rss
24

The full renewable energy catastrophe: $1 per home per week

Print Friendly

So, this is the full renewable energy catastrophe for Australia.

After painting the worst possible scenario, and factoring in the most gloomy technology cost estimates, the most virulent anti-green business forces in Australia have come to the conclusion that the renewable energy target is having such a devastating impact that it is costing the average household …… wait for it …. drum roll …… less than $1 a week.

And that’s without counting its benefits.

For this, the Business Council of Australia, the Australian Chamber of Commerce and Industry, and the Minerals Council of Australia, would dearly love the Abbott government to risk its remaining political capital and scrap the RET completely, at the cost of thousands of jobs and billions of dollars of clean energy investment.

But they have actually stopped short of making such a strident and politically untenable call. Instead, the three lobby groups have suggested that the RET be adjusted to a “real 20 per cent” target – a change that would still scrap billions of dollars of green energy, and thousands of jobs, but would bolster the profits of existing coal and gas-fired generator. And it would save households the grand sum of  …..  50c a week.

The report from Deloitte Access Economics has been keenly awaited – ever since a snippet of its supposed “devastating” modeling was trumpeted with great fanfare by the Murdoch press in June. In many ways it was considered to be the final roll of the dice for the fossil fuel lobby against their green energy rivals.

Instead, it has produced a damp squib. It has simply reinforced what everyone already knew – that making changes to the renewable energy target delivers the greatest benefits to incumbent fossil fuel industry, and satisfaction to conservative ideologues. It is not about the cost of consumers at all, otherwise they would be applying their modelling and their economic gobbledygook to much greater threats to household bills, soaring gas prices and rising network costs.

But let’s put this in context.

It was expected that the Abbott government would drive its truck right through the RET, despite its stated bipartisan support before the election. In choosing to bypass the Climate Change Authority, which has the statutory requirement to conduct the current RET review, and appointing instead an “independent” panel comprising two people – Dick Warburton and Shirley In’t Veld – who do not accept the science of global warming, and another – Brian Fisher – with strong interests in lobbying for fossil fuel interests, the government made its intentions clear.

Two realities have thrown a spanner in the works.

The first is economic – they simply haven’t been able to produce economic modeling that justifies their position. Even ACIL Allen, sometimes described as the fossil fuel industry’s modellers of choice (it prepared the anti-RET submissions of EnergyAustralia) concluded in its report to the RET review panel that households and businesses get a long term benefit from keeping the renewable energy target as is. And it agreed, contrary to the protestations of the incumbent utilities, that the target could be met if the industry was given policy certainty.

Instead, it sought to base opposition to the RET – and the construction of wind and solar farms, and the installation of rooftop solar – as a “transfer of wealth” from fossil fuel generators to the consumer, as though that prospect would somehow cause outrage in middle Australia.

The second reality is political. Abbott does not have the numbers in the Senate to force through changes to the RET. The Palmer United Party and Ricky Muir stand in their way, and as the cheerleaders in the Murdoch media trumpeted today, may only be dissuaded with convincing economic arguments against their position.

Hence the need for the lobby groups to produce some killer modelling with the help of Deloitte. But to reach even its own modest impact, Deloitte had to imagine the impossible – that the capital costs of wind and solar in 2020 would be twice that modeled by ACIL Allen (itself based on a somewhat conservative forecast).

Then Deloitte had to imagine that the fall in wholesale prices caused by the influx of renewables would somehow be less than half of what every other independent analysis predicted. And finally it had to throw in some economic gobbledygook to justify its claims that the RET would cost the economy 5,000 jobs and $28 billion. There was no modeling on the jobs created and the economic benefits of actually building $20 billion of wind and solar energy.

Where ACIL Allen saw a transfer of wealth from fossil fuel to consumers, Deloitte saw a transfer of consumers to renewable generators.

Is that really the best that they can do? Perhaps it would be best to come clean with the real reasons why these three lobby groups decry the RET, while others such as the Australian Industry Group insist that the RET must continue as is.

The reasons are simple. BCA and MCA represent some the vested interests and extractive industries threatened by the transition to clean and renewable energy sources and the emergence of new, disruptive business models. Their opposition is designed to delay the inevitable, when science, long-term economic analysis and popular opinion calls for the transition to accelerate.

wind-150x150Others, such as ACCI’s chief economist Burchell Wilson, just don’t like renewable energy. Last year he described the RET as “crazy” and “bad policy”. Renewable energy, he said, is “producing a product that no one wants to buy.”

That sort of thinking has a lot of sympathy within Cabinet. Joe Hockey thinks wind turbines are “utterly offensive”, Tony Abbott fears they are growing like mushrooms and renewables don’t work when the sun don’t shine and the wind don’t blow. Agriculture Minister Barnaby Joyce last year lamented the “insane lemming-like desire to go to renewables.”

But any plans to bring the RET to a sudden halt, or even diluting it to a “real 20 per cent” target look certain to by stymied by the Senate, where Palmer’s proxies have decided to defend the current 41,000GWh target – at least until 2016.

Given that opposition, it’s hard to imagine Abbott risking more political capital for the sake of 50c a week per household. It’s even harder particularly when renewables, and rooftop solar in particular, are so popular with the electorate.

Unfortunately, the position of Palmer et al amounts to little more than a stay of execution for the renewable industry. Deferring the debate until 2016 simply does not provide the long-term certainty for off-take agreements and financing to be signed and trigger the $15-$20 billion.

Abbott knows that he can effectively bring the industry to a halt simply by doing nothing and allowing the uncertainty to linger. It’s worked for the last 18 months – with investment in large-scale renewables at their lowest level since 2001. The entire clean energy transition has been funded from the wallets of individual households and businesses, who are investing several billion dollars a year installing rooftop solar.

As for the report commissioned by the lobbyists, perhaps the most damming assessment comes from Deloitte itself. At the conclusion it includes a small paragraph under the title of “Limitations of our work”

“This report is prepared solely for the use of the Australian Chamber of Commerce and Industry,” it says. “This report is not intended to and should not be used or relied upon by anyone else and we accept no duty of care to any other person or entity.”

Enough said.

   

RenewEconomy Free Daily Newsletter

Share this:

  • juxx0r

    “less than $1 a week.”
    and:
    “And that’s without counting its benefits.”

    So how much are the benefits worth and who’s counting those?

    Perhaps it’s time for a pozible campaign to get Deloitte to count the benefits and then problem solved?

    • Guest

      Deloitte is a modelling provider, they don’t need to be “campaigned” to perform modelling you simply pay them a fee and they prepare a model.

      • juxx0r

        That’s where the pozible campaign comes in.

        http://www.pozible.com

        or Kickstarter.com if you like

        • patb2009

          well then ACC may pay Deloitte to rig the study.

          • RobS

            They may, however a company like Deloitte whose business it is to audit and model who is caught fudging numbers is done, they’re finished. If found to be forging numbers for cash no audit or model they ever produce again will be trusted so no one will commission reports from them and the company will fold. Thats a very big risk to take.

          • patb2009

            I’ve seen bigger entities do worse for less.
            S&P was taking peanuts to rig the credit ratings on all the MBS garbage. Anderson ruined their rep over the Enron account.

          • patb2009

            as for consultants, read House of Lies and ask yourself if Marty Kihn would ever have passed up a nickel.

  • Zvyozdochka

    “Is that really the best that they can do?”

    It seems that the reaching of opponents has hit a peak. Stretching as far as they can, it’s near impossible to present solutions as out of reach economically. Krugman on similar attempts in the US;

    http://www.nytimes.com/2014/05/30/opinion/krugman-cutting-back-on-carbon.html

  • Rob G

    At what point do state governments bring common sense to the floor and by-pass the federal idiocracy by giving their assurances to potential renewable companies to go ahead and start building. NSW has claimed that they want to be Australia’s California. VIC and SA have been reasonably renewable friendly. I’d like to think it can only get better for renewables and that Abbott and Co will be just like an annoying little stone in the shoe of our renewable future.

    • Alen

      Don’t forget the ACT their 90% target is not to be forgotten. Let’s see how effective the CEFC’s solar leasing push is, if it is even half as successful as in the US then Qld and WA will be in deep(er) shit very soon.

      • Rob G

        Agree, time is running for these guys. We have many parallels to the US, good and bad. Seems that our extreme right wing government has a lot in common with the Tea party.
        I suspect QLD will ultimately be turned around by realising how far behind they are and there is already strong roof top solar which is already making its presence felt. Battery storage is just around the corner too.

    • Miles Harding

      Not much hope in the Worst, The WA state government’s dumber than a slug when it comes to seizing the opportunities of this century, far from being backward looking like the Feds, it seems to be gripped by an edifice complex. There are several big and essentially worthless public infrastructure projects proceeding at present. Colin Barnett’s gift the the people includes a remodeling of the river foreshore, manufacturing several high rise sites in the progress and leaving a cheesy diorama of a ‘harbour’ with a touch of corny island in the form of a cable car to kings park. Another project of note is straight out of the fall of the roman empire — a new coliseum!

  • RobS

    I think given the governments poll crash, the ACIL alllen modelling showing a net benefit to the RET and now this report showing a $25 savings per year from modifying the RET without considering any benefits of renewables that the government will almost certainly leave the RET as is. If they still had popular support then I think they would let ideology trump common sense, but their political capital to do such tings has been spent, their powder is wet and I just dont think they will risk blowing anything else up. We will have to wait and see but I genuinely think we will see no change from this review.

    • patb2009

      Fossil conservatives will burn down the city to avoid replacing a light bulb in the governor’s mansion. It’s all short term thinking.

  • Laurie Kidd

    What, 50 cents a week. At that rate, after 14 weeks saving that you would have enough to pay the GP Tax

  • Chris Fraser

    It does appear somewhat incongruous for Mr Warburton to appoint ACIL Allen, who then came up with all the RET positives themselves, and then allow himself to completely ignore them. He must be on another channel …

  • David Rossiter

    And ACIL Allen showed the cheapest option they examined was 30% RET by 2030 where benefits exceeded costs by the largest margin.

    • RobS

      I just cant picture how the review can now reccomend anything but that. what are they going to say “We are primarily concerned with helping Australians minimise energy costs to take the pressure off the cost of living, so we went with an option our own modelling shows will cost more…”?

      • David Rossiter

        But they might keep it as it is – though even that might be in the pigs might fly category. Pity no one wants to think about a 2030 target but the timing is about right for setting that – 10 to 15 years hence gives a good lead time unless they continue fiddling while Rome burns.

  • patb2009

    doesn’t matter really. With 10-15% of households now invested in solar, and that decision being primarily consumer driven, it will soon enough make it out to 50% which is about the peak of what a consumer driven system will do. That’s going to be a big deal. The consumers will start investing into storage, say 10 KWH next and that’s about that. The cost of solar continues declining, installs will rise and the darn things will grow.

    Abbott is going to try and take care of his friends, but they are a dying technology.

    • Tony Pfitzner

      “Abbott is going to try and take care of his friends, but they are a dying technology”
      Strap ’em to a windmill I say.
      Blade number 1 – Hunt near the tip.
      Blade number 2 – Abbott half way along
      Blade number 3 – Hockey near the hub.

      (This way the windmill will not be out of balance.)

      • Paul

        Nice on Tony, lovely analogy!

        • Tony Pfitzner

          Just as the guillotine became the emblem of the French Revolution, so shall the windmill be emblematic of the Renewable Revolution.
          Deniers to the Windmill!

  • patb2009

    It’s really interesting watching some people cry like little kids over the ‘cost’ of renewables. It’s great listening to them whinge.