Let’s not kid ourselves — we all saw this coming. Australia’s Prime Minister Tony Abbott has reportedly asked the head of the Renewable Energy Target review to investigate abolishing the RET altogether, a process that has sidelined the Environment Minister Greg Hunt, and left renewable energy companies, fossil-fuel generators, and investor groups warning the government such a decision will ultimately damage Australia’s investment desirability.
The Australian Financial Review reported on Monday that “sources” had informed them that Mr Abbott had asked the head of the review, Dick Warburton, “to do more work on the option of terminating the target altogether”, after Mr Warburton’s review was apparently leaning towards simply scaling back the RET.
These same sources added that the Environment Minister Greg Hunt — who had advocated scaling back the RET as a compromise — “has been sidelined from the process”, leaving Mr Abbott, Treasurer Joe Hockey, and Finance Minister Mathias Cormann pushing for the complete abolishment of the RET.
The AFR added that their government source has confirmed that it is now “more likely” that the RET will be abolished under a so-called “closed to new entrants scenario” in which only existing contracts would be honored. The government is likely to make their decision (which is to say, announce their decision) by the end of August.
Unsurprisingly, this news has not been taken well.
“Slashing the Renewable Energy Target would devastate Australia’s renewable energy sector, send hundreds of companies to the wall and tens of thousands of hard-working Australians onto the employment scrapheap,’’ said Clean Energy Council acting chief executive Kane Thornton.
“Such a move would be reckless, given the government’s own analysis shows slashing the RET would save no money on power bills, yet would devastate billions of dollars of investments made in good faith in renewable energy projects across the country.’’
Another Bull-headed Tony Abbott Plan
Ever since entering office in September of 2013, Tony Abbott has made no bones about his distaste for existing environmental policy implemented by the previous Labor Government. The carbon tax that had been the pinnacle of previous Prime Minister Julia Gillard’s term was first on the cutting block, and after several weeks of political machinations, was finally scrapped in July of this year.
By that point, Mr Abbott had already selected Dick Warburton, former Reserve Bank board member and arguably another climate skeptic, as the head of a committee set to review the Renewable Energy Target. All the while Mr Abbott, Treasurer Joe Hockey, and the majority of the Liberal Government have been claiming that the carbon tax and other renewable energy policies were driving up the cost of electricity for “everyday Australians”.
In response to the weeks of inevitable speculation and rumors regarding Tony Abbott’s plans, and finally these latest revelations, renewable energy groups, investors, and even the fossil-fuel generators, are warning Mr Abbott.
Miles George, chief executive of Infigen Energy, has described the proposed changes to the RET as “economic vandalism” in an attempt to “pander to the climate-sceptic minority.” Mr George went on to reprimand the Liberal Government for creating “sovereign risk” by betraying their “often-stated position that ‘Australia is open for business'” in winding back or even closing off the RET to future investors.
In the leadup to the last federal election, when addressing over 500 people at the renewable energy industry’s annual Clean Energy Week convention in Brisbane, Senator Simon Birmingham said, “It has been interesting to note the claims being made about what the Coalition will or won’t do though. All of it is simply conjecture. Can I make clear, the Coalition supports the current [RET] system, including the 41,000 GWh target. We know and appreciate that the industry wants certainty.”
The Australian Financial Review quoted Origin Energy and Energy Australia, electricity generators which would both benefit if the RET were abolished, as saying that the RET should be reduced, not scrapped, while GE Australia has said that killing the RET would make a mockery of the governments open for business mantra.
Solar Industry Already Suffering As World’s Largest CPV Is Scrapped
The uncertainty surrounding the likelihood the Australian Renewable Energy Target will survive has already claimed a number of investment opportunities over the past several months, none more high-profile, however, than the news that plans for the world’s largest Concentrated Photovoltaic (CPV) power plant have been scrapped amid low wholesale electricity prices and uncertainty over Australia’s RET.
The news came at the same time that a new report from the Australian Solar Council warning that demand for solar PV in Australia could fall by 40% to 50% if the Renewable Energy Target is scrapped.
The project, which had been set to install a 100 MW CPV power plant in the northwest of Victoria, Australia, would have been the world’s largest of its kind. Its cancellation also negates a $75 million (AUD) funding agreement with the Australian Renewable Energy Agency (ARENA) and a $35 million (AUD) from the Victorian government.
“After careful consideration of project economics, we have decided to reassess plans for the Mildura 100 MW Solar Power Station,” said Dr Michael Goldsworthy, CEO of Silex. “Since we launched the 1.5 MW Mildura Demonstration Facility in June last year, we have captured a great deal of useful data and are now investigating alternative opportunities to build on the outstanding work already achieved at the Mildura site.”
The news comes on the heels of the announcement of French nuclear giant Areva discontinuing its attempts to commercialize Australian CPV technology.
Australia Solar Council’s Furious Response
These two announcements serve as proof of the Australia Solar Council’s reaction to the news that the RET could be scrapped.
“Under instructions from the Prime Minister, the Warburton [RET] Review did a hasty back track and is now recommending the axing of the RET,” said John Grimes, the Australian Solar Council’s CEO.
“This is a line in the sand moment for the solar industry. If the Government goes ahead with its plans to axe the RET, demand for solar will fall 40-50% straight away,” said Grimes. “Thousands of Australians will lose their jobs. Hundreds, if not thousands, of small businesses will shut up shop.”
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