Some of Australia’s leading consumer and community groups have joined forces with the renewable energy industry to call on the Federal Government to leave the Renewable Energy Target (RET) unchanged to keep power prices down and allow the policy to create more jobs – not to mention the environmental benefits.
A coalition of consumer and industry groups has written to Prime Minister Tony Abbott calling on him to restore the spirit of bipartisanship that the policy has enjoyed since it was first created by then Prime Minister John Howard in 2001.
The move comes as the Federal government finally made its promised approach to the Labor Party to gain bipartisan support from the changes it wants to push through. Labor is arguing that the bipartisan target should be where it has been since 2010 – with a 41,000GWh target, rather than the 17,000GWh or 25,000GWh target favoured by the controversial Warburton review.
Labor has, however, indicated that it is willing to delay the target from 2020 to, say, 2022, an outcome supported by Bernie Fraser, of the Climate Change Authority.
A letter from Industry Minister Ian Macfarlane to the Labor Party delivered last last week invites talks, but does not outline a position. Labor is preparing its response.
The Abbott government had previously assumed that – with the support of the Warburton Review – it could ram through its proposed changes, including a potential halt to the scheme, which is what the fossil fuel industry has been calling for. But while Warburton delivered the recommendations Abbott wanted, it was not supported by its own analysis or modelling.
This is the point taken up by the consumer groups and industry groups, which include the Australian Council Of Social Service (ACOSS), the Brotherhood of St Laurence, the Consumer Utilities Advocacy Centre, the Public Interest Advocacy Centre, the Clean Energy Council, the Alternative Technology Association and the Ethnic Communities Council of NSW.
The letter urges Abbott to keep the RET in its current form, using his own words against him: “You have personally emphasised that the impact on electricity prices was your central concern. As you noted on February 6: ‘We’ve got a review of the renewable energy target coming up this year and I’ll be asking that review to consider the impact of the renewable energy target on power prices and doing what it can to bear down on power prices’.”
It says the modelling conducted by ACIL Allen, commissioned by the Warburton review panel itself, has shown that in all of the scenarios in which the RET is reduced, the result will be higher prices for consumers.
The letter also highlights that “if the RET is cut, Australia’s greater reliance on gas-fired power will increase the cost of power for all energy users”, which they touted as “the greatest threat to household energy prices in the next five years” due to “the sharply rising cost of natural gas as a result of linking Australia’s gas price to the international LNG market.”
The letter urges “the government instead to focus on other areas that have had a vastly more significant effect on driving up power bills” including “electricity network pricing, wholesale gas prices and retail competition and regulation”.
The Clean Energy Council has also released a briefing paper on power prices based on the analysis conducted for the Warburton review of the Renewable Energy Target, which shows that reducing the target will, in fact, drive up power prices for consumers.
The CEC says ACIL Allen’s own analysis says
- Moving to a so-called ‘real’ 20 per cent target would see household power prices as much as $35 a year higher in 2020 compared to leaving the RET alone.
- Closing the LRET to new entrants and shutting down the SRES in 2015 would cause household power prices to be $56 a year higher in 2020 and $85 a year higher by 2030.
- Any scenario in which the RET is reduced would result in higher power prices for consumers.
However, under the scenario to maintain the target or achieve a ‘real’ 30 per cent share of generation by 2030, prices are lower for consumers.
ACIL Allen’s modelling of the 30 per cent target shows that this would result in just under 30,000 GWh of large-scale renewable generation annually by 2020 rising to 52,500 GWh by 2030. By 2030 the analysis predicts that there would be almost 16,000 GWh of annual generation under SRES.
“Analysis by the CEC using the results of the ACIL Allen modelling has shown that by early 2020 household power prices could be as much as $35 a year lower under this scenario, compared to Business as Usual, and by as much as $92 a year lower by 2030,” the CEC says.
Brotherhood of St Laurence Senior Manager, Equity in Response to Climate Change Damian Sullivan said it was essential for low-income households that the real drivers of rising energy prices were addressed.
“Let’s not get distracted by the Renewable Energy Target. While the RET may have a small short-term impact on energy prices, it will ultimately lead to lower energy prices for all Australians. Critically, it also promotes sorely-needed employment opportunities,” Nicholson said.
ACOSS CEO Dr Cassandra Goldie said calls to reduce the RET were ignoring larger factors that had increased the cost of power for consumers over the last decade.
“Retreating from a commitment to renewable energy will hurt, not help, consumers over the long-term. The only winners will be a handful of big power companies.
“Many people are struggling with their power bills and propping up coal-fired power stations at the expense of the vulnerable makes no sense,” Goldie said.
Clean Energy Council Acting Chief Executive Kane Thornton said the Prime Minister made it clear before the review that the policy’s interaction with power prices and cost of living was the most important issue that would be examined.
“The analysis for the review clearly showed that it was better for consumers if the RET was left alone than if it was slashed,” he said.
“All the renewable energy industry is asking is that the level of the target that is already legislated be preserved so we can get on with delivering tens of billions of dollars of investment and tens of thousands of jobs, while keeping power prices low for consumers. Let’s return to the bipartisanship on renewable energy that has endured through multiple elections.”
