Why Barry O'Farrell and the Productivity Commission are wrong on renewables

Supporting renewable energy is just the first step to a level playing field. AAP

There is much hypocrisy in the statements of those who wish to terminate subsidies to renewable sources of energy through the certificate scheme associated with the federal Renewable Energy Target and the remaining state-based feed-in tariffs.

The Productivity Commission and Barry O'Farrell are ignoring the huge continuing subsidies to the production and use of fossil fuels.

Christopher Riedy has calculated that the economic subsidies to fossil fuels amount to at least $10 billion per year nationally. To these should be added the external costs; that is, the costs of environmental, health, social and economic damage caused by the combustion of fossil fuels.

Feed-in tariffs are succeeding in expanding the markets and bringing down the prices of renewable electricity. If the current trend continues, residential and commercial solar photovoltaic electricity will be competitive with retail electricity prices in parts of southern Europe, the USA and Australia within five years.

Wind farms and large grid-connected solar power power stations have to compete with wholesale electricity prices and so will take longer before they can compete.

Removing the subsidies to fossil fuels and implementing a high and increasing carbon price will take account of the external costs of fossil fuels. This will help speed up the transition to a renewable energy future.

In practice the political power of the fossil fuel industries may defeat these essential policies.

The Productivity Commission and other fundamentalist economists are only interested in the next cheapest source at the margin, namely natural gas.

However, in the face of accelerating global climate change, we cannot afford to limit ourselves to planning at the margin; we must plan for our long-term future. It would be foolish indeed to put renewable energy on hold, while polluting gas is rolled out to replace coal.

Wind, solar and other renewable sources are clean and they work. They are rapidly becoming cheaper. For a successful transition to a renewable energy future we must maintain and strengthen the Renewable Energy Target and feed-in tariffs.