Macfarlane, Hunt entrench hardline position on renewable energy target

The two key government ministers involved in the negotiations on the renewable energy target have entrenched their position on the RET, as the Abbott government continues in its hardline stance on “problem” issues.

Industry minister Ian Macfarlane and environment minister Greg Hunt both appeared on Sky News on Thursday, one to accuse Labor and the clean energy industry of working together, and warning of no concessions, and the other to tacitly support a threatened boycott of new projects by major retailers.

Macfarlane was particularly aggressive, accusing Labor and the clean energy industry of being in “lockstep”, and appearing to rule out any concessions unless the other parties agree to considerable cuts in the target. It was a take it or leave it approach.

“The industry will have to understand that we are not going to build way more generation capacity then we need,” Macfarlane told Sky News in an interview. “There has to be some rationality in this.”

Those concessions include removing the two-year review cycle and taking measures to address the overhand of credits. But he says this will not happen unless Labor and the industry agrees to significant cuts to the large-scale target.

Macfarlane also appeared to re-introduce the argument that the expected increase in rooftop solar be offset by a cut in large-scale wind farms and solar farms. Currently the small-scale target has no cap, but by re-introducing rooftop solar into the overall target, the Coalition believes it can massage the figures to pretend there is no cut at all.

“We’re still seeing an exponential growth in rooftop solar in Australia and we are on track to very significantly exceed the rooftop solar target which was 4,000 gigawatt hours and we’re already at about 7,000 gigawatt hours,” Macfarlane said.

The Warburton Review, and many large players, believe there will be some 14,000GWh coming from rooftop solar by 2020. Subtracted from the “old” target of 45,000GWh, that leaves 31,000GWh as the government’s preferred target for large-scale capacity.

If rooftop solar ends up at 13,000GWh, that leaves 32,000GWh for the large-scale scheme. So far, about 16,000GWh has been built, but construction has been at a standstill for more than one year because of uncertainty about the scheme.

The Abbott government knows it cannot touch the rooftop target, and has promised not to do so. But by effectively shovelling it in to the large-scale target, it can achieve its ambitions on cutting down the amount of large-scale wind.

Indeed, moving beyond the low 30,000s GWh appears to be a no-fly zone for the Abbott government. Going below 35,000GWh is a no-go zone for Labor, and for most of the clean energy industry, even if some are desperate to take whatever is on the table.

Macfarlane knows this: “The other problem they’ve got is that if the scheme stays as it is, and that’s the alternative – that we just walk away and leave it – the renewable energy industry will be the one that pays the cost of that,” Macfarlane said.

Macfarlane would not be drawn on the exact target, but said this:

“The industry knows what it is, I’m sure the Labor Party knows what it is because they seem to work in lockstep with the Clean Energy Council. The offer that’s been made is based not only on sound policy, but on the reality of where renewable energy is in Australia, and that is that we are seeing a significant growth in rooftop and small-scale solar which has to be taken into consideration.”

Macfarlane’s threat to “leave the target as it is” points to the current deadlock over investment, which has been at a standstill for nearly two years because of uncertainty about what the Abbott government would do, or try to do, to the RET.

Amazingly, Macfarlane rejected the idea that the discussions had brought uncertainty to the industry, despite everyone involved in the industry, from small-scale solar installers, large-scale developers, the incumbent industry and all independent analysis making that very point.

“No well I don’t think it has,” he said, but then added, “I mean the situation is we’ve got a scheme that everyone agrees is going to go into default, is not going to be sustainable, is going to basically do something that in the end is not good for the renewable energy industry. I’ve offered them a compromise, an alternative, a logical solution to the issue, or they can keep the scheme they’ve got. That’s their choice.”

In a separate interview, Hunt again gave tacit support for the threats by major retailers to pay the penalty price rather than build new wind or solar farms.

As RenewEconomy highlighted on Thursday, in our story Abbott government says war on renewables not over yet, Hunt has used this argument repeatedly in recent months, and on Thursday afternoon he was at it again, also on Sky News.

“Now, I think there is the ground for a middle path with a long-term future for renewables. Everybody who’s engaged in this wants to achieve two things: sustainable renewable development but without the risk that the current target will lead to a failure and then we’ll get hit with a penalty which is a $93 a tonne carbon tax equivalent.”

The clean energy industry argues that this would not, or should not, happen, because the target can still be met and projects can be built at a cost significantly lower than the penalty price.