Canberra endorses status quo on renewables target

The Australian government has announced it endorses the Climate Change Authority’s recommendation that the fixed target of 41,000GWh be retained for the country’s Renewable Energy Target – rejecting and resisting the intense pressure put on it by conservative state governments and the bulk of the fossil fuel industry in Australia.

The decision was a crucial one for the renewables industry, which has said that $18 billion of investment in wind and solar farms would be under threat if the government acceded to a push by some major generators and energy utilities to dilute the target. The generators, and utilities such as Origin Energy and EnergyAustralia, fear reduced earnings from their coal and gas fired generation if more renewables are deployed, although they painted the problem as an issue of cost to consumers.

That argument was rejected last year by the CCA, and on Thursday, after three months of reflection, federal Climate Change minister Greg Combet said that given the CCA conclusion there would be little or no benefit to consumers in reducing the target, and in the interests of investment certainty, it had decided that the fixed target should be retained.

“This is a Government very committed to renewable energy,” Combet told reporters. “We are going to remain committed to it and it is in stark contrast to the Opposition whose position is a bit all over the place.” If that suggests that the Federal Government is now keen to play up its commitment to clean energy and the contrast with the Opposition, it is a shame that the timing of the message, given that it will likely be drowned out by the controversy over media reform and the ongoing leadership speculation.

Despite the announcement, there will be ongoing uncertainty about the RET because the Opposition has made it clear that it is sympathetic to arguments about diluting the target in response to reduced demand, and promises to abolish the CCA – the institution that found those arguments to be unsubstantiated. As our story today on Infigen’s robust response to Origin Energy’s position reveals, there is still much to be played out in this policy story.

Much may depend on the timing of the next RET review. Combet said the government also endorsed the CCA’s recommendation that the next review should be held in 2016. But that will require legislation to go through parliament. The Coalition wants the next review to be in 2014 – a situation that could extend the gridlock that has impacted the industry, and has set the renewables sector at loggerheads with the major utilities, as this story reveals.

Combet also decided not to pursue recommendations relating to changes to the Small-Scale Renewable Energy Scheme eligibility threshold, which had caused concern in the solar industry, particularly relating to commercial solar, and the operation of the Small-Scale Renewable Energy Scheme Clearing House and reviewing the non-eligibility of native forest wood waste.

The proposal was to reduce the eligibility of solar arrays for the small scale scheme from 100kW to 10kW. The Australian Solar Council said the decision was welcome. “This proposal created significant industry uncertainty and was a solution to a non-existent problem,” said CEO John Grimes.

Solar PV, however, faces the prospect of growing regulation, with Western Power in WA indicating it may join Queensland in imposing higher fixed costs on consumers, ostensibly to recover grid costs that it claims are not being paid by owners of rooftop solar.

The Australian Greens, who argue Australia should have no less than 50 per cent renewable energy by 2030, also welcomed the government’s RET endorsement, but warn there is still  a “big black cloud of uncertainty hanging over the industry,” and called for Tony Abbott and Greg Hunt to make their position clear.

“(Abbott and Hunt) must come out and rule out reducing the 41,000 gigawatt hour target for large-scale renewables or accept responsibility for killing off major projects,” Greens leader Christine Milne said.

“Ducking and weaving and refusing to answer the question by constantly saying that the Coailtion supports the 20 per cent renewable energy target is dishonest. Is it 41,000 gigawatt or not? …They need to be upfront and admit that what they want to do… is cave in to the vested interests in coal and gas and in so doing destroy renewable energy.”

Don Henry, CEO of the Australian Conservation Foundation has also called for bipartisan support for the CCA’s RET recommendations.

“All political parties should get behind this. We can and should aim higher and faster, so that Australia will continue moving towards a cleaner, healthier, pollution-free future for our children,” Henry said in an statement, adding that Australia could head towards 60 per cent renewables by 2030.

Climate Institute CEO John Connor has also welcomed the news, warning that the renewables industry “can’t survive much more chopping and changing.”

“Every time there is a review of the policy there is an investment strike in clean energy,” said Connor. “Coalition and other suggestions of yet another review in 2014 will stymie investment in clean energy, slow the necessary transformation of the sector and ultimately increase costs to consumers.”

Connor also notes that calls from some vested interests to water down the RET focus on the costs that would be passed on to consumers, but he says this argument hasn’t factored in the costs of uncertainty, or of fossil fuel dependence. “Consumers would ultimately pay for higher gas and carbon costs, as well as for the higher risk premiums resulting from the impact of policy changes on the sector.”

Clean Energy Council Deputy Chief Executive Kane Thornton said common sense had prevailed.  “The Federal Government has acted to lock in current and future investments in Australian clean energy and Australian jobs, by leaving the nuts and bolts of the scheme in place,” Mr Thornton said.

The lobby group, Yes 2 Renewables, said there would now be a battle between Conservative states about which one could attract the most investment. It said Victoria’s restrictive wind farm planning laws put more pressure on other states to do the heavy lifting to achieve the target. For Victoria. This, at least, is something that NSW appears to have recognised in its renewables plan, despite the diffidence of its Premier and other senior ministers towards wind farms.

Pacific Hydro general manager Lane Crockett said the renewable energy industry has invested around $20 billion into projects since 2001, creating tens of thousands of jobs along the way and abated around 23 million tonnes of CO2e. A similar level of investment and job opportunities to regional communities, where jobs are often hardest to find, was expected in coming years. “We call on all sides of politics to support all measures that add stability and certainty to the industry so that we can get moving again,” Crockett said.