Coalition deepens attack on renewables, as Labor takes long term view

Perhaps the only good news for the Australian renewables industry is that we are now past the half way point of the current federal electoral cycle. The promise of a new government in late 2016, early 2017, may be its only hope of salvation.

Whether that prospect is enough to keep the big international players interested in the Australian renewable energy market is yet to be seen. But right now, it is the only glimmer of hope on the horizon.

The ferocity of the Abbott government’s response to compromise proposals put by the Clean Energy Council, then by major industry groups, and on Thursday by Labor, has caught many by surprise.

Industry minister Ian Macfarlane hasn’t just rejected the offer of a compromise cut to the target from 41,000GWh to 33,500GWh, he’s also making stuff up.

Last August, the government’s own Warburton review – despite its ideological position against renewables – rejected arguments put forward by fossil fuel generators that the 41,000GWh target for 2020 could not be built. All it needed was a bit of policy certainty.

Little more than six months later, Macfarlane is now arguing that even a one-third reduction in the new build target – a 33,500GWh target would require 17,500GWh of new build generation rather than 26,000GWh – would be impossible to meet.

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Federal industry minister Ian Macfarlane

In an interview with The Australian, Macfarlane accused the CEC of trying to set up a scheme for failure. He didn’t provide any analysis on why these numbers have changed.

He continued in the same vein on ABC Radio on Thursday. Indeed, environment minister Greg Hunt was using the same argument before Easter, even claiming that the Climate Change Authority had agreed with his assessment, which we pointed out was simply not true.

It summarises the principal frustration of this debate. After the Abbott government was elected, it was about whether the 41,000GWh should stay in place. The numbers have changed, but the arguments have not.

Labor is now holding out the prospect of a higher target if it wins the next poll. It is not talking details, but there are several thing on the cards: lifting the short term target, extending the scheme beyond 2030, and ensuring there is some mechanism to encourage large-scale solar.

But it hasn’t yet explained how, exactly, that may happen. It may be that Labor will have to rethink the entire renewable energy mechanism, given that it has been trashed by the lobbying of the fossil fuel industry and the ideology of the current government.

That ideology was more or less confirmed by the Coalition’s Arthur Sinodinos, who said in a Sky News interview that Labor should give Macfarlane credit for getting the Coalition even to 32,000GWh. The resistance to that had been significant.

Federal assistant treasurer Arthur Sinodinos
Federal assistant treasurer Arthur Sinodinos

“It’s not so much about the science,” Sinodinos said, bowing to the wishes of the Coalition, many of whom don’t accept the science of climate change. And the recent emissions reduction targets discussion paper and the energy white paper gave no acknowledgement to the global 2°C target, instead focusing on scenarios that would usher in warming levels of 4°C.

Labor’s Mark Butler said on Thursday that the Coalition was isolated on the issue. “Labor cannot stand by and watch another industry disappear under the Abbott government’s watch.”

“We are only in this position because Abbott walked away from a crystal clear election promise. Australia was one of the four most attractive countries for renewable energy investment,” he said. Now it risked losing even current projects and jobs.

“We want to talk about an ambitious future for renewable energy,” Butler said.

In the meantime, the question that is hanging over the industry is what would happen if there is no agreement, and the 41,000GWh target remains in place? Clean Energy Council CEO Kane Thornton says no one really knows, but it is likely to be chaos.

That’s because, despite the legislation being in place, few corporates would be willing to allocate hundreds of millions of dollars to new projects. That has been the reason for the standstill in investment in the past 18 months.

Even if the Coalition government does not have the numbers to push through its changes, the fine balance of the Senate means that the numbers could change at any time. International players will not be putting large licks of capital at risk based on the viability of Australia’s Senate cross-benchers.

The big unknowns will be to what extent the retailers decide to build new plant to meet their targets, or try to pass on a “penalty price” to an increasingly dissatisfied consumer base. And there will be a focus on the extent that state governments and corporate consumers could also step into the market.

As Thornton says, the result could be messy.  That situation could last until the next election, when Labor – should it win – can either re-establish the 41,000GWh target, possibly with an extended deadline, or map out a higher, longer-term target.

One scenario put forward by a senior renewable energy representative went something like this:

“The most likely outcome is that this issue will continue to fester until the next election. If Abbott is re-elected and has a working majority, the large-scale renewables can book their flights out of the country.

“If Labor gets elected, does what it actually says it will do and follows the advice of the Climate Change Authority, then the industry could be resuscitated.

“Maybe then they can give some thought about a policy that actually looks beyond the early 2020s, and looks to deal with what happens as more and more Australian coal-fired generators get past their used by date.

“A simple answer is to impose emissions standards, and not extend their lifetime. That will see a relatively orderly transfer that could see most of Australia’s electricity demand satisfied by renewables by 2040 – a contribution of larger wind farm and solar arrays, and maybe even wave energy and geothermal, and as much as half by localised generation – balanced by the storage that networks will find economical to install in lieu of endless upgrades to the poles and wire networks.

“Simple really, as long as you don’t owe your livelihood to a coal-fired generator.”

Comments

23 responses to “Coalition deepens attack on renewables, as Labor takes long term view”

  1. Blind Freddy of Cairns Avatar
    Blind Freddy of Cairns

    Why not agree to the Coalitions offer, with the usual bleating, which at least offers some way forward, then if Labor is elected and with the Greens support, they will be able to implement what they like! Trouble is it is all about the politics.

  2. Chris Fraser Avatar
    Chris Fraser

    The government must be playing for time. What they really need science to come up right now with is an economic answer in carbon capture technology, because they don’t have the balls to stand up to the incumbents. Or otherwise they have no vision for energy. Instead seeking photo opportunities with under-developed technologies that don’t pose an existential threat. Since CCS hardly exists even in a coal miner’s wet dream, they need to dissemble, threat, wait, create havoc … all in accordance with their ideologies. They’re happy to keep paying out four times the subsidies for fossils than is given for renewables, for the same energy production. They tell you this with a straight face.

  3. Jason Avatar
    Jason

    it is hard to understand how the Liberals can be so utterly idiotic … this is truly god awful management of an industry that should be booming and creating jobs!

    1. Lee Tennant Avatar
      Lee Tennant

      Yeah, who would have thought electing a proxy government for the mining industry could go so wrong…

      1. Blind Freddy of Cairns Avatar
        Blind Freddy of Cairns

        What about common sense! I agree that coal fired power should be eventually retired and replaced by renewables and definitely get rid of brown coal, as in SA and VIC, however in Australia there is currently a huge surplus of power generation, with AEMO declaring that no new generation is required for at least 10 years! This whole argument has been hijacked by the Renewables companies, some of which are multinationals, who want to build renewables regardless of need. According to the CCA report of DEC14, even at 32,000GWh, based on the reduced forecast demand of 258,500GWh, renewables will be around 22%. With more residential and commercial solar being installed, regardless, mandating higher than 32,000GWh might significantly overshoot the original undertaking of 20% by 2020. Even if Australia does agree to cut back, it will not be the end for the renewables companies. They will still be manufacturing PV panels, probably much cheaper and a new crop of renewable BDM’s will be knocking on your door. To persist with a rapid structural change is to be an anarchist.

        1. Rob G Avatar
          Rob G

          ‘Oversupply’ is a term the big three (AGL, Origin and Energy Australia) like to trumpet. Renewables are becoming cheaper than coal and gas in many parts of the world, they simply don’t want them eating into their business. Remember it’s not renewables that need to back down, but the dirty old coal fire generators that are well past their allotted expiry date.

          Read this http://www.theguardian.com/commentisfree/2015/apr/09/the-energy-white-paper-is-privatisation-under-the-guise-of-competition

  4. Michael Porter Avatar
    Michael Porter

    I may be simple-minded but it seems to me that if renewable energy is so overwhelmingly cheaper in the rest of the developed world as well as in Australia (if the bleating from the Libs and the coal industry are to be believed) then the stalled development just needs to get going (witness the ACT actions) and bypass the implied blockage with RET.
    Why won’t a new ‘gentailer’, either single-source or as a partnership, out-compete the current fossil generation losers without the subsidies attributed to the RET?
    If reports are to be believed, business is already moving in this direction on their own patches.

    1. Henry WA Avatar
      Henry WA

      Unfortunately the situation is not simple. The purpose of the large scale RET was to accelerate the change from a very dirty FF power generation introduction of renewables in order to reduce carbon emissions. The Renewables weren’t subsidised as such rather the retailers were and still are required to install or purchase sufficient to generate 41000 GwH annually by 2020 or pay a penalty. This figure was agreed by the major parties and fixed by legislation in 2010 to give certainty to the industry. Since then Wind and Solar have continued to drop in price and the climate denying Warburron committee reluctantly found that meeting the RET will result in lower electricity prices for consumers. This was not expected when the RET was originally introduced.
      However there is no simple competitive market. The large retailers own FF generators which will be displaced by the Renewables. The FF generators’ profits are reduced by the competition or if closed permanently remediation costs arise for the owner. The retailers look after their larger business and will not agree to buy additional renewable power unless required to do so

      We

      1. Michael Porter Avatar
        Michael Porter

        What I was trying to say was that all retailers suffer the same network costs essentially and the real competition is based on price to the consumer. If a new generator establishes a retail subsidiary their costs do not include the sunk costs of the big 3 with their FF base and apart from the ramp-up process they should be in a dominant position in time, especially if they can gather up a few of the smaller retailers with a seed market share. This process would be simpler if the RE producer has no ASX listing.

    2. nakedChimp Avatar
      nakedChimp

      RE is cheaper per kWh than what the end-consumer is paying, not what the retailer is paying for FF power going into his net. That’s why it’s a no-brainer for everybody with a roofspace to get some small PV system to reduce his electricity costs.
      Same would got for businesses unless they are really large scale consumers, which means they got better prices in the first place.

      I don’t know what a ‘green’ gentailer would need to come into the market (capital, lawyers, lobbyists), but I’m pretty sure that it won’t be easy, even if he’d get the electricity for nothing. Especially as he’d need to use the poles and wires of the incumbents.. good luck with that without some backing by legislation who’s affiliation is absolutely clear.

      1. Michael Porter Avatar
        Michael Porter

        You’re correct I believe. However there are some players other than the big 3 with quite deep pockets and no ASX listing. Fortunately the distibution network does not discriminate so if you have a captive RE source you are ahead of the big 3 cost-wise but I guess you are aiming at the commercial market if you can handle the coming storage storm.

  5. Rob G Avatar
    Rob G

    Normally, you’d expect a politician to gloss over their negative position on the topic of the day (here it is renewables) and look to be positive and upbeat about it – especially something so dear to the public as renewables. Then quietly they would look to act out their hidden agenda. But in the case of Abbott and his cohorts, Macfarlane and Hunt we see a higher level of arrogance that proudly denounces renewables, happily lying to further their one-eyed view. Arrogance that is so brazen in their attacks that they appear not to fully realise how annoyed voters are becoming. To further emphasise this point it would be like a murderer proudly describing the killing of his victim, blissfully unaware of the public distaste of the act. We would call that being a psychopath. Normally psychopaths are loners, but in the case of this government they, the anti-renewable psychopaths; appear to have gathered in numbers.

  6. Keith Avatar
    Keith

    One day we shall hear where the LNP plans to find the new jobs. It is clear that the renewables industry is one of the few opportunities.

    Just shows what happens when you govern by ideology….

    This won’t end well for the LNP. Hopefully the industry can tough it out. I see no point in compromise as they will just reneg on any agreement anyway. They are not good at being honourable.

  7. disqus_3PLIicDhUu Avatar
    disqus_3PLIicDhUu

    LNP scumbags

  8. martin Avatar
    martin

    If the next election is a win by conservatives and a win for the country it is all over for windmills.
    If Shorten was to win it will be a disaster for the country.
    He is an economic illiterate.
    If he was to win but doesn’t have workable majority in the reps windmills are gone.
    If he does not control the senate it is the end for windmills.

    If Shorten is in control of anything investors will not put money in windmills, as he won’t be in power for long and the Labor caucas and members will not be able to vote him out due to Krudds in-house voting reforms.

    No sane investor will invest in windmills in this country.

    Weaven and IMF may but only to save their skins.
    Once union members come to understand who Weaven is and what he has done with their super money ($700 million lost in the last year) it is all over for Pac Hydro.
    It probably already is.

    What you people need to understand is it is all over for windmills.
    Come to your senses and get on board with base-load renewables investment, as then this web page may stay alive.

    I’m not here to argue with you. It wastes my time and yours.

    Windmills are nothing more than a huge scam. There is no doubt about it.
    Unfortunately,the idealogues, like small children, refuse to see.

    That’s fine with me

    1. Alastair Leith Avatar
      Alastair Leith

      Troll alert @Giles

    2. Ken Dyer Avatar
      Ken Dyer

      Martin, Spaceship Earth is sick and getting sicker. The inaction of Abbott and his COALition cronies do not care, because of greed.
      If you do not believe this, I suggest you apply for immediate membership here. http://www.theflatearthsociety.org/

    3. Barri Mundee Avatar
      Barri Mundee

      If you are not here to make your case, except rant about “windmills” ( wind turbines,mate, wind turbines), then what are you doing here at all?

    4. Rob G Avatar
      Rob G

      As soon as you mention ‘windmills’ we know we’re dealing with a troll. Best head back to the Daily Telegraph were you can share your ignorance with like-minded folk and the now rare Abbott supporter.

    5. john Avatar
      john

      Windmills.
      So old school mate these things that are driven by wind a zero input energy source are actually very efficient.
      How do you say ” Huge scam”
      You do realise on any scale of delivery of power that your argument does not stand up?

  9. Alastair Leith Avatar
    Alastair Leith

    Labor’s Mark Butler said on Thursday that the Coalition was isolated on the issue. “Labor cannot stand by and watch another industry disappear under the Abbott government’s watch.”

    This is not just about another industry like cars — this is about Melbourne not becoming Dubbo! This is about tripping the wire for ten to twenty metres of sea level rise in the next decade or two, even if it takes over a century for that to actually occur.

    There is this level of unreality going on in Canberra now about so many issues but none more so than Climate Change. Gillard and Rudd had the opportunity to fund a massive education campaign and avoid it at all costs. Sad really.

  10. john Avatar
    john

    All state Governments in Australia are faced with a problem.
    The transmission system which has had $45 billion pumped into it to meet a demand that did not happen and now have to find the return on that investment.
    The federal government is of the belief that if they can stop the use of RE then over time the system can return to normal before the uptake of RE and energy efficiency measures.
    They are trying to help.
    In one aspect they have done well they have created a total state of uncertainty which has resulted in very little investment in any RE except household PV.
    Now lets look at the outcome for the actual suppliers of energy.
    Over the last ten years what has happened is the high return for peak demand which made them profitable has to a large extent gone.
    So generators are just working on minimum output getting between $20 to $40 a MWH for the power which just covers the cost of production.
    The more high users of energy closed down making this a more dire situation.
    The next step in this situation is that home users of energy are going to uptake storage and this is going to remove the evening peak from the generator price structure.
    I can sympathy’s with the present government problem, they really do not want to hurt any part of the society, however they are faced with a dwindling set of outcomes that do not meet their expectations.
    The short term decision is to kill any expenditure in RE to stop any further dilution to the base price for power delivery.

  11. howardpatr Avatar
    howardpatr

    Meanwhile Macfarlane is out espousing the benefits of smart meters yet at the same time supporting his leaders anti renewable energy stance.

    The Coalition is populated by so many yesterday people.

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