force 21 March 1997) (‘Climate Change Convention’). See generally Daniel Bodansky, ‘The United Nations Framework Convention on Climate Change: A Commentary’ (1993) 18 Yale Journal of International Law 451; Daniel Bodansky, ‘Managing Climate Change’ (1992) 3 Yearbook of International Environmental Law 60; Christopher Stone, ‘Beyond Rio: “Insuring” against Global Warming’ (1992) 86 American Journal of International Law 445.

[16] Opened for signature 16 March 1998, 37 ILM 32 (not yet in force) (‘Kyoto Protocol’). See generally Peter Cameron, ‘From Principles to Practice: The Kyoto Protocol’ (2000) 18 Journal of Energy and Natural Resources Law 1; Michael Grubb, The Kyoto Protocol: A Guide and Assessment (1999); Peter Davies, ‘Global Warming and the Kyoto Protocol’ (1998) 47 International and Comparative Law Quarterly 446.

[17] See generally Nicholas Robinson (ed), Agenda 21: Earth’s Action Plan (1993).

[18] Australia now has a mandatory target of an additional 9500 gigawatt hours (GWh) of electricity to be produced from renewable energy resources by 2010. This target is established by the Renewable Energy (Electricity) Act 2000 (Cth), coupled with the Renewable Energy (Electricity) (Charge) Act 2000 (Cth) and the Renewable Energy (Electricity) Regulations 2001 (Cth).

[19] For a general discussion of ‘green labelling’, see David Cohen, ‘The Regulation of Green Advertising: The State, the Market and the Environmental Good’ (1991) 25 University of British Columbia Law Review 225; Organisation for Economic Cooperation and Development, Environmental Labelling in OECD Countries (1991); Glenn Israel, ‘Taming the Green Marketing Monitor: National Standards for Environmental Marketing Claims’ (1993) 20 Boston College Environmental Affairs Law Review 303; Sophie Dawson and Neil Gunningham, ‘The More Dolphins There Are the Less I Trust What They’re Saying: Can Green Labelling Work?’ [1996] AdelLawRw 2; (1996) 18 Adelaide Law Review 1; James Grodsky, ‘Certified Green: The Law and Future of Environmental Labeling’ (1993) 10 Yale Journal of Regulation 147.

[20] William Lawrence and John Minan, ‘The Role of Warranties and Product Standards in Solar Energy Development’ (1981) 34 Vanderbilt Law Review 537, 593.

[21] Cohen, above n 19, 256–8.

[22] This legislation is contained in Electricity (Energy Labelling of Electrical Appliances) Regulations 1995 (NSW), made pursuant to the Electricity Safety Act 1945 (NSW) s 37(2); Electricity (Electrical Articles) Regulation 1994 (Qld), made pursuant to the Electricity Act 1994 (Qld) s 266; Electrical Products Regulations 1997 (SA), made pursuant to the Electrical Products Act 1988 (SA) s 8. Cf United States legislation: Energy Policy and Conservation Act of 1975 Pub L No 94-163, 89 Stat 871; State Energy Resources Conservation and Development Act, CAL PUB RES CODE (West) §§ 25000-986 (1975); Canadian legislation: Energy Efficiency Act, SC 1992, c 36; Energy Efficiency Act, SO 1988, c 32; Energy Efficiency Act, SBC 1990, c 40. For a discussion of this legislation, see Adrian Bradbrook, ‘Eco-Labelling: Lessons from the Energy Sector’ (1996) 18 Adelaide Law Review 34.

[23] In relation to developing countries, see Lin Gan, ‘Promoting Green Electricity Development from Industrial to Developing Countries: What Needs to Be Done?’ (unpublished paper, 2001) (copy on file with author).

[24] See, eg, Barbara Farhar, Willingness to Pay for Electricity from Renewable Resources: A Review of Utility Market Research (1999). In other contexts, see also Dawson and Gunningham, above n 19, 2; Rochelle Burbury, ‘Ecophobia Can Turn Away Sales’, Sydney Morning Herald (Sydney), 24 February 1994, 34.

[25] See Sustainable Energy Development Authority <http://www.seda.nsw.gov.au/

gp_retailers_body.asp> at 1 April 2002.

[26] See Australian Inland Energy and Water <http://www.aienergy.com.au> at 8 October 2001.

[27] See Integral Energy <http://www.integral.com.au> at 1 April 2002.

[28] See Energy Australia <http://www.energy.com.au> at 8 October 2001.

[29] See AGL <http://www.agl.com.au> at 12 October 2001.

[30] Established by the Sustainable Energy Development Act 1995 (NSW).

[31] To achieve accreditation and the right to display the ‘green power’ logo, an electricity supply company must:

• use energy sources that are based primarily on a renewable energy resource and that result in reduced greenhouse gas emissions and net environmental benefit;

• source 80 per cent of green power from ‘new’ renewable generators (generators commissioned after 1 January 1997);

• place money earned from selling green power into a separate account which is independently audited;

• use green power account funds for the purchase of energy from renewable resources;

• lead by example by becoming green power customers themselves; and

• make publicly available a yearly financial statement on their green power program which clearly identifies how important the consumer’s support is in the fight against greenhouse gas emissions.

See Green Power Guarantee, Sustainable Energy Development Authority <http://

www.greenpower.com.au/images/pdf/gpguarantee0102.pdf> at 1 April 2002.

[32] For a discussion of green power schemes in the United States, see Blair Swezey and Laura Bird, Green Power Marketing in the United States: A Status Report (5th ed, 2000). For a discussion of the green power programs in the Netherlands, see Lin Gan, above n 23, appendix.

[33] Swezey and Bird, above n 32, 3.

[34] Ibid 3.

[35] Ibid 5.

[36] Ibid 6.

[37] Ibid 7–8.

[38] As at 11 April 2002, the Kyoto Protocol had been ratified by 53 countries, but only one non-developing country (Romania).

[39] Some companies (eg, Energy Australia) have been forced to suspend temporarily their green power programs because customer demand has exceeded the available supply of renewable energy resources.

[40] See Dawson and Gunningham, above n 19, 18–22.

[41] See generally International Energy Agency, Voluntary Actions for Energy-Related CO₂ Abatement (1997).

[42] This voluntary agreement was coupled with compulsory minimum energy performance requirements, incorporated in the Building Code of Australia, to remove the worst cases of energy inefficient design: see The Australian Greenhouse Office <http://

www.greenhouse.gov.au/energyefficiency/building/code.html> at 1 April 2002.

[43] A useful illustration is the Corporate Average Fuel Economy Standards, enacted under the Energy Policy and Conservation Act, 42 USC § 6201 (2000), now re-enacted in the Motor Vehicle Information and Cost Saving Act, 49 USC § 32901 (2000), whereby motor vehicle manufacturers were required to progressively improve the overall fuel consumption of their vehicle fleet each year over a specified 20 year timetable approved in the legislation. See John DeCicco, ‘Savings from CAFE: Projections of the Future Oil Savings from Light Vehicle Fuel Economy Standards’ (Working Paper, American Council for an Energy Efficient Economy, 1992); Adrian Bradbrook, ‘Regulating for Fuel Energy Efficiency in the Road Transport Sector’ (1994) 1 Australasian Journal of Natural Resources Law and Policy 1.

[44] The literature on privatisation of the electricity industry is voluminous. Amongst the most interesting, from a legal perspective, are: Peter Cameron, ‘Reforming Energy Markets: A Review Article’ (2000) 18 Journal of Energy and Natural Resources Law 353; Georges Zaccour (ed), Deregulation of Electric Utilities (1998); Walter Patterson, Transforming Electricity: The Coming Generation of Change (1999); Caroline Varley, Electricity Market Reform: An IEA Handbook (1999).

[45] United Nations Department of Economic and Social Affairs and World Energy Council, above n 1, ch 3.

[46] Climate Change Convention, above n 15, art 4.1(c); Kyoto Protocol, opened for signature 16 March 1998, 37 ILM 32, art 2.1 (not yet in force); Energy Charter Treaty (1995) 34 ILM 360, arts 19.1(d), 19.3; Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects (1995) 34 ILM 446, arts 3.2, 5, 8.2.

[47] Renewable Energy (Electricity) Act 2000 (Cth); Renewable Energy (Electricity) (Charge) Act 2000 (Cth).

[48] Much has been written on appropriate legal solutions to encourage energy efficiency and energy conservation in all sectors of the economy. See, eg, Office of Technology Assessment, Improving Automobile Fuel Economy: New Standards, New Approaches (1991); Adrian Bradbrook and Alexandra Wawryk, ‘Legislative Implementation of Financial Mechanisms to Improve Motor Vehicle Fuel Efficiency’ [1998] MelbULawRw 25; (1998) 22 Melbourne University Law Review 537; Adrian Bradbrook, ‘Regulating for Fuel Efficiency in the Transport Sector’ (1994) 1 Australasian Journal of Natural Resources Law and Policy 1; Grant Thompson, Building to Save Energy: Legal and Regulatory Approaches (1980); Adrian Bradbrook, Energy Conservation Legislation for Building Design and Construction (1992); Adrian Bradbrook, ‘Energy Conservation Legislation for Industry’ (1992) 10 Journal of Energy and Natural Resources Law 145; Adrian Bradbrook, ‘The Development of Energy Efficiency Laws for Domestic Appliances’ [1990] AdelLawRw 3; (1990) 12 Adelaide Law Review 306.

[49] The Australian government has established the Renewable Remote Power Generation Program (RRPGP), with funds available to provide a rebate for the cost of installation of renewable energy resources in remote regions to replace diesel fuel. This program is administered by the States on behalf of the Commonwealth: see Supporting the Use of Renewable Energy for Remote Power Generation: Renewable Remote Power Generation Program (2000) Australian Greenhouse Office <http://www.greenhouse.gov.au/renewable/rrpgp/index.html> at 1 April 2002.

[50] For example OTEC, wave and tidal energy.

[51] The greatest onshore wind resources in Australia are found in the south-west of Western Australia (from Bunbury to Albany), in the Coorong region of South Australia and on the west coast of Australia: see National Energy Advisory Committee, Renewable Energy Resources in Australia (1981) 6.1; Adrian Bradbrook, ‘The Access of Wind to Wind Generators’, above n 5, 435.

[52] In respect of onshore petroleum, for example, the legal management regime is contained in State and Territory legislation: Petroleum (Onshore) Act 1991 (NSW); Petroleum Act 1923 (Qld); Petroleum Act 2000 (SA); Petroleum Act 1998 (Vic); Petroleum Act 1967 (WA); Petroleum Act (NT).

[53] For a discussion of the problem of fraud, see Challenges of Electric Power Restructuring for Fuel Suppliers, Energy Information Administration <http://www.eia.doe.gov> at 8 October 2001.

[54] See, eg, Environment Protection and Biodiversity Conservation Act 1999 (Cth); Native Vegetation Conservation Act 1997 (NSW); Native Vegetation Act 1991 (SA); Water Management Act 2000 (NSW); Water Resources Act 1997 (SA).

[55] See Medicare Levy Act 1986 (Cth).

[56] Introduced by the Emergency Services Funding Act 1998 (SA). See also Water Management Act 2000 (NSW).

[57] National Firearms Program Implementation Act 1996 (Cth).

[58] Air Passenger Ticket Levy (Imposition) Act 2001 (Cth); Air Passenger Ticket Levy (Collection) Act 2001 (Cth).

[59] See, eg, Australia: Renewable Energy (Electricity) Act 2000 (Cth) and Renewable Energy (Electricity) (Charge) Act 2000 (Cth); United States: Public Utility Regulatory Policies Act, 16 USC § 824a-3 (2000); United Kingdom: Utilities Act 2000 (UK) c 27, ss 62–7.

[60] For a discussion of the Commonwealth’s legislative power in respect of the electricity industry, see generally Adrian Bradbrook and Alexandra Wawryk, ‘Constitutional Implications of the Restructuring of the Electricity Industry’ (1996) 3 Australasian Journal of Natural Resources Law and Policy 239.

[61] (1992) 31 ILM 849.

[62] Constitution s 51(xxix).

[63] [1983] HCA 21; (1983) 158 CLR 1 (‘Tasmanian Dams’).

[64] This measure was enacted in 1997 in California by CAL PUB UTIL CODE (West) § 398.4 (1997).

[65] Section 142.

[66] Section 143.

[67] See Australian Greenhouse Office <http://www.greenhouse.gov.au/transport/env_strategy.html> at 1 April 2002.

[68] The matching funds are paid into the Sustainable Energy Development Office, which is administered by the Alternative Energy Board. The fund is used to support the use of renewable energy resources by independent power producers, and distributes the proceeds by competitive grants for research, demonstration and education programs that support renewable energy and energy efficiency: <http://www1.sedo.energy.wa.gov.au/funding.asp> at 8 October 2001.

[69] See Adrian Bradbrook, ‘The Use of Income Taxation Incentives to Promote Renewable Energy and Energy Conservation’ [1990] Australian Mining and Petroleum Law Association Yearbook 1.

[70] The 1999 Forum is discussed in Bradbrook, ‘Energy, Sustainable Development and Motor Fuels’, above n 7. See also Asia-Pacific Non-Government Organisation Forum on Effective Consumer Information for Sustainable Energy Use (1999) Citizens’ Alliance for Consumer Protection Korea <http://www.cacpk.org/cacpk/cacpk-en/forum/forum.html> at 1 April 2002.

[71] For a further discussion of the importance of the role of consumers in advancing sustainable energy, see W Kempton and M Neiman (eds), Energy Efficiency: Perspectives on Individual Behaviour (1987); Adrian Bradbrook, ‘The Development of a Regulatory Framework on Consumer Protection and Consumer Information for Sustainable Energy Use’ (2000) 5 Asia Pacific Journal of Environmental Law 239.