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Oct 26, 2012

Coal rebuffed: review sticks with status quo on RET

A broad-based attack on renewable energy subsidies has failed, as the government's Climate Change Authority defiantly sticks with the status quo on the renewable energy target.

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The federal government’s Climate Change Authority has given the middle finger to those who would reduce public subsidies to renewable energy — although it’s accepted that solar rebates are probably too high.

The statutory body established four months ago to advise Canberra on climate policy has released its first draft of a major review into the renewable energy target. The process has flushed out a wave of hostility to the RET from coal-fired power stations and their allies, who want the target cut back.

But they haven’t been heard. The Authority — under the guidance of its chair, ex-RBA governor and superannuation pin-up man Bernie Fraser — has stuck with the status quo and recommended no major changes.

The RET, broadly supported by the Coalition, is arguably a more expensive but more effective way of greening up electricity supply than the carbon tax. It obliges retailers to buy renewable electricity (consumers pay for it). The RET is one to watch — if the Coalition wins the election, and struggles to repeal the carbon tax as promised “in blood”, pressure may build within the party to gut the RET.

The hottest topic for the RET is the level of the target: it’s supposed to mean 20% of electricity is generated from renewable sources from 2020 to 2030, but the actual target in the legislation is set at 41,000 gigawatt hours per annum. Electricity demand is lower than predicted, so that fixed target will end up being more like 25% of electricity, according to estimates in the review.

In its discussion paper, the Authority flatly rejected the idea of winding back the 41,000-gigawatt hour target, as proposed by a phalanx of industry players — the Business Council of Australia, retailers Origin Energy and Energy Australia (the new TRUenergy), the Minerals Council, the Australian Coal Association, etc. The Authority stuck with the existing target because “the benefits of any change at this time (either an increase or decrease) would be outweighed by the costs of increased regulatory uncertainty”. The Climate Institute’s Erwin Jackson told Crikey “they’ve rebuffed the flawed arguments of a few coal-fired generators”.

Effectively lifting the RET from 20% to 25% of electricity will cost $4.4 billion between now and 2030, according to modelling contained in the review, but that’s over a long period in a large sector; “the net present value of the impact on average household bills between now and 2030 would not be significant”, the review states. (A genuine 20% target would be 26,400 gigawatt hours, not 41,000.)

It’s not surprising the Authority has backed Labor’s RET, given its members are mostly figures who accept (indeed, in some cases write) the science of anthropogenic climate change, and have been receptive to Labor’s climate policies. Scientist David Karoly, academic Clive Hamilton and serial Labor board appointee Heather Ridout sit on the board.

To put Australia’s RET in context, China this week announced it would aim to generate 30% of electricity from non-fossil fuels (i.e. renewables and nuclear) by the end of 2015.

The Authority does want the RET tweaked. The army of householders putting solar panels on their roofs could get less money from it; the Authority has proposed reducing the multiplier of RECS credits to less than one, which would mean lower up-front cash rebates. This is part of the sector-wide scaling back of public subsidies, as solar costs come down, installations build up and governments stare in horror at their budgets. Solar homes currently get an upfront federal rebate (through the RET) and ongoing subsidies for their electricity produced (through state-based feed-in tariffs); both are now on the chopping block.

The review recommends fixing up the RET clearing house for RECS permits, so that it acts less as a dumping ground for householders optimistically expecting $40 a REC, and more as it’s supposed to; the Authority recommends permits only be lodged when the facility needs them.

The Authority has squibbed on whether to increase the RET target to accommodate the Clean Energy Finance Corporation, a publicly-financed green bank which will tip billions into various projects from next year. Some conservation groups want the RET increased so CEFC projects are genuinely additional, but the review has put that decision off until 2016.

The Authority also proposes it does less work. Legislation states reviews of the RET should take place every two years; the review wants that changed to every four years.

Jackson says the Authority “has taken a common sense and economically rational approach to the review”, and welcomed the recommendation to retain the 41,000-gigawatt hour target, saying this meant more renewable energy, which would reduce greenhouse gas emissions.

Coalition Senator Ron Boswell, an outspoken critic of the RET, told Crikey he was “personally opposed to all renewable energy, I think it’s too expensive and it’s phasing the cheaper power out”. Boswell says, at the least, the gigawatt hour target should be reduced so that it genuinely represented a 20% target, as Labor had promised. “It should be based on the real target,” Boswell said.

The Coalition’s climate spokesman Greg Hunt says his party will consider the Authority’s review with an open mind and seek a meeting with the Authority to discuss its recommendations.

Cathy Alexander —

Cathy Alexander

Freelance journalist and PhD candidate in politics at the University of Melbourne

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17 comments

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17 thoughts on “Coal rebuffed: review sticks with status quo on RET

  1. John Bennetts

    Ordinary Person has made a sweeping statement which has, thus far, a very elusive answer.

    Energy storage, whether as potential (ie gravitational) energy, or chemical energy (in batteries) or thermal energy (hot water or steam or hot solids) or chemically (by producing a material which can be used to store energy for later release, such as methane) or in flywheels or springs or compressed air have all, at some time, been extensively and enthusiastically supported.

    Currently, most of the above technologies are not commercially competitive. They are simply too dear.

    The front runner is pumped hydro, which is used in several places in Australia but for which significant expansion is not practical. Between one third and one half of the energy used is recovered. Possibly, pumped salt water storage has a future, but currently projected costs are excessive.

    Batteries are capital intensive, maintenance intensive, dangerous and are thus justified only for limited applications.

    Everything else appears to be less useful, though not without any hopes at all.

    My point is that, unless practical solutions to the problems inherent in energy storage are found, then energy storage will remain strictly limited.

    Despite being hypothetically possible, storage at practical scales, is currently out of reach. To say otherwise, or to claim that lack of affordable practical storage options an “invalid argument against renewable energy” is nonsense.

    Reliability, schedulability, availability and other supply standards are not optional. In order for energy systems to work, they are essential parameters which cannot be brushed away with unhelpful contrary assertions.

  2. Captain Planet

    @ Person Ordinary,

    Mark Duffet is referring, principally, to nuclear power. Mark is one of Crikey’s most persistent (and i might add, polite and persuasive) advocates of nuclear power as a prospective solution to climate change.

    Interesting to note that China aspires to produce 30 % of its power from “Non Fossil” fuels by the end of 2015. You can bet that the bulk of the heavy lifting there will be done by nuclear.

    I agree with John Bennets about the difficulties of energy storage: however, direct storage of thermal energy in molten salt tanks (some incorporating crushed rock) has significant potential and is now operational in utility – scale solar thermal power plants in Europe, generating power 24 hours a day.

    The other thing to consider about energy storage, is that increasing interconnectivity of geographically remote electricity grids, DOES negate many of the arguments against renewables being unreliable and unavailable when required. The larger the “grid”, the more diversified the number and type of renewable energy systems connected to it, and the more interactive the network is (“smart grid” technology) the more it is possible to match renewable generating capacity to demand.
    Biomass power generation, fueled by timber plantation waste or food crop waste (to name just two options) also avoids the “energy storage” dilemna, as the energy is still stored in it’s chemical form, as fuel. Biofuels and algal – derived liquid fuels have similar advantages.

  3. John Bennetts

    Agreed, Captain Planet. Limited thermal storage has been achieved on a trial basis. Here’s hoping that it can be massively increased. However, figures I have seen for the required many millions of tonnes of salts in order to have anything close to a significant carbon impact will come with two huge prices to pay: cost and environment (mining and transport).

    Regarding hopes that massive extension of high voltage transmission lines will assist wind and solar to be more reliable, this cannot be achieved without massively increasing the “gold plating of transmission systems” which has received much negative publicity in Australia recently and for which every Australian retail energy customer pays but from which no benefit, either in reliability or carbon reduction, has yet been quantified.

    My guess is that derived liquid and gas fuels are the primary way of future energy storage, but we aren’t even close to achieving that at scale yet. With climate change forcing the pace, some long term propositions, though encouraging, will deliver too little, too late.

    Hence, my conviction that, in order to counter climate change by decarbonising our energy systems, no option should be ignored.

    Arguing against nuclear power on the basis of a possible future technological development is an irresponsible diversion of attention away from the immediate and proven threat of global climate change. To argue that the single most effective tool available to reduce burning of fossil fuel is to argue that action against climate change can wait for several decades. I don’t think that we have that luxury.

  4. Hamis Hill

    Do any of the resident experts have any comment on the “trigeneration” systems currently in use in sophisticated “Green” high rise Architecture?
    I remember being asked, as part of my Thermodynamics studies, to size the power systems required to air condition a certain sized room.
    I am sure that the known experts can remember the requisite understanding of maths, physics and chemistry and mechanical engineering,(certainly not at first year undergraduate level), needed to work this out?
    And re-iterate the breakthroughs in scientific understanding, as they occured over the centuries, which allowed this understanding to develop?
    At any rate the savings from green architecture are well established.
    The point being that demand for the boiling kettle, be it coal or otherwise, is being reduced by abandoning the blind and trusting profligacy of the past.
    Any idea of the scale of the new approach compared to the old? 40% more efficient, 50%, 30%?
    We may, in this area, be approaching George Bernard Shaw’s famous observation of a century ago that “The expert is, in the truest sense, an idiot”.
    We may also have to assume, for the sake of argument, that any “credentials” that such experts put forward are expected to be taken on faith.
    I confess to being a non-believer in the present experts and sincerely doubt their capacity to mount any measured and reasonable arguments beyond bald simple assertion and bluster.
    The energy saving charateristics of Green architecture comes from multidisciplinary co-operation between professionals which entails mutual respect, a common, basic understanding of science and capacity for communication.
    Is any of this at all present in the debate here so far?

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