Why trim the RET when you can axe it?

In mid-June, 2013,  protesters from four states rallied at Parliament House in Canberra against the continuation of the expensive and inefficient Renewable Energy Target (RET), in essence a government-mandated scheme to force increases in electricity prices.

The rally was told by politicians from the Coalition, Senators Xenophon, Madigan and broadcaster Alan Jones that the RET has caused significant rises in energy prices for households and industry with no measurable environmental benefit.

Back in 2001 if the need to create the RET was to reduce emissions to save the planet, subsequent unexceptional global temperature trends since then seriously undermine that argument. If the need was to preserve fossil fuels – always a prudent measure – the quantum leap in known gas reserves since then, coupled with our 300 year reserves of coal dictate we take a less expensive route in promoting renewable energy that does not cripple our economy in the meantime.

Not all renewable energy is subsidised by taxpayers, hydro-electricity for instance makes the biggest contribution without subsidy. Many individuals and companies wish to commit to renewable energy and they should do so with their own money, not be subsidised by those who can’t afford it.

This is one of the most insidious consequences of the ‘noble cause’ that the RET scheme has become; low-income households are the worst affected, now spending a disproportionate amount on escalating electricity bills.

Figures from the Queensland Competition Authority’s annual report show “that 344 households were disconnected every week due to non-payment [of electricity bills] over the past year. The total of 17,913 was a 20 per cent jump on the previous year”. And this is just one state in the Lucky Country!

The concept of renewable energy is sound; it is the politically expedient manner in which we have adopted it that has failed us.

Unheeded warnings about mandated schemes to subsidise expensive renewable energy are now apparent to all in our rapidly rising electricity bills and real life impacts on jobs in many industries.

To be fair, not all of the 60% increase in electricity charges over the last five years is due to the RET. Necessary upgrades to transmission networks have accounted for substantial increases, but these upgrades, by and large, are essential for an efficient system and unavoidable. Generation of costly, subsidised electricity adds no value to anyone except large national and multi-national energy companies who are the direct beneficiaries of Renewable Energy Certificates subsidised by consumers.

Indeed, the Clean Energy Regulator confirmed to the Australian Environment Foundation that a staggering 195 million REC’s issued since 2001 have transferred, we estimate, $6.5 billion from consumers to energy companies over and above what they have earned providing electricity as required. Cheap energy is a building block of wealth creation and a productive society. The RET destroys this fundamental concept.

Another unforseen issue has emerged in the last 12 months caused by an unexpected decline in demand for electricity. The proportion of renewable energy has exceeded the original 20% target with former Energy and Resources minister, Martin Ferguson recently stating the RET had achieved 30% renewable. According to electricity retailer Energy Australia the cost to consumers and industry of 27 per cent renewable would be $25 billion by 2030.

But wait there is more! Grant King the managing director of Origin Energy, one of Australia’s largest electricity retailers is on the public record warning that the RET will now become the biggest driver of electricity prices in the years ahead, adding that renewable energy costs accounted for 14% of electricity bills compared to 2 per cent five years ago.

The ‘dangerous’ anthropogenic global warming scare is in disarray through static global temperature trends over at least the last 15 years, despite rising emissions, which is completely contrary to all projections from unproven climate models. 

Herein lays the dilemma for an incoming Abbott government that has already pledged to repeal the discredited carbon tax with widespread public support.

Will an Abbott government accept the facts and evidence now apparent from over a decade of well intentioned, but foolish efforts to rush into the generation of expensive renewable energy unwillingly subsidised by hapless consumers? Or will it persist with the Labor government’s massively ramped up RET?

The known outcomes from this populist policy to date are energy poverty in increasing numbers of households and job losses in industry from an unnecessary $6.5 billion bill that has produced no tangible benefit.

The Coalition speakers at the rally were an indication of a much broader unease with the RET spreading through not only the Coalition, but government members as well. This unease was manifested in a recent speech by former chief government whip, Joel Fitzgibbon who urged his own government to ditch "the ideology of the RET" and comments by Martin Ferguson warning that  mandatory renewable energy targets are pushing up power prices.

This ideology was never accepted by a substantial and growing number of Coalition backbenchers in exactly the same way an emissions trading scheme was rejected in 2009, but the Turnbull-led Opposition succumbed to the “initiative driven totally by politics”. West Australian Liberal Dr Dennis Jensen told one party room meeting if the Coalition continued to accept the public’s current belief in renewable energy it would have gone along with the carbon tax or an emissions trading scheme, and "we wouldn’t be in the position we are in now" with the opposition in front of the government based on its opposition to the carbon tax.

In a May 15 radio interview with Alan Jones, Shadow Treasurer Joe Hockey was badgered by Jones about the RET and was asked: “Would a Coalition government continue to support subsidising wind and solar power”? To which he answered: “We are going to continue to do it, but in a measured way”. Measured waste! Joe Hockey will need to sharpen his razor if he is to balance the budget.

Hockey’s less than explicit response may have just been ‘measured’ politics revealing his reluctance to be specific on an issue that is popular with the public because its disastrous economic outcomes are poorly understood. 

Hockey’s response is also difficult to reconcile with what he told Michelle Grattan in an interview on June 11 talking about subsidies in general: On industry “entitlement”….he says: “My views are well known. I think the starting point is that you don’t have subsidies”. Hear, hear…but what about the RET?

The question is: will an Abbott government once again put good policy before populist politics as it did when it rejected the emissions trading scheme?

The job for the Coalition is to start explaining to the electorate in advance why change to the RET is necessary. A good starting point would be that we can no longer afford the luxury of a ‘feel-good’ scheme that encourages production of expensive electricity.

The only benefit from over a decade of RET operation is it is now obvious to blind Freddy the scheme, which at face value once seemed like a nice idea to some, is now hideously costly and of no value.

In little more than ten years the RET has taken Australia from having almost the cheapest electricity to being amongst the dearest five developed nations globally, and it has done that for no measurable environmental benefit.

Max Rheese is executive director of the Australian Environment Foundation.