It’s been a curious fortnight in Australian politics. First, there was the unlikely duet between Clive Palmer and Al Gore, and then the debarking in Canberra of some of the more extraordinary people ever to be elected Senators in Australia.
As Ross Garnaut says today, and as any investor or proponent of renewable energy and climate policy can tell you, this is creating an environment of great uncertainty.
But there was another curiosity that went largely un-noticed, and it should not have. A group of 25 Coalition MPs created a bit of fanfare earlier this week when they signed a petition calling for the renewable energy target to be diluted, and for aluminium smelters to be fully exempted (they already are for 90 per cent of their obligation).
But who were they? What was unusual about this petition was that the most of the Coalition MPs who signed it didn’t want their name to become public. It’s almost unheard of for political petitions, and it’s not entirely clear why.
A few MPS broke cover at the time. Well, someone had to, just to get it reported in The Australian. Dan Tehan, the Victorian MP whose electorate includes several wind farms, as well as Keppel Prince, the largest manufacturer of wind turbine machinery in Australia, was principal spokesman.
He was supported by Ken O‘Dowd, from the Queensland seat of Flynn, Andrew Nikolic from the Tasmania seat of Bass. One added signatory that Tehan did proffer was Ewen Jones, the member for Herbert in north Queensland who recently argued for a coal fired power station to be built near Townsville.
All have a common interest – the presence of smelters and heavy industry they say are being affected by the RET. But who are the others? When RenewEconomy asked Tehan for the other names of the signatories, he said he wasn’t authorized to give them. RE got the same response from Hunt’s office, which received the petition.
When RE asked Tehan why this was the case, he replied: “I’m not quite sure. It’s up to them. It’s up to them as to how they want to present the argument.”
Exactly what the Coalition MPs are trying to achieve has been the subject of some conjecture. RE’s own theory was that this was an attempt by some “moderates” – as Tehan describes himself – to at least salvage something from the renewable energy target, for fear that right-wing forces within the PM’s office, most of his advisors are climate skeptics and anti-renewables, would lead to the RET being closed to new business. That scenario amounts to two of the four options currently being considered by the RET Review panel.
Tehan says he is a supporter of renewables. “I understand the importance of the renewable energy sector,” he told RE. “It has made significant contribution to the economy. It is just a matter of finding a balance.”
This theory was supported by the reaction of Hunt – who suggested that the petition was a sensible compromise – and then by Abbott, who went on ABC to launch another rant against the supposed cost of renewable energy. This was despite modeling by his hand-picked consultants, ACIL Allen, proving otherwise. Consumer bills would in fact fall if the RET was left alone. (See table below)
So, to test RE’s theory, we went to other MPs to ask if they had signed on. Angus Taylor, the MP for Hume, and one of the most vocal critics of wind energy and the RET in the Coalition, refused to confirm or deny whether he was a signatory.
Eventually, after discussions with Tehan, he sent a text to say that yes, he was, indeed, a signatory to the petition. “I have signed the petition and will continue to push for a restructure of the RET, along with a group of my colleagues,” he texted.
(We missed his text initially, and then texted him back to ask whether he would be satisfied with a true 20 per cent, which seems rather a lot more than he would have wanted, or for that matter some of his vocal supporters. We haven’t heard back).
Since then, the names of a few other MPs have also come to light. They are Eric Hutchinson of Lyons and Brett Whiteley of Braddon, neighbouring electorates to Nikolic.
They too, have an apparent common interest in the protection of aluminium smelters, an issue that is known to have pre-occupied the thoughts of RET Review chair Dick Warburton.
Various reports, though, suggest that the impact of the RET on aluminium smelters is seriously overplayed. Round numbers such as $80 million over 5 years sound threatening, but in fact it represents a fraction of their collective revenues.
The impact of the RET – even the carbon price – is trivial when compared to the level of the Australian dollar and international commodity prices, a Grattan Institute report noted way back in 2010, and repeated in 2012.
RE’s discussion with Tehan revealed some of the tenuous views that are held about the renewable energy target.
Tehan noted that not many renewable energy projects are occuring, due to inability to get finance and power purchase agreements. True enough, no new projects have been committed since late 2012 – but that has everything to do with fears that the Abbott government would do as the Coalition MPs propose – reduce the RET target by 15,000GWh at the very least from the current fixed target of 41,000GWh. Most studies agree that will delay any new build for another few years.
When I pointed this out, Tehan said it would benefit no-one to have the smelters closed down – its impact on electricity demand alone, particularly in Tasmania – would be dramatic. True enough again, but will affording the smelters an extra 10 per cent protection on prices really make the difference between opening and closing?
It is a similar argument to what Abbott is prosecuting on consumer prices – the 3-4% added to electricity bills from the RET is not only offset by the impact of renewables on wholesale prices, it is inconsequential in comparison to the impact of surging network costs, gas prices and gentailer margins. It is hardly worth knee-capping one emerging industry to try to save what in some cases are ageing and obsolete smelters that are already heavily subsidized just to compete with cheaper international alternatives.
And there is no doubt where the electorate sympathies lie on this matter. They have quite clearly demonstrated their support for renewables, and many are acting with their own wallets by installing rooftop solar.
In fact, that is what is expected to happen. Check out this graph from ACIL Allen, it suggests clearly that if th target is adjusted to a “real” 20 per cent, then consumer bills will rise $66 a year, rather than fall $166 a year under the current target.
Furthermore, investment in wind, in particular, is trashed, large solar is reduced. Only household solar – a no brainer economically according to BNEF – continues, albeit slightly reduced. Emissions actually rise. Maybe that’s why the Coalition MPs don’t want to put their name to the petition.
One thing is for certain: If this is the best that the “moderates” can offer, then the RET is headed for a massive hair-cut, if not repeal. Only the Palmer United Party stands in the way, and given the declarations of PUP’s Tasmanian Senator Jacqui Lambie this week, that support is not certain, nor is it long term.