Despite strong and consistent public support, renewable energy has been held back for decades by Australian governments. They have done this with a combination of token support on the public stage and decimation behind the scenes.
The principal feature of John Howard’s tokenism was the tiny Mandatory Renewable Energy Target (MRET), a certificate system the gave a subsidy to generators of renewable energy. MRET was so keenly supported by the new clean green industries, that the 2010 MRET target was essentially reached in 2006 and then Australia’s nascent wind turbine manufacturing industry went from boom to bust. Factories making wind turbine components in Wynyard, Tasmania, and Portland, Victoria, were shut down.
Before the 2007 federal election, Rudd Labor promised to change all that. Its election commitments for renewable energy included an expanded Renewable Energy Target (RET), the Renewable Energy Fund (for demonstration and dissemination), the Energy Innovation Fund (for research), the $8000 rebate for residential solar electricity, and an emissions trading scheme. Voters were also led to belief that several existing schemes — such as the Remote Renewable Power Generation Program and Cities for Climate Protection — would be continued.
Eighteen months after Rudd Labor was swept into office, partly on the strength of its promises for renewable energy, every one of these promises and reasonable expectations had either been broken, or delayed in implementation, or only funded to a negligible degree. Here, I focus on RET, which was finally passed into law in August 2009, over a year after it could have been implemented. Its official aim is a worthy if modest one: to lift renewable energy’s contribution to 20% of Australia’s electricity by 2020. However, the scheme is designed in a way that ensures that this goal cannot be achieved in practice.
The first design flaw, pointed out before the scheme was put before parliament, is that a large proportion of the target will be taken up by solar and electric heat pump hot water. While these technologies deserve support, it should not come from inclusion in the RET. With existing subsidies, the main barrier to solar hot water is not an economic one, but rather the requirement by many local governments that solar hot water must have planning permission.
The second major design flaw of the RET is that, under the Solar Credits Scheme, each residential solar electricity system that is installed is counted as if it contributed five systems, one real and four “phantom”, to the target. Although the phantom systems will be phased out by mid-2015, by then the damage will have been done. Together with solar and heat pump hot water, the phantom solar electric systems will have taken up the vast majority of the RET and the subsidies that come with the renewable energy certificates (RECs) generated by the RET.
It is difficult to believe that these fundamental design flaws were a result of incompetence alone. One result is that there will be few if any RECs available for large-scale wind power and bioelectricity from crop residues, the two lowest cost of the new renewable electricity technologies. Another result, already causing consternation among renewable energy businesses, is that the price of RECs will fall and so the large-scale renewable energy technologies will not be able to compete with dirty coal power. Several wind farms currently under development are now facing bankruptcy. The remaining manufacturers of wind turbine components, such as Keppel Prince, are on the point of laying off many workers. The Condong and Broadwater bioelectricity power stations, which burn sugar cane residues, are said to be making big losses.
The solutions to this situation are simple. The federal government should remove solar and heat pump hot water from the RET and should immediately stop counting phantom RECs as contributing to the target. State governments should ban local governments from requiring planning permission for the installation of solar and heat pump hot water. Thus we can have solar hot water, residential solar electricity and large-scale wind power and bioelectricity. However, we would still need a separate scheme to build the market for large solar power stations. Based on European experience, the best mechanism is feed-in tariffs.
Dr Mark Diesendorf is deputy director of the Institute of Environmental Studies at UNSW and author of Climate Action: A campaign manual for greenhouse solutions.