The Government is expected to respond to the review in a week
The Abbott Government could face a tough battle in the Senate if it acts on controversial recommendations to wind back the 20 percent Renewable Energy Target, and the issue has the potential to send the country to a fresh election.
The Government says it will respond to the RET Review recommendations in a week or so, but already political opponents and the renewable industry are arming for a political conflict if the Government pushes ahead to legislate for winding back the target.
The Government’s RET Review, chaired by Dick Warburton, says there is a “strong case” for winding back financial support for small scale energy systems, such as household solar, while support for larger renewable energy projects should either be closed or scaled back.
The report suggest two options to the government. In option one, the scheme would be closed to new investment, thereby slashing the target to around 15 percent.
Under option two, the target would be set at 20 percent but be reset each year and new renewable energy power stations be given approval only if electricity demand increased.
Industry Minister Ian Macfarlane defended the review’s recommendations on ABC Radio, saying the RET’s goal of encouraging small scale solar had been a success, with two million home installations.
He agreed with the review’s conclusion that “the small scale renewable energy industry is becoming commercially viable.”
The review findings include:
- An assessment that the RET would cost a further $22 billion in cross subsidies if left unchanged.
- Renewable energy generation has almost doubled under the RET scheme
- Proposes a “compromise” plant that renewable energy make up 50 percent of new capacity, which would be minimal as power demand has fallen
- The RET is exerting downward pressure on wholesale power prices, has delivered a “modest level” of reduction in greenhouse emissions but is a “high cost approach” to delivering that goal.
Renewable energy proponents joined in strong criticism of the review, with Green’s leader Christine Milne describing it as “climate denier drivel.”
“The Prime Minister has made a decision that he wants to prop up coal,” she said.
“The RET review is part of the dinosaur protection racket, a $8 billion favour for Tony Abbott’s mates in the fossil fuels sector.”
Research from financial analysts Bloomberg New Energy Finance says closing the RET would destroy billions of dollars invested in Australia’s power sector, causing potential bankruptcies.
The Clean Energy Council claimed that the recommendations would “decimate” the renewable energy industry, damaging over $10 billion in investments made so far and putting 21,000 jobs at risk.
“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 investment,” said Kane Thornton, CEC acting chief executive.
“The review panel has clearly misunderstood the devastating effect of many of its recommendations. It is particularly naïve 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.”
Thornton said adopting the recommendations would create a major sovereign risk issue for renewable energy investors in Australia, and flew in the face of 99 percent of the 24,000 submissions sent to the review panel which supported RET retention.
John Grimes, from the Solar Council, said that if adopted, the review’s recommendations could cost up to 8000 jobs in the solar industry, and he warned the government of the political backlash.