Hunt says renewables target equivalent to $90/tonne carbon tax

Environment Minister Greg Hunt has again sought to demonise the renewable energy target, saying that leaving the current target at its current level of 41,000GWh would be the equivalent of imposing a $90/tonne carbon tax on the population.

Hunts comments came as the Abbott government and Labor began discussions on the RET legislation, with the Coalition insisting that it be no higher than a “real” 20 per cent target, or about 26,000GWH, and Labor insisting it should be around the current target of 41,000GWh.

“We’ve always been committed to this 20 per cent,” Hunt told 2GB’s Steve Price. “We’ll deliver that but not a figure which is likely to lead to a very, very high tax on Australian families. It’s the equivalent of a $90 per tonne carbon tax. The Australian people have just voted out a $25 a tonne carbon tax. I don’t think they want a $90 a tonne carbon tax.”

New modelling shows an increase in the renewable energy target could cut power costs. Dave Hunt/AAP

Hunt repeated the $90/tonne carbon tax four times during the short interview, although he didn’t explain how it was that he found that number. Presumably, it’s a reference to the penalty price that would be paid by retailers if they refused to comply with the legislation and built enough renewable energy to meet the target. The cost of actually building wind and solar energy would be far less.

Some utilities, such as AGL Energy, argue that it is not possible to meet the 41,000GWh target. Others, such as General Electric and the government’s own modellers, say that is nonsense.

It would be an interesting proposition for a utility to try to pass on the $92 “penalty price” to consumers – on the basis that they did not build or contract enough renewables – in a market with a “churn” rate of around 25 per cent, and where numerous competitors are now entering the market with solar and battery storage options.

It’s yet another sign, however, of the determination of the Coalition government to dramatically reduce the scope of the target. As we suggested on Thursday, a compromise deal somewhere in the “mid 30,000” GWh seems the most likely outcome – under the basis that “something” is better than nothing.

Hunt confirmed that the 26,000GWh target is the government’s preferred option. There is currently around 16,000GWh built under the target, and he said a “20 per cent” target would allow “60% growth” between now and 2020. The clean energy industry points out that this is actually 60 per cent less than what would be built under the current target.

Hunt described the government’s offer as “a very generous proposition”, before embarking on the carbon tax allusion once again.

“What we don’t want to see is this risk under Labor’s scheme of a carbon tax of $90 per tonne equivalent. You know, almost four times greater than the carbon tax that, you know, the Australian people just voted to get rid of. And that would be a very odd thing to do and look, I actually think that this is one area where we can get bipartisan support with Labor.”

Comments

15 responses to “Hunt says renewables target equivalent to $90/tonne carbon tax”

  1. Keith Avatar
    Keith

    How outrageous. The LNP were very quiet about not rocking the boat in supporting the RET before the election. While some of us smelled a rat, I’m sure most voters assumed they meant what they said ie there was bipartisan support for the 41,000 GWh target.

    Hunt needs to be asked to indicate where the $90 tax was mentioned before the election.

  2. Rob Avatar
    Rob

    I fear you are being too generous when you agree with him Giles. The penalty only applies to the shortfall which would be around 10% of total generation (assuming little else gets built) and therefore only equivalent to a $9/tonne carbon price. The reality is at that price lots of renewables will be built and it will look more like a $5/tonne carbon price at most or 18 times less than Greg’s hysterical commentary.

  3. Winston Avatar
    Winston

    You people in Flinders, look what you’ve done.

  4. adam Avatar
    adam

    Hmm by Hunt’s logic:
    * LNP supports 20% RET
    * 41TWh RET = $90 tax on Carbon
    * 26TWh RET = $X tax on Carbon
    * LNP back 26TWh
    * LNP admit to supporting a tax on Carbon at $X.

    1. juxx0r Avatar
      juxx0r

      solving for x: 26/41*90 = $57/t

  5. RobS Avatar
    RobS

    “under Labor’s scheme of a carbon tax of $90 per tonne equivalent”
    Someone needs to remind Mr Hunt that this Scheme was introduced by the Howard Liberal Government.

  6. Alen T Avatar
    Alen T

    Now wouldn’t this be nice, a $90/t carbon price. Oh how I wish this was true and it would actually make me an even BIGGER supporter of the RET. His logic doesn’t add up though and would fairly simply be successfully argued on a very basic microeconomic level, e.g. more RE leads to depressed wholesale prices, which is in opposition to the theory of how a tax should operate..simple, to me anyway maybe not to him (I hope he didn’t have this kind of logic in his thesis)

  7. James Townsend Avatar
    James Townsend

    Removing the RET means that Greg is driving up living costs for all. Shame! #LNPincreasingLivingCosts

  8. Sean Sweetser Avatar
    Sean Sweetser

    My calculations show that in zone 4 it is approximately $23 a tonne and actually less in zone 3 despite a higher “value”. This changes depending on the STC price. Of course Hunt is probably using $40 for STC price as a starting point.

  9. Rob G Avatar
    Rob G

    Has it just dawned on this dim witted man that carbon has a price no matter which way you spin it. Try your scare tactics Greg, it won’t work anymore, Australians are
    pretty versed in the way your government operates and we’ve had a gutsful.

  10. John P Avatar
    John P

    Is anybody still listening to Hunt?

  11. Henry WA Avatar
    Henry WA

    How can Hunt make such claims without any media challenge to the basis for such claims? The Warbuton Committee’s own anti-renewables modellers were forced to admit that keeping the LRET at 41 TWh would result in lower electricity prices for consumers.

    The Abbott Govt previously claimed that a $27 carbon tax cost households $500 a year. If that claim was true (and it was almost certainly exaggerated), a $90 tax would presumably cost households about $1600 a year. Yet the full price of the LRET has been calculated to cost just $107 a year without taking into account its effect on reducing electricity prices and of course its other benefits.
    http://www.originenergy.com.au/4244/Renewable-Energy-Target
    “The way the RET works, consumers are charged via their standard electricity bills to cover the cost of the required investment in renewables under the scheme. The New
    South Wales Independent Pricing and Regulatory Tribunal estimates that, assuming
    a typical household consumes 6.5 megawatt hours of electricity each year, the
    RET adds up to $107 to the household’s electricity bills annually.”

    1. Miles Harding Avatar
      Miles Harding

      Ahhh, it must be a failing of education. The pollies all seem to come from an arts and humanities background (lawyers!) and don’t have much experience with arithmetic, so the frequently make whopping mistakes!
      The same must be true of many journalists who seem to not notice! :o))

  12. Miles Harding Avatar
    Miles Harding

    Classic contrarian logic, well done, Greg!

    It’s interesting how a minister of the government of the day can use these contrarian tactics to outrageously spin and distort the facts of the matter without apparent challenge from the media.

    We know from experience that more renewables actually reduce power prices, although this is at the expense of the coal generator’s profits, which is really what GH is arguing for.

    My feeling is that it is far more likely that the coal generators will never get the opportunity to be penalised because their market share will drop away rapidly as the agreed 41,000 GWh RET spurs investment in renewables.

  13. john Avatar
    john

    The Adults are in charge.
    We will spend money to support those actions we approve of.
    $90 well of course that is the upfront immediate cost not the long term LCOE which comes out at about 3c KwH.
    Greg Hunt has a huge problem he is regarded inside the Liberal Party as an unreliable adherent to the Party line.
    So he has to make these kind of statements to try an show he is on song with the rest of the party.

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