Australia’s $20 billion alternative energy sector has been plunged into fresh uncertainty after the federal government indicated further policy changes to reduce the reliance on wind and solar power, potentially leaving billions of dollars invested in the sector stranded or devalued.
Signalling it wants to reduce the 20 per cent renewable energy target by 2020 to what it calls “a real 20 per cent”, the Abbott government has proposed reducing the agreed green energy target of 41,000 gigawatt hours of baseline power by 2020 to closer to 26,000 gigawatt hours.
The government argues the lower production target is needed because aggregate energy consumption has fallen from the projected amount in 2020, meaning the 41,000 gigawatt hours would have been 27 per cent.
Industry Minister Ian Macfarlane announced the decision at the National Press Club and said he would talk with the Labor opposition to see it passed.
The position effectively rejects the recommendations in the review of the target headed by businessman and climate change sceptic Dick Warburton.
The review, which cost the government more than $500,000, recommended in August Australia’s large-scale RET either be closed to new projects or scaled back dramatically on the basis of yearly reviews.
But the government, which hoped to restore a bipartisan agreement with Labor, faced a battle to negotiate its position through Parliament.
Clean energy producers slammed the proposal as devastating for the industry because it would cost thousands of jobs and millions of dollars in investment.
General manager of Pacific Hydro Lane Crockett said: “What reason can there be [for this cut] other than to protect the coal industry?”
National co-ordinator of the Australian Wind Alliance Andrew Bray said the government had “learnt nothing” from the Warburton review, noting its own commissioned research pointed to electricity prices being lower over the longer term with the RET as it was.
“What the government has indicated today is that it wants to increase the massive profits of big power companies by charging everyday Australians more for their electricity,” Mr Bray said.
Labor said it would reject the proposed scale back, which Mr Macfarlane said would constitute a so-called “real 20 per cent” of Australia’s electricity production.
“It won’t be a 27 per cent renewable energy target, it will be 20 per cent renewable energy target,” Mr Macfarlane said.
Mr Macfarlane said the position put to Labor on Wednesday included exemptions for emissions intensives industries, including aluminium, copper, zinc and cement.
The small-scale solar panel scheme would be untouched and biannual reviews of the target would cease.
The government said on Wednesday Labor would have to choose between its old RET policy and protecting blue collar jobs in traditional energy industries.
Labor’s shadow treasurer Chris Bowen said the government’s position was unacceptable and he hoped it was just a starting point for talks.
“Let me make it clear, we do want to engage with the government constructively to see what can me done,” he said.
“Let me also make it clear that a 40 per cent cut in the renewable energy target, which is what would be a 20 per cent real renewable energy target in the language of the government, is completely unacceptable to the Labor Party and we will not agree to it.
“We will not be agreeing to a 40 per cent cut, we will be working to ensure that, if at all possible, both of Australia’s major political parties can return to a position of bipartisanship.”
Labor leader Bill Shorten said the opposition had made it clear it was open to discussing the target but it had established “no-go zones”.
“The government say they want a real 20 per cent, I call it a fraud 20 per cent, a fake 20 per cent,” Mr Shorten said. “The truth of the matter is that renewable energy is part of our energy mix. It’s had a great benefit for a whole lot of consumers.
“We’ve seen thousands of jobs created … and we’ve seen billions of dollars of investment. The real damage that this government’s doing in renewable energy cannot be overstated.”
In the ideological tussle within the Coalition about climate policy, the position announced on Wednesday, while a compromise, represented a win for those in cabinet, such as Environment Minister Greg Hunt, who favoured greener policies.
The Climate Institute claimed the swing back to conventional energy would be an $8 billion windfall for coal and a billion-dollar boon for gas-fired electricity.
