Hunt says renewables target equivalent to $90/tonne carbon tax

Environment Minister Greg Hunt has again sought to demonise the renewable energy target, saying that leaving the current target at its current level of 41,000GWh would be the equivalent of imposing a $90/tonne carbon tax on the population.

Hunts comments came as the Abbott government and Labor began discussions on the RET legislation, with the Coalition insisting that it be no higher than a “real” 20 per cent target, or about 26,000GWH, and Labor insisting it should be around the current target of 41,000GWh.

“We’ve always been committed to this 20 per cent,” Hunt told 2GB’s Steve Price. “We’ll deliver that but not a figure which is likely to lead to a very, very high tax on Australian families. It’s the equivalent of a $90 per tonne carbon tax. The Australian people have just voted out a $25 a tonne carbon tax. I don’t think they want a $90 a tonne carbon tax.”

Hunt repeated the $90/tonne carbon tax four times during the short interview, although he didn’t explain how it was that he found that number. Presumably, it’s a reference to the penalty price that would be paid by retailers if they refused to comply with the legislation and built enough renewable energy to meet the target. The cost of actually building wind and solar energy would be far less.

Some utilities, such as AGL Energy, argue that it is not possible to meet the 41,000GWh target. Others, such as General Electric and the government’s own modellers, say that is nonsense.

It would be an interesting proposition for a utility to try to pass on the $92 “penalty price” to consumers – on the basis that they did not build or contract enough renewables – in a market with a “churn” rate of around 25 per cent, and where numerous competitors are now entering the market with solar and battery storage options.

It’s yet another sign, however, of the determination of the Coalition government to dramatically reduce the scope of the target. As we suggested on Thursday, a compromise deal somewhere in the “mid 30,000” GWh seems the most likely outcome – under the basis that “something” is better than nothing.

Hunt confirmed that the 26,000GWh target is the government’s preferred option. There is currently around 16,000GWh built under the target, and he said a “20 per cent” target would allow “60% growth” between now and 2020. The clean energy industry points out that this is actually 60 per cent less than what would be built under the current target.

Hunt described the government’s offer as “a very generous proposition”, before embarking on the carbon tax allusion once again.

“What we don’t want to see is this risk under Labor’s scheme of a carbon tax of $90 per tonne equivalent. You know, almost four times greater than the carbon tax that, you know, the Australian people just voted to get rid of. And that would be a very odd thing to do and look, I actually think that this is one area where we can get bipartisan support with Labor.”