The RET Review panel appointed by Prime Minister Tony Abbott has effectively rubber stamped the lobbying of the fossil fuel industry and called for the closure of Australia’s renewable energy target to new entrants as one of two options it is recommending to the government.
It is also calling for the immediate closure, or rapid wind back, of the small-scale renewable energy scheme, which supports rooftop solar and solar hot water. It says this scheme should either close now, or by 2020 at the latest. It also says it should be restricted to installations of less than 10kW – effectively cutting out the commercial-scale solar market. (It was previously open to 100kW systems).
As for the large-scale scheme, the panel says the two options are effective closure to new entrants, or a form of modification to restrict it to a “real” 20 per cent of demand.
If the government accepts either of the recommendations, Australia would become the first country to either ditch a renewable energy target, or wind it back – in much the same way as it was the first to scrap a carbon price.
Abbott is said to be in favour of the most drastic action, which is effective closure to new entrants. He personally appointed the panel, rather than follow the statutory requirements to have the review done by the Climate Change Authority, which just 18 months ago rejected the same arguments that the new panel has now accepted.
Although any legislative changes will be resisted and probably stopped in the Senate, the uncertainty will be enough to kill investment in large scale renewables. Changes to the small scale target could be done without the need for parliamentary approval.
The RET Review panel report suggests that the LRET could be modified to increase in proportion with growth in electricity demand, by setting targets one year in advance that correspond to just 50 per cent share of new growth. Except that there is no forecast demand growth. It says this approach would result in renewables making up a 20 per cent share of forecast electricity demand in 2020.
The RET Review panel says that targets would not be mandated for future years, exposing renewable energy investors to the same market risk (that future levels of electricity demand are unknown) that other investors in the sector currently face.
The findings brought immediate condemnation from the renewable energy industry. Climate Councillor Tim Flannery accused the panel – headed by climate change science skeptic and pro-nuclear advocate Dick Warburton – of bias.
The industry has warned of potential bankruptcies and massive job losses if either of the two scenarios outlined by the RET Review panel was implemented. Bloomberg New Energy Finance warned this week that such moves could “kill” the renewable energy industry in Australia for up to a decade.
The RET Review panel said it “recognises that repeal may result in adverse financial implications for existing investors.” But it said it would prefer to ignore the term “sovereign risk” and describe it instead as “regulatory risk” that is always present.
It accepted all the arguments put forward by the fossil fuel lobby on the costs of abatement, and the cost of the policy, and downplayed findings by its hand-picked modeller that suggested the costs of the target to consumers were more than offset by the fall in wholesale electricity prices.
Yet, at the same time, it said scheme has led to lower wholesale electricity prices and that its impact on household bills over time is “relatively small”. Abbott has led his campaign against renewables on the supposed cost of the scheme.
Clean Energy Council Acting Chief Executive Kane Thornton said that the recommendations proposed by the review could bankrupt the industry and put thousands of workers out of a job, while terminating competition and innovation in the Australian energy sector.
“It is inconceivable that the review could objectively recommend slashing the RET when its own economic modelling showed this would lead to higher power bills in the long run, while at the same time smashing billions of dollars of investment,” Thornton said.
“The review panel has clearly misunderstood the devastating effect of many of its recommendations. It is particularly naive to suggest that slashing the target would not have a massive impact on businesses that have invested on the basis of a legislated policy scheduled to operate out to 2030, and with over a decade of bipartisan support to date.”
“The biased review panel unsurprisingly recommends phasing out or abolishing the small and large-scale targets which threaten the strangle hold of highly polluting coal and gas producers,” said Flannery.
“Well I can tell you who does like renewable energy – the 10 per cent of Australians who generate their energy from their solar panels and the 21,000 people who have good Australian jobs in renewable energy. They will all be gravely disappointed by this flawed process.”
“For a panel led by someone who has lack of understanding of the scientific basis of climate change the results are hardly surprising.”
The Greens on Thursday described the report as “climate denier drivel”. “I’m glad this dangerous and ignorant report is finally public, so everyone can see it for the climate denier drivel it is. The outcome was determined long ago,” said Greens Leader Senator Christine Milne.
Here are the full list of recommendations:
|1||The Renewable Energy Target (RET) should be amended in light of the changing circumstances in Australia’s main electricity markets and the availability of lower cost emission abatement alternatives.|
|2||The Large-scale Renewable Energy Target (LRET) should be amended in one of the following two ways:Option 1 – Closed to new entrants (‘grandfathering’)|
In order to reduce the costoftheLRET and its impact on electricity markets, the Panel recommendsthattheLRET should be closed to new entrants.
Option 2 – Share of growth in electricity demand
Based on current electricity demand forecasts, this approach would achieve a 20 per cent share of renewables in the electricity generation mix by 2020.
|3||The Small-scale Renewable Energy Scheme (SRES) should be amended in one of the following two ways:Option 1 – Abolition|
In order to address the costoftheSRES (and its effect on electricity markets), the Panel recommends that it be closed immediately in the following manner:
Option 2 – Bring forward the phase-out of the SRES
Rooftop solar PV: period certificates may be created
Solar and heat pump water heaters: period certificates may be created
|4||The current partial exemption arrangements for emissions-intensive trade‑exposed businesses should be maintained.|
|5||The self-generation exemption should be amended to extend the one kilometre radius restriction and to permit self-generators to supply incidental amounts of electricity (below a set threshold) to third parties without attracting a RET liability. The Government should consult with affected parties to determine an appropriate distance limit and threshold for incidental off-takes.|
|6||The Government’s commitment to the reinstatement of native forest wood waste as a renewable energy source under the LRET should be implemented through the reintroduction of the relevant regulations in force prior to 2011.|
|7||The requirement for statutory reviews of the scheme should be removed from theRenewable Energy (Electricity) Act 2000.|
|8||Projects, or components of projects, receiving support under the RET should be excluded from participating in Emissions Reduction Fund auction processes.|
|9||Projects that receive support under the RET should not be eligible to receive further assistance from the Clean Energy Finance Corporation or the Australian Renewable Energy Agency.|
|10||To further reduce the costs of the RET the Government should consider the following proposals to improve the operation of the scheme:|
|11||The Government should consult with affected parties on implementation of the Panel’s recommendations for the RET including:|
|12||The Panel’s recommendations for progressively reducing the deeming rate for solar PV installations and reducing the size eligibility threshold from 100 kilowatts to 10 kilowatts should take effect from the date of announcement. Transitional arrangements should be provided for parties that have entered into contracts on the basis of the current policy at the date of announcement.|