The Abbott government has made clear that its war on renewable energy in Australia is far from over, and it still intends to scrap the $10 billion Clean Energy Finance Corporation, as well as chop the head (and shoulders) off the renewable energy target.
Reports out of Canberra and from the corridors of power suggest that these are the dying days of the Abbott regime, and the influence of the Far Right that underwrote his arrival in high office. But they are not going down without a fight.
Finance Minister Matthias Cormann says the government still wants to scrap the CEFC, despite the fact that the fund will deliver a profit to the government, and could potentially help make up the shortfall in emissions abatement from the Direct Action program.
“It would be our intention to revisit that at the right and appropriate time so, from the government’s point of view, there hasn’t been any change in our policy position,” Senator Cormann told a Senate Estimates hearing on Wednesday..
This comes on top of the government’s determination to de-fund and scrap the Australian Renewable Energy Agency, and to dramatically reduce the renewable energy target, an achievement that will deliver it another world-first, along with its decision to scrap the carbon price.
Even though the government has moved from its original position to dump the target, and then insisting it be cut from 41,000GWh to around 27,000GWh, it still wants the target to be reduced significantly, to around 32,000GWhh, which would, in effect, cut the task at hand by one-third.
It cannot legislate that change, because of the numbers in the Senate, so is holding talks with Labor, attempting to strike a compromise. But it is in no hurry to do so, because while the uncertainty remains, the large-scale renewable energy industry remains at a standstill, to the benefit of the incumbent fossil fuel generators. It has been six months since the discredited Warburton review completed its report.
Those talks now have the added complexity of being held while everyone is trying to work out who is in charge in Canberra, or who will be in a fortnight. Will a deal be sought before Abbott’s troubled reign is terminated? Or will the negotiators wait until there is a new PM? It is hard to work out exactly what the tactics of the various parties might be.
Big business is growing frustrated with the delays, with both the Business Council of Australia – which wants the RET cut back sharply – and the Industry Australia Group, which largely supports it – calling for a quick resolution.
Even Clive Palmer is back in the act, appearing at a press conference on Thursday morning with former Liberal leader John Hewson and calling for clarity on the RET. Greens leader Christine Milne wants Labor to hold firm and resist any changes.
“It is not broken. It does not need fixing,” Milne said on Thursday. “It must stay at 41,000GWh and be increased out to 2030 in order to restore confidence and to reduce pollution.”
While this is going on, the generators themselves are threatening a “boycott”, or a capital strike on investments, saying they would choose to pay a penalty price of $93 per MWh (megawatt-hour) rather than contract for new wind or solar farms.
The threats are based on the assumption that it is impossible to meet the 41,000GWh target in the 2020 timeframe, or that it cannot be done below the penalty cost.
This has been debunked by the industry, who point to enough “shovel-ready” wind projects, not to mention a growing portfolio of small and mega-scale solar farms, that could meet the target.
Miles George, who heads Infigen Energy and is also chairman of the Clean Energy Council, said on Wednesday that the “boycott” by the major retailers – if it eventuated – would merit investigation by regulators. He said the threat didn’t make sense, noting that his company, and all the others, could easily build enough wind and solar at a lower cost than the penalty price.
But the generators’ position has been repeatedly endorsed by the government, and environment minister Greg Hunt in particular, who has been arguing in radio interviews that the RET is an effective $93 carbon tax on consumers. ($93 is the effective penalty price)
In October, Hunt told 2GB:
“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.
And he told Sky News in December:
“Are they really going to inflict a $93 a tonne carbon tax on the Australian people? And this year, in the first six months, now is the time for them to release their own explanation of what is the carbon tax they would be putting on the Australian population.”
We discussed in more depth Hunt’s arguments here. His position has appalled some in the renewables industry, who describe his comments as ludicrous. They point out that the RET is neither a tax, nor in any way referenced to a tonne of carbon. The government’s own modeling shows that the 41,000GHw target can be met, and that the cost of the RET is offset by falls in wholesale electricity prices. The principal victims of that price fall are coal-fired power plants.
As it turns out, there are growing signs of a corporate market in Australia for renewable energy generation that could partly get around any boycott by the retailers. The corporate market – as in the US and Europe where giants such as Apple, Google, General Electric and Ikea are investing heavily in wind and solar – is interested not just in saving money, but also corporate branding and reputation, an aspect the retailers in Australia appear to think they can paper over.
Now, the renewables industry is concerned that the Abbott government will launch a politically motivated inquiry into the solar industry.
There is no doubt that Australia has proved a lucrative market for cut-price, and low quality solar panels. But the safety issues raised by Hunt, and some media, are overblown, the industry says. And it follows Hunt’s personal attacks on solar industry itself, and his demonisation of the RET support for rooftop solar as a massive cross subsidy.
Which is not to say that the Abbott government hates all renewables. Industry minister Ian Macfarlane, whose portfolio includes energy, was full of praise for the world-first grid connection of Carnegie Wave Energy’s multi-machine project off Garden Island (see picture right, with Carnegie boss Michael Ottaviano).
Macfarlane has been fond of wave energy for years, telling the renewables industry a few years ago that wind and solar were not up to the job, and wave energy was much more interesting. (Ironically, Carnegie’s next big project, a full-scale 3MW installation, will only go ahead because it is being funded by the two agencies Macfarlane and his government want to kill, the CEFC and ARENA).
This prompted a question a few weeks ago from RenewEconomy, noting Macfarlane’s recent absence from clean energy trade events and official openings of wind and solar farms.
No Abbott representative could be bothered to drive all the way out to Royalla (it’s a 24 minute drive from Parliament House) for the opening last year of the 20MW solar farm. Indeed, the only national government representative at the first large-scale solar plant to be connected to Australia’s main grid was foreign minister of Spain, who flew 24 hours. (The project developer was Spanish firm FRV).
Had the minister (Macfarlane), we asked, ever visited a wind farm? It turns out he has – a wind farm in Tasmania, his office tells me – in his days as energy minister in the Howard government, possibly around the time that he chose not to expand the then mandatory renewable energy target.
