Doomed Planet

Australia’s Obscene Green Subsidy Machine

When an ALP government introduced a “carbon price” on electricity in 2012 it was sold as a neutral tax. It was, of course, nothing of the sort. The tax was on the carbon content of fossil fuels, but a neutral tax would have had the new tax replace other imposts. In fact, mandatory levels of renewable energy required of every retailer, which were the major Commonwealth subsidies to wind/solar, were left in place, as were other support mechanisms. In addition, there were state schemes, though at the time these were still modest in scope.

At its 2014 rate of $24 per tonne, Labor’s carbon tax, if applied to all fossil fuel inputs into electricity, would have raised $3.7 billion in 2020 (or, if the recommended 4 per cent a year escalator was applied, $5.6 billion).   There were, however, “transitional” arrangements for energy intensive industries that reduced the tax impost by more than a half in its earlier years — concessions that were supposed to phase down. 

Compare the carbon tax impost to the $6.9 billion that is the current actual level of support to renewables through regulatory requirements, grants and soft loans.  Subsidies in the form of grants and soft loans received a major boost when Tony Abbott abolished Labor’s carbon tax.  Present subsidies to renewables and for schemes like carbon-capture-and-storage are as follows:

Australia’s toxic politics has railroaded the nation into renewable energy subsidies that prejudice the natural advantages of a large, sparsely occupied continent and very low cost and low sulphur coal.

The measures taken two decades and more ago set the trend.  These included preventing land clearances, effectively an expropriation of landowners, which enabled Australia to comfortably meet the emission targets it set itself under the 2002 Kyoto Protocol.  At the same time the Coalition  initiated subsidising wind and solar through the Mandatory Renewable Energy Requirement, measures that have been considerably amplified over the years, notwithstanding some pushback by the Abbott government.

Those subsidies have resulted in a massive uptake in wind and solar, in the case of rooftop installations, more than anywhere else in the world.

Share of solar rooftop installations in total dwellings

Without the subsidies, wind and solar installations would have been negligible. 

BUT these are only one part of the crippling cost that government actions on climate change are imposing on the economy.  In support of renewables, governments are massively reinforcing transmission lines and building pumped storage to allow the dispersed and irregular wind and solar to operate.  At least $3 billion a year is being spent on this.  Then there is the private sector money attracted to renewables developments as a result of the subsidies extended to them – that is some $9 billion a year. 

In addition, we now have state governments’ purchasing arrangements for renewables.  Even excluding these, we have an annual $19 billion a year in spending and subsidies which basically undermine the low-cost, reliable energy we had before the descent into madness. And the ramifications of that descent can also be quantified.  One measure of this is the higher prices we are paying for wholesale electricity. In 2020/21 average wholesale electricity prices were around $60 per MWh.  For a coal-oriented system with gas and hydro performing balancing functions, prices would be around $55 per year (On average, prior to 2012, before renewables started cutting into efficiency, prices were under $50 per MWh).  Even at $5 per MWh, the cost to the economy is over $1 billion a year.  Once prices rise to the level that renewables can operate profitably – about $90 per MWh – the annual cost becomes around $10 billion. 

The costs of $19 billion a year we impose upon ourselves for on-power generation, once the higher wholesale costs of the renewables cut in, approach $30 billion a year.  This – equivalent to almost one quarter of private investment – represents a serious drain on the means that enhance national productivity. 

Propelling us to even greater action is Chinese belligerence, presenting Australia with a military threat for the first time in 75 years.  This is pressing us to become closer to the US and seeking independent control of defensive US or UK nuclear powered submarines.  And the Biden Administration’s vociferous support for climate change action – in spite of this having no possible effect in retarding climate damage (even allowing this is taking place)  – is pushing us towards even more damaging measures.

On top if this we have a greener political colouring with the elevation of renewable enthusiast Matt Kean to the key position of NSW Treasurer.  Moreover, in addition to Angus Taylor’s forlorn faith in state-financed new tech to place a lid on emissions, he now has a new deputy, born-again climate worrier Tim Wilson, who says a zero-emissions future is filled with opportunity for rural and regional communities — presumably by being paid not to produce goods wanted in  the commercial market.

13 comments
  • Geoff Sherrington

    Hello Al, It remains a mystery for me, why cannot reasonably intelligent people formulating and enforcing policy see the many large and obvious problems with the current path to “renewables”?
    Sometimes, not being a lawyer, I wonder if a person in my circumstances can or should go to court about some of these subsidies. We have a residential building terminally unsuited for rooftop electrical solar, yet we have to help pay others around us a huge subsidy from our taxes and others that seems to be about 40% of the contract cost of their new systems. This is discriminatory, with no argument to the contrary that I can see. Question is, is it actually lawful if you dig deep enough into the law? Heck, not only do I object to my taxes going towards the subsidy, I also dislike the whole concept of solar electricity so I’m a double whammy of discontent. Geoff

  • Searcher

    “Why do the people imagine a vain thing?” — Psalm 2.

  • Peter Marriott

    Good analysis with all the right facts and figures, as usual. What is so disheartening to me is that you’ve been pointing out in great details the fallaciousness and uselessness of the whole renewable industry for years, an industry that can only be kept going by penalising the coal based, highly efficient thermal base load power, and subsidising inefficient wind and solar. If it was a real level playing field solar and wind power would go broke overnight, and we’d save billions. Why are we, and have we been, held to ransom like this. literally for decades. The whole thing is a massive sick joke, a soap box opera that no-one seems to know how to bring down the curtain on ; an out of control machine that no-one seems to know how to turn off ?

  • rod.stuart

    ” I have certain rules I live by. My first rule: I don’t believe anything the government tells me”……Geolrge Carlin
    For decades, things such as the DDT scare, acid rain, the ozone hle, glolbal cooling, global warming, “climate change”, Coronavirus, etc. has involved a never ending stream of lies.
    The biggest lie of them all is that carbon dioxide is in any way, shape, or form related to the weather. There is NO LOGICAL reason to think this to be the case.
    Yet over and over, just as it is with the CASES, the CASES, the word “emissions” is repeated over and over and over. Yet it is completely without meaning.
    Mr. Moran has made this abundantly clear for decades. Yet whenever this topic enters a conversation the emphasis seems to be that Australia’s emissions are insignificant. Even Bolt and Credlin and Kenny repeat this nonsense over and over again. OF COURSE IT IS INSIGNIFICANT! The entire idea that “emissions”, whether it is ours, China’s or anyone elses matter is a LIE. That resides at the crux of the matter.

  • Mike O’Ceirin

    Excellent Alan. Geoff rooftop PV is going through the roof pardon the pun.

    https://www.spasmodicenergy.com/Pages/Sources.aspx?start=01/07/2020&end=30/06/2021

    Last financial year see the link it has reached nearly 10% of all electrical energy on the eastern grid. It is available to those who own a separate house or at a reduced capacity for those who is rooftop does not face north. That is my case my roof is either east or west. There would be many many people who cannot avail themselves of this means to reduce their electricity bill which continues to go up. I think it is well past time that a class action is mounted to address this inequity.

    The link is to my website and uses as its basis published data from the AEMO. It will not be too long before rooftop exceeds wind as an electricity energy source on the Australian eastern grid.

  • magus

    Follow the money. Who’s making it and who’s paying.
    Follow the electorate. Who needs green preferences, who doesn’t

  • Adam J

    Electricity bills and probably water too are subsidised by the states, protecting the consumer from the true cost. That also encourages ignorance and waste.

  • pgang

    Our domestic electricity prices have increase around 8% per year since 2011. That rate of increase has probably gone back almost to 2000. The total increase since 2011 is about 100%.
    We have decided to surrender to the socialists and next year we will make Australia that little bit worse by going solar, as we can’t sustain these sorts of increases. It’s gotten to the point where a solar installation will pay for itself within a year.

  • Brian Boru

    Good informative article. But my focus is on the forecast elimination of the combustion engine.
    .
    I would like to know just where the charging stations will be on the Gibb River road. Or on the Nullarbor and how will the electricity needed be generated.
    .
    The Canning stock route also comes to mind. Will 4wd driving enthusiasts have to trail a power cable behind them or stop for days for their rooftop solar to generate enough to recharge the vehicle?
    .
    Maybe there will be a National electrification scheme to take in these areas. That’s a lot of infrastructure.

  • Ian MacKenzie

    While industry super funds and compulsory super are the corruption at the heart of the ALP, renewables subsidies are the corruption at the heart of the Liberal party. In both cases these parties have used the parliaments of Australia to plunder the wallets of Australians to the benefit of their political mates, on the one hand by garnisheeing their wages, on the other by diverting taxes to subsidies for the provision of expensive, inefficient, unreliable electricity. Clearly there is collusion between the two, as neither will revoke the corruption of the other when in power, resulting in continual increases to compulsory super and ever increasing renewables subsidies. The voters are left like a battered spouse being told its all for your own good. What a mess.

  • Marcus McInness

    Given that the “worlds biggest battery” in South Australia stores little more energy than a B double trailer of diesel, will those in power assure us that before any existing coal fired power generator is shut down that:

    (a) wind and solar plants are supported by sufficient energy storage and alternative back up generation to support the vagaries of wind and solar and,

    (b) the cost of such back up is factored into the cost of producing wind and solar energy and,

    (c) those costs do not further escalate costs to consumers.

  • magus

    Spot on Ian MacKenzie, also the super funds carry a lot of clout at the boards of some of our largest companies, who are also promoting a woke culture which is alien to the majority of Australians.

    Australians that by contributing to super funds are perpetuating the renewable subsidies and supporting the woke brigade.

  • Simon

    The cost of this farcical attempt to reduce global temperatures (which are controlled by many factors outside of human control), falls most heavily on the poor who can’t afford to indulge the inner city twits who live and breathe this sort of nonsense.

    Even if the delegates at COP 26 in Glasgow find themselves snowbound and without electricity for heating and lighting, it will make no difference. The talking heads will still drone on about this being our ‘very last chance to reverse the end of the world’.

    And there is not a leader in the Anglophile West prepared to stand up for common sense. There is not a single leader prepared to say renewables are not the answer to our base load needs – if GHGs are a real danger then nuclear is the ONLY solution. Not one.

    All we can do is wait for higher prices and wait for the lights to go out – OR get rid of our ‘leaders’. I’m with the latter – vote the LNP and Labor / Greens out. Put them at the very bottom of every preference.
    Vote for One Nation, LDP or UAP only.

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