Warburton Review recommends slashing Australia’s Renewable Energy Target

August 30, 2014 at 3:40 pm 5 comments

Earth Relay for Climate Action - BrunswickNo surprises in the Warburton Review recommendations published this week. The review panel was after all hand picked to return a result the conservative and ideologically driven Abbott Government would be happy with.

Chaired by self confessed climate denier and former chairman of Caltex Dick Warburton, the recommendations involve changing the target by either closing the scheme to new investors or by setting targets based on the growth of electricity demand. The review also called for the outright abolition of the small-scale RET scheme – the scheme that assists solar PV panels installation on domestic houses and small businesses. This change would push up the cost of panels by 50 per cent according to a Sydney Morning Herald Report.

The review was very narrow in focus and did not consider adequately the climate science imperative for rapid climate change action and need to rapidly transition to renewables in stationary energy, and the need to do this as part of the global uptake in renewables, and nor did it assess or model the substantial health benefits and reduced medical costs provided of reduced air pollution.

Link: Warburton Review of the Renewable Energy Target

A biased panel with a fossil fuel agenda

The Climate Change Authority had the original ambit for reviewing the operation of the Renewable Energy Target this year. The role was usurped by Prime Minister Tony Abbott hand picking Dick Warburton and fellow panelists who came with their own agendas strongly connected to the fossil fuel industry.

Climate Councillor Professor Tim Flannery said “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,”

“For a panel led by someone that has a lack of understanding of the scientific basis of climate change the results are hardly surprising. Clearly the process has been highly flawed. There was already an independent body tasked with reviewing the Renewable Energy Target, the Climate Change Authority. Unfortunately a Panel was convened with a number of people with a well-known history of working closely with the fossil fuel industry.”

Flannery highlighted that renewable energy has overwhelming support amoung Australians with about 10% of Australian households who already generate energy from their solar panels. The industry currently supports about 21,000 people mostly in small businesses and many in regional areas where jobs are often scarce.

“It is crucial that reviews like this are independent and at arms length from those with a vested interest. The public cannot have confidence in this process as vested interests are simply too close to it.” he said. “How can the government take advice on renewable energy from panel members who’ve worked for the fossil fuel industry.”

“The RET review has been a poor process with no credible outcomes. It will only lead to more uncertainty for the future of Australia’s energy.” he concluded in a statement on the Climate Council website.

The Climate Council issued a major report on Australia’s electricity industry by Andrew Stock arguing that the sector was ageing, inefficient and unprepared with much of the coal powered generation needing replacement in coming decades anyway.

Senator Christine Milne, leader of the Greens, did not equivocate on the report calling it climate denier drivel. This is what she did with the report:

Air Pollution Health costs not considered

Secondly the review failed to incorporate social costs and benefits of changing generating technologies in the ongoing cost of pollution on population health. Doctors for the Environment Australia spokesperson Dr George Crisp outlined succintly that Reducing the RET will cost Australians’ health.

“It’s just astonishing why the Government would want to pull apart a policy that was saving lives and reducing illness.” Dr Crisp said in a media release. “Despite this, the significant cost to the health system of continued fossil fuel use, particularly in terms of air pollution, was not taken into account in the review,”

Crisp argues that the cost of health care associated with coal fired power generation emissions has been conservatively estimated at $2.6 billion a year in Australia. He highlighted that air pollution increases the risk of heart disease, stroke and lung cancer; worsens chronic lung disease, asthma and bronchitis; and delays lung development in children, all of which increases emergency department presentations, hospital admissions, loss of productivity through illness and other well-documented economic costs.

Fine particulate pollution (PM2.5), which coal mining, transport and coal fired power stations contribute to, accounts for 1590 deaths in Australia’s four main cities of Sydney, Melbourne, Brisbane and Perth every year. PM2.5 particulates cause 2070 hospital admissions for heart disease annually across these cities, while the larger PM10 particles are estimated to cause 1130 hospital admissions every year for respiratory problems.

“When you account for public health, the notion that coal is cheap is just pure nonsense,” said Dr Crisp. “Unfortunately, it’s the public- especially children, those with chronic illness and the elderly- who will inevitably pay the price.”

20140710-AI-estimated-RET-abatement

Narrow Economic costs of current Industry paramount

Instead the review focussed tightly on economic costs, but even in this regard the modelling by ACIL Allen showed that continuing the present scheme there was little retail price impact on electricity costs with sligthly more costs leading up to 2020, then slight savings from then on.

The review also failed to factor in and model subsidies to the coal, oil and gas industry in Australia, including their broader negative health and climate change effects, which amounted to around $23 billion in 2011 alone.

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20140227-OECD-G20-data1- Aus-fossil-fuel-subsidies

The Engineering peak body, Engineers Australia made a statement backing the Renewable Energy Target in its current form.

“Not only are there major environmental benefits to be had under RET, but there are significant employment and economic benefits to be gained from RET projects, especially in regional areas,” said Chair of Engineers Australia’s Sustainable Engineering Society, Dr Alice Howe.

“Ongoing investment in renewables is a critical component of our energy security mix.” Howe said, “Heavy reliance on fossil fuels creates a major vulnerability in our economy. If significant global action on greenhouse gas reductions occurs, the consequences for Australian energy exports and even Australia goods and services, due to their high carbon footprints, may be severe.”

Transfer of wealth from fossil fuels to renewables

Lenore Taylor writing in the Guardian summed up the central reason:

‘The review conceded the RET was meeting its objective of encouraging renewable investment and reducing carbon emissions, and that it was also pushing down power prices. But it said it should be closed because it is “transferring wealth” from fossil fuel generators to renewable generators.’

There you have it. The renewable energy target was all about transitioning wealth away from coal and natural gas to renewables. The energy companies had full knowledge of this transition and were in a powerful position to transition their business models accordingly, but have chosen to largely defend their rapidly aging, outdated and polluting generating assets and technologies.

The abolition of the carbon price in July has already given fossil fuel generators a windfall in reduced costs. Slashing the Reneweable Energy Target would also give billions in windfall profits to all these generators and particularly the big three: Energy Australia, AGL Energy, and Origin Energy.

The Climate Institute, Australian Conservation Foundation and WWF-Australia did independant modelling analysis on who would benefit from reducing or abolishing the RET and released their report on 18th August. The report (media release | report PDF) found that:

  • $8 billion additional profit to coal and $2 billion to gas generators (net present value of future profits 2015-2030).This includes $2 billion in extra profit for EnergyAustralia, $1.5 billion for Origin and $1 billion for AGL.
  • No decline in electricity prices: in fact, they could increase slightly (an average $30 increase to the annual household power bill, with most of this increase taking place after 2020). This is consistent with modelling commissioned by the Government and studies conducted independently by leading economic analysts.
  • Additional carbon pollution of about 150 million tonnes to 2030 (equivalent to adding nearly 4 million cars to the road) with additional pollution costs of over $14 billion.
  • Loss of $8 billion in investment in new renewable capacity, with New South Wales and South Australia each standing to lose over $2 billion in foregone investment.

20140818-RET-top-6-companies

Watch the video associated with the report:

Changes to RET opposed by ALP, Greens and PUP

It is however unlikely the Government could get changes to the RET through the present Senate before the next election. The Government came into office with a bipartisan promising to retain the RET, but to conduct a review into it’s effectiveness. Well, the Warburton review has found it to be successful, too successful for it’s own good, and not beneficial to fossil fuel industry and electricity generators which the Abbott Government is so intent on supporting.

Both the ALP and Greens want the present scheme continued. Senator Glen Lazarus, leader of the Palmer United Party in the Senate also articulated strong support for the RET in a media release:

“The RET has to be retained. Australia needs to move towards cleaner renewable energy sources and the RET supports this. Australia must continue to invest in cleaner renewable energy and the clean energy sector needs certainty to continue that investment. Retaining the RET will support increased investment resulting in much-needed innovation and efficiencies to drive improvement and growth.

“The majority of Australians want Australia to move away from dirty fuel like coal and to increase our use of renewable energy sources. By reducing or removing the RET, the Abbott Government is risking the future of our environment and the health of our planet. The cleaner renewable energy sector needs to grow. It offers significant potential for jobs and other opportunities for the economy.

“All this talk about abolishing and reducing the RET is harming investment in this sector and jeopardising many jobs. At the moment, businesses are reluctant to inject further investment in cleaner renewable energy because the RET’s future is under a cloud. Businesses need finance to fund cleaner renewable energy projects and banks won’t lend money to businesses when the future of RET is up in the air. The market needs certainty and the Abbott Government needs to take a responsible and firm approach on this.

“Palmer United is firm. We will block any attempt by the Abbott Government to abolish or reduce the RET.”

RET scheme review all about business uncertainty

Glen Lazarus hit the nail on the head. Abbott doesn’t have much chance of changing the current RET scheme, but the review and talk of slashing the RET has effectively changed the business investment certainty in renewables in Australia, and along with it business investment. Silex Systems announced recently it’s suspension of developing the 100MW 2000 dish solar CPV farm near Mildura due to uncertainty over Federal Government support for renewables. The company built a demonstration plant which was launched in July 2013.

Wind projects presently in the planning phase will also be hit by the business uncertainty. The Hydro Tasmania Taswind project of a $2 billion wind farm on King Island with an undersea basslink connector to the National Electricity Market is also unlikey to proceed in the current environment, as are other projects on Tasmania and the mainland, according to a Hobart Mercury report.

“The uncertainty in the energy market that has been brought on by this process is preventing investment in Australia’s energy future. It’s lamentable that over the last year or so most of the large scale investment in renewable energy has dried up,” said Prof Flannery from the Climate Council.

This all comes as South Australia is about to pass 20 per cent renewables and will set it’s own Renewable Energy Target of 33 per cent of it’s own enertgy from renewable sources by 2020.

“Have a look what’s happening around the world in China, America, and all over Europe, where they’re investing heavily in renewable energy, and think about why they’re doing that,” South Australian Environment Minister Mr Hunter said in an ABC news report, “Why on earth would we do the opposite?”

With elections in the next year in Victoria, NSW and Queensland state governments need to feel community pressure to step up and transparent regulate of mining and the power industry in supporting the transition to renewable energy.

Here in Victoria this is particularly important given air pollution and long term health concerns engendered by the Morwell mine fire and the multiple regulation issues highlighted in the Enquiry that has just finished.

Long running concerns over residents being taken for granted have sparked kitchen table discussions in the La Trobe Valley, similar in style to the community focus on issues and representation in the Federal seat of Indi last election which resulted in Liberal Sophie Mirabella losing her seat to independant Cathy McGowan. Morwell Neighbourhood House coordinator Tracie Lund has put herself forward as a possible candidate for the Latrobe Valley 1st group, according to a Latrobe Valley Express report.

There is also the lack of transparency over the potential sale or future of Alcoa’s Anglesea coal mine and power station which local community group Surf Coast Air Action is campaigning on.

Electricity consumers also have the option of moving to energy companies that support the renewables sector and source their power from renewables with Giles Parkinson writing up Who is the greenest energy retailer in Australia? to help people assess their energy retailers.

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Progress on Moreland Council Divestment #MarchinAugust for a fairer Australia and climate action

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