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Killing renewables softly with endless reviews

You have to feel sorry for people working in renewable energy. Their industry has been reviewed to within an inch of its short life, and the goalposts have been shifted so many times that they don’t know…

One in five Queensland homes have gone solar, like this house in Brisbane’s Alexandra Hills. Melanie Cook/Flickr, CC BY-NC-SA

You have to feel sorry for people working in renewable energy. Their industry has been reviewed to within an inch of its short life, and the goalposts have been shifted so many times that they don’t know where to kick the ball.

And now they are to be reviewed again, this time by a panel that is hostile to them. The chair of the review, Dick Warburton, does not believe in human-caused climate change. So if there is no problem with greenhouse gas emissions, why would we need policies to reduce them?

He is joined, among others, by Brian Fisher, who has a long history of working closely with the fossil fuel industries. For many years he was the executive director of the Australian Bureau of Agricultural and Resource Economics, a government research agency that was castigated by the Commonwealth Ombudsman for taking money from the fossil fuel industries to finance its work on climate change policy. Fisher did not agree that his work had been “compromised” or that he displayed “poor judgment” in having his agency’s policy work partly funded by Exxon, BHP and the Australian Coal Association.

Renewables under review - again

The last review of the Renewable Energy Target (RET) was published just over a year ago, and was conducted for the federal government by the independent Climate Change Authority. I was part of that review and remain one of the Authority’s members.

The RET scheme currently mandates that electricity retailers must source 41,000 GWh of electricity from new renewable sources by 2020. During the six months that our review took, the most frequent plea from industry we heard was to provide investment certainty for the emerging companies.

Even the Australian Industry Group, no friend of strong greenhouse gas reduction policy, argued that any further change threatened to “reduce the credibility and reliability of energy policy as a whole”.

The Climate Change Authority published its findings in December 2012, concluding:

Transitioning to a clean energy future will require considerable investment over decades. A stable and predictable policy environment is crucial to fostering the confidence required for such investment.

The Authority’s 2012 conclusions echoed those from a decade earlier.

Back in 2003, the Howard government called its own review into whether to extend or end Australia’s first renewable energy target. Chaired by former Coalition Senator Grant Tambling, it came to the same conclusion — stop meddling.

In fact, the Tambling review recommended expanding the renewable energy target, “as a sensible insurance policy against significant greenhouse gas abatement measures being introduced in the future”.

History repeating?

Yet the meddling with the renewables industry has begun again. Even before the new Warburton review gets under way, the message has been sent to renewable energy investors: the coal lobby is back in town.

As former Liberal staffer Guy Pearse revealed in his shocking book, High and Dry, in the Howard years the fossil fuel lobby became so accustomed to setting energy policy that they bragged about vetting cabinet submissions.

The “greenhouse mafia”, as they called themselves, have certainly had the ear of the Coalition in the past. In May 2004, Prime Minister John Howard convened a secret meeting with Industry Minister Ian Macfarlane (in the same portfolio then as now) and energy executives to come up with alternatives to avoid expanding the Renewable Energy Target, which was then a piddling 2% objective.

Leaked minutes taken by Rio Tinto’s Sam Walsh show Macfarlane chiding senior executives of Rio Tinto, BHP Billiton, Alcoa, Origin Energy and others for their “roaring silence” and for letting renewables advocates set the public agenda. At the end of the meeting, the minutes noted Macfarlane:

stressed the need for absolute confidentiality. He said if the Renewables Industry found out there would be a huge outcry.

Falling demand boosting renewables' market share

A decade on, the coal-fired generators need all the political help they can get because something has happened that no one predicted. Four years ago, after 100 years of uninterrupted growth, demand for electricity in Australia went into decline.

Energy analyst Hugh Saddler estimates that the fall from expected levels has been equivalent to the output of three coal-fired power plants. He attributes it to more energy-efficient buildings and appliances, structural change in the economy away from energy-intensive industry (including manufacturing), and residential consumers taking less power from the grid, in part because of huge growth in rooftop solar panels.

The decline in demand means that the 41,000 GWh of new renewable energy is expected to represent around 27% of electricity supply in 2020, instead of the 20% initially estimated. This is very good news, not least to those concerned about climate change – but not for coal-fired power generators.

But isn’t renewable energy too costly? Interestingly, the Climate Change Authority found that the entry of new renewables into the market has actually been driving the wholesale price of electricity down, both because they increase supply and because they have lower marginal costs of production. The profits of coal-fired generators are being squeezed, and they hate it.

For all their lobbying of sympathetic MPs and senators, there is a problem. Other than in some local communities where attitudes to wind farms have been poisoned by disinformation spread by groups like the shadowy Waubra Foundation (which shares a PO box with a mining investment company), Australians love the idea of getting energy from the wind and the sun.

Solar homes as a political force

Solar photovoltaic panel uptake across Australia. ACIL Allen Consulting for the Australian Renewable Energy Agency

Going solar in the suburbs: solar PV uptake in Brisbane. ACIL Allen Consulting

While most Australians took a set against the carbon price, the Renewable Energy Target has always enjoyed strong public support, even if it does increase average household electricity bills by $1.30 a week, or $68 a year, as the Authority’s report found.

Australians particularly like the element of the scheme that encourages the installation of rooftop solar energy. The surge in demand caught everyone by surprise, and now 1.4 million homes across the nation generate their own electricity from the sun.

And contrary to popular myth, that’s not just happening in wealthy homes. Research for the federal government late last year found that outer suburbs and regional areas have led the way in going solar, as these maps of Australia and Brisbane show. (You can see detailed city and state maps at the end of this report.)

For this reason, the government knows it cannot simply kill off the scheme as the mining lobby, some power companies and many Coalition MPs and senators would like.

Instead, it is easier to choke renewables slowly - and the Warburton review is the government’s way of slipping the rope around the industry’s neck.