The new conservative plan to shut down renewable energy

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The plan by Senate cross-benchers to nobble the renewable energy target, and hand out $14 billion in subsidies to hydro plants built decades ago, is patently absurd. The big worry is that it is not far off what the Coalition proposes, and a deal to kill renewables may not be hard to obtain.

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More details have emerged about the plan hatched by a group of conservative cross-bench Senators to dramatically reduce the amount of new renewable energy projects to be built in Australia over the next five years, and to deliver a windfall subsidy to old hydro electric plants.

The plan outlined by libertarian (low taxes, minimal government) Senator David Leyonhjelm essentially delivers on the Coalition plan to limit new build renewables to around 26,000GWh, but has the bizarre inclusion of handing subsidies earmarked for new projects to state-owned hydro plants that were built decades ago.

The renewable energy industry has reacted with horror. The Clean Energy Council said it would result in a transfer of nearly $14 billion of wealth to those plants, remove more than $14 billion from new development, causing new projects to remain at a standstill and put 18,000 jobs at risk. (See its list below)

The proposal was described by The Australia Institute as a “shocker” and by the Australian Wind Alliance as “hair-bained” and “madness”. All agreed it would be worse than even what the controversial Waburton Review proposed.

It is truly absurd. But what is really unsettling for the industry – and anyone who cares about the development of renewable energy in Australia – is how similar the policy is to what the ruling Coalition is proposing.

Now, while it seems preposterous that the Coalition would ever allow renewable energy certificates to be pocketed by the hydro operators (over and above the baseline currently in place), nothing can be ruled out from this government.

But it’s really just about mixing numbers to get to the same answer, and right now it seems that that answer is 51,000GWh – what the conservative side says is equivalent to a “real” 20 per cent of the revised demand forecast by 2020. They just propose different routes to get there, although the impact on the renewable energy industry would be equally devastating.

As we know, the current legislated target for the LRET (the large scale component) is 41,000GWh by 2020. Tha would cause about 8,000MW of new wind and solar plants to be built over the next 5-6 years, something that the existing coal and gas generators clearly don’t want to happen. The small scale component (mostly rooftop solar, but also solar hot water and others) is uncapped, but is currently thought to be at least 10,000GWh by 2020 at the current rate of deployment. That makes a total of 51,000GWh.

This number was bandied around by Industry Minister Ian Macfarlane last month when the Coalition came under pressure to cut a deal with Labor, and after the minister signaled that he wanted the 41,000GWh to be slashed to 26,000GWh – meaning new build projects would be cut by two thirds. (16,000GWh of new build has already been completed).

So Macfarlane’soffice tried to hide this number by using a different one – 51,000GWh. They got there by adding 26,000GWh of large scale, to 10,000GWh of rooftop solar, and 15,000GWh of pre-existing hydro, and declared they weren’t against renewables after all.

The difference between the Coalition and the cross-benchers would be in the treatment of the pre-existing hydro, which when added to the original RET target of 45,000GWh (before it was broken into a large scale and small scale target)  took the total of 60,000GWh, or around 20 per cent of what was then presumed to be aggregate demand in 2020.

Leyonhjelm wants the pre-existing hydro to get the certificates for everything they produce. This is patently ridiculous. It might not take much for Macfarlane to convince them that the same outcome (nobbling of new build renewables) can be achieved without such lavish handouts to the NSW and Tasmanian governments.

DLP Senator David Leyonhjelm
DLP Senator David Leyonhjelm

Even Macfarlane would agree with the TAI’s Richard Dennis, who said the proposal wouldn’t cut the cost of the RET to consumers. It would see the billions flow to the owners of existing hydro electricity generators, rather than to the builders on new renewable power plants.

“Under the scheme consumers would pay all of the costs but get none of the benefit,” he said in a statement. “Indeed, if you were designing a scheme with the objective of undermining the RET and increasing electricity price, it’s difficult to think of a more effective way of doing it.”

But it is remarkable how similar the broad Leyonhjelm proposal is with that of the Coalition – apart from the hydro treatment and proposed links to Direct Action. Leyonhjelm advocates full protection for affected industries, curtailing the development of new wind and solar, leaving household solar (a political hot potato) untouched. It even advocates for more measures to encourage stand alone systems in remote and off-grid areas with solar and storage.

It is said that the Coalition is being urged – particularly by “big business” and the incumbent utilities – to reach bipartisan agreement with Labor over a change in the target, because that is seen as providing more “certainty”.

But the Coalition doesn’t care. It’s mission is quite clearly to reduce the “new build” component of the RET to the 26,000GWh suggested by Warburton and endorsed by Macfarlane, Hunt and Abbott.

If it can do that with support of the cross-benchers, then that is exactly what it will do. Already, the idea has the stated support of John Madigan and Bob Day, Jacquie Lambie seems interested, Nick Xenophon will support anything that kills the wind industry, and even Clive Palmer – as we discussed in our article Can Palmer be tusted to defend the RET” – has made similar noises about pre-existing hydro.

Leyonhjelm’s ridiculous proposal will just be a smoke-screen for what is really on the agenda as confirmed by the support of the Coalition and many of these cross-benchers, including the Motorist Party’s Ricky Muir – of yet another investigation into wind energy and its economic impact.

The CEC described that “farcial” move – approved by the Senate on Monday – as “groundhog day”. It will be the 9th such inquiry – and all have so far supported the case for wind energy.

Here is the CEC’s list of reasons why the Leyonhjelm’s scheme is madness:

  • Supporting existing hydro at the expense of new renewable energy. This proposal would provide additional support to existing hydro generation, reducing the amount of new renewable energy generation needed by over 60 per cent, from 25,000 Gigawatt-hours (GWh) to just over 9,000 GWh. This scale of reduction would have a devastating impact on existing market participants, while the flaws in this approach would likely undermine any new investment.
  • Transfer of $13.5 billion to existing hydro operations. It would lead to a massive wealth transfer to existing hydro generation, at the expense of new renewable energy, worth more than $900 million per year, or $13.5 billion between now and 2030 when the policy ends. Almost 60 per cent of this would flow directly to Tasmania.
  • Loss of broader economic benefits. The benefits of investment in new large-scale renewable energy would be lost. This includes the $14.5 billion of expected investment and thousands of new jobs in rural and regional parts of Australia.
  • Loss of carbon abatement benefits. The new investment delivered by the current RET is expected to deliver carbon reductions of 194 megatonnes of carbon by 2030. If the policy was altered as proposed, taxpayers would need to fund additional measures through the Direct Action policy to replace this abatement.
  • Higher power prices for consumers. A reduction in new electricity supply and competition in the wholesale electricity market would lead to higher power prices for consumers. The benefit of new renewable energy investment on power prices was demonstrated by the ACIL Allen modelling for the recent Warburton Review, which showed that any scenario which led to less renewable energy also led to higher power prices.
  • Hydro power is already supported by the RET. Hydro is already eligible under the RET, where it generates above a pre-determined baseline. This provides an incentive for the maintenance and upgrade of existing hydro generation, and has provided revenue to Australia’s existing hydro power generators over the life of the policy.

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30 Comments
  1. Beat Odermatt 5 years ago

    Are these people real or do they try to win the Nobel prize for Stupidity?

    • disqus_3PLIicDhUu 5 years ago

      Reactionary freaks of the far right, only have one master, that’s corporations, who they manage the people’s money on behalf of.
      They serve the IPA in Australia, which is coal, fossil fuels, mining and business council, with a media arm Murdoch the Menace, their personal politics are plain to most, that of sycophantic sociopaths.
      Get angry people, we need to bring these aholes down.

      • michael 5 years ago

        slaves to the corporations….. you did notice that the money was going to STATE OWNED hydro schemes?

        • disqus_3PLIicDhUu 5 years ago

          You don’t get it do you.
          The worst part is some cheap, off peak, dirty coal power is wasted pumping water back up into the reservoir again, for later peak consumption, so that supposed renewable 1GWh is really an energy loss at the consumer and cost about 1GWh’s worth of coal.

          • michael 5 years ago

            Guess I don’t. Read the article again and once more couldn’t see the reference to any pumped storage generated from coal power… Was that mentioned by them and not highlighted above?

          • disqus_3PLIicDhUu 5 years ago

            Besides losing new renewable to this, off peak coal to hydro storage needs to be stopped

    • Blair Donaldson 5 years ago

      They are more likely good candidates for the Darwin awards.

  2. Marg1 5 years ago

    Where do these dickhead senators get their information from? Honestly, it makes me so angry.

    • Megs 5 years ago

      They get their information from the people who would make money from it, and of course contribute to the odd election campaign,.

    • john 5 years ago

      Probably Hunt, Fox. Jones who knows

  3. Farmer Dave 5 years ago

    I was listening to the Senate this afternoon and Senator Leyonhjelm made a statement in praise of coal. It was straight from the coal industry’s “coal is the only thing that will save people from energy poverty” songbook. His 5 minute paean of praise for coal (and rubbishing of those who wanted to see coal exports stop) contained not a word about the climate, about emissions from coal, nor even of the direct health hazards of coal production and combustion. Senator Leyonhjelm is clearly a climate change denier.

    • Guest 5 years ago

      Clearly a brainwashed dickhesd to boot.

    • Leon Degney 5 years ago

      Clearly a brainwashed dickhead to boot, Dave.

  4. suthnsun 5 years ago

    As disenfranchised individuals all we can do is build out whatever we can in rooftop solar…consider donating a system to those who can’t afford it but have available roof space.. ensure that all parasitic loads are removed, insulate to the max. and replace appliances with the best energy rating.
    I am down 95% transport and energy emissions..

  5. Blair Donaldson 5 years ago

    If the Labour Party win the Victorian state election and introduce a Victorian-based RET, would that circumvent this latest stunt from the anti-renewables fools?

    • Evan Vernon Giles 5 years ago

      Yes, it would and since it is all down to the state governments any way you’d need them to come to the party
      Why the cross bencher’s would support such a proposal is the question here
      Dose not make sense when South Australia is getting all it’ base load power from renewables at the moment

    • john 5 years ago

      no

  6. Mike A 5 years ago

    What are the funds going into Hydro power proposed to be spent on?

  7. john 5 years ago

    The hard line on why Renewable Energy needs to be stoped is because
    RE has totally undermined the Generators profit.

  8. john 5 years ago

    I wish I could post a graph of price of power over the last 30 years.
    What it shows is that Electricity demand has fallen down and the high price for peak demand has gone in last 3 years this is devastating for the industry.
    Frankly the Industry has to get a realistic outlook and get into storage as quick as possible because if they do not they will be out of the cycle.

  9. Alan Baird 5 years ago

    Not so much egregious reasoning, more brain dead. They’ve obviously been casting about for something thick to enact and they’ve unwittingly scored a bullseye. Just remember, it was FEDERAL PARLIAMENTARIANS that took several days to work out that an old crock from West Australia had used more electricity to double her bill (which they had been moaning ad nauseam about) and it HADN’T been caused by the carbon tax or anything else! And THEY were probably the Rhodes Scholars. I actually think that Tony got his because his dad’s mate ran a dance academy in the UK and was Prime Minister in his spare time. It all makes sense now. Note to the anti-wind turbine crowd: all the above is serious so you have permission to be outraged for any reason that may occur to you.

  10. onesecond 5 years ago

    Goodnight Australia!

  11. michael 5 years ago

    quoting the Australia Institute…. that’s not going to end well. Next they’ll be having us believe that providing roads to regional towns is direct mining subsidy… oh wait, they already tried that one. No next they’ll say mining diesel is different to farming diesel… nope they’ve already tried that one too. Are they the australian institute, or just anti-right, anti-mining institute? (this by no way endorses the above approach by the cross benchers!)

  12. Ken Fabian 5 years ago

    David Leyonhjelm and most professional Conservatives/Libertarians are betting our future that 97% of climate scientists, every peak science institution and every bit of formal, expert advice is wrong – that’s wrong in the ‘right’ way of grossly overestimating the impacts of emissions on climate of course, rather than wrong in the wrong way of grossly underestimating them. Free market ideology as it currently exists simply cannot deal with reality on climate because a global problem of this kind requires intergovernmental agreements and national regulations, tax incentive/disincentives and constraints of the sort that they hold as an article of faith impinges unreasonably on individual and corporate freedom.

    The Conservative and Libertarian Right will continue seeking to encourage and support disbelief and inculcate intractable distrust of science based knowledge and forethought on the issue within the community – encourage the electorate to deny science based reality – rather than upgrade their dogma to better deal with reality in large part because it has appeared to be electorally successful. And when Leyonhjelm, Abbott, Joyce and others have their confidence that 4 to 6 degrees of warming simply cannot happen undercut by accelerating warming our nation will retain the big demographic opposed to action on emissions they have helped create.

  13. George Papadopoulos 5 years ago

    Conspiracy theories? I thought that was something that “anti-wind” people were accused of believing in.

    • Blair Donaldson 5 years ago

      George! Back from your latest pseudoscience con flab on how magic paint protects people from EMR or how magnets will fix your dodgy joints? You’ve been missing from the windfarm debate for a while, is that because your beloved Sarah Laurie has demonstrated such a tenuous grasp of reality that even you are starting to see the light? Miracles may indeed exist.

      • George Papadopoulos 5 years ago

        And you expect any response to your abusive, offensive slander? Hail Blair – the protege of the wind industry!

        • Blair Donaldson 5 years ago

          Hi George, found some new medical condition lately to flog another one of your potions? I hope you’re keeping out of the sunshine and all that EMR 😉

          • George Papadopoulos 5 years ago

            Your new medical condition must be UVB therapy and cosmic ray bombardment. Keep enjoying it Blair – hope there are some small brains around to laugh at your nonsense.

          • Blair Donaldson 5 years ago

            So, you’re not laughing?

Comments are closed.

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