tip off

With friends like these, the RET never stood a chance

Those charged with “reviewing” the Renewable Energy Target were actually told to look at killing it.

The Australian Financial Review, confirmed the worst fears of the renewable energy industry in a front-page story this morning, reporting that the panel charged with reviewing the Renewable Energy Target had been “instructed” by Prime Minister Tony Abbott to look at ways to shut down the scheme.

Shutting down the RET would bring to an end a $20 billion industry, cost thousands of jobs and force household and business bills to soar. But that is what the government has wanted from the beginning. It appointed a panel composed of climate sceptics, pro-nuclear advocates and fossil fuel lobbyists.

Killing the RET would satisfy the right-wing ideologues and deep-lined antipathy to renewable energy within the Abbott government. The AFR also confirms what has long been suspected: that Environment Minister Greg Hunt and Industry Minister Ian Macfarlane have been effectively sidelined from the process, despite the issue crossing into their portfolios.

The PM’s office has had carriage of the project since the start, and his intentions have long been clear. The secretarial support has been housed within Abbott’s office — and within reach of his principal business advisers, including climate sceptic and renewables opponent Maurice Newman and Abbott’s own energy adviser, former AGL executive Sarah McNamara.

Government insiders who have worked on the RET Review say the intent of the review has always been to cut the current 41,000GWh Renewable Energy Target to a maximum of 25,000GWh (what might be called a “true” 20% target), and possibly close it to new entrants altogether.

There were glimmers of hope that the RET could be retained, particularly when the panel’s own modeling dismissed the two major arguments to drop the target  — that the target could not be physically met, and that it would be costly to consumers. An ACIL Allen report said there would be no issue meeting the 41,000GWh target and that even based on its own conservative inputs, consumers would be better off in the long term from having more renewables in the grid.

The new argument was based around a “transfer of wealth” from the generators to consumers. But even then, the RET report is believed to have favoured a “scaling back” of the target to 25,000GWh or 27,000GHW — a position said to be favoured by Hunt.

A report released today by consulting firm Jacobs, on behalf of The Climate Institute, Australian Conservation Foundation and WWF Australia, says that the biggest beneficiaries to dumping the RET would be the fossil fuel generators. The Jacobs report suggested $8 billion in additional profits to coal-fired generators out to 2030 and an extra $2 billion to gas generators. The big three retailers, AGL Energy, Origin Energy and EnergyAustralia, would be the biggest beneficiaries.

The large-scale renewable energy industry has already ground to a halt. No new projects have reached financial closure since the election of the Abbott government …”

AGL Energy — presuming it completes the purchase of Macquarie Generation’s 4.6GW of coal generators in New South Wales — would pocket an extra $2.7 billion, EnergyAustralia would get an extra $2 billion boost, and Origin Energy would secure a $1 billion. All three companies have been active in their opposition to the RET, and to subsidies for small-scale solar in particular.

Although the RET Review panel was not due to deliver its final report to Abbott’s office until late July, it was to “consult” with draft findings before that delivery. That is when the RET Review panel was instructed to “look more closely” — as the AFR puts it — at the option to close the target to any new entrants, and possibly to await the result of Australian Energy Market Operator estimates, which showed no new capacity was needed on the eastern states’ grid for at least another 10 years. The fossil fuel generators, which are largely responsible for that excess capacity, fear that more renewables would mean more early closures for ageing coal plants.

Whether the Abbott government finally agrees with a scaled back target or an effective closure, any changes seem likely to be blocked in the Senate, where the Palmer United Party has promised to side with Labor and the Greens.

But it matters not. The large-scale renewable energy industry has already ground to a halt. No new projects have reached financial closure since the election of the Abbott government, and the Abbott government knows that even by doing nothing  — apart from allowing continued uncertainty — no new projects will come to market.

Households will also be affected. They have so far contributed $12 billion of the $18 billion invested in renewables over recent years, initially driven by generous feed — in tariffs and then as a hedge against rising electricity prices once those tariffs were removed. The government, though, can remove some of those remaining incentives that defray the upfront cost of the system, without needing legislative changes. Industry experts say that could cause the rooftop solar market to fall by one-third or even half, with the loss of thousands of jobs.

Meanwhile, state governments — with huge vested interests in state-owned networks and generators — continue to act against renewables. The Western Australian government is even canvassing importing coal from Indonesia rather than moving to develop renewable energy projects at home, while in Queensland, businesses have been hit by a whopping $500-a-day service charge (essentially to read the meter) to dissuade them from installing solar.

The renewable energy industry — which possibly unwisely sought to negotiate a “compromise deal” with the big three utilities in 2013 — said a move to halt the target would be “devastating” to the industry.

“Such a move would be reckless, given the government’s own analysis shows slashing the RET would save no money on power bills, yet would devastate billions of dollars of investments made in good faith in renewable energy projects across the country,” Clean Energy Council acting CEO Kane Thornton said.

“Hundreds of Australian and international investors have built their businesses based on the strong bipartisanship of this policy which has existed in legislation since 2001. Tearing up this bipartisanship, and the policy itself, would show that the Australian energy sector is clearly not open for business — it would stop industry dead and smash investments that have already been made.”

Some international groups, such as US solar developer Recurrent Energy, have already packed up. Others, including Goldwind and Trina, have warned of the potential fallout, while Australian groups Pacific Hydro and Infigen Energy are directing their efforts overseas.

The Australian Solar Council echoed the CEC remarks. It is taking its “Save Solar” campaign to marginal electorates, with the first stop at the northern Brisbane seat of Petrie, held by the LNP’s Luke Howarth, this Thursday. The ability to make solar a potent political issue  — many marginal electorates boast more than 20% solar penetration — appears to be their last resort.

“Solar saves money, creates jobs and shifts votes. The Abbott government is about to find out how much Australians love solar and the Renewable Energy Target,” American Solar Council CEO John Grimes said.

17
  • 1
    Bart Tony
    Posted Monday, 18 August 2014 at 1:41 pm | Permalink

    God help us from this idiotic government that never lets the facts get in the way of their right wing ideology.

  • 2
    Mark Duffett
    Posted Monday, 18 August 2014 at 1:55 pm | Permalink

    Isn’t this the same Giles Parkinson who has been loudly and repeatedly trumpeting renewable energy grid parity and the ‘death spiral’ for scale-efficient centralised electricity generation as done deals for quite some time now? If that’s the case, why is even the threat of RET removal proving so apocalyptic for the renewables industry? Something’s not adding up.

  • 3
    JohnB
    Posted Monday, 18 August 2014 at 3:00 pm | Permalink

    What Mark D said. For example, http://www.crikey.com.au/2013/02/08/game-changer-renewables-now-cheaper-than-coal-gas/

    Paid by the word, Giles? Content quality not relevant?

    That said, I do consider the RET to be a long term commitment of both sides of the House. If TA wrecks it now, he will also be wrecking the Australian Government’s credibility as a corporate partner.

    I can hear the distant cries of “sovereign risk” stirring, even though a more appropriate term is “country risk”. Abbott may be about to be taught an expensive lesson, with the tab picked up by 23 million Australians.

  • 4
    nullifidian
    Posted Monday, 18 August 2014 at 3:45 pm | Permalink

    Mark Duffett’s comments make sense only if a) AGW is a socialist plot, and b) the coal industry receives no subsidies from various Australian governments. Aside from tax breaks and direct assistance, the coal burning industries avoid entirely paying for the adverse health effects due to particulate and gaseous pollution.

  • 5
    DF
    Posted Monday, 18 August 2014 at 4:17 pm | Permalink

    The coal industry forcing out the renewables reminds me of the story of General Motors and public transport in the US.

    http://en.wikipedia.org/wiki/General_Motors_streetcar_conspiracy

    As the King of Id said: Remember the Golden Rule. He who has the gold makes the rules.

  • 6
    tonyfunnywalker
    Posted Monday, 18 August 2014 at 5:33 pm | Permalink

    The lunacy that the Abbott Government and its puppet status are once again exposed with Murdoch and the IPA calling the tune. The loss of the repeal of 18C and the failure to sell the budget has enraged the IPA and not to repeal the RET would be the political end of Abbott.
    News Ltd is already canvassing a reshuffle or leadership spill.
    Hockey and Hunt are already sidelined and bound for the backbench as Abbott with selected henchmen taking over, while painting both as procrastinators and lazy thinkers this challenging Australia’s sovereign risk status by not ” getting out of the way” originally of the coal and gas miners and now the power generators power retailers and their bankers.
    The banks are also a part of this as their ROI on investments would evaporate with the fall in the wholesale price of power over the next 20 years. The banks already winners with the “Spivs Charter” being implemented and the threat of a RC behind them were pivotal in Abbott’s decision.
    The fact that billions of future investment opportunities in renewables have already moved offshore - and that the local renewables industry is now bankrupted matters little, that 21000 jobs join the dole queue as installer companies close the doors is unprecedented.
    The move to empower solar panel owners at the ballot box has begun - that’s a base of 1.5 million households conned by Abbott and his promise to protect the RET.
    With the RET goes the emissions target and the need for the Direct Action and the end of Hunt’s Ministry as environmental approvals have already been devolved to the States.
    I have long blogged on the transparent and real danger of electing Abbott without a mandated set of policies. Abbotts’ populism and the LNP lack their own policy agenda (beyond 3 word slogans) and the lamentable lack of intellect amongst the Ministry to realise the consequence of their actions.
    The Government speaks of competitiveness - has conferences to discuss it - today’s decision will now guarantee Australia will boast the most expensive power amongst the developed industrial nations. Manufacturers, like Blue Scope already threatening to move overseas with the sovereign risk to new investment in manufacturing from our newly signed Trade Agreements will evaporate too.
    When you have people like Maurice Newman as the PM’s economic advisor and Bolt /Jones his environment gurus; Australia is doomed to recession until this government is removed; hopefully before it is too late and the hole in the economy is too big to repair.

  • 7
    Bill Hilliger
    Posted Monday, 18 August 2014 at 5:43 pm | Permalink

    Shutting down the RET would bring to an end a $20 billion industry, cost thousands of jobs and force household and business bills to soar. rAbbott looking after the well being of the Australian sheeple.

  • 8
    graybul
    Posted Monday, 18 August 2014 at 6:02 pm | Permalink

    ONE MILLION TWO HUNDRED THOUSAND HOUSEHOLDS are watching VERY CLOSELY! Taking into consideration University Students, Unemployed Youth, Pensioners, Low Income car Drivers et al. Oh Oh forgot . . NSW Liberal Voters who have lost Representatives and been deprived of a vote next State Election . . TOGETHER, that represent a very pissed-off Electorate come next Federal Election.
    PS It is the LOCAL MEMBER ie Backbencher . . that will be ‘front and centre’!! PPS Everyone interested in Solar . . watch “Four Corners” tonight.

  • 9
    fractious
    Posted Monday, 18 August 2014 at 6:13 pm | Permalink

    @ nullifidian - agreed, and that’s not even counting the irreversible loss ($value unidentified) of water catchments cleaned for free by relatively intact vegetation communities (including soil biodiversity), soil formation and retention ($value not completely identified), effects on downstream communities (including but not limited to marine ecosystems, human communities) and ecotourism as a direct result of yet more open-cut and longwall coal mines being granted consent. Even if some want to contend the science of climate change, they cannot deny the obvious and direct adverse consequences of continuing to approve more and more mining.

  • 10
    ananth raj
    Posted Monday, 18 August 2014 at 8:38 pm | Permalink

    Renewable energy target is too narrow. The aim is to reduce co2 emissions so targets should be geared to a clean energy target (uranium and gas are clean). Creating a false economy for renewables is as much a waste as the direct action policy. Let industries prove themselves as viable on their own including solar, wind etc. if they aren’t competitive then they should die a natural death.

  • 11
    old greybeard
    Posted Monday, 18 August 2014 at 10:27 pm | Permalink

    Gas is not clean, just not as dirty as coal. Still produces CO2, just more efficient. The uranium argument is dubious. Lot of water needed, therefore it is on the coast, how will that go down?

  • 12
    old greybeard
    Posted Monday, 18 August 2014 at 10:31 pm | Permalink

    It is apparently easier to open a coal mine than a windfarm in NSW. If we made the fossil fuel lobby pay the cost of their environmental vandalism instead of paying them for it renewables would be viable. Remember that renewables stopped load shedding last summer. What they do is erode the ability of the power companies to make a huge profit on high load days. HERESY!

  • 13
    cartoonmick
    Posted Monday, 18 August 2014 at 11:53 pm | Permalink

    Whilst our pollies allow Big Biz to rule, renewables will be put back many years. They’re not putting Australians first.

    The word “unAustralian” comes to mind.

    And a cartoon which sums it up …

    http://cartoonmick.wordpress.com/editorial-political/#jp-carousel-889

    Cheers
    Mick

  • 14
    CML
    Posted Tuesday, 19 August 2014 at 2:44 am | Permalink

    Seems to me, the rAbbott is hell-bent on removing any and all traces of Labor programs and policy from the planet.
    Never mind what damage this will do to the country and its people. Just so long as these idealogues can make things right for their rich mates.
    Crazy stuff! When are the voters going to wake-up!!

  • 15
    maureen
    Posted Tuesday, 19 August 2014 at 11:06 am | Permalink

    The Liberal Government is starting to give the Labor Party policies that are going to be approved by the communities. Most want renewable energy. All you have to see is the amount of solar panesl being contructed. The Liberal party are in the control of the coal, gas and big business.
    I heard remarks this morning on the ABC from the person in charge of Renewable Energy and he said that we are going to lose billions of investment because of this RET preview.

  • 16
    Maisie
    Posted Tuesday, 19 August 2014 at 11:52 am | Permalink

    Abbott won the last election on the basis of his attack on “the big bad carbon tax” and so many ignorant people fell for his lie s. Now we’ll all end up paying more for electricity and our environment will be further degraded with increased CO2 emissions and more destructive coal mines. I just hope the Australian people wake up before the next election.

  • 17
    Graeski
    Posted Tuesday, 19 August 2014 at 11:57 am | Permalink

    This government is truly evil.

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