Can Clive Palmer be trusted to protect renewable energy target?

Clive Palmer, who has helped Abbott government dump the carbon price and has now reversed his opposition to Direct Action, may now allow changes to the RET. He also says Australian coal is good for emissions reductions.

The chances of the current renewable energy target (RET) remaining intact may have taken a dramatic dive after Clive Palmer, the coal baron with a crucial voting block in the Senate, appeared to flag changes that could support the Coalition’s stance on the RET.

Just hours after Palmer had backflipped on a promise made in June and signaled he would, after all, support the Abbott government’s Direct Action policy, Palmer said that hydro-electric generators built decades ago should be included as part of the current renewable energy target.

The importance of this comment is that it effectively endorses the Coalition’s argument that the RET should be reduced from its current level of 41,000GWh to around 26,000GWh, which would slash the amount of new generation to be built by two-thirds, and destroy the renewable energy industry in the process.

Palmer was at pains to say that the Palmer United Party supported the 41,000GWh target. “Well, for the third time, Tony, yes, we do,” he told Tony Jones when quizzed on the ABC’s Lateline program last night.

But Palmer also told Jones that he wanted to fix an “anomaly” that meant that old hydro schemes were not included in the current target. (Because the hydro schemes were pre-existing, it was decided they did not need the subsidy, although the 15,000GWh they represent is added to the 41,000GWh current target, and the small scale solar scheme to reach the so-called minimum 20 per cent).

“So we think – same with the Snowy Mountain Scheme – if you’ve got hydroelectricity, it’s clean energy, it’s something that shouldn’t be categorised the same as you would a coal-fired power station, for example. But on the current legislation, that’s how they deal with it. That’s an anomaly which is not in the country’s interest and we think it should be rectified.”

It’s a dangerous comment for the renewables industry, because by including the 15,000GWh of pre-built hydro in the current scheme, Palmer is effectively arriving at the same number that the Abbott government wants to prosecute – 26,000GWh.

And in the current policy environment, where hikes in fuel excise are described not as a tax hike but as “revised implementation arrangements”, a 41,000GWh target (and a 20 per cent target for that matter) can mean whatever you want it to mean.

Industry Minister Ian Macfarlane’s office has been telling callers that he supports a 51,000GWh target. That is 15,000GWh of mostly pre-built hydro generation, 10GWh of rooftop solar, and 26,000GWh of large-scale renewables under the current target. And it just so happens that turns out to be 20 per cent of what he says are the new demand estimates for 2020.

Palmer’s proposal of counting hydro in the new RET amounts to the same result, and it deals him back into negotiations. Given his propensity for showmanship and pirouettes, it would not surprise that he would come to an accommodation.

It is a proposal that would horrify the renewables scheme, because it would be a handout for assets that were built decades ago. As it is, some hydro generators have been accused of rorting the scheme because if they generate above a “baseline” (around 15,000GWh) over a certain period, they get the added benefit of renewable energy certificates. But if they produce less in another period, they don’t have to hand them back.

The state governments might support this idea because it would boost the value of the hydro assets they are trying to sell. Palmer might also get the support of Nick Xenophon, who not only says he does not like wind, but is agreeing to wave through Direct Action on the basis that the government will support penalties for businesses that increase their emissions, although the Abbott government has said it has no intention of doing any such thing. And the Abbott government will do anything it can to dial down renewables.

Indeed, Wednesday was an extraordinary day of politics; there were so many back-flips it looked like a training session for Circus Oz. And “Circus Oz” is a fairly apt description of Australia’s clean energy and climate policy environment. The end result is a victory for the Abbott government and environment minister Greg Hunt, but not a victory for the environment or climate policy. But still the mainstream media watched and clapped like an impressionable infant.

“Thanks to Clive Palmer, emissions trading isn’t dead,” golly-goshed the Fairfax economics editor. Absolute bollocks. In return for his own backflip, Palmer obtained Hunt’s vow not to abolish the Climate Change Authority (well, Hunt couldn’t abolish it anyway without Palmer’s support), and to commission the CCA to look into the benefit of emissions trading scheme and future emissions reduction targets (something they have already done).

To top that off, Hunt made it clear that the Abbott government has no intention of taking any notice of the CCA report that Palmer has commissioned.

And don’t doubt Hunt on that one: he completely ignored the CCA’s groundbreaking Targets and Progress Review which recommended that Australia lift its 2020 target to a 19 per cent reduction from a 5 per cent reduction, suggested Australia needed to cut emissions by 40-60 per cent by 2030, and made absolutely clear that the best means to achieve that was through a market mechanism. i.e. a carbon price and a bunch of other mechanisms such as an energy efficiency scheme and emissions standards that the fossil fuel lobby implacably opposes.

The Abbott government, of course, has no intention of doing any of that. The Direct Action’s Emissions Reduction Fund is not even calibrated to meet the 5 per cent target, and Abbott has made it clear that there will be no new funds, even though various studies say it will fall short of the target by between $4 and $20 billion. And there will be no carbon price under a government that Abbott leads.

The irony is, however, that Abbott and his team know that if Australia was ever to implement a policy that matched the country’s commitment to cap global warming at 2°C, then it would have no choice but to introduce a carbon price. All the studies, including from the Howard government era, point to that. Abbott even favoured it himself before discovering that sloganeering was a cheap and effective political trick.

One thing that this process has shown is that Palmer has an extraordinary ability to conjure up press conferences with intelligent and highly principled people and make them look faintly ridiculous, and embarrassed.

He did it back in June when he shared the stage with Al Gore, who had the look of a man trying to remember which advisor it was that advised him to appear on the stage with a coal baron pulling apart one of the most advanced and respected carbon pricing scheme in the world.

He did it again this week sharing a podium with a slightly bemused Bernie Fraser, the former Reserve Bank governor who interrupted a pleasant retirement in the Southern Highlands to head up the Climate Change Authority.

The difference between Gore and Fraser is that the latter probably had no choice but to attend the media event.

Palmer said in June that Direct Action was a waste of money and was “hopeless” and “dead” because it would be too expensive with little environmental outcome. Now he has voted for it. He vowed to save the Australian Renewable Energy Agency, but then voted to help the Abbott government strip it of more than one-quarter of its funds.

So, the next media event will probably be an agreement to wave through changes to the RET, meaning that both the Greens (who want no changes) and Labor (who are tempted by a compromise) will be sidelined.

Palmer clearly cares only about coal, and his project in the Galilee Basin. He argued on Wednesday that Australian coal was “good for the climate” – he based this notion on his claim that it resulted in 35 per cent fewer emissions than Indonesian coal.

But this is debatable. The best Indonesian coal has the same emissions as the best Australian coal; what’s more, they are considerably lower in ash and sulphur, the nasty emissions that are making the air in Chinese cities toxic and unbreathable, and causing the Chinese government to look for alternatives.

And then there is the small matter of price; China does not want to pay the sort of money required to make the Galilee Basin deposits economic. And it may not need to, China could cease to become an importer of coal later this decade.

Palmer’s grip on renewables policy and technology is also tenuous at best. His much-admired defence of the RET had a use-by date of 2016, and that is not enough to provide certainty to attract investment and keep international money in Australia. And much of the running appears to be made by the inimitable Jacquie Lambie, whose main interest is protecting a range of old and heavily supported industries such as old smelters that are not, to borrow one of her phrases, particularly “well hung”. Tasmania’s future lies in clean-tech, and its representatives need to know that.