Renewable industry rolls dice on policy certainty, and loses | RenewEconomy

Renewable industry rolls dice on policy certainty, and loses

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Don’t underestimate the determination of the Abbott government to throttle the large scale renewable energy industry in Australia. We warned as much before the last election, but the prevailing view seemed to be that no Abbott government could be as destructive as some suggested. How wrong they were.

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Don’t underestimate the determination of the Abbott government to throttle the large-scale renewable energy industry in Australia. We warned as much a day before the last election, but the prevailing view seemed to be that no Abbott government could be as destructive as suggested. How wrong they were.

reneweconomy abbott

For the past 12 months, the renewable energy industry has been bludgeoned into accepting a much smaller renewable energy target in the hope of gaining policy certainty. Having finally obtained agreement on the numbers surrounding a reduced target on Friday, that promised certainty was pulled at the very last minute.

Industry minister Ian Macfarlane threw in this piece of news almost as an afterthought at the announcement on Friday. But he well knows the impact. Even though the 41,000GWh target remains legislated, it is the uncertainty over its future that has caused investment to dry up in the past 18 months.

And as Macfarlane and environment minister Greg Hunt said in a media release on March 16:  “We will also remove the requirement for regular two-yearly reviews of the RET to give the industry the certainty it needs to move ahead.” They said the same thing in another media statement on October 22.

Now they want to take that certainty away. It means that in 21 months of government, Macfarlane has announced four separate review of the renewable energy industry: the Warburton Review, the mandated review by the Climate Change Authority that it ignored, the Senate inquiry into wind farms, and now the 2016 review.

Macfarlane

Not only is it an astonishing back-flip, but Macfarlane has announced the 2016 review even before he has presented legislation from the 2014 review.

One wonders, firstly, what the cost to taxpayers is. The answer is definitely a lot less than the cost to the coal industry if the 41,000GWh RET target remained in place. To add to his back-flips, Macfarlane wants the body the Abbott government has vowed to dismantle, the Climate Change Authority, to conduct the review.

Interestingly, the CCA has four board seats currently sitting vacant. Any nominees in the wings? Perhaps Maurice Newman, Andrew Bolt, or Bjorn Lomborg? Christopher Pyne is looking for another institution to park Lomborg’s Consensus Centre, perhaps he could morph it into the CCA.

At best, Macfarlane could be seen as a poor loser. He had made much of his refusal to go beyond the 32,000GWh, that he had already suggested was too much for many of his Cabinet supporters.

The result of this sabotage is that the renewables industry has rolled the dice on cutting targets in the hope of certainty – and lost, Both Pacific Hydro and Senvion told ABC Radio.

Another major investor said the large-scale renewables target would remain at a standstill. “We haven’t yet worked out how to tell head office (overseas). It is just too confusing.”

Miles George, the head of Infigen Energy, said maintaining legislated reviews is anti-business, a show of support for red tape, and does nothing but undermine investor confidence.

“The government’s own review panel and the CCA and have recommended against biennial reviews and Minister Macfarlane has said on many occasions that the recent review would be the last one before 2020. Given the government was unable to act on either the recommendations from its own panel review or the CCA review, one has to question the value of these reviews.”

But the Minister’s stance is not so much anti-business, as anti renewables. We’ve reported on many occasions Macfarlane’s form with the past renewable energy target, that he ended a decade ago when in the same role with the Howard government.

He does not hide his contempt for renewables, and neither do his Cabinet partners such as Joe Hockey, Barnaby Joyce and Tony Abbott. Three years ago Macfarlane told the industry he did not think much of wind and solar technologies. Wind energy rates a single mention in the energy white paper released last month.

Kobad Bhavnagri, the head of Bloomberg New Energy Finance in Australia, says that Australia has been “un-investable” for large-scale renewable energy in the last 18 months. The decision by Macfarlane suggests it could remain so.

“That also really sends an implicit signal to industry that, ‘Look, this ain’t over,’ by the Coalition,” Bhavnagri told ABC TV’s 7.30 report last Friday.

“The Coalition … is really giving us a signal perhaps that we’re prepared to tinker with this, to reduce it perhaps, to even wind it back further if the conditions are right to do so. So, I don’t think a unanimous signal of confidence in investment has really been sent yet on this policy.”

John Grimes, the head of the Austrailan Solar Council, says it is potentially devastating, and could also mean a review of the small-scale solar target, which the Coalition has promised to leave untouched this time around.

In an email to members on Monday, Grimes said:

“After three RET reviews in 3 years, they want another review in 7 months! That will devastate every solar business and every solar worker in Australia. Household solar, commercial solar and big solar completely uncertain once again.”

The Clean Energy Council, which has copped criticism from the solar industry in particular for compromising on the target in the hope of gaining certainty for the industry, dispatched chief executive Kane Thornton to Canberra on Monday to try to negotiate changes.

But it is not just the two-year reviews that will hurt the industry. The decision by Macfarlane to throw native wood burning into the RET cocktail will also add to uncertainty.

Not only does this create the potential for crowding out wind and solar, it also raises issues about the integrity of the RET given the debate about burning native forest. Retailers previously were not keen to use certificates created in this way to meet their liabilities under the RET, and this has probably not changed, given the opposition from NGOs.

But by continually changing the definition of what constitutes renewable energy under the RET, the government creates further uncertainty for other investors. Native forest wood waste was classified as renewable energy until 2011, then it wasn’t, now it may be again. It begs the question about what else might be slipped into the market in the next five years to suit the political fashion of the day.

A spokesman for the CEC said: “The CEC’s position is that we would only support native wood waste being eligible under the RET if there was an appropriately rigorous and broadly agreed-upon standard for ensuring the methods and locations of timber harvesting are environmentally sustainable. In our view these conditions don’t exist yet.”

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22 Comments
  1. Warwick 5 years ago

    Giles, you’ve understated the red tape reviews…there’s the additional NHMRC study into the ills of wind farms, and next year the unchanged legislation will require an additional RET review but the government won’t accept the advice of the Climate Change Authority, so therefore will hire another Dick Warburton/Maurice Newman to head an “independent review”… i.e. an additional 2 more reviews than you highlight

  2. Keith 5 years ago

    I’m with you Giles about the LNP being determined to wreck Renewable Energy in any way they can. How do they get away with lying about pretty much everything? Maybe they won’t when the election comes around ….

    I don’t understand why Labor allows them to have any credibility on this. The politics of it are silly for Labor. They just weaken the differentiation between them and the LNP.

    • suthnsun 5 years ago

      They continue to make mugs of the ALP and the rest of us.
      Small scale, private and deep, deep cuts seems the only path for an individual (off grid ASAP?). Local and State Goverments can do a little more..

    • Ken Dyer 5 years ago

      Keith
      As evidenced by Kyoto as far back as 1997, Australian “brown ” interests, aided and abetted by successive Governments, both Liberal and Labor, have fought against imposed restrictions on greenhouse gases. This problem centered thinking has influenced many politicians to view the proposed restrictions as damaging to the interests of Australia’s coal industry, which was then misrepresented as being in Australia’s interest.

      To give in to the interests of the coal industry is both short sighted and foolish. Australia is attempting to prop up a nineteenth century industry while ignoring the opportunities to create twenty first century industries. By providing this “protection” for fossil fuel based power generation, Australia is doing damage to its companies that may seek to develop new and innovative products and markets that are sustainable.

      Even with the Paris meeting pending, and as it did at Kyoto, Australia is again choosing to promote its own self interest over the global community, despite solar almost at grid parity with coal, which means that our domestic markets will remain “browner” and out of step internationally. Australia is at risk of becoming the brown pariah of an increasingly green world, that is rapidly awakening to the promise of renewable energy, and which progressive companies with a mission are doing something about.

      • Keith 5 years ago

        Hi Ken,

        There are many differences this time, which indicate to me that Australia is about to learn the hard way that there are consequences to being an international pariah.

        I don’t think that it was a co-incidence that Christiana Figueres has visited both Canada and Australia over the last couple of weeks. These are the rogue states re emissions reductions and attempts to destroy renewables. I heard her speak in Sydney and, while she is a most impressive diplomat, there is a tough determination to get international attention to shine on emissions and especially coal. Of course Abbott made a complete fool of himself by sending out his attack dog Maurice Newman on a “the world is cooling” attack. These things are being noticed internationally.

        The other very tricky thing that is happening for Australia (and the rest of the developed world) is that, whereas until recently the developed and developing worlds were trading shots about who needs to reduce emissions first, today China has made clear that it is acting. This is going to make it hard for the developed world to keep on polluting.

        Worse for Australia is that both China and India are looking to drastically cut their coal imports. I can’t imagine why they would look favourably on rogue state Australia when deciding on where to source their coal (if indeed they don’t stop importing the stuff) …

        I’m sure it is noticed that Australia is alone in removing its carbon pricing, closing down expert panels, and winding back its renewable energy targets. Why does the LNP think they are going to get off scott free … because they aren’t. It is shameful that the citizens of this country are going to suffer for being governed by fools.

        • Ken Dyer 5 years ago

          I find your analysis quite compelling because it illustrates how counter intuitively the Abbott Government is behaving, obviously because of the undue influence of the coal lobby.

          In trying to understand this, I came across the Kondratieff Wave theory which indicates that if the wave performs truly, the next 5 years or so will see major disruptions in the world’s economy. If you google the Kondratieff Wave, you will see why.

          Then I went further. I wanted to try and understand how the wave is linked to renewable energy and possibly how the current situation may be affected. This is what I found:
          http://leofoley.com/PDF/phil_anderson_speech.pdf

          It is a relatively old paper being written in 1986, but its contentions seem relevant today. It examines how local rates might be changed to encourage solar investment and linked the Wave to the developing state of renewable energy. I found it quite remarkable and far sighted.

          This later paper confirms what we fear. Written in 2010, it still underestimates the velocity of the development of renewable energy technology.
          https://www.allianz.com/v_1339501901000/media/press/document/kondratieff_en.pdf

          The Kondratieff Cycle certainly points out that the age of coal is well and truly over, which does not auger well for Australia. When we crash, and we will, it will be bloody hard.

  3. Stephen Gloor 5 years ago

    Best thing to do is to opt-out of this farce as I will be doing with my next house. Not even going to connect it to the grid. Have no confidence that the coal mining union government (Labor) will be any better than the current coal mining government.

    Why do we put up with this BTW. How can a government completely wreck an industry and get away with it?

    • John P 5 years ago

      Spot on Stephen. Labor is spineless and completely devoid of principle as well as ideas. It is all quite depressing.

      • Stephen Gloor 5 years ago

        This is the only possible way you can regard politicians – From Hitch Hikers Guide.

        “It comes from a very ancient democracy, you see…”

        “You mean, it comes from a world of lizards?”

        “No,” said Ford, who by this time was a little more rational and coherent than he had been, having finally had the coffee forced down him, “nothing so simple. Nothing anything like so straightforward. On its world, the people are people. The leaders are lizards. The people hate the lizards and the lizards rule the people.”

        “Odd,” said Arthur, “I thought you said it was a democracy.”

        “I did,” said Ford. “It is.”

        “So,” said Arthur, hoping he wasn’t sounding ridiculously obtuse, “why don’t people get rid of the lizards?”

        “It honestly doesn’t occur to them,” said Ford. “They’ve all got the vote, so they all pretty much assume that the government they’ve voted in more or less approximates to the government they want.”

        “You mean they actually vote for the lizards?”

        “Oh yes,” said Ford with a shrug, “of course.”

        “But,” said Arthur, going for the big one again, “why?”

        “Because if they didn’t vote for a lizard,” said Ford, “the wrong lizard might get in. Got any gin?”

        “What?”

        “I said,” said Ford, with an increasing air of urgency creeping into his voice, “have you got any gin?”

        “I’ll look. Tell me about the lizards.”

        Ford shrugged again.

        “Some people say that the lizards are the best thing that ever happened to them,” he said. “They’re completely wrong of course, completely and utterly wrong, but someone’s got to say it.”

        They are all just lizards ……

        • John P 5 years ago

          Thanks for the reminder.
          I had forgotten all that. I bet I laughed loudly at the time assuming it could never actually happen!!

          • Stephen Gloor 5 years ago

            Yep if you didn’t laugh you would cry.

            Australia is probably the one country in the world, with it unbelievable renewable resources and low demand, that could be 100% renewable without even breaking a sweat.

            These pigs at the trough are condemning our future generations to have to sell dirt to the rest of the world forever until there is no more.

          • John P 5 years ago

            Exactly! As I said further down this page, I have been living in a zero emissions house for the last 22 years because I couldn’t trust the leadership to actually provide leadership and decided to do it myself with renewables.
            I have saved a small fortune and never had a power failure.

        • Coley 5 years ago

          We must all like these lizards, seeing that here in the UK we have just voted a particularly obnoxious bunch of them in.
          I can see all the advances we have made over the last few years going up (literally) in smoke.

          • Stephen Gloor 5 years ago

            Yep they are all lizards alright – does not matter what country you come from the lizards are the same.

  4. John P 5 years ago

    When I went ‘off grid’ 22 years ago, one of the reasons was that I could not see any OZ government doing anything about climate change because of the likely impact on our fossil fuel exports.
    However, I never imagined anything like this level of perverse resistance to the ‘bleeding’ obvious.
    So much for intellectual capacity and honesty in government.

  5. Rob G 5 years ago

    Sadly, it’s just the way Abbott intended it. But mark my words – this along with many of the governments actions will see the death of the LNP in federal power for some time to come. The same has played out in the US following George Bush and the Republicans.

    • Calamity_Jean 5 years ago

      “The same has played out in the US following George Bush and the Republicans.”

      As a US citizen, I sincerely hope you’re right in 2016.

      • Rob G 5 years ago

        I hope so too. My wife studied US politics and follows it very closely. And while the issue of getting people to vote is always a problem, her take on things is the serious backwardness of the current Republicans – old and out of date (much like LNP here in Oz) and just not electable. The growing Latino vote (Democrat) in Republican held states and the Does America really want another Bush?

        • Calamity_Jean 5 years ago

          “Does America really want another Bush?”

          We’ll find out eventually.

          Good luck with your elections.

  6. lin 5 years ago

    If you were saboteurs planted by a foreign power to destroy a country from the inside, you couldn’t do it more effectively than our current government is. Any chance we can try these bastards as traitors when sanity returns?

  7. Chris Fraser 5 years ago

    Gee there actually has been considerable effort put in by Liberal politicians to destroy RET, just so afterwards they can take up $500k p.a Directorships for some tin pot exploration company in some declining petrostate. They’d probably sell out completely.

  8. Michael Portman 5 years ago

    While we shake our heads, wring our hands and investment in renewables heads offshore we are seeing the effect of disruptive technologies and the lack of appropriate thinking in the current political landscape in Australia. An interesting way to look at the renewable argument is through the lens of disruptive technologies. Whatever the coalallition in Australia is up to consumers (commercial and domestic) are investing where they see value and environmental responsibility.
    These people are mobile, agile and savvy with new technologies – just look at the impact of LED lighting on power bills.
    The obfuscation of the Abbot cartel is not going to alter the reality of what prosumers are doing. The battery packs will be added to house walls and commercial buildings and the consumers will become producers (prosumers)
    A great analogy of the effect of disruptive technology was seen on the back of a Gold Coast taxi recently. It said ” Don’t risk your life. Rideshare apps are: Unlawful, Unsafe and Uninsured.
    Funny how so many consumers are only using Uber now!

    What is necessary in this debate are people who embrace disruptive thinking to add value to the political and economic landscape. Or we risk becoming uncompetitive against out savvy rivals.

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