CENREC submission to RET Review

The Renewable Energy Target (RET) scheme aims to increase renewable energy generation and hence reduce greenhouse gas emissions from the electricity sector. It was designed to deliver the equivalent of 20 per cent of Australia’s electricity from renewable sources by 2020.

Central New South Wales Renewable Energy Co-operative Ltd (CENREC) is a community-based organisation established with the primary aim of purchasing one of the turbines in the then proposed, now approved, Flyers Creek Wind Farm. It was formed in late 2012, and in the short time that it has been in existence it has been exposed to continuing uncertainty, which threatens its very existence. This current review of the RET scheme is just one more in a series of events, which includes the carbon tax/emissions trading scheme and a protracted approval process by the NSW Government.

Although it was reviewed in 2012 and that review inter alia recommended that future reviews be conducted at four yearly intervals, the Commonwealth Government has chosen to conduct a review in 2014. Given that there has been a change of government, and that the new government has different priorities, this choice is understandable. Nevertheless, the need to ensure that greenhouse gas emissions are reduced as quickly as possible must remain a high priority for Australia, as one of the moral leaders of the world.

One of the RET’s primary objectives is “to reduce emissions of greenhouse gases in the electricity sector”. It has achieved a reduction so far of 22.5 million tonnes. If it is removed, an estimated 34.7 million tonnes of additional carbon emissions will be released by 2020.

In research conducted by CENREC funded by the NSW Office of Environment and Heritage, the veracity of the impact of human activity on green house gas emissions and consequent global warming. Further, this research confirmed that less than 7% of the population claims that this is not the case. More than 80% of the population is convinced that it is so. As a democratic government, these figures should provide sufficient evidence for the desire of the population for the continuation of climate change initiatives such as the RET scheme.

However, there are other compelling reasons for maintaining or even extending the RET scheme. These can be summarised as:

  1. Investment

  2. Employment

  3. Electricity prices.

Investment

Since 2001 the RET and its predecessor has generated an estimated $20b in investment in renewable energy in its various forms. This is in spite of the uncertainty spawned by frequent changes in policy settings by both State and Commonwealth governments. It has been estimated by the Clean Energy Council that the RET in its present form will generate $14.5b of investment in large-scale renewable energy projects by 2020. This is in addition to billions of dollars more in household renewable energy systems.

This investment could be increased even further, if appropriate attention was paid to adjusting existing regulations which are a barrier to the transfer of energy between entities without using the national grid. It could also be increased even further if the regulations currently strangling the embryonic mini-hydro industry were eased. Currently that industry is growing rapidly by installing hydro systems in nearby nations, but rarely in Australia. It has been demonstrated by the industry that there is sufficient hydro potential in the Eastern running rivers of NSW to supply the entire NSW electricity demand with small scale run of river hydro generators.

However the potential investment in renewable energy is unlikely to reach its potential in the absence of government support in the form of changes to stifling regulations and incentives like the RET scheme. Although the “age of entitlement” may be over, investment in such green field industries is very different to the continuing support of car manufacturing, which has little prospect of ever being viable in Australia without government support. We note that the fossil fuel industry still receives 6 times the subsidy of clean energy.

Employment

The RET has helped build a renewable energy industry now employing in excess of 24,000 people, many in regional Australia, which in particular has enjoyed job transition opportunities. These are jobs of the future that are here already. If the RET is retained in its current form, another 18,000 jobs will be created by 2020. Approximately half of these will be in large-scale renewable, and the reminder in small-scale renewable energy. If the regulatory impediments indicated above can be rectified, these numbers could be increased even further. Removal of the RET would jeopardise most of these jobs.

Electricity prices

Despite the current rhetoric regarding electricity prices, the reality is that the RET scheme has the potential to reduce electricity prices by providing more competition in the energy market. The cost of producing wind power, for example, is already competitive with the electricity produced by new conventional power plants. If the RET scheme is dismantled, Australian households will pay over $50 pa more in 2020, and beyond 2020, they will continue to experience further rises in electricity prices. The reason for this is the escalating price of gas, which is expected to treble in price in the next ten years.

In total, it has been estimated by the Clean Energy Council that removal of the RET scheme would result in Australian households paying $510 million more for their electricity in 2020, and up to $1.4b per year beyond 2020.

In summary, retention of the RET scheme makes sense because it will result in lower electricity prices, billions of dollars of new investment and the creation of thousands of new jobs. It also supports Australia’s efforts to meet its international commitment to reduce carbon emissions to 5% below the 2000 level by 2020.