Here is a statement of the bleeding obvious: If the Coalition government is such a strong supporter of renewable energy, as prime minister Tony Abbott and environment minister Greg Hunt protest they are, then it would be pressing green buttons on policy.
“This government is a supporter of renewable energy,” Abbott told reporters in Darwin on Monday, just weeks after telling media that wind turbines are “awful” and “ugly” and probably a threat to medical health, and after instructing the Clean Energy Finance Corporation not to invest in wind energy or rooftop solar. Hunt told ABC how much he “loved” renewable energy.
It must be tough love. Because, as predicted in late 2012 by Climate Change Authority chairman Bernie Fraser, and just after the September 2013 election win by this website, Abbott and his team have been hitting the red buttons on policy, not the green ones.
This includes the refusal to endorse the renewable energy target, its insistence on a RET review (by a climate science denier), its disregard of the modelling results, its insistence on holding the industry hostage while trying – and succeeding – in cutting the target, to its attempts to dismantle both the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.
According to Simon Corbell, the ACT environment minister and the architect of Australia’s most successful renewable energy support program, Abbott is now “public energy No 1” on renewable energy.
“He’s putting jobs at risk, he’s putting investment at risk and he’s putting the industry at risk, an industry that will need to grow considerably over the next decade if Australia is to meet its international greenhouse gas reduction commitments,” Corbell told the Canberra Times.
Corbell has overseen a program, via a series of capacity auctions, that has resulted in the only new capacity built in Australia since the election of the Abbott government – a 24MW solar farm, two other solar farms and three wind farms totalling 200MW that have or are about to begin construction.
The Abbott government, on the other hand, has presided over a renewables investment drought since its election, and now appears to be trying to prolong that by announcing that it disapproves of wind farms, and wants the $10 billion CEFC to stop financing wind energy, and stop providing loans for rooftop solar programs that target those who have yet to install panels on their rooftops.
Corbell described the Abbott government’s move as a “kick in the guts” for the sector.
“There’s enormous potential for growth in this sector but it’s still difficult to secure finance through the traditional mechanisms, and the reason for that is that banks are very conservative,” he said. “We need a government that supports renewable energy not one that kicks it in the stomach every time it gets the opportunity.
“The CEFC is there to demonstrate to the traditional finance sector that there is a sound business case and that you can make money from investing in these projects. That’s what they’ve been doing – and now that this directive has been issued all of that is at risk.”
Australian Solar Council chief John Grimes put it a little more bluntly in an interview with The Guardian Australia: : “If the Abbott government is returned and has control of the Senate, our industry is finished.
“Either the Abbott government changes its policy on this – and given all of the history and indications we assess that that will never happen – so the next step is we’ve got to remove this government from office,” Grimes said.
“They are completely out of step with the Australian public on the issue of renewables and we will harness and give voice to that constituency and the government will pay the political price.”
Indeed, the Abbott government’s insistence that the CEFC invest in “new and emerging” technologies is yet another in a very long list of back-flips in its position on clean energy.
In the lead up to the election, Hunt was criticising the CEFC’s mandate to invest in emerging technologies and new innovation that couldn’t get financed elsewhere.
As we reported here, Hunt said the Coalition would seek to stop the CEFC from using “taxpayers money to invest in speculative ventures which the taxpayer would have to fund and which the private sector would not fund.”
Now, that is exactly what it is insisting the CEFC invests in, rather than acting as a partner with major banks on more commercial projects.
“If you still have this body, it should be focusing on emerging technologies,” Hunt told Radio 2CC on Tuesday, after making similar comments on various TV and radio interviews on Monday. Earlier, he insisted that the CEFC’s purpose was to finance emerging technologies and new innovation “that can’t get financed elsewhere.”
That is not the focus, however, of the new $5 billion northern Australia infrastructure fund, the so-called Dirty Energy Finance Corp, which Abbott wants to finance the most mature energy technology of all – a coal-fired power station near Townsville. But he doesn’t want to fund its competitor, a mega wind and solar project that could deliver equivalent amounts of power at a much lower price.
The truth is, the Abbott government is probably skating on thin ice in trying to force the CEFC to ignore large parts of its investment mandate, and narrow down its investment choice – at the same time as insisting on getting higher returns without increasing its risk.
As CEFC chairwoman Jillian Broadbent said earlier this year, such requests fail basic economics and finance 101.
The CEFC earlier this year sent a paper prepared by former Audit Commission head Bob Officer and financial analyst Steve Bishop to give the ministers and their staff an “economics 101″ of how markets work, and the correlation between risk and returns.
The decision to demand higher returns with no increase in risk continued the scatter-gun approach of the Coalition towards the CEFC. Originally, it alleged that the CEFC would be making loans in “wild and whacky” investments that “other banks would not touch in a fit”, and then complained when it joined with other banks in a wind farm refinancing, accusing it of “crowding banks out of the market.”
Treasurer Joe Hockey, who has said he finds the appearance of wind farms “utterly offensive”, has previously said he would repeal loans made by the CEFC, before it was pointed out to him they had a legal mandate, and to do so would further undermine Australia’s sovereign risk.
Now the government is insisting it goes back to what it used to call the “wild and whacky”.
