The Australian Government has conceded to a compromised Renewable Energy Target deal with its opposition, bringing the nearly two-year political debate to an anticlimactic close with a 33,000 GWh by 2020 target and no formal two-year review.
The bipartisan deal was sealed Monday, after the ruling Coalition agreed to drop plans to impose a two-year formal review of progress towards the 2020 target. The previously-agreed upon 33,000 GWh target is a great deal less than the legislated 41,000 GWh target which seemed to have been the catalyst for this current review in the first place.
In place of a formal review, the opposing Labor Party agreed to allow the Clean Energy Regulator monitor the target with annual statements on cost and progress.
“The reporting system is really all we wanted,” said Industry Minister Ian Macfarlane today, in what is pretty much the closest a politician can get to an outright lie. “What we wanted were credible facts and figures provided to the government of the day that indicate where the scheme is.”
The practical outworking of this deal is that the amount of large-scale renewable energy to be built between now and 2020 has been dropped from approximately 8,500 MW down to 5,500 MW.
But in many regards, the damage has already been done, by what Labor’s environmental spokesperson labeled the Prime Minister Tony Abbott’s “reckless attack” on the renewable energy industry. The Australian renewable energy industry has suffered a 90% drop in investments, not to mention job losses in the thousands, and it will take a long time for investors and the banks to rediscover confidence in Australia as a location for renewable energy development.
In an article on the Australian Financial Review, Matthew Warren, chief executive of the Energy Supply Association of Australia, explained that his lobby had approached the banks in December of 2014, and found that their interest in new renewable energy generation was lukewarm at best.
“The banks’ view late last year was that they still think with the chronic oversupply in the market it’s hard to see returns on any new investment, whether it’s new thermal generation or new renewables,” Mr Warren told a GE-Australian Financial Review energy roundtable in Melbourne.
There are some bright spots in the Australian renewable energy industry, with rooftop solar and energy storage both succeeding on a globally-competitive scale, but it will take several years to return to the previous success the industry as a whole had been experiencing.
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