CCA’s Fraser wants RET extended, coal generators closed

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CCA chief Bernie Fraser says keep 41,000GWh renewables target, but allow more time for it to be met. And use Direct Action to help permanently close coal generators that are passed their useful life.

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Bernie Fraser, the chairman of the Climate Change Authority, has entered the fractious debate around renewable energy in Australia by suggesting that the renewable energy target be maintained at its current level of 41,000GWh, but be given more time to be met.

bernieThe former head of the Reserve Bank of Australia also suggests that the Abbott government use funds from its Direct Action policy to help owners close old and inefficient coal fired generators – so addressing the problem of excess capacity caused by coal generators working beyond their “useful” life.

The CCA has been sidelined from the debate around the renewable energy target, because the Abbott government has tried to abolish it, and rather than allow the CCA to fulfill its statutory duty to conduct this year’s RET review, chose instead to create a panel led by climate change denier Dick Warburton.

Fraser, speaking on ABC Radio National’s Breakfast program, said it was clear that the Warburton review had not taken the long-term implications of climate change into account in its conclusions.

Instead, Fraser said, the Warburton Review had focused only on “short term” issues about over-capacity and its adverse impact on coal fired generators – despite recognisng that the RET was functioning as designed. (See our story: Why were RET modellers instructed to ignore commercial reality”.

Fraser said one solution could be to retain the 41,000GWh target – but could allow more time to meet it rather than the current deadline of 2020. This, he said, would provide confidence to developers and to financiers.

Interestingly, this is the same compromise deal that leading players in the renewable energy industry tried to take to leading utilities last year. However, that offer was knocked back when the utilities sensed that the Abbott government could be persuaded to either close the target to new entrants, or to scale it back significantly – which are the two key recommendations of the Warburton Review.

It is also the preferred position of the NSW Coalition government, which has argued that the 41,000GWh target be kept, but the timing adjusted to cater for surplus market capacity issues.

“Renewables will become much more prominent in the mix of sources of generation,” Fraser said in the ABC interview. “That is pretty clear to everybody.”

Delivering a few extra years to meet the target (he did not suggest a new timeframe) would give fossil fuel generators adapt to those trends.

In the meantime, funds from Direct Action could be deployed to help the oldest, dirtiest and least efficient coal fired generators to exit the market permanently. Some 3,000MW of fossil fuel capacity has been mothballed, but little closed completely because of the high remediation costs.

As we reported on Tuesday, this can cost between $100 million and $300 million per plant. Coal generators owners find it cheaper to keep the plant in mothballs.

AGL Energy said this was one major reason why three quarters of Australia’s capacity had gone beyond their “useful” life, and why there was around 9,000MW of surplus baseload capacity in the market. (See our story: Australia’s real energy problem: Too many useless coal generators

Fraser said if part of the funding of Direct Acton were to be made available to facilitate such exits “ that would be a meaningful use of direct action.”

Such a move would still be controversial, given that in the world’s biggest energy markets, China and US, old coal generators are being forced out of the market by regulation and tight emission standards, rather than government handouts.

Fraser said the threat of repeal had been “devastating” to the CCA staff, but it retained a “core” competence that could provide a useful role in solving the political impasse over renewables.

The Abbott government has signaled that it was looking for “bipartisan” support from Labor – given that any plans to change the RET would be blocked in the Senate by the minor parties.

Perhaps Labor could take up Fraser’s suggestion and bring him to the table in any talks with the government.

The Climate Institute seized upon Fraser’s remarks, saying that a bipartisan approach to decarbonising Australia’s electricity sector with a goal of at least a 50 per cent cleaner power supply by 2030 needs to be central to discussions around the Renewable Energy Target.

“Both major parties accept the international goal of working to avoid 2°C warming but neither has yet accepted that this requires a longer term decarbonisaton goal,” said Erwin Jackson, Deputy CEO of The Climate Institute.

“Australia’s energy policy debate has been in a stalemate with a short-term fixation to 2020, when all parties should look much further ahead.”

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15 Comments
  1. barrie harrop 5 years ago

    Hopefully this is not too sensible for PM.

  2. Peter Campbell 5 years ago

    In all spheres of life someone will adopt an extreme position (say, abolish the RET) only to make a half way point seem reasonable and achievable. It is a common logical fallacy to think that the reasonable position is half way between extremes when it could be at any point on the continuum for any particular issue.
    It is so galling that every step forward has to be fought for and backsliding compromise so often seems necessary.
    I remain offended that my personal effort and expenditure to improve energy efficiency is now used as an excuse to cut back or delay renewables, not coal.

    • BroSheffieldBrotherton 5 years ago

      Me too

  3. Pedro 5 years ago

    The problem as it see it is that CCA and other like organizations are willing to bend over backwards to come up with a compromise solution with a government intent on destroying the RE industry. Wake up to your selves!!…..There is no compromise possible, not with this government. Its an ideological battle that the RE industry, pro RE NGO’s and government RE advocates have to fight and win by removing the current government.

    Bernie Fraser and the like should be advocating at least 60TWh by 2030, instead of pussy footing about and watering down what is already not a particularly ambitious RET, other wise the next government that gets in will start with a piss weak RET of 41TWh by 2030 as a starting point. As for using “direct action funding” to retire inefficient end of life coal generators is just another utterly sickening fossil fuel subsidy. So for 40 odd years of making reliable risk free profits these same generators can’t now afford to clean up their mess.

    • suthnsun 5 years ago

      I tend to think mothballing may not be so cheap if it continues, surely there will be insurmountable problems which will arise with a mothballed plant if left too long? In addition there will be sizeable ongoing costs with no returns. So the generators will have this finely calculated and are hanging out for a reasonable offer which satisfies their risk envelope . So out of my frustration I think I would be offering something like 15% of a reasonable estimate for remediation , reducing 3% per annum and putting a regulatory constraint on emissions intensity after 5 years ( accelerating in time) which is going to put any recalcitrant dirty operators out of business anyway at that time. If a tripartisan approach was accepted like that we would be guaranteed that within five years or so all the dirtiest operators would be out of business and the remaining ones would have accepted they must clean up and meet an accelerating emissions standard. Considering how much notice has been given informally I understand your point of view but it has all been too loose , self-contradictory and ambiguous in the past, so we need something solid to work with that might just satisfy the ‘ direct action’ mantra of this govt.

      • Pedro 5 years ago

        How about slapping the diesel fuel excise on coal mining companies and use part of the revenue raised to close down inefficient end of life coal generators.

        • suthnsun 5 years ago

          You and I would but I suspect LNP would not go for it. I was trying to formulate something that could get within their stated approach and get three political party agreement which could be strong enough to lure the generators to take some money and close. We don’t have the time available to wait for change of government which may or may not help anyway? We need an unequivocal and strong minded plan for aging dirty generators to be categorically closed ASAP. I know you agree with the objective and I am hoping there is some faint window of political possibility..

  4. Robert Johnston 5 years ago

    Dear Mr Fraser, Can you please advise when you will meet your Legislated requirement to perform your 2014 review of the RET? If you aren’t can you please publicly explain why. Thanks.
    PS I suspect I know the answer, but if you have been prevented please tell us that is the case.

    • Gstar 5 years ago

      Ian Mcfarlaine was asked this question and indicated at the Committee for Economic Development of Australia (CEDA) lunch today that he believed it would be superfluous to have a second review now that the Dick review has been done…doesn’t inspire confidence does it?

  5. david H 5 years ago

    Why should tax payers funds be used to pay gencos to shut down obsolete power plant that was written off years ago?
    Why should our EPA’s inflict arduous environmental limits on new small solid fuel fired boilers for industry while our old fleet of coal fired power stations are not required to meet the same limits? If the same limits were imposed on the old power station they would be shut down as uneconomic.

  6. Rob G 5 years ago

    As much as I believe in letting the market decide the fate of coal fire power. To buy them out is certainly an option when that energy is being replaced with a renewable source. It’s a solution that means a handout, but given the subsides these guys already get look at it as their final pay cheque.

  7. Chris Fraser 5 years ago

    The CCA position could be a well argued and dispassionate response from an uninvested public service, as well it should be. 41 TWh by 2025 ? ok fine but only because we had to put up with obsessive delay from an obstructionist, zealous anti -renewable Coalition since November 2009. We could have easily made the Target if the industry was left to go about its business from six years ago, without the need for any coal-closing handouts from Direct Action. This government bloody can’t even save itself from its own useless time-wasting abortion-prone policy. Any bipartisan agreement could only be on condition that the government thoroughly discredits that wasteful RET Review Panel, and recognise the waste of time it really was. RET Review Panellists couldn’t even recognise the economic and ecological benefits of high RET levels, even through modelling that it paid for itself, and should be outed as ideological zealots.

    • Giles 5 years ago

      Talked to a few leading lights in renewables today – they are concerned that any date beyond 2022 would simply extend the investment drought, prolong the slump in RECs prices, and do nothing to build up renewables in the coming few years. Kicking the can down the road.

  8. Winston 5 years ago

    Bernie: no no no.

    AGL already takes $300 million a year from its customers. They can afford it. They bought those plants knowing their age. The decommissioning cost was built in to the price they paid. Same goes for GDF Suez and Alinta.

    It’s the sort of thing that makes people look for new ways to avoid paying their taxes.

  9. Amy Kean 5 years ago

    Good summary of the NSW Government position GIles.

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