New research from Bloomberg New Energy Finance has confirmed the obvious need for national political ambition for a growing and robust renewable energy industry, but the current Turnbull Government is threatening Australia’s booming clean energy deployment.
Last month Australia’s Federal Government, headed up by Liberal Prime Minister Malcolm Turnbull, dismissed plans to implement a Clean Energy Target and instead rolled out a National Energy Guarantee that puts the power of choice into the hands of the nation’s utilities — a move which has not worked out wonderfully well for the country in the past. At the same time Bloomberg New Energy Finance explained that this was not all bad news because the National Energy Guarantee (NEG) could in fact deliver a 42% renewable energy share by 2030 — the same level forecast by the Finkel Review and hoped to be implemented in the Clean Energy Target.
But such shares of renewable energy rely squarely on national ambition driven by political certainty from the Federal Government.
This, therefore, is the problem, according to new research published by Bloomberg New Energy Finance (BNEF) this week, which explained that “the outlook for renewable energy depends squarely on the ambition of the emission reduction target.” Specifically, the current Liberal Party plan to decrease emissions by only 28% by 2030 “could decimate large-scale wind and solar construction” in Australia according to BNEF, whereas the Labor Party’s target to decrease emissions by 45% would likely continue the current renewable energy boom in Australia.
“The government’s current 28% below 2005 levels by 2030 CO2 target would slow the current pace of renewable installations and emissions reduction in the National Electricity Market (NEM) and requires little effort to achieve,” said Kobad Bhavnagri (Head of Australia, Bloomberg New Energy Finance) and Leonard Quong (Associate, Bloomberg New Energy Finance).
“Existing policies should deliver a 23% reduction by 2020, and small-scaleJil – PV uptake should do most of the heavy lifting thereafter, bringing renewable generation to 39%. But only 1.5GW of new large-scale renewables will be required from 2021-30 to meet this Emissions Guarantee target, which is not consistent with the long-term emissions reduction goals of the States in the NEM, nor the broader aims of the Paris Agreement.”
The 45% reduction on 2005 levels proposed by the Labor Party, and which is consistent with the net-zero emissions goals of New South Wales, Victoria, Queensland, South Australia, Tasmania, and the ACT, would require 17.3 GW worth of large-scale renewables in the next decade, and would lift renewable electricity generation in Australia to 52%, while continuing the current pace of emissions reductions from existing policies in the NEM.
“The Reliability Guarantee is unlikely to give windfall gains to coal, if it is designed to ensure there is enough dispatchable capacity only,” added Bhavnagri and Quong.
“Around 6GW of coal is forecast to close and be replaced by 5GW of gas in either scenario, with our assumed policy configuration. However the Reliability Guarantee will likely prevent further coal closures under a deeper emissions reduction target, ensuring the system remains stable whilst reducing emissions and coal burn.
“The level of ambition on the emissions reduction target is key. The NEG could be an effective and innovative policy mechanism, but if the target is weak, it will deliver little. It would be like finally having the gumption to join the gym, but then not lifting any weights when you get there.”