Last week we shared on Facebook the video of Waleed Aly’s excellent take-down of the Abbott government’s position on the renewable energy target. New data provided by Green Energy Markets further highlights the absurdity of the situation.
Right now the Abbott government has refused to budge from its so-called “final offer” of cutting the RET – which currently requires 41,000GWh of renewable energy to be built by 2020 – to 32,000GWh. This is despite Labor, led by the Clean Energy Council and other industry groups, proposing a compromise of 33,500GWh.
Labor, which has argued that the RET should not be cut at all, apart from allowing full exemptions for trade-exposed industries, had previously indicated their “low end” position was 35,000GWh.
So, what is the Abbott government fighting over? According to Green Energy Markets, just 450MW of new generation out to 2020. And over the next two years, basically nothing at all.
That reduces the amount of wind energy, and large-scale solar, to be built from now until 2020 from around 7,900MW to 6,100MW – a cut of 1,800MW. (This pretty much accords with a separate analysis done by New Zealand’s TrustPower, that we reported on here).
The Abbott government’s position of 32,000GWh would require only about 5,200MW of wind and solar (and other renewables if they can compete on cost).
But the Labor position requires just another 5,650MW. Yet the Abbott government refuses to entertain this on the basis, says Industry Minister Ian Macfarlane, that it would be impossible to build that extra capacity. We’ve already pointed out the absurdity of that statement.
In other words, as the rest of the world scales up ambition and expands renewable energy targets, the Abbott government is ensuring that renewable energy investment remains at a standstill, because it wants to cut its own target by another 450MW. This comes as new pressure is put on the Abbott government to justify its own climate and clean energy position.
As Green Energy Markets notes, the level of projects required to be committed over the 2015 to 2016 period remains broadly the same under all scenarios.
The difference of just 450MW of new projects is for the 2017 and 2018 period. By which time, the renewable energy sector would hope, the Abbott government will have been booted out of office and the Labor government will deliver on its promise to re-boot the 2020 target, and hopefully design a policy that looks beyond 2020.
However, agreement needs to be reached soon. Under the “stepping stone” targets for the RET, some 1,400MW of capacity needs to be committed in 2015 to ensure that there will be enough capacity to meet those targets. If the current surplus of certificates dries up quicker than expected, as much as 2,300MW might be needed.
But as Bloomberg New Energy Finance has pointed out, only one Australian project has been financed in the past six months, and there are no other new projects being delivered, apart from the 200MW of wind farms and some 20MW of smaller solar plants commissioned by the ACT government; and the 210MW of solar plants being built (Nyngan, Broken Hill and Moree) under funding from the Australian Renewable Energy Agency.
The biggest casualty of any compromise agreement will be big solar, which might have thought it would account for much of the 2,500MW of capacity that will now be sacrificed for political purposes.
That’s because most projects under the new scenario would need to be financed and committed by 2017 – around the time that many expect big solar to compete with wind energy.
Still, smaller projects could get the go-ahead, particularly with corporate and local council interest, and WA could also provide a lot of solar projects because of the unique state of its market.