Even if Abbott wins, he will find it hard to destroy renewable energy in Australia
Not all doom and gloom for renewables under Coalition REneweconomy, By Stephen Webb on 5 September 2013 Renewable energy has its neck on the guillotine with Messrs Hunt and Hockey holding the blade up with rope, awaiting a nod from the Australian Electoral Commission that they can let go. At least, that’s the impression the electorate might be receiving: carbon price (tax) – gone, CEFC – gone, Clean Technology Program – gone, Climate Change Authority – gone, with as yet unspecified cuts to ARENA as well. In all, $9.1 billion (less according to Labor) in climate change and renewable energy expenditure-related savings.
However, even assuming that the Coalition are able to get these changes through the Senate and pierce former PM Gillard’s “Abbott Proof Fence”, all is not doom and gloom. The Renewable Energy Target (RET) is King and domestic and international developers are not abandoning Australia like some may think.
Our clients describe the Australian market as “steady” and “buoyant” and a number of domestic projects have continued to proceed this year despite the regulatory environment being in a an undesirable short-term state of flux.Executive Director of ClimateWorks Australia, Anna Skarbek recently noted that Australia has seen a two-thirds growth in renewable energy electricity generation over the past decade ($4.2 billion investment in 2012 alone according to the Clean Energy Council), so it should not be hugely surprising that Australia, along with Japan, Thailand, the Philippines and (to a lesser extent) Indonesia, is among the group of countries consistently touted by developers in this part of the world.
While PPAs in domestic wind projects have slowed dramatically in recent times, solar PV has been the big mover in Australia and in the region, with Australian and international developers actively seeking opportunities across diverse markets. – …………
, if we want to stay in the leader’s group, our RET needs to be strong.
At a clean energy conference in July, spokesman Simon Birmingham (rather reluctantly) indicated the Coalition’s support for 41,000GWh of renewable energy by 2020 (the current 20% RET), albeit with a more extensive review of the target in 2014 than we would have expected under Labor, who seem rock-solid on the existing RET.
Last year, Australia produced a record 13.14% of its electricity from renewable sources. So even if the Coalition slightly reduce or delay the 20% by 2020 RET, there is still much development to occur within the short term (even more so given Labor hard-wired the 20% target at 41,000GWh which, given demand has fallen, now represents around 27% of demand)……..
The RET adjustment, or lack thereof, will therefore be pivotal to the future direction of Australia’s energy future. With global and domestic electricity demand falling (largely due to a decrease in manufacturing), Australia can either keep its current RET (in so doing, increase the proportion of renewable energy), or alternatively, maintain the current distribution mix and keep the dirtiest generators in business.
The Coalition must uphold the primary driver of renewable energy investment in Australia and indications up till now are that there will not be drastic cuts to the RET as desired by fossil fuel developers or more militant elements within the Coalition. If there is any significant decrease to the 41,000GWh target, or a deferral of this target till 2025 or later, international and domestic companies who have remained optimistic for Australia’s clean energy future in spite of the conjecture surrounding government policy may simply focus on the booming markets of Asia where RETs and feed-in tariffs abound. Like our clients though, I am optimistic the Coalition will not turn their back on renewables in this country by significantly changing the current RET.
Stephen Webb is a Partner and Asia Pacific Head of Renewable Energy and Climate Change at DLA Piper. He is also the author of Renewable Energy in the Asia Pacific: A Legal Overview
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