The government report released yesterday said that without a mechanism to reflect environmental costs there was little incentive for investment in renewable generation.

The 'State of the Environment Report 2007' charts environmental progress over the last nine years, compiles a report card on current conditions and identifies 34 environmental issues of importance to Western Australia.

It did not specify ways to increase investment in renewable energy, instead focusing on energy efficiency.

For existing infrastructure, it recommended introducing incentives for owners to improve energy efficiency by retrofitting technology, while all new generators should be required to meet world's best practice.

Other suggested energy responses included expanding WA's renewable energy industry, increasing the diversity or capacity of fuel supply infrastructure for cleaner fuels, expanding measures improve consumer energy efficiency and introducing incentives to encourage greater uptake of fuel efficient and alternative fuel vehicles; and

The report ran through a suite of current initiatives to boost renewable generation, including funding an urban renewable energy demonstration plant and supporting the Kalgoorlie-Boulder Sun Farm that proposes to use concentrating solar dishes.

It has also backed the Narrogin Integrated Wood Processing plant, which has demonstrated the potential of biomass as the first Australian biomass gasifier to generate electricity into an electricity grid.

Also, it has implemented the Energy Smart Government program, which seeks to reduce energy consumption in government buildings and services and achieve a cultural shift in how energy is consumed in the public sector.

In 2005-06 the program cut the energy consumption of participating agencies by 7.8%, keeping the final target of 12% by the end of this year in view. Associated greenhouse emissions have fallen by 3.6%.

However, electricity consumption across the state is forecast to grow at an average rate of 2.7% per year, with the most significant growth in average electricity demand forecast to come from the mining and commercial sectors.

To meet the overall demand growth, a new combined cycle natural gas-fired power station will partly replace the aging coal-fired Muja power station, scheduled for decommissioning in 2008. A 200MW coal-fired power station at Collie has also been approved and is under construction.