Renewable energy target about to get an Abbott-style haircut

Oh, dear, this is going to get ugly. Very ugly. Australia is poised to become the first country in the world to reduce the ambition of its renewable energy target – either through a deal between the Coalition and other parties. Or by default.

Only in Australia, one imagines, can a proposal by the government to slash the country’s renewable energy target by more than half be proclaimed by the “experts” as a “victory” for the moderates. Such is the toxic nature of this government’s antipathy to all things clean and green, and wind farms in particular. Welcome to Team Australia. Open to vested interests.

Devastation for the renewable energy industry appears to be the only outcome for the political manoeuverings going on in Canberra. As if this was not evident enough, Keppel Prince – the largest manufacturer of wind towers in the country – mothballed its business and sacked 100 staff on Thursday.

It’s a decision that reflects the grim reality – there will be precious few, if any, new wind farms built in Australia in coming years. The Coalition government and its anti-wind element simply won’t allow it. And it is the simple mechanics of what is happening now in the federal policy area.

The Coalition knows through its policy of obfuscation that even with a “something is better than nothing” approach, the industry will wither on the vine. The only way to encourage investment is for the Coalition to agree to a robust target – something it has no intention of doing. Even a compromise deal – something rather than nothing – is unlikely before 2015, because there are only two weeks left for the parliament to sit.

The Abbott government came to power with an unstated platform to kill the large-scale renewable energy industry in Australia, and it is largely succeeding.

The wind industry – and the large-scale solar industry for that matter – is getting desperate. Investment has come to a standstill, some international players have left, others are on the verge of doing so, and the local players are on the verge of financial ruin.

The trouble is, even a little “something” (in the form of a compromise deal of around 31,000GWh) could be disastrous for the industry. It would push back many projects by years, cause many remaining international developers to leave Australia, and put existing investments in peril because of the fall in the price of certificates.

Only a few wind farms – such as those contracted by the ACT government from its own 90 per cent renewable energy target – and some smaller-scale solar farms will get built. The rest of the industry will remain at a standstill.

This, of course, would suit the Coalition. Their policy is driven by a host of factors, not least their hatred of wind farms, their refusal to accept the climate science, and their commitment to the interests of energy and industry incumbents.

Little wonder that Australia’s reputation as a safe investment destination is being trashed. It has fallen from 4^th to 10^th on an index of investment attractiveness, has fallen to last on another survey on climate and clean energy policies, and ranks below poor Caribbean and African countries in terms of investment.

Even Jeff Immelt, the head of General Electric, the largest supplier of machinery to energy systems in the world, and a supporter of the current RET, lamented today that when he switched on the TV this morning, he was confronted by two politicians arguing over renewables.

But the hypocrisy of this government knows no bounds. This was Greg Hunt, environment minister, speaking on radio this morning, about LNG exports.

“Look, there are contracts that are being struck. They were mostly done under the previous government I’ve got to say, for the export of gas. So you can’t break (a) contract and nor should, you know, I think a Government of any persuasion would contemplate, let alone a Coalition Government.”

Yet that is exactly what the government is proposing for the RET. It signed on for a 41,000GWh target in 2010, even after being told quite clearly that it would result in more than 20 per cent share or production. It criticised the then Labor government for delays in implementing the target – Hunt himself said the uncertainty was bad for the industry.

The ineptitude of the Coalition is highlighted by two other comments made today:

One was by Greg Hunt, who is claiming that electricity prices fell by up to 10 per cent as a result of the removal of the carbon price (another first for Australia). Yet official data shows that electricity prices fell by only 5.1 per cent, and even those falls will soon be gobbled up by rising network and soaring gas prices. In any case, bigger discounts are on offer by all major retailers, and a few smaller ones too.

The other was made by Dan Tehan, the local member for Wannon, the electorate where Keppel Prince is located, who told The Guardian,  that “the government is seeking to provide certainty on the RET … this demonstrates the need to get a sensible bipartisan outcome.”

No, it demonstrates the need to keep the target as it is, and for the Coalition to sign up for that commitment. Tehan led a group of 25 “moderates” who called for a “real” 20 per cent target earlier this year – a petition that his colleagues were too afraid to sign publicly.

Yet the closure of Keppel Prince’s wind manufacturing operations is exactly the result predicted by slashing the target to a real 20 per cent.  This, dear member, is a direct result of your policy settings. And it highlights the perversity of Coalition policy: less manufacturing means less electricity demand, ergo we should cut renewable energy target. Result? More manufacturers out of business. As the French say, plus con, tu meurt. Any dumber, you’d be dead.

Now, the negotiations are in the hands of Ian Macfarlane, the man who in the same position a decade ago, killed the then MRET, also when modeling commissioned by the government showed it to be beneficial for industry, jobs, investment and electricity prices.

But this is not a government that functions on facts. The Labor Party can either hold firm on 41,000GWh or negotiate a compromise in the mid 30s. Either way, the wind energy industry in Australia is effectively stuffed.