Australia opposition accuses government of "blackmail"

By Rob Taylor

CANBERRA, June 11 (Reuters) - Australia's opposition accused the government on Thursday of "legislated blackmail"after tieing millions of dollars in business compensation for new renewable energy laws to a doomed scheme for carbon emissions trading.

The major conservative opposition and Australian Greens, wielding the upper house balance-of-power, said the government was threatening $22 billion in planned energy investment by linking renewable energy laws to its ill-fated carbon trade regime. "This is legislated blackmail," Greens leader Bob Brown told state radio.

The laws, setting a 20 percent target for renewable energy by 2020 in Australia's currently coal-reliant electricity supply were unveiled this week, with industry analysts initially confident the scheme would not face the same political hurdles as carbon trade laws, which face Senate defeat this month.

"We think the Renewal Energy Target (RET) will probably drive about A$28 billion ($22.7 billion) worth of new investment in generation capacity," Clean Energy Council Chief Executive Matthew Warren told Reuters.

But a clause in the renewable energy target legislation, which opponents described as a "poison pill", linked industry assistance for the A$100 million a year impost of the renewables scheme to safe passage of carbon trade laws.

"This is the government saying to industry 'unless we get one piece of legislation passed, we will fail to give you compensation you are expecting under another piece of legislation', which is much more likely to pass," Brown said.

The Labor government, facing parliamentary defeat of its carbon trade plans, aims to bolster its green credentials ahead of global climate talks in Copenhagen in December with the new laws and drive a shift to renewables.

The legislation underpinning the RET will be introduced to parliament next week and include a statutory target of 9,500 gigawatt-hours (GWh) in 2010, increasing to 45,000 GWh in 2020.

STRONG COAL RELIANCE

Renewable sources provide only 8 percent of Australia's current energy needs, with the rest generated from coal, oil and gas, making the country one of the world's worst per capita polluters.

Under the RET, wholesale electricity buyers are required to meet a share of the renewable energy target in proportion to their share of the national wholesale electricity market.

The laws provide for creation of Renewable Energy Certificates (RECs) by renewable energy generators, with certificates to be traded and sold under the watch of a Renewable Energy Regulator, with a shortfall charge levied when companies fail to meet the overall renewable target.

Power companies watching closely for the legislation to pass parliament and underpin a wave of renewable energy projects include Origin Energy Ltd (ORG.AX), AGL Energy (AGK.AX), TRUenergy, owned by Hong Kong-based CLP Holdings (0002.HK) and Pacific Hydro, owned by a group of Australian pension funds.

"The early starters will be major wind projects which are literally ready to go, waiting for the ink to dry on this legislation," the Clean Energy Council's Warren said.

The conservatives, who hold the largest voting bloc in parliament's upper-house Senate, said they could try to amend the RET laws with support from independent swing-vote.