30 April 2014 — The federal government is moving closer to a destructive attack on the renewable energy sector with its review of the renewable energy target expected to wipe out the RET. However, a new report released on Wednesday shows the damage will be widespread in terms of energy bills, jobs and the economy.
Climate change denier Dick Warburton who heads the review of the RET today (Wednesday) made it clear he is prepared to ditch the RET and any grandfathering of energy certificates, clearing the path for the attack.
At the same time a report released by the Clean Energy Council showed what the collateral damage would be. Households would pay more than half a billion dollars a year extra for electricity in 2020, and up to $1.4 billion more each year beyond that.
The CEC report, by ROAM Consulting, showed that removing the RET also puts $14.5 billion of investment in the Australian economy at risk – and potentially destroy 18,400 jobs that would be created by the policy.
To make matters worse for the climate there is growing concern about the lack of detail in the Direct Action white paper, its ability to deliver the promised emissions reductions or even to operate properly.
- See our article Little direction in direct action white paper
And in recent times the spectre of a potential legal challenge to the legislative framework for DA has also emerged that could stymie the government’s plans to wrap up funding for the program in the budget, as it would like.
Today (Wednesday) Dick Warburton lobbed a serious volley into the arena by making it clear that the CEC’s report on the repercussions of ditching the RET were of little consequence.
He would be happy to remove protection for existing energy certificates used to subsidise renewable energy, he told media.
In other words, no grandfathering. No prisoners.
Would existing arrangements be protected?
“We have not made a decision on that – how could we when we have just started consulting with the industry,” he said in the Australian Financial Review.
“In other words, it is possible that Warburton’s committee will abandon the RET targets and the accompanying certificates that are used by renewable energy developers to subsidise operations,” the article said.
“That helps explain why the renewables industry is starting to be priced for a disastrous outcome that could wipe out billions of dollars in existing investments and see a wave of bankruptcies and restructuring.
“Shares in wind farm operator Infigen Energy have fallen 25 per cent since the RET scheme review was announced. Its shares are being priced for a negative outcome from Warburton’s review.
“Chief executive Miles George says Infigen’s Australian business would lose roughly 40 per cent of its revenue in the event of existing targets and certificate arrangements not being honoured.
“‘Our business would fail, along with most other wind farms in Australia,’ he says. Infigen has 20,000 shareholders split about one third between mums and dads and two thirds institutions. They could lose their entire investments.”
Other major damage is being inflicted on IFM Investors, “concerned its renewable energy business, Pacific Hydro, will have to shut down and move its investment offshore”.
Chairman of IFM Investors and Pacific Hydro Garry Weaven told the newspaper that he is particularly worried by the “climate change vibes” emanating from the Abbott government.
A wild card in the RET is the inclusion of consideration for sovereign risk in the terms of reference.
Key wording says: “The review should provide advice on the extent of the RET’s impact on electricity prices, and the range of options available to reduce any impact while managing sovereign risk.”
But how that will be interpreted is unclear.
You would think that sovereign risk is that the government at some stage will be forced to reverse its climate trashing policies by force of logic or international pressure, or both.
On the RET’s impact on electricity prices you might also think that the review should now take into account the Clean Energy Council’s report by ROAM Consultants.
Makes sense, doesn’t it? After the initial investment in the infrastructure, and, okay, some allowance for maintenance and even keeping the poles and wires in order, the price of wind and solar energy is free.
But does logic come into this equation? Or is it sectional interests with huge lobbying power?
The CEC said with $20 billion of investment already generated, “the RET will drive a further $14.5 billion of investment in large-scale renewable energy out to 2020, as well as many billions more in household renewable energy such as solar power. If the policy is removed, most of this simply won’t happen.
“Removing the Renewable Energy Target means more of Australia’s electricity will come from coal and increasingly expensive gas-fired power, forcing up both power prices and emissions.
“For the federal government to meet its target of reducing emissions by five per cent it would need to find an extra 34.7 million tonnes of emissions abatement from other sectors without the Renewable Energy Target.
“Due to reduced demand for electricity, the report estimates that renewable energy will deliver 22.6 per cent of the electricity consumed in Australia in 2020 as a result of the Renewable Energy Target’s current policy settings.”
Shadow Minister for Climate Change Mark Butler said the CEC report showed that “Tony Abbott’s scare campaign about the RET driving up electricity prices is completely false”.
“The Renewable Energy Target is a policy success story,” Mr Butler said.
“Tony Abbott is so ideologically opposed to clean energy investment that he is blind to the economic benefits of the RET, not to mention the environmental benefits.
“The RET accounts for between two and three per cent of an average household’s electricity bill. This research shows investment in renewable energy will stabilise power prices while traditional energy generation becomes more expensive.”
Jobs in the industry had tripled and the CEC research indicates there will be further job growth into the future, he said.
“Families around Australia are making informed decisions to improve energy efficiency in their homes based on economic as well as ethical considerations.”