RET deal struck, but policy bastardry continues

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Coalition and Labor agree on a big cut to renewables target, but they have not put an end to the policy bastardry that has marred the last 18 months. Big coal, as usual, is the biggest winner.

A Good Luck Gesture (File contains clipping path)

The appalling shenanigans over the renewable energy target stand as one of the most cynical examples of policy sabotage in Australia. And yet, even as a deal is purportedly struck to consign $5 billion of potential investment to the dustbin, the policy bastardry continues.

The deal struck with Labor on Friday– provisional on Cabinet and Labor caucus approval – will see the large-scale renewable energy target slashed from 41,000GWh to 33,000GWh.

Yet, even having slashed the remaining “to-do” target by one third, the Coalition is refusing to provide the certainty that the industry has craved, and has back-flipped on its promise to put off the next review for four years.

The cynicism is breath-taking. It means that after a flurry of near-term investment, the renewable energy industry will be facing yet another review next year, which will surely cause the same investment drought that has occurred over most of the past two years.

The government, typically, is selling this as an increased target. It is anything but. The deal means a cut of more than one-third of what will be built between its election and 2020 – a reduction of some 3,000MW as we reported here, although the Coalition wanted even bigger reductions

It means that Australia will become the first developed country to slash its renewables target, adding to the dubious epaulet it received when it became the first country to trash a carbon price.

The Australian renewable energy industry has been at a standstill ever since it became clear in early 2013 that Abbott would get elected and would deliver on his party’s unstated (but barely concealed) intention of slashing or removing the RET altogether.

The Coalition’s rhetoric was one of semantics and obfuscation – a source of some pride for environment minister Greg Hunt, but as we pointed out in this piece on the Abbott government’s 10 biggest whoppers, it got caught out on a few occasions. The only winner has been the fossil fuel industry, and coal-fired generators in particular.

In essence, the battle over the RET is a microcosm of similar games being played out across the world, as Big Oil and Big Coal seek to delay policies that will accelerate their inevitable exit.

They have largely succeeded in delaying carbon policies, although as the UN’s lead climate negotiator Christiana Figueres pointed out this week, more than 60 countries now have a carbon price.

But few, if any governments, have been as accommodating as the Australian government to the demands and intense lobbying of big coal. It is difficult to know whether this is a matter of ignorance, craven capitulation to Big Coal, or ideology. Or a potent mixture of all three.

But it is not the first time. The events of the last 18 months have been a re-run of what occurred a decade ago, when the then and now Industry Minister Ian Macfarlane achieved a similar standstill in the renewables industry, by refusing to implement an expansion of the then MRET scheme, despite a government report recommending he do so.

Like the current situation, the renewables policy was deemed “too successful” and damaging to coal interests.

Indeed, even the Warburton review, led by climate change denier and pro-nuclear lobbyist Dick Warburton, found that keeping the renewables target intact would deliver benefits to consumers; and then on seemingly nothing but ideological grounds, it recommended that the target be scrapped, or slashed to 26,000GWh

To understand the thinking within the PM’s office, it is instructive to read the latest outburst from his main business advisor, Maurice Newman, who wrote in The Australian today (again) that climate science was a hoax designed  by the UN as part of a fiendish plot to establish a new world order.

So, while the government’s most senior advisors have been hiding under the table in the hope of avoiding this new world order – and maybe even giant bats – investment has dried up, and many international investors and financiers and project developers decided to turn elsewhere, particularly to the Asia, Africa and Latin America markets, where renewables are in full bloom.

The agreement struck today with Labor will lead to a doubling in large-scale capacity over the next five years, but the original agreement called for a trebling.

The Coalition argues that the result is still a target of 23 per cent. They get there by adding back (and double counting) rooftop solar, but they have never explained why an outcome of 27 or 28 per cent renewables should be unacceptable.

This agreement translates into a cut of around 3,000MW of large-scale renewables capacity, and probably around $5 billion of investment in the next few years. In this graph below, the yellow line indicates the investment intended under 41,000GWh. The result will be somewhere between blue and light green.

GEM RET years

The biggest loser from that is big solar. Because the target is smaller, much of it will be rapidly filled with the huge back-log of wind farms, the machines that the conservative side of politics appears to find so objectionable.

There is some hope that large-scale solar farms can get up in Western Australia, which has much higher wholesale market prices, and maybe a few smaller plants in the eastern states. Once again however, the scheduled review will make financing hard to achieve, and more expensive.

The outcome could be worse. The Coalition is also proposing to include native wood waste in the RET, which as Emma Chessell writes, could take up to one-third of the new target.

The renewable energy industry, and solar in particular, are pinning their hopes on two things.

One is that states could come to the rescue, as Victoria did in 2005 when Macfarlane completed his first act of sabotage. They are keen on following the ACT’s lead – and its successful auction system – but need the feds to change legislation. (The Coalition had introduced amendments to try and head off a repeat performance by Victoria.

The other hope is in Federal Labor, assuming that – should it get elected at the next federal poll – it delivers on its promise for a more ambitious post-2020 renewable target.

But there is reason to be doubtful. The draft document for the national platform to be discussed in July talks in fine words about the need for renewables, but makes no mention of a target, and certainly not the 50 per cent by 2030 urged by advocates.

There is a fear that Labor could duck the issue, as they have done on climate targets. Despite commissioning the Climate Change Authority to act as an independent advisor, much like the Reserve bank, it has not embraced the CCAs repeated recommendation that the 2020 emissions reduction target be ramped up to 19 per cent below 2000 levels.

That recommendation, of course, has been ignored by the Abbott government. Now the Abbott government is insisting that the CCA, a body it wants to dismantle, and which has been starved of funding, should review the target again.

For the record, the CCA just did complete its own review, just a few months ago. And its finding was that there was no justification for the 41,000GWh to be cut, although it did recommend that the end date be deferred by two years to take into account the two years of investment blockage that the Coalition had caused.

The Coalition ignored it. Perhaps the Abbott government would take more notice of the CCA’s findings if it appointed Newman as chairman. Nothing would surprise.  

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  • lin

    Very disappointing. If they had a spine, they would be pronouncing that the RET or similar programs would be expanded by Labor after the next election. Instead, they look weak and tricky, almost as if they are being dragged towards a renewables future against their will.

    • JIm

      Butler’s response is they will look at topping RET up

  • The Lismoron

    It seems to me that ALP is in “furious agreement” with the LNP. Why are they agreeing to this rat-bagginess? Very very sick-making. I now think that the only logical choice with all this is to vote GREEN. At least they will not let the society down by “politicing away” what must be done

    • JeffJL

      The ALP is in “furious dis-agreement” with the LNP over the RET target. The ALP preferred target is 41 but politics is politics and they will get 33 with this agreement and not zero.

      Failing to achieve some certainty for the renewable energy businesses would be letting down society.

      Fair enough vote Green, but make sure the ALP is number two.

  • Rob G

    I think we should view this dud deal as just a temporary arrangement (much like the Abbott government – just temporary). When sensible government returns in 2016 the RET will be set back to where it needs to be. And that’s going to be a whole lot higher than the original target to catch up to the rest of the world. We actually want Abbott to continue being hostile. We need his mates, like Newman, to be heard loud and clear. The more we hear and see of Abbott and his cronies the worse it’s going to be for him come election time. In fact, when he goes quiet his approval rating tends to improve and we don’t want that! What we’re really wanting is for a complete wipe-out of the LNP, so much so that it will take them years to recover and by then the climate policies will be totally entrenched.

    • Petra Liverani

      I really hope you’re right. I keep thinking TA is an irrelevance waiting to happen but one can’t really be too confident as he’s managed to stay the course this far.

      • Coley

        Aye, take nowt for granted, we were expecting the Tories to be humbled here in the UK but the sods have come back with a majority!!

  • Ken Dyer

    A positive thing out of this is that renewables get going again. The other positive thing is that when the Abbott Misgovernment is dispensed with in just over 12 months, a climate more conducive to the rollout of renewables will hopefully prevail.

    From all this we now know the coal industry benefits when the Governmen tpermits the taxpayer to pay for most of its costs. Unfortunately, it also benefits by way of the Government regulations the use of free (Crown) land;the ability to pollute air, water, and land at will, and the ability to renege on the health care of its workers.

    We also know that for several years now, solar PV has improved its cost position relative to coal to the extent that it is about to make coal a much more expensive proposition for Australia to continue using it. Its price will continue to escalate over time as the cost of solar PV reduces. Eventually sanity will prevail, and the government the day will fall over themselves to right the grievous wrong the Abbott Government has so selfishly and knowingly inflicted on the people of Australia.

  • suthnsun

    I can’t help it, any non-LNP politician caught smiling and chuckling or being friendly with TA fuels despair and paranoia. Please! please! all other parties – Blackball TA and his cronies! I have never, ever even remotely considered exhorting a blackball for anyone else whatsoever. This guy and his mates are off the scale..

  • Chris Fraser

    That Mr Newman is a funny fellow. Everyone assumes he’s Abbott’s business advisor, but he’s really a taxpayer-funded conspiracy generation machine. Just supposing a global Government is somehow feasible, it’s probably more benevolent than the current Australian one.

    • Petra Liverani


  • Petra Liverani

    Please sign and share this petition for a pro-rata RET in NSW

    • shinytop

      Signed and shared

    • Russell Yann

      Signed and shared on twitter also.

  • Martin

    I wish we could take them to court – there must be some angle on culpable negligence aside from the corruption of it all – the Dutch are doing it:

  • john

    What to say about this agreement.
    1 At least now we have some target.
    2 It is lower so fill it.
    Unfortunately because of the policy uncertainty it just may prove hard to get to the target because of the long delay.
    This of course will be pointed out as a failing on behalf the industry, true and expected because of the long delay.
    As to the not so celebrated adviser who wrote a piece in a rag of no importance any more; this fellow is regarded by everyone who has any connection to energy policy as a joke.

  • john

    One little point evidently there is going to be some account of wood burning.
    It is quiet possible that the wood used to heat houses mainly in NSW, Vic, TAS and SA is going to be counted as abatement.
    Just how some figure can be put on this is of some question, however it just may be slightly better than using electricity for the same purpose.
    So how is this be accounted for some 1 in 20 or 50 household figure burning 40 kg of wood and displacing just how much CO2 worse than otherwise?
    One could come up with any figure to put in here to justify any dream figure one could wish to have I feel.
    So lets say it displaces x amount of bad produced power and is of x– value ok so good so far but the wood that was burn has to be replaced with trees to replace the burning otherwise it is a cost to the CO2 budget, so accounting has to be made in replacing what has been done.
    I can not see this happening in a pink fit.

    • JeffJL

      It is large scale renewable energy sources. You know, like chopping down native forrests to fuel boilers for turbines.

      The wood burning you are talking about is going to go against solar panels on peoples homes.

  • Well no surprises here, LNP ideology. The same the world over from all neo-cons!!. There was an extremely relevant point made by Christine Milne in her last speech to the press club yesterday, climate change is the number one issue for humans, if we don’t respond within this decade we will reach a tipping point which we will be unable to stop. This is the truth, which Labor seem stop have conveniently forgotten since the statement of Climate change being the most important issue !!
    Talk about fiddling while Rome burns, we seem to learn so little;( One really has to ask, do we as a species really deserve to live on this planet, when we treat it so disrespectfully?

  • onesecond

    When will the Australians vote for a new government? And will they get rid of Tony Abott and his party?

  • onesecond

    I just pictured a reelection of Tony Abott. Another term and Australia may be responsible for 10% of the worlds climate changing emissions because the impoverished and starving Australians would cling deperately to the coal business as the only remaining business, because they destroyed any technology with a future and farming becomes impossible. And then the USA ravaged by a megadrought in the west and midwest and hurricanes and floods in the east would bomb Australia to destroy the coal mines and coal plants. Maybe the UN would start a rescue mission to evacuate the remaining Australians, but I wouldn’t bet on that.

  • Jacob

    We do not need a RET. Solar panels are crashing in price anyway.

    Batteries are crashing in price too.

    What we need is to put $1 billion on the table to get Gigafactory #2 built in Vic or South Australia to replace car making.

    Maybe even instead of the submarines!

    • JeffJL

      We need an RET. Yes the price for solar panels has dramatically fallen over the past eight years and is getting closer to grid parity but we need to reduce carbon emissions faster! The RET will help put the dirtiest of the coal fired power plants out of service.

      As to a Giga factory. What battery chemistry do you propose?

      • Jacob

        Grid parity is here. Look at the solar PV auctions in Brazil, India, Middle East, etc.

        As for the cell chemistry. Look at the Wikipedia page for Powerwall. It reveals that the cell chemistry is different to the car and designed to last 5000 cycles.

        • JeffJL

          Still no rational reason here why we do not need an RET.

          OK. So the $1B is for Tesla/Panasonic. Personally I would like to wait for more research into battery chemistries before committing that amount of money. Sure buy and support the product (and other battery systems out there), but this area of R&D is too fluid at the moment to be picking winners.

          • Jacob

            Why cant AUS be like Israel in terms of technology.

            Such a tiny nation, perpetually at war, and yet so innovative.

            Israel exports computer chips, and god knows what else.

            Even Ireland exports computer chips.

            Campbell Newman by contrast wanted to export coal.

            We got a synchrotron in Victoria. Great. what does that export?

          • JeffJL

            In many ways we are a leader in areas of technology. The best way to stay ahead is to invest in people and R&D. Maintaining the RET would have helped by putting money into emerging technologies. Thus part of the reason to have an RET.

  • John McKeon

    I so hope that the punters out there (for the next federal election) realise to what extent UNELECTED fossil fuel interests have been making & enforcing crucial decisions on Australian infrastructure policy – to suit themselves.

  • Jason

    Labor you’re lost. I’m voting GREEN. The UK election should be making Labor shake in their boots…. We clearly need a stronger target and with Tesla storage already economic in this country the fools who continue to resist will simply be swept aside.

    • JeffJL

      So you would prefer no more renewable energy to be constructed in Australia? This is what is happening now with the current deadlock.

      The ALP do not like this deal but it is the best they are able to achieve. Without it the uncertainty will result in little to no new large scale renewable energy being constructed.

      • Jason

        For one year till the next review. Labor is committing to nothing and their support for the TPP and allowing the META data laws their review into how to fix the revenue side of the budget showing no ideas as usual is the why I said this . …

        • JeffJL

          2020 is less than 5 years away. Do you want to waste 20% of the available time?

          As to the two other reasons. Fair points.

  • Ron Horgan

    As I understand it, the LNP will simply continue to use every tactic to delay the inevitable decarbonization of Australia. So these latest antics are to be expected.
    But there is a catch!
    Ayn Rand ( no soft touch) summarized it concisely:
    “You may choose to ignore reality, but you cant choose to ignore the consequences of reality”
    The pity is that prizes for last are not what most people want.
    Rumors of a double dissolution sustain me.