GREEN DEALS: The sun also sets

As one solar program rises in the south of the country, courtesy of the Brumby government's “Big Solar” target, another one appears to be in danger of setting further north. There is now great confusion over the fate of the federal government's $1.5 billion Solar Flagships program after $220 million was removed to fund the cash for clunkers scheme. It seems $50 million of those clunker funds will come from the flagships program in 2012/13, and $170 million in 2013/14. Because this comes before the planned completion of stage one of the program in 2015, does this mean that the scale of the projects will be downgraded? No one seems to be too sure. And, as the Greens pointed out, this does not quite fit with Prime Minister Gillard's promise of more funds for solar.

The problem is that the budget for stage one of the program – to produce two flagship projects of around 400MW – was never detailed, but it was presumed to be around half of the overall allocation. One quarter of that now seems to be destined for the owners of old commodores and falcons. Does this mean, then, that the size of the flagship ambitions will be reduced accordingly, or will it simply go to the lowest-cost proposal? – in which case you might as well announce the proposal to transform the Collinsville power station as the solar thermal winner right now. Or, it could mean that the federal government has quietly decided that there is a better idea: Follow the Brumby lead on a large-scale feed-in-tariff.

Another big disappointment in the solar energy industry has been the discontinued funding for the UNSW Centre of Excellence into solar PV. The Centre's chair, Muriel Watt, expresses her thoughts in this opinion piece, and John Grimes, the head of the Australia and New Zealand Solar Energy Society, is also aghast. He notes the centre has been a world leader in efficiency gains on solar PV, and is widely recognised as such. He says that if diesel gets several billion dollars in subsidies each year, then surely the UNSW centre could get $6 million to maintain Australia's leadership in this sector.

Panasonic's green merger

Japan's Panasonic Corp is to spend $10 billion to buy out the outstanding half share in Sanyo as it tries to keep pace with the rapid push of its rivals into green energy. Panasonic plans to merge the two electric subsidiaries so it can start to match the investment and speed of decision making of rivals such as Samsung, LG, and Hitachi. "Our overseas competitors are making decisions faster than we can even imagine, and there's no way we can beat them if we stick to our current pace," said Panasonic President Fumio Ohtsubo.  "Our overseas competitors are like 100-meter sprinters, while we are a medium-distance runner."

Panasonic Electronics currently focuses on lighting equipment, sensors and other key components for energy-efficient homes and offices, while Sanyo isthe global market leader in rechargeable lithium-ion batteries and a has a significant presence in the solar-panel industry. Analysts say Panasonic and other Japanese electronics groups are trying to move away from older businsesses in televisions and refrigerators as profit margins shrink and are seeking new niche markets in green and energy efficient technology.

The new carbon cops

The anticipated passage of John Brumby's Climate Bill through the Victorian government will establish that state's Environmental Protection Authority as the first such state body in Australia to have the power to regulate carbon emissions. The EPA will have specific control to ensure that no new power stations using conventional brown-coal technology are built in Victoria and that greenhouse gas emissions will be considered in licensing and works approvals for industrial and commercial sites. Brumby said in his speech to parliament that the EPA's powers may be used for other purposes in the future – such as establishing emissions standards for existing power stations – with the aim of moving Victoria's brown coal generators into line with international best practice and providing a strong investment signal to upgrade technology.

It's quite similar to what is about to occur in the US, where the Democrats have abandoned attempts to get a cap-and-trade scheme through the Senate. As HSBC's London-based researcher Nick Robins notes in his latest analysis, the control of greenhouse gases will now revert to the regulatory approach led by the Environmental Protection Agency under the Clean Air Act. Many in Congress have said they would like to suspend or postpone EPA regulation of carbon, but President Obama has signalled his intention to veto any such legislation. Which sets the scene for corporate and state litigation against EPA regulation, and a big win for the lawyers. The World Resources Institute estimates EPA regulation and state-level climate and clean energy actions could potentially deliver a 14 per cent cut in CO2 emissions by 2020 from 2005 levels, which would be short of the 17 per cent reduction that President Obama pledged at Copenhagen.

Perpetual motion

Perpetual Investments has announced it has joined the Investor Group on Climate Change, the organisation that represents institutional investors interested in the impact of climate change on investments. Perpetual joins the likes of AMP, BT, and Colonial, and takes the total funds represented by the group to more than $600 billion. Perpetual's head of equities, Cathy Doyle, said joining the IGCC was the logical next step after signing up to the UN Principles of Responsible Investment, late last year. “Climate change is an extremely complex issue with many implications for investors,” Doyle said. “Through the IGCC, we can work collaboratively with our peers to increase our understanding of climate change issues.”

-- Giles Parkinson