Published on September 2nd, 2014 | by Joshua S Hill41
Australian Renewable Energy Target Now A Giant Game Of Unintentional Dominoes
September 2nd, 2014 by Joshua S Hill
Last week, news reached mainstream media that the Australian Renewable Energy Target review panel had handed in its recommendations to Prime Minister Tony Abbott, and predictably enough those recommendations were soon public knowledge.
To quote Bloomberg, “Australia should weaken or phase out its renewable-energy target in favor of a lower-cost approach to cutting greenhouse-gas emissions, a panel appointed to review the plan recommended.”
I covered the rumors and fears of such a recommendation for several weeks leading up to last Thursday, and then I remained relatively quiet. In some regards, I was simply stymied by the fact it was the weekend. In other respects, I simply let those smarter than me cover the immediate aftermath.
Friend of the network and fellow countryman Giles Parkinson has been doing a stellar job covering the fallout over at RenewEconomy, and I recommend you go and check out his immediate response and subsequent articles. Bloomberg has also written a pair of interesting articles investigating the issue that are worth a read.
Playing Dominoes with the Climate
The fallout from the recommendations given by Dick Warburton’s panel of biased climate skeptics have been utterly unsurprising — another reason I haven’t felt compelled to write about them given the number of other stories from around the world which do something other than inspire thoughts of overthrowing the national government. Chinese solar capacity could reach 100 GW by 2018, while European energy efficient building spending is expected to reach $800 billion through 2023.
In other words, thank heavens the rest of the world is carrying on as if one of the leading economies of the world hasn’t just made a monumental environmental policy mistake at the behest of ignorant political chiefs.
But at some point, the number of dominoes that have collapsed to the ground or are teetering on the brink simply require critical comment.
Never mind for a moment the obvious pandering to fossil fuel lobbies and their institutional cronies desperate not to lose their polluting cash-cows. Let’s just look at the impending culling that is predicted to sweep across the Australian renewable energy industry.
An Industry Down the Drain
Bloomberg kicks us off with a very succinct and clear picture of what the recommendations mean for the Australian renewable energy industry:
Accepting either [recommendation] would imperil A$20 billion ($19 billion) of existing projects and shut the door on new investment.
They further quote Kobad Bhavnagri, an analyst for Bloomberg New Energy Finance in Sydney, who said that “Essentially, this says Australia is closed for business for renewable energy.”
The Australian RET required electricity retailers to purchase renewable certificates from wind and solar farms or generate clean energy themselves. The recommendations (available in full here) suggest either winding down the RET altogether and “grandfathering in” existing recipients, or modifying the program to allocate a share of growth in electricity demand to renewables.
Such a change to the Target diminishes any impetus companies have to invest and rely on renewable energy generators, subsequently kicking the renewable energy industry in the shins and running away, squealing in happiness all the way to the bank with the share of their savings.
Meanwhile, the renewable energy industry loses out on at-home investment, sees diminishing demand for capacity, all of which force international investors to look elsewhere, kicking off the cycle again so that, inevitably, the industry suffers a catastrophic failure.
Existing and Future — Gone
Giles Parkinson, writing on Monday, covered the warning from Australian analysts that a number of Australia’s wind farms could be forced to close down if the RET proposals are taken on-board. The RET review panel has made inaccurate assumptions, failed to consider the basic refinancing risks, and ignored the debt obligations many of the wind farms are under and the future struggles they will face as a result.
Quoting an unnamed analyst:
“I’m amazed at how flawed this document is. It is internally inconsistent, it is intellectually flawed … and it doesn’t even try to cover up its bias. It is 160 pages of self-serving logic.”
Another unnamed commentator, referring to the fact that almost every wind farm in the country is set to be up for refinancing in the next 3 years, said, “They will be in major financial distress, and they are all at risk of falling over.”
The wind industry isn’t the only one facing a desperate future. The Australian solar industry — already second best to wind — faces innumerable challenges if the RET recommendations are upheld. A number of companies have already bailed on Australia, many more have warned of the dire consequences facing Australia if they go through with the RET recommendations. Already projects across the country have been scrapped, scaled back, or put on hold, as investors and companies wait for some sign that the government isn’t as short-sighted and blind as they currently appear.
Dick Warburton Living up to his Name
And to put a wonderful cap on it all, Dick Warburton couldn’t last 10 minutes without making a fool of himself in an interview with Fran Kelly of ABC radio’s Radio National a day after the report was released, when confronted with facts from his own report which showed that their modelling estimated the value of existing coal-fired power generators would increase by $9.1 billion. Warburton had challenged Kelly’s assumption that coal generators would be big winners, and when faced with his own modelling, Warburton could only suggest that the $9.1 billion was of “neutral benefit to” the coal generators.
Needless to say, such logic does not stand up.
Or sit down. Lie down. Exist at all in any dimension of reality or otherwise!
If you aren’t up for listening to the entire interview, head along over to the Climate Spectator for their rundown — given the absurdity of what Australia is facing, Dick Warburton’s inability to back up his own recommendations under the face of any type of scrutiny is proof enough everything has gone to hell in a handbasket.
Beaten by their Own Facts
The final nail in the coffin of Warburton’s recommendations comes via the very people whose work they used to justify their recommendations.
ClimateWorks has hit back at the panel for using their Low Carbon Growth Plan to support their proposal that there are cheaper options than the RET. In a statement sent out Monday, ClimateWorks make it clear what they think of their work being used by the review panel:
The panel cited ClimateWorks’ Low Carbon Growth Plan as evidence that there are lower cost abatement measures available than renewable energy. However, our research also clearly shows that we need all of those measures plus renewables if we are to achieve the emissions reductions that scientists … have advised are necessary. In looking beyond 2020 to 2050, ClimateWorks’ new research … shows that ultimately full decarbonisation of the electricity system is necessary. And the most cost effective way to achieve this is with a majority of our electricity coming from renewable energy. For this transition to occur, the RET or an equivalent should be retained and increased over time, not reduced.
I just want to highlight one part before I close. “The most cost effective way to achieve” full decarbonisation of the electricity system “is with a majority of our electricity coming from renewable energy.” A possibility that has been rendered absolutely impossible if any of the recommendations provided by the panel are implemented — recommendations that were made using ClimateWorks’ own modelling.*
In other words, Dick Warburton and his panel have lied.
It’s plain and simple. For whatever reason, under whatever pressure, Dick Warburton, his review panel, under the auspices of the Australian Government, with intense pressure from Prime Minister Tony Abbott and treasurer Joe Hockey, have lied to the public.