Renewable energy review could have a preordained outcome

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Australia’s clean energy sector has talked tough on the Abbott government’s review of the Renewable Energy Target. But in reality, the writing is on the wall, and the renewables industry is in deep trouble.

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Australian clean energy groups put on plenty of bravado when the federal government unveiled the members and the terms of reference of its long-threatened review of the renewable energy target on Monday. “Bring it on,” strutted the Clean Energy Council. The CEC and other groups such as Vestas, the world’s biggest wind turbine maker, and Pacific Hydro, Australia’s biggest specialist investor in renewables, suggested the facts would speak for themselves.

If the clean energy industry thinks that facts will win this argument, it is kidding itself. It has taken the government several months to work out how it will get around its statutory obligation for the Climate Change Authority to conduct the next review. In choosing climate change science denier Dick Warburton to head its inquiry, the Abbott government has chosen someone who has not let facts get in the way of his ideology and policy positions.

Warburton says he is not a climate change denier, but a “sceptic” about the role of humans in climate change. He doesn’t accept the science. Given the consensus of thousands of scientists, all major scientific bodies and all but a couple of rogue governments, then denial and what he calls “scepticism” amount to the same thing.

Warburton has also surrounded himself with people who, like himself, have spent much of their careers fighting environmental initiatives (carbon pricing, renewables) in an effort to protect the interests of the companies they managed or represented. Warburton did this as head of Manufacturing Australia, Shirley In’T Veld as head of Verve Energy, and Brian Fisher, the former head of ABARE and more recently a fossil fuel lobbyist, had a long history of creating modeling that argued against environmental mechanisms.

The purpose of the RET review is purportedly about the cost of the RET to consumers, but these are as well documented and as verifiable as the scores from the last cricket test in South Africa. Each year, the costs are documented by state-run pricing bodies, they have been assessed by the Climate Change Authority, by the Australian Energy Market Commission and countless others. And they all come to the same conclusion – the cost is sweet bugger all, at best 3 per cent of electricity bills even after retailers have been allowed to profit from the inflated prices they charge back to consumers.

What this really is about is protecting the interests of the incumbent retailers, generators, and network providers, many of whom are government owned. They are losing money, and their assets are being forced out of the market. This is very much about self-preservation for these businesses. But it’s a hard argument to reconcile if the head of the review does not even accept the science that fossil fuels have contributed to climate change, and should be curtailed.

To an extent, the public relations battle has already been lost by the clean energy industry. It was interesting to note how ABC’s Q&A discussion centred almost entirely on the perceived high cost of renewables, and the fact that there would be “too much” of it. The Labor representative, Tony Burke, was hopeless in its defense and simply wasn’t on top of the brief, despite being a former environment minister.

On the ABC TV’s flagship, 730 Report, the “talent” chosen to give an independent perspective was Burchell Wilson, the chief economist from the Australian Chamber of Commerce and Industry, a right wing ideologue and a fierce anti-renewable campaigner. Last week, we pointed out that he was using costings invented by the Institute of Public Affairs that are pure fiction. He was at it again on Monday on the ABC, unchallenged by the interviewer, quoting the same nonsense.

Wilson claimed Fisher would approach the issue like an “economist” and not have “any predetermined views on the matter”. Then, in virtually the same breath, Wilson said of Fisher: “What he will tell you is the Renewable Energy Target is high-cost, it’s inefficient as a means of abating carbon, and if that’s your primary objective with respect to the RET, then we should scrap it altogether.” It’s all decided then. And Wilson accused the renewable energy industry of being “disingenuous.”

In the written media, the position of the clean energy companies – which is now largely based around the attraction of renewables in the face of soaring gas prices – was hardly heard. The Australian had several opinion pieces, including one from its ill-informed chief political correspondent Dennis Shanahan, who suggested that in dumping the RET target, Australia would merely be following in the footsteps of Germany.

Not so. Germany continues to reduce its feed-in tariffs, as Australia has done, but is committed to rolling out renewables. It has a 35 per cent target for 2020 and the new “grand coalition” of centre right and centre left parties has reaffirmed a commitment to 60 per cent renewable energy by 2035.

“The world looks with a mixture of a lack of understanding and curiosity on whether and how the Energiewende (Germany’s move from nuclear to renewable energy) will succeed,” Merkel said last month in her first major speech of her third term. “If we succeed, then she (the Energiewende) – and I’m convinced of it – will become another German export hit. And I’m also convinced that if any country can succeed with this Energiewende, then it’s Germany.”

RET WORLDAs this table shows, Australia’s renewable energy target is relatively small, and it is the only government in the world which has discussed reducing its target – just as it is the only government in the world looking to dissolve carbon pricing. Interestingly, WWF was the only group we could find that said Australia should lift its target – it talked of 50 per cent by 2030.

The spin from government insiders about the review was “not to panic”. Warburton and his team would be reporting to a secretariat in Abbott’s office, but that secretariat would be led by the renewables boss from the environment ministry. And did you hear Tony Abbott speaking to Alan Jones on Monday morning? He was defending renewables, I was told.

Oh really? This is what the government operatives think is being supportive of renewables.

ALAN  JONES: Yes, and don’t we say to foreign companies, if you want to involve yourself in solar power or wind power and set up a business don’t expect money from the government. They are currently getting billions of dollars.

PRIME MINISTER: Well, renewable energy makes a lot of sense.

ALAN JONES: It’s not affordable.

PRIME MINISTER: If it goes too far it becomes very, very costly. It is one thing to have solar hot water systems and what have you but it’s another thing to expect that we can deliver base load power with renewables. That is why all of these renewable systems need conventional backup.

One platitude, followed by a rapid backpedal. Hardly a ringing endorsement, or even an informed comment.

It was remarkable watching the Tweedledum and Tweedledee performance at the joint press conference hosted by environment minister Greg Hunt and Industry Minister Ian Macfarlane, whose portfolio includes energy. Neither have been trusted with managing the RET review, which will remain within ideological reach of Abbott and his inner cohort, including Maurice Newman.

But such is the crazy Tea-Party like politics of this conservative  government, that Hunt and Macfarlane are considered moderates on the matter of renewables. Hunt, of course, has managed to dismiss everything he learned about environmental markets in prosecuting the case for Direct Action, an absurd policy if a government is serious about climate change.

How Macfarlane earned his reputation as a renewable moderate is hard to understand. Remember, it was he who, as energy minister in the Howard Government, commissioned the Tambling review into the then MRET. Tambling didn’t follow the script and recommended that the target be expanded, but Macfarlane decided otherwise and closed it down. It was too successful he argued, and it was buggering up the finances of the incumbents.

Those are the very same arguments that are being prosecuted today. But the clean energy industry has probably only got itself to blame. It has been unable to prosecute the case for renewables, and its policy of “managed retreat” and negotiated compromise, and its refusal to insist that the former Labor government adopt the CCA recommendation to delay the next review to 2016,  has blown up in its face.

Nearly three years ago, in an interview, Origin Energy CEO Grant King first canvassed the issue of delaying the target to 2025. At the time it was considered to be the worst case scenario, and somewhat fanciful. Now, a version of that would seem to be the best that the industry can hope for. More than likely, it will end up with the same result as Macfarlane delivered a decade ago.

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25 Comments
  1. patrickg 5 years ago

    Too sad and too true, Giles. Even assuming (naively) that we’re looking at a one term federal government, the speed and ruthlessness with which the Coalition is executing its priorities is very disturbing. By time we get a decent government and a proper bloody senate, it could well have set Australia back literally decades, not to mention making us an international pariah, as denialist governments are evaporating in the heat.

    Of course, it’s not all the Coalition’s fault: Labor bears a huge burden for both letting petty leadership nonsense distract it from leading, and rendering the idea of Abbott PM plausible (consider if someone had said that in 07…).

    Moreover, they bear ultimate responsibility for making all the right noises with regard to climate change, but pursuing a course of action that was little better than denialist, followed up with pathetic, milquetoast mewlings as a form of advocacy and public explanation.

    They left others to make the case for fear of a mythical Western Sydney bogan voter. Well, they lost the vote anyway, and they lost a chance to be on the right side of history with it. It boggles my mind that a nation as conservative as Germany – with a conservative party – is so far ahead of us on climate change.

    In terms of ignorance, regulatory capture, and politicians more interested in rhetoric than policy, it seems we are following the US model, with all the inequality and erosion of democracy that implies. Sad stuff.

  2. Chris Fraser 5 years ago

    It’s tragic and amusing that they still harp on about baseload and conventional backup. Have they not read Diesendorf ? The point is, if they did and understood, we would have bipsartisan agreement on 60% – 70% LRET before 2030. We only have polar views on this subject because of political opportunism, so no need to mention the Government’s support for RET in years past – a promise they were happy to lie about through their teeth.
    It’s not hard to understand what really scares them. The Government is really channeling the fears of incumbents when they say ‘we still need backup’. Their real fear is PV, which reduces our use of the grid. Even though in the public interest of sharing (or trading) we never intended to completely leave it. Many commentators have said the new competition is uncomfortable for those who have been enriched by the old ways.

    • wideEyedPupil 5 years ago

      Yes I had to explain to loads of people at the SLF 2014 while manning a stall last weekend that “Baseload” is a terminology that applies to coal and nuclear generation not to energy demand, networks or renewables.

    • JohnRD 5 years ago

      Chris: It is worth noting that about 60% of the power in the BZE plan comes from solar towers with molten salt energy storage and A BACKUP SALT HEATER using bio-waste as fuel. These towers can be used for baseload power if required.
      However, in the short term the powers should be designed for peaking power rather than baseload. Peaking power requires fewer mirrors and less molten salt storage than a tower of equivalent peak output designed for baseload.

  3. Miles Harding 5 years ago

    A fundamental problem with the AGW* denial lobby is that the physics facts simply do not support their assertions. In order to be a “skeptic” the choice is to invent the facts yourself or hire an organisation, such as the IPA to do it for you.

    I heard an interview with Dick Warburton on ABC radio today which gave me some cause for optimism. I felt there was a good chance that he would evaluate the facts and situation fairly, which he should do as a matter of personal integrity. I will, however, be looking at the basis of their recommendations with considerable interest.

    The members of this committee would be well advised to acquaint themselves with the fundamentals behind greenhouse warming and the *very* likely dire outcome if appropriate action is not taken. If nothing else, I would recommend the Richard Alley speech, below.

    One of the best descriptions of the human predicament was delivered at the “Perspectives on Limits to Growth” Symposium in 2012 at the Smithsonian. The speakers included Dennis L Meadows, Lester Brown and Richard Alley. Richard’s speech contained a particularly good description, in simple terms, of the science behind the IPCC projections. The talks are available on youtube.

    *Androgenic Greenhouse Warming

    • wideEyedPupil 5 years ago

      Okay so you think they will say 40% by 2020, 70% by 2030 and 98% by 2040 because that’s the sort of progress we need. The carbon budget (despite what 350 say) is already spent and that goes for double in the historically most excessive GHG polluting nation per capita on Earth like ours.

      I’m thinking no adjustment to target will be seen as a heroic victory for renewable energy and the climate when in fact it’s just not good enough.

  4. Andrew Thaler 5 years ago

    The writing is indeed very likely on the wall but not yet published. I found Hunts comment that the Govt will not be revisiting the RET for a “very long time” quite telling. The Govt appears to have organised a outcome for the RET review, though it now needs to proceed through the legislated mechanics to achieve their desired ‘outcome’ and to hell with community expectation or desire. That Abbott clearly does not understand the RET and what is is likely to further achieve is either his pig ignorance, or more likely (as he must be smart to be PM), that he doesn’t want to appear to understand it because that would show him to be more incompetent and duplicitous than he already appears to be.
    I don’t even want to go into analysing their comments about “there being too much renewable energy”.

    • wideEyedPupil 5 years ago

      Yes its a master stroke of Putinesque or Berlusconian magic that Abbott can look so reasonable to right wingers and dumb as f stupid to progressives all at the same time. Yet, as you say, underneath it all is a lizard just looking for his next cold blooded strike to kill.

  5. Miles Harding 5 years ago

    Abbott has such a thick skin that it will take the other delegates at climate conferences actually pointing and laughing at the Australian contingent for for him to acknowledge his part in an unfolding world climate catastrophe. Really, we should not expect anything more from a career opposition leader that failed to develop any progressive policies while in opposition.

    He doesn’t seem to realise that there is a vast social and economic opportunity in addressing climate change and CO2 emissions, as well as resilience and energy security.

    There is abundant evidence that climate, food security and energy will be the dominant issues this century, likely immutable by 2030 (15 years away) and that Abbott and his cronies will have been responsible for having helped fumble the future through their hubris and backward looking world views.

    • wideEyedPupil 5 years ago

      Immutable by 2020 I’d guess.

      And later this century when one third of Bangladesh who live below 1 metre above sea level are flooded multiple times every year and monsoonal rain stops falling in india and African starvation occurs on unprecedented scale we will see population migrations and disease epidemics like never before. Boat refuges issue of today will look quaint by comparison.

      • Alen 5 years ago

        Dont forget all the Pacific islands surrounding Australia

  6. Tosh, Energy for the People 5 years ago

    Make no mistake, this review will have an impact. But for me, it highlights that now is a great time to be planning for a renewable energy industry that can survive without government support. Want to prove Abbot wrong on renewable baselod? take people off the grid. Want to make renewables work without the RET? rethink the business model. We have to channel the frustration into positive action.

    • wideEyedPupil 5 years ago

      More easily said than done. For example solarCST are looking to markets like Chile with high energy costs because they cant get ongoing support in first world markets. We would not be talking about SolarPV on rooftops and off grid at all today if it wasn’t for decades of support by German Greens in Parliament offering massive subsidies that were tapper down. You can’t tapper from high to zero overnight. Doesn’t work that way.

      And don’t forget FF are getting a few Billion a year in subsidies in this country.

      • Tosh, Energy for the People 5 years ago

        I fully accept we are riding the coat tails of other nations, and that is not ideal. But it is also the reality in Australia. Not a reason to disengage from policy debate, but just a reality for anyone trying to do projects right now

    • Chris Fraser 5 years ago

      Yes, rethink the business model and i’ll raise you one. Assume no government future subsidies for renewable. The only solution to get more renewable (in the absence of legislation forcing it on us) is – Demand. Only sign up for renewable energy at home and in business. Crowdfund the good guys investing in renewable. Eventually it’ll pay more than if we bought shares in AGL due to the portfolio’s higher proportion of renewable assets.

  7. wideEyedPupil 5 years ago

    Giles you are doing great work on documenting the little known facts around this battle against renewables and the climate. God speed to you. Sharing all over FB, Twitter and in the streets! MSM could learn a lot from you and they wouldn’t be tanking so bad.

  8. wideEyedPupil 5 years ago

    Giles, Beyond Zero Emissions has been saying the 2020 target is 100% since 2009 Stationary Energy Plan. Not sure if we constitute a ‘group’ 😉

  9. wideEyedPupil 5 years ago

    “The Labor representative, Tony Burke, was hopeless in its defence and simply wasn’t on top of the brief, despite being a former environment minister.”

    Well said. ALP is a rabble. Why is it that IPA can get an interview on Energy policy any day of the week but god forbid we invite Greenpeace, Beyond Zero Emissions, the Greens, Yes2 Renewables, Friends of the Earth?

  10. JohnRD 5 years ago

    Our RET is one of the few emission trading schemes that is actually working. It has steadily driven the growth of large scale renewable power while having a negligible effect on power prices. Part of the reason that the RET had so little effect on prices is that IT IS NOT A TAX. Almost all the money extracted from the dirty power producers is used to reduce the price of renewable power.
    So what did Labor do? It should have excluded the electricity from the carbon tax and raised the RET target. Even more so given that the carbon tax is too low to drive investment in renewables. But they didn’t and they lost power and left us in the grips of a radical Tea party government – Partly because the carbon tax was so easy to campaign for.
    The supporters of climate action should realize that the bottom line is reducing power related emissions. The RET is one way of doing this but there are other approaches such as variations on the more direct ACT solar auction scheme that could deliver a similar result because it isn’t a tax either.
    A logical strategy would be to concentrate on the bottom line (reduced power emissions per kWh) and agree to drop the carbon tax as part of a package that raises the target for reducing power emissions.

    • Alen 5 years ago

      Power related emission are not the only focus point or bottom line in reducing GHGs to a safe level. The transport sector and the agricultural sector are other examples of more very important contributors in the growing GHG concentration in the atmosphere. The carbon tax should be viewed as a (easy) starting point to addressing the global crisis known as climate change. The carbon tax by itself is (soon to be ‘was’) never sufficient enough to manage the task of mitigating aGW and resulting CC. The RET and the Carbon tax are only part of the solution and it would be good for people to remember that even if by some miracle the RET stays unaffected, that the fight and push for a sustainable future will not be over.

      • JohnRD 5 years ago

        Alen: The logical plans for cleaning up transport depend on using renewable electricity. Ditto much of the other effort. Priority 1 should be increasing renewable capacity while doing some of the other easy things.
        In the current political climate the carbon tax is a distraction that reuires much higher price increases to acheive much.

  11. James Prest 5 years ago

    The Government’s approach here is to depart completely from the system for
    statutory reviews of the Renewable Energy Electricity Act 2000 already
    set out in s.162. The Act says that reviews of the RET are to be
    conducted by the Climate Change Authority,
    not by Mr Warburton and friends. That statutory body is still in
    existence – as the misguided Climate Change Authority (Abolition) Bill
    2013 has not passed at this point in time. IF the Government had the CCA
    carry out the review, then the CCA would be bound by the Act which says
    in s.162(11) that ” A recommendation [of the review] must not be
    inconsistent with the objects of this Act”. Problem for the Government
    and the climate change denying opponents of renewable energy being that
    the objects of the Act (s.3) include ” to encourage the additional
    generation of electricity from renewable sources; and to reduce
    emissions of greenhouse gases in the electricity sector.” Little wonder
    then that they don’t want the CCA to carry out the review in 2014.

  12. Simon Baird 5 years ago

    I think the major elephant in the room that is all but being ignored is that right now Australia’s economic prosperity is directly linked to how much stuff can be dug out of the ground and then burnt or turned into goods. By backing renewables either at home or the international arena, the Australian government would be giving serious ammunition to the forecaster who are saying at least 1/3rd of all our fossil fuel natural resources need to remain in the ground. However wether the Australian government is willing to admit this or not the fact is that regardless of how quickly they try to speed up approvals for gas or coal mines it is soon going to be clear that there will be no market for these goods. China has finally admitted that exponential growth based on cheap energy from fossil fuels has far to negative effect on the environment and human living standards and is now seriously looking at how to scale back. Other developing nations in Asia and Africa will take note of the utter devastation China’s economic mircale has wrought and I do not believe will pursue a similar course of action. It is clear that energy is required to lift living standards and the cheaper and quicker it can be deployed the faster said living standards will appreciate, however I do not see the fossil fuels being the provider of these future energy needs. It is much more likely that this cheap source of energy will come from sustainable sources such as wind or solar. It is only in Australia and other developed nations where the infrastructure to convert fossil fuels to energy is already in place that this type of production wins over renewables. (hence why the attack is now on renewables reliability or even health concerns aka wind farms, rather than on the cost of infrastructure or energy produced by them)

    What this all adds up to is that Australia is in a very tough position, it is likely that as a nation we will have to take a massive hit on our sovereign wealth if we are to truly admit that the natural resources we sit on are essentially worthless. This hit is in the trillions palling into insignificance in comparison to the cost of RET or any other green schemes. Until Australian’s are willing to standup and say that Australia must exit the mining game we can not have a green agenda either at home or abroad. Personally I do not see any current political leader of either labour or liberals willing to take this stance and so we will continue to see the dismantling of our green program’s until such time that international pressure forces as to accept this reality.

    If climate change is true (no doubt) and is caused by the burning of fossil fuels, then Australia perhaps more then any other country (certainly based on drop in GDP) has more to loose if there is international action to reduce carbon emissions. This position has been made ten times worse over the last decade as so much of our growth has been dependant on fossil fuel being burnt predominately in China. Our political leaders understand this issue clearly and that is why they are simply unable to bring themselves to support a stance that has such a devastating effect on Australia’s wealth and economic prosperity.

    The question that then remains is how quickly will real proof surface that climate change is happening with real world effects (unfortunately this proof may come to late due to the oceans acting as sink holes for excess heat) and when it does how quickly will international leaders be forced to act. Because when it does happen and it will happen Australia and all our investments in fossil fuels will be obliterated. Perhaps if we act now to diversify our economy we may have a hope in hell of surviving the worlds shift away from fossil fuels, however that is seriously unlikely given the magnitude of the problem.

  13. moosey 5 years ago

    Climate change may be the biggest talking point and rightly so, as it can affect all of us, but something much closer to home and just as important, if not more so to those who happen to live near them? is the effects on peoples health caused by these smoke belching coal fired power stations.
    At the time of writing, it seems as if it can be much worse than that, especially when you have not one but two coal fires in the open cuts like we do in the Latrobe Valley, when is the death toll going to be taken into account? how many respiratory sicknesses and heart conditions which cause shorter life spans will be taken into account?

    The coal fired power plants world wide have killed far more people (slow premature deaths) than all of the nuclear power plants and nuclear bombs put together yet, not one politician would tell you that.

    I believe Nuclear and Solar CPV will be the best answer, especially when Solar has the backing of a suitable storage system like these new flow batteries being developed, this would allow for distributed power to come into it’s own, which in turn saves power lost by sending it over long distances, it would also help with power security against terrorist acts.

    But it seems like our politicians would rather see technology developed right here in Australia go overseas, they are backing their mates who own the coal and the power stations, we will have to pay a premium one day to pay for technology that originally came from Australia, talk about Nero fiddling whilst Rome burns, our pollies are Luddites.

  14. Rob Campbell 5 years ago

    I am sure that the states will count the feedin tariffs in excess of 7.2 odd cents as a “cost” of renewables, this would be a complete lie, it is a cost of poor policy.
    Earth sized balls Giles!

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