The Diminishing of Renewable Energy Target Will Drastically Alter Australias Energy Landscape
Renewable energy is Australia is currently in a very unfortunate position. What was once a blossoming industry has now effectively come to a screeching halt. As the various parties wait for the result of Dick Warburton’s review, many are examining what the future of Australia’s energy industry may look like if the RET is reduced or scrapped altogether.
According to a model released by the Jacobs Group, the reduction of the RET would transfer approximately $10 billion over the next 15 years to big coal and gas companies. It also predicted that consumers would see an increase in energy prices during this period.
The two biggest companies who would benefit most, EnergyAustralia and Origin Energy, have been some of the most prominent voices in the call to cut the RET. If the RET is cut to 20 percent of its current state, each would gain $1.9 and $1.5 billion, respectively, over the 15 year period. This money would come from an increase in energy pricing, from the $35 currently paid by households in New South Wales for 6.5 MWh of energy to a whopping $80.
Also, there would be tangible effects to the environment, as burning more fossil fuels would increase Australia’s carbon emissions by 154 million tons by 2030.
At the same time, the Australia Solar Council warned the Australian solar industry could face declines of 40 to 50 percent if the RET is scrapped. According to the Australian Financial Review, the scrapping of the RET is the most likely course of action, as a source claimed the Abbot government has requested modeling of the industry with a scrapped RET. The Australian Solar Council has warned against even the reduction of the RET, saying it could gut the industry.
“Under instructions from the Prime Minister, the Warburton [RET] Review did a hasty back track and is now recommending the axing of the RET,” John Grimes, Australian Solar Council’s CEO said. “So far the Prime Minister is refusing to release the Warburton Review Report. This is a line in the sand moment for the solar industry. If the Government goes ahead with its plans to axe the RET, demand for solar will fall 40-50% straight away. Thousands of Australians will lose their jobs. Hundreds, if not thousands, of small businesses will shut up shop.”
The Jacobs modeling found that Australia could miss out on $8 billion worth of renewable energy investments if the RET is scrapped.
While there are those who cite the oversupply of energy as a reason to scrap the RET, proponents believe they’re missing the point. Miles George, managing director for Infigen Energy, said any reduction of the RET would have devastating effects and would turn investors away.
“Infigen’s shareholder base of over 20,000 investors has invested in renewable energy in Australia on the basis of a fixed target of 41,000 GWh by 2020,’’ George told Australian Financial Review. “This is no different to investors in private public partnerships acquiring a toll road concession, or a port lease. If the Government pulls the rug from under institutional investors in renewable energy we shouldn’t expect those investors to come back to buy other infrastructure assets here, including the electricity networks and generation assets that the governments of NSW and Queensland are proposing to sell or lease.”
The results of the RET review are expected out soon.
UK must stop blundering into high carbon choices warns CCC
The UK Government must end a year of climate contradictions and stop blundering on high carbon choices, according to the Climate Change Committee as it released 200 policy recommendations in a progress to Parliament update.
While the rigour of the Climate Change Act helped bring COP26 to the UK, it is not enough for Ministers to point to the Glasgow summit and hope that this will carry the day with the public, the Committee warns. Leadership is required, detail on the steps the UK will take in the coming years, clarity on tax changes and public spending commitments, as well as active engagement with people and businesses across the country.
"It it is hard to discern any comprehensive strategy in the climate plans we have seen in the last 12 months. There are gaps and ambiguities. Climate resilience remains a second-order issue, if it is considered at all. We continue to blunder into high-carbon choices. Our Planning system and other fundamental structures have not been recast to meet our legal and international climate commitments," the update states. "Our message to Government is simple: act quickly – be bold and decisive."
The UK’s record to date is strong in parts, but it has fallen behind on adapting to the changing climate and not yet provided a coherent plan to reduce emissions in the critical decade ahead, according to the Committee.
- Statutory framework for climate The UK has a strong climate framework under the Climate Change Act (2008), with legally-binding emissions targets, a process to integrate climate risks into policy, and a central role for independent evidence-based advice and monitoring. This model has inspired similarclimate legislation across the world.
- Emissions targets The UK has adopted ambitious territorial emissions targets aligned to the Paris Agreement: the Sixth Carbon Budget requires an emissions reduction of 63% from 2019 to 2035, on the way to Net Zero by 2050. These are comprehensive targets covering all greenhouse gases and all sectors, including international aviation and shipping.
- Emissions reduction The UK has a leading record in reducing its own emissions: down by 40% from 1990 to 2019, the largest reduction in the G20, while growing the economy (GDP increased by 78% from 1990 to 2019). The rate of reductions since 2012 (of around 20 MtCO2e annually) is comparable to that needed in the future.
- Climate Risk and Adaptation The UK has undertaken three comprehensive assessments of the climate risks it faces, and the Government has published plans for adapting to those risks. There have been some actions in response, notably in tackling flooding and water scarcity, but overall progress in planning and delivering adaptation is not keeping up with increasing risk. The UK is less prepared for the changing climate now than it was when the previous risk assessment was published five years ago.
- Climate finance The UK has been a strong contributor to international climate finance, having recently doubled its commitment to £11.6 billion in aggregate over 2021/22 to 2025/26. This spend is split between support for cutting emissions and support for adaptation, which is important given significant underfunding of adaptation globally. However, recent cuts to the UK’s overseas aid are undermining these commitments.
In a separate comment, it said the Prime Minister’s Ten-Point Plan was an important statement of ambition, but it has yet to be backed with firm policies.
Baroness Brown, Chair of the Adaptation Committee said: “The UK is leading in diagnosis but lagging in policy and action. This cannot be put off further. We cannot deliver Net Zero without serious action on adaptation. We need action now, followed by a National Adaptation Programme that must be more ambitious; more comprehensive; and better focussed on implementation than its predecessors, to improve national resilience to climate change.”
Priority recommendations for 2021 include setting out capacity and usage requirements for Energy from Waste consistent with plans to improve recycling and waste prevention, and issue guidance to align local authority waste contracts and planning policy to these targets; develop (with DIT) the option of applying either border carbon tariffs or minimum standards to imports of selected embedded-emission-intense industrial and agricultural products and fuels; and implement a public engagement programme about national adaptation objectives, acceptable levels of risk, desired resilience standards, how to address inequalities, and responsibilities across society.
Drax Group CEO Will Gardiner said the report is another reminder that if the UK is to meet its ambitious climate targets there is an urgent need to scale up bioenergy with carbon capture and storage (BECCS).
"As the world’s leading generator and supplier of sustainable bioenergy there is no better place to deliver BECCS at scale than at Drax in the UK. We are ready to invest in and deliver this world-leading green technology, which would support clean growth in the north of England, create tens of thousands of jobs and put the UK at the forefront of combatting climate change."
Drax Group is kickstarting the planning process to build a new underground pumped hydro storage power station – more than doubling the electricity generating capacity at its iconic Cruachan facility in Scotland. The 600MW power station will be located inside Ben Cruachan – Argyll’s highest mountain – and increase the site’s total capacity to 1.04GW (click here).
Lockdown measures led to a record decrease in UK emissions in 2020 of 13% from the previous year. The largest falls were in aviation (-60%), shipping (-24%) and surface transport (-18%). While some of this change could persist (e.g. business travellers accounted for 15-25% of UK air passengers before the pandemic), much is already rebounding with HGV and van travel back to pre-pandemic levels, while car use, which at one point was down by two-thirds, only 20% below pre-pandemic levels.