Friday, February 27, 2015

RET compromise no victory for renewable energy

Feb 27, 2015 - News that the Coalition is possibly negotiating again with Labor over a compromise agreement on the Renewable Energy Target is not to be celebrated.

The current uncertainty over the future of the target means that there is pretty much zero investment happening, banks won't loan money for renewable projects, because no-one knows what the future will bring.

Unfortunately, if Labor negotiate a reduced target with the Coalition, we could be in the position where a significant reduction in the target will be painted as a victory for the industry -- because it gets the finance and construction of projects happening in the short term.

This is despite the fact that the existing, 41,000 gigawatt-hour target could easily be met by wind farm projects, if they were allowed to be built under the scheme, with no reduction needed.

Energy giants like Origin have threatened to opt out of the target and instead pay the fines for not meeting it as a better option. Perhaps they feel they've been swindled. When the RET was initiated, it was expected that the growth in renewable energy would simply fill a part of the overall growth in energy demand.

Since 2009-10, not long after the RET was brought in in its current form, actual energy demand has unexpectedly fallen, every year. Big energy generators are finding that instead of adding investment in a renewable portfolio, the RET is seeing renewables take a growing slice of their shrinking pie.

There have been threats from the industry that they will not be able to meet the target, and now that they will simply ignore it – a capital strike, as RenewEconomy editor Giles Parkinson put it

And whatever deal is cut in parliament, the years of uncertainty over the RET (since the ALP government and Martin Ferguson's tenure) have certainly staved off some new wind energy from being built. The only beneficiary of this has been the incumbent fossil fuel generators.

According to Climate Spectator's Tristan Edis, Federal Industry Minister, Ian Macfarlane, may now be looking at a target above 30,000 Gigawatt-hours: perhaps a 25% reduction on the target.

So if a deal is stitched together, and investment resumes (toward a new, lower target) it is understandable that some in the industry will be relieved. The pressure on their jobs and businesses may ease.

But there is no way that this blatant corporate standover operation, with assistance from senior government ministers in two governments, can be seen as any kind of victory for renewable energy in the broader sense. It just illustrates the depths to which the fossil fuel industry will sink to maintain their stranglehold on our electricity supply – and keep their profits flowing.

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