RET Scam

Wind Turbines Kill More than Birds and Bats……They Kill Jobs, and Economies!

/ 1957chev / Leave a comment

Subsidising Wind Power: A Sure-Fire Job Killer

September 1, 2014 by  

spain unemployment

As the wind industry gravy train shudders to a halt in Australia, the wind industry and its parasites are working overtime to garner support for retention of the completely unsustainable 41,000 GWh mandatory Renewable Energy Target.

One of the “pitches” being made is that winding back the RET will costs tens of thousands of jobs. Never mind that the wind industry has generated only a handful of permanent jobs in Australia; that the bulk of the jobs created were in fleeting construction work; and that new wind farm construction has more or less ground to a halt: “investment” in the construction of wind farms went from $2.69 billion in 2013 to a piddling $40 million this year (see this article).

When the “wind industry creates jobs” mantra is being chanted, what the Clean Energy Council doesn’t say is that every single job it’s “created” depends entirely on the mandatory RET and the Renewable Energy Certificates issued to wind power outfits under it.

The REC operates as a Federal Tax on all Australian power consumers – that is paid as a direct subsidy to wind power generators. The REC Tax/Subsidy has already cost power consumers over $8 billion and – if the current RET remains – will add a further $50 billion to power bills over the next 17 years (see our post here).

A subsidy paid to “create” a job in one part of an economy, means that a job (or jobs) will be lost elsewhere. A study by UK Versa Economics found that for every job created in the wind industry 3.7 jobs are lost elsewhere in the UK economy (see our post here).

One Australian study has forecast that the current mandatory RET will kill over 6,000 jobs (see our post here).

The idea of wind industry job “creation” is like robbing Peter to pay Paul, except that the thief has to filch $4 from Peter to end up handing $1 to Paul.

The Germans have worked out that their dream of “creating” thousands of sustainable “green” jobs was just that: a dream. The hundreds of €billions spent subsidising wind and solar have killed the German’s international competiveness, with major companies heading to the USA – where power costs are a third of Germany’s (see our post here). And, as renewables subsidies are inevitably wound back, the jobs they “created” are disappearing fast (see our post here).

The renewables subsidy story in Spain is no different. The Spaniards have thrown 100s of billions of euros in subsidies at solar and wind power, and have achieved nothing but economic punishment in return. The much touted promise of thousands of so-called “green” jobs never materialized. No surprises there. Instead, the insane cost of subsidising wind and solar power has killed productive industries, with the general unemployment rate rocketing from 8% to 26% – youth unemployment is nearer to 50% in many regions (see our post here). For an update on the Spanish renewables disaster see the study produced by the Institute for Energy Research available here.

A study undertaken by Gabriel Calzada Álvarez (PhD) of the University of Rey Juan Carlos back in 2009 – “Study of the effects on employment of public aid to renewable energy sources” (available here) summed up the adverse employment impacts of the Spanish renewables disaster as follows:

EXECUTIVE SUMMARY: LESSONS FROM THE SPANISH RENEWABLES BUBBLE

Europe’s current policy and strategy for supporting the so-called “green jobs” or renewable energy dates back to 1997, and has become one of the principal justifications for U.S. “green jobs” proposals. Yet an examination of Europe’s experience reveals these policies to be terribly economically counterproductive. This study is important for several reasons. First is that the Spanish experience is considered a leading example to be followed by many policy advocates and politicians.

This study marks the very first time a critical analysis of the actual performance and impact has been made. Most important, it demonstrates that the Spanish/EU-style “green jobs” agenda now being promoted in the U.S. in fact destroys jobs, detailing this in terms of jobs destroyed per job created and the net destruction per installed MW. The study’s results demonstrate how such “green jobs” policy clearly hinders Spain’s way out of the current economic crisis, even while U.S. politicians insist that rushing into such a scheme will ease their own emergence from the turmoil.

The following are key points from the study:

1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain’s and Europe’s “green jobs” schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is “at what price?”

2. Optimistically treating European Commission partially funded data, we find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.

3. Therefore, while it is not possible to directly translate Spain’s experience with exactitude to claim that the U.S. would lose at least 6.6 million to 11 million jobs, as a direct consequence were it to actually create 3 to 5 million “green jobs” as promised (in addition to the jobs lost due to the opportunity cost of private capital employed in renewable energy), the study clearly reveals the tendency that the U.S. should expect such an outcome.

4. At minimum, therefore, the study’s evaluation of the Spanish model cited as one for the U.S. to replicate in quick pursuit of “green jobs” serves a note of caution, that the reality is far from what has typically been presented, and that such schemes also offer considerable employment consequences and implications for emerging from the economic crisis.

5. Despite its hyper-aggressive (expensive and extensive) “green jobs” policies it appears that Spain likely has created a surprisingly low number of jobs, two-thirds of which came in construction, fabrication and installation, one quarter in administrative positions, marketing and projects engineering, and just one out of ten jobs has been created at the more permanent level of actual operation and maintenance of the renewable sources of electricity.

6. This came at great financial cost as well as cost in terms of jobs destroyed elsewhere in the economy.

7. The study calculates that since 2000 Spain spent €571,138 to create each “green job”, including subsidies of more than €1 million per wind industry job.

8. The study calculates that the programs creating those jobs also resulted in the destruction of nearly 110,500 jobs elsewhere in the economy, or 2.2 jobs destroyed for every “green job” created.

9. Principally, the high cost of electricity affects costs of production and employment levels in metallurgy, non-metallic mining and food processing, beverage and tobacco industries.

10. Each “green” megawatt installed destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro.

11. These costs do not appear to be unique to Spain’s approach but instead are largely inherent in schemes to promote renewable energy sources.

…
Gabriel Calzada Álvarez (PhD)
University of Rey Juan Carlos

Well, that couldn’t be much clearer.

In Spain, just as here, the great bulk of employment in the wind industry involves fleeting construction work (once the turbines are up, there’s nought to do) – as noted in point 5 – of the jobs created:

“two-thirds of which came in construction, fabrication and installation, one quarter in administrative positions, marketing and projects engineering, and just one out of ten jobs has been created at the more permanent level of actual operation and maintenance”.

That the Spaniards had to stump up “subsidies of more than €1 million” to create each wind industry job; that each wind industry job thus created, killed off 2.2 jobs elsewhere in the economy; and that each MW of wind power capacity installed destroyed 4.27 jobs – is nothing short of an economic disaster.

Faced with an unemployment calamity, the Spanish government has moved to dramatically slash the subsidies to renewables: tearing up wind farm contracts; retrospectively stopping subsidies for wind farms built before 2005; reducing the insanely high rates paid for wind power (previously guaranteed for 20 years) – capping the (subsidised) profits wind power outfits can make at 7.4%, above which the outfit must sell at the (unsubsidised) market rate (see our post here).

Given the results of Spain’s disastrous wind power experiment, the Australian wind industry’s “fan-tastic” claims about an employment Eldorado at the end of the RET rainbow are little more than fool’s gold.

pyrite

Even the “Slower” Aussies, are catching on, to the fact that Wind Turbines are Useless!

/ 1957chev / Leave a comment

How the Public Are Deceived About the True Cost of the Mandatory RET

August 26, 2014 by  

sprinter_2248190b

The Australian Financial Review – as one of the lefty Fairfax stable – “drank the Kool Aid” early and happily ran with the wind industry’s narrative that having Australia bristle with giant fans is a sure-fire way of cooling mother Earth; that wind power is free; and that the mandatory RET is public policy at its best.

In short, the AFR has been a faithful outlet for wind industry spin and propaganda. Regurgitating an endless stream of Clean Energy Council (CEC) press releases; and giving the likes of Infigen (aka Babcock & Brown) free rein to spruik about the “wonders” of wind – never questioning, let alone challenging, the wild and fantastic claims made about lowering retail power prices (all while “saving” the planet, of course) – it’s been a serious media outlet of choice for the wind industry and its parasites.

Until now.

In the last few weeks there’s been a seismic shift in the AFR’s approach to the imminent demise of the mandatory RET. Faced with an increasing barrage of hysterical claims about the world ending if the RET gets the axe (by the likes of the CEC and Infigen’s Miles George) the AFR’s journos and editor have finally opened their eyes to the greatest rort of all time. And, to the horror of the CEC and its taskmasters, they’ve stopped buying the myths and mis-information pitched up by Infigen & Co.

Phil Coorey’s piece on how Tony Abbott, Joe Hockey and Mathias Cormann have joined forces to bring an end to most ludicrous policy ever devised sent the wind industry into a state of panic (see our post here).

Since then, the AFR has followed up with a terrific piece from Alan Moran and an editorial calling the mandatory RET flawed and unsustainable (seeour post here) – and a detailed analysis of the inherent flaws and failings of the RET by crack energy market economist Danny Price (see our post here).

With the AFR turning on it, the wind industry must know its days are numbered.

The AFR continues its recent trend with this fine piece of work by Ben Potter and another terrific editorial that strip away the myth that the mandatory RET is a benign piece of “climate change” policy which won’t cost power consumers a thing.

Renewable energy lobby’s shell game
Australian Financial Review
Ben Potter
25 August 2014

shell-game2009Mar06

The renewable energy lobby employs a neat trick to show that billions in subsidies for the costliest forms of electricity can lower power prices.

Wind and solar power costs between 1½ and 10 times as much to produce as power from coal and gas. But the vagaries of the National Electricity Market allow the renewables sector to claim that it lowers prices – even if it imposes costs on consumers elsewhere.

In a shell game, a conman quickly moves around three shells on a table or mat and his buddies pressure passers-by to bet which one contains a pea.

The pea under the shell is $37 billion of renewable energy certificates (RECs) that electricity retailers will buy from renewable energy generators or generate themselves between now and 2030 if the renewable energy target scheme isn’t changed.

“It’s misleading, because the subsidy is the REC, and the REC certificate is acquitted at the retail level and is included in the retail price of electricity,” Origin Energy chief executive Grant King says.

The renewable energy target has helped drive installations of 52 wind farms and 1.3 million solar roof-top systems – about one-eighth of total capacity – since 2001, Bloomberg New Energy Finance says.

The NSW Independent Pricing and Regulatory Tribunal estimated the cost of the renewable energy target to the average household in 2013-14 at $107 – about 5.3 per cent of a typical $2012 bill.

It is now under review by a panel headed by businessman Richard Warburton, who is sceptical that human activity is causing global warming.

Because the price of RECs is about the same as the electricity price per megawatt/hour, renewables generators are deriving as much revenue from selling RECs as they are from selling power to the National Electricity Market.

“All it is is a tax on existing producers which is passed onto existing consumers,” says Tony Wood, head of the energy program at the Grattan Institute.

“No one denies, when they are asked the right question, that renewable energy costs more than fossil energy.

“The only question is who pays for it? And right now it’s a combination of consumers and fossil generators who are paying for it, and you’ve got to question is that the right policy?”

The RET’s costs are buried in ACIL Allens’ modelling for the RET review and a report issued by the Climate Institute last week.

Most of the costs are REC costs. Deloitte Access Economics in a report for business groups estimates the net present value of REC transfers to the renewables industry over 2015-30 at $17 billion, compared with $8 billion to $9 billion if the RET is closed or the target is wound back to a true 20 per cent of energy supplied.

When REC costs are included, retail bills are higher until at least 2020, after which opinions diverge.

ACIL Allen and the Climate Institute find that continuing the RET on its current path lowers household power bills by as much as $80 a year from now to 2030, despite swelling bills between now and 2020. Deloitte, using different assumptions about capital costs, falling demand and market responses, finds retail bills higher after 2020 as well.

The Climate Institute report shows the high long-run marginal production costs of solar and wind power – which include capital costs – relative to coal and gas. Coal and gas power come in at about $60 to $80 a megawatt hour in the eastern states, wind at $88 to $544 a megawatt hour and solar at $128 to $1533 megawatt hour.

But when it comes to bidding in the National Electricity Market, wind and solar clean up because they have zero short-term marginal costs (in the short term, capital costs are less important). Wood argues they even have negative short-term marginal costs because they need to produce energy to sell RECs.

The rising RET target forces renewables into the NEM, even though electricity demand is shrinking and no more capacity is required. Those factors combine to suppress wholesale prices, which have dipped below $40 a megawatt hour.

That in turn squeezes profits and market share for coal and gas generators, which have to cover their fuel costs, at peak times when they used to make their profits. Retailers then have to buy or generate renewable energy certificates to cover the renewable energy target – currently about 10 per cent, rising to about 28 per cent by 2020. The REC cost goes into the retail price.

If that cost is less than the wholesale price suppression, the consumer wins. But it’s a fine call, says Wood.

The RECs subsidy costs about $29 billion in net present value economic activity, 5000 jobs and $1260 in average annual earnings. This comes from more costly investments in renewables, which Deloitte says raise power prices and suppress resources, jobs and demand in other sectors.

Erwin Jackson, deputy chief executive of the Climate Institute, says such losses are more than offset by the benefits of emissions reductions under the RET.

A Climate Institute report released last week puts a much lower $2.7 billion economic cost on the RET. It finds it lowers household power bills after 2020. It values the social benefits of emissions cuts at $19 billion, based on a $24 to $50 a tonne social cost of carbon. Mr Jackson said this was almost certainly an under-estimate but “you have to factor it in, otherwise it’s a one-sided model and you are assuming climate change doesn’t exist.”

He admitted it was only an estimate of the RET’s contribution to global climate change efforts – offset by emissions increases in large emerging economies such as China and India – rather than any quantifiable benefit to Australia.

But it was the “best tool we have” to “open up the conversation” to considering the benefits of reducing emissions.

“What they’ll talk about very carefully is the cost to consumers, and they’ll show the cost to consumers is either slightly favourable or not much different – therefore ‘isn’t this a reasonable price to pay for renewable energy?’” Wood says.

“What they are very careful not to say [is] ‘what’s the cost to the Australian economy?’ because the cost to the economy includes the negative cost to the existing generators.

“To say that the renewable energy target is a small impost to consumers is the right answer but it’s the wrong question. The right question is ‘what’s the economic impact of the RET?’ and the economic impact of the RET is negative.”

The RET is a costly way to cut greenhouse gas emissions. Its price of abatement is $54 to $186 a tonne, up to eight times the recently abolished carbon price, ACIL Allen modelling for the RET review finds.

A cheaper – but politically tricky – way to reduce emissions to would be to return to a technology neutral carbon price signal.

The difference between Deloitte’s estimate of the REC cost savings from winding back the RET to a true 20 per cent and closing it – $9 billion – is similar to the $10 billion “additional profit” for coal and gas generators – such as Origin and EnergyAustralia – claimed by the Climate Institute report.

“It’s not that they’re better off because the RET was removed. It’s that they’re worse off because the RET was introduced,” Wood says.

Tim Sonnreich, strategic policy manager at the Clean Energy Council, an industry body, accepts that there’s a substantial wealth transfer from incumbent generators to renewables generators.

“We are not denying that,” Sonnreich says. “But it’s a wealth transfer that’s in favour of consumers so we would have thought in a political sense that’s a pretty popular one.”
Australian Financial Review

A valiant effort there from the CEC, as its spin master plays the shell game and otherwise attempts to turn night into day.

The mandatory RET sets up the greatest wealth transfer in the history of the Commonwealth. However, it’s not – as the CEC asserts – one that power consumers are going to thank their political betters for. That transfer – which comes at the expense of the poorest and most vulnerable; struggling businesses; and cash-strapped families – is effected by the issue, sale and surrender of RECs. As Origin Energy chief executive Grant King correctly puts it:

“[T]he subsidy is the REC, and the REC certificate is acquitted at the retail level and is included in the retail price of electricity”.

It’s power consumers that get lumped with the “retail price of electricity” and, therefore, the cost of the REC subsidy to wind power outfits. Between 2014 and 2031, the mandatory RET requires power consumers to pay the cost of issuing 603.1 million RECs to wind power generators. With the REC price likely be at least $65 (by 2017) – and tipped to exceed $90 – the wealth transfer from power consumers to the wind industry will be somewhere between $40 billion and $60 billion, over the next 17 years (see our posts here and here).

Here’s the AFR’s editor in response to the wind industry’s latest efforts to spin its way out of trouble.

Models can’t hide true RET cost
Australian Financial Review
Editorial
25 August 2014

Studies relied on by the renewable energy lobby to justify the continuation of the Renewable Energy Target make a lot about noise about the RET’s effect on the wholesale price of energy. But as shown in this newspaper today, force feeding up to 30 per cent renewables such as wind and sun-generated electricity into the power grid may put downward pressure on wholesale prices amid weak demand by artificially boosting supply. But the effect of forcing more power into the system will then show up in other ways: by increasing retail prices through the cost of renewable energy certificates. Those increased prices will reduce gross domestic product, by depressing productivity and by pushing up prices and costs elsewhere in the economy. That is, it is a highly expensive way to reduce emissions.

As previously discussed in this newspaper, an ongoing review of the RET led by Dick Warburton to make recommendations about winding back or even ending the scheme has resulted in considerable argument over the scheme’s effect on the electricity markets. These arguments include contradictory findings by computer modelling groups, with the RET lobby relying on studies pointing to the effect of dumping a lot of additional capacity into the wholesale market at a time of stagnating demand. However, as the coverage in today’s Financial Review notes, retailers still have to buy the Renewable Energy Certificates required to meet their obligations under the RET from the renewable generators, and that is expected to cost $37 billion between now and 2030, or as much as the electricity itself. That is $37 billion that must be reflected in higher prices elsewhere.

The arguments over the Renewable Energy Target show just how deftly skilled lobbyists can distort the debate, but we should not lose sight of the fact that the RET in any form will cost many billions of dollars in return for an hypothetical social benefit of the carbon emissions being offset.
Australian Financial Review

dirtyrottenscoundrelsoriginal

Renewable Energy Targets, are the Best Targets to Miss. Stop them All Together!

/ 1957chev / Leave a comment

Hostages to a renewable ruse

Written by Nick Cater, Australian on 28 July 2014.

wind farm blightIf there is a sound more pitiable than the whine of a pious environmental activist, it is the wail of a ­financier about to do his dough.

The mournful chorus now wafting from Greg Hunt’s waiting room is the sound of the two in unison, pleading with the Environment Minister to save the life of their misshapen bastard child, the renewable energy target.

You have to hand it to Hunt, who either has nerves of steel or is stone deaf, for he has retained both his cool and his fortitude.

The RET review by Dick Warburton on the government’s behalf has brought the rent-seekers out in force, for billions of dollars of corporate welfare is resting on its outcome.

As it stands, the RET will produce a bounteous return for a small group of investors shrewd enough to get into the windmill game while the rest of us are slapped with four-figure power bills.

Wind farms may be ugly but they are certainly not cheap, nor is the electricity that trickles from them. No one in their right minds would buy one if they had to sell power for $30 to $40 a megawatt hour, the going rate for conventional producers.

But since the retailers are forced to buy a proportion of renewable power, the windmill mafia can charge two to three times that price, a practice that in any other market would be known as price gouging.

As if a $60 premium were not reward enough, the transaction is further sweetened with a renewable energy certificate that they can sell to energy producers who insist on generating power in a more disreputable manner.

The going rate of $40 a megawatt hour means the total income per megawatt for wind farms is three to five times that of conventional power, and unless the government changes the scheme that return is only going to get better.

In an act of rent-seeking genius, the renewable lobby managed to persuade the Rudd government to set the 2020 target as a quantity — 41 terawatt hours — rather than 20 per cent of overall power as originally proposed.

Since the target was set, the energy generation forecast for 2020 has fallen substantially, meaning the locked-in renewable target is now more like 28 per cent.

That will send conventional producers scrambling for certificates, pushing up their price beyond $100. It’s a mouth-watering prospect for the merchant bankers and venture capitalists who were smart enough to jump on board, and brilliant news for Mercedes dealerships on the lower north shore, but of little or any benefit to the planet.

The cost of this speculative ­financial picnic will be about $17 billion by 2030 or thereabouts, ­according to Deloitte, which produced a report on the messy business last week.

Since the extra cost will be added to electricity bills, the RET is a carbon tax by another name, a regressive impost that will fall most heavily on those with limited incomes, such as pensioners.

The lowest income households already spend 7 per cent of their disposable incomes on energy, according to the Australian Council of Social Service. Energy takes just 2.6 per cent of the budget of those on high incomes.

Thus under the cover of responding to climate change — “the greatest moral, economic and social challenge of our time” — billions of dollars are taken from the poor and given to the rich investors in the unsightly industrial turbines that are blighting the lives of rural communities and stripping value from the properties of people who just wish to be left to live in peace.

Read rest…

Renewable Energy Targets Must Go….It’s a SCAM!!!

/ 1957chev / Leave a comment

Burchell Wilson: Sectors Should Join to Beat the RET

July 16, 2014 by  

 

Together we can protect small business and mums and dads from the burden of bad energy policy

Burchell Wilson is an extraordinary economist and holds the chief economist role at the Australian Chamber of Commerce and Industry. He writes today in the Australian;

Sectors should join to beat RET
Burchell Wilson
The Australian
17 July 2014

A QUIET but effective lobbying campaign is under way by the Australian Aluminium Council to deflect the unnecessary economic damage being inflicted on the industry by a dramatically expanded renewable energy target.

Rather than tackle Labor’s hidden carbon tax head-on, representatives of the aluminium industry understandably are seeking to exempt themselves from the fatal toll the RET is inflicting on Australian producers of aluminium.

From a political economy perspective the strategy adopted by the sector makes sense and would appear to be an attractive option, at least as far as the aluminium industry is concerned.

However, exempting aluminium refiners and smelters alone from the RET has the effect of shifting the cost of the scheme on to other energy users. It may allow aluminium producers to save hundreds of millions of dollars in energy costs, yet it unfortunately heaps the cost burden of the scheme further sideways on to mums and dads and small-business operators at the expense of the broader community.

The likelihood that those who would be asked to bear the cost of these exemptions will provide sufficient political resistance to these proposals is limited. Small businesses are too busy keeping their heads above water to be overly engaged in policy machinations and most households are focused on putting food on the table and ensuring their kids get the best chance in life.

Similar behaviour by sectoral interests was seen around the imposition of the carbon tax. Rather than opposing bad policy outright, many focused instead through necessity on carving themselves out of the policy to minimise exposure. As a political dynamic this is one reason so many policy failures get up in the first instance. There can be only limited effective opposition to bad policy when industry sectors focus instead on narrowly targeted campaigns to moderate their own impacts.

All of which serves to highlight the importance of broad-based industry associations in the political environment as advocates for good economic policy. The Australian Chamber of Commerce and Industry represents the interests of a large base of energy users in the business community covering 300,000 businesses and acts on their behalf to ensure their views are considered in the national policy debate. The broad interests of industry in relation to the RET also happens to largely coincide with those of household energy users; both groups would benefit considerably from the scheme being phased out or scaled back.

The RET operates to drive up electricity prices for the sake of high-cost carbon abatement opportunities. Soon to be released modelling for ACCI by Deloitte Access Economics shows this will not only impose costs on energy consumers directly, it will also lead to broader economic damage to the Australian economy to the tune of $30 billion across the remaining life of the scheme. Jobs and investment will also be a casualty of the RET due to the loss of competitiveness it inflicts on Australian industry. The chief bene­ficiaries of the RET are in the wind industry, which will pocket $37bn in subsidies until 2030, or about $2.5bn a year on average.

Rather than seeking an exemption for individual sectors, ACCI is seeking wholesale reform of the RET on behalf of all energy users. Just as Palmer United Party senator Jacqui Lambie wants to see the entire state of Tasmania exempted from the scheme, ACCI believes the most appropriate exemption is one for the entire country.
The Australian

A reminder of Burchell’s cracking interview on the ABC’s 7.30 with Sarah Ferguson broadcast on 17 February 2014 (see our post here) – transcript follows.

**

****
Transcript:
SARAH FERGUSON, PRESENTER: A day after US Secretary of State John Kerry described climate change as perhaps the world’s most fearsome weapon of mass destruction, the Abbott Government has today taken another step towards overhauling the climate policies left over from Labor’s years in power. The Government has announced a major review of the impact of clean energy on retail power prices. It’ll be headed by a self-confessed global warming sceptic, businessman Dick Warburton. And it’s widely expected to result in a decision to wind back the current Renewable Energy Target, which aims to ensure that 20 per cent of Australia’s power comes from renewable sources like wind and solar by the year 2020. Industry groups are lobbying for the target to be abolished or cut. Among them is the Australian Chamber of Commerce and Industry. Its chief economist, Burchell Wilson, joined me earlier from Canberra. Burchell Wilson, thank you very much for joining the program.

BURCHELL WILSON, AUST. CHAMBER OF COMMERCE & INDUSTRY: You’re welcome.

SARAH FERGUSON: There was a substantial review of the Renewable Energy Target in 2012. Why do we need another review so soon after?

BURCHELL WILSON: Well the review is scheduled by legislation to take place in 2014, so obviously it has a parliamentary mandate to take place. But the other thing about the scheme is there needs to be more clarity around the cost it’s imposing on consumers, the cost it’s imposing on industry and the sort of inefficiencies it’s giving rise to in the energy sector.

SARAH FERGUSON: What about those people who are investing in the renewable sector, are they not part of the Chamber of Commerce as well?

BURCHELL WILSON: Look, the problem with the Renewable Energy Target is it’s imposing a cost of $1.6 billion across the economy. It amounts to about five per cent of household energy costs now and that’s just going to mushroom over time as the scheme continues to be rolled out.

SARAH FERGUSON: Let’s just talk about the domestic cost for a minute because the Climate Change Authority did look at the consequences of scrapping the target, if that were to happen as a result of the review, and they found that the effect on domestic energy prices would be negligible. Why do you say it’s such an important factor in this decision to review the target then?

BURCHELL WILSON: Look, you’ve had a range of regulatory authorities around the country come out in recent – in recent months and say – and tell us that the cost of the RET to average households is around $102 per annum, which is about five per cent of their electricity bill …

SARAH FERGUSON: And how much of that is covered by government compensation?

BURCHELL WILSON: None of it. It’s all – it’s a consumer subsidy. Taxpayers don’t foot the bill, energy users do. That just makes it more insidious. It’s not on the budget anywhere. It’s a cost to consumers that they don’t really know that they’re wearing.

SARAH FERGUSON: Is $100 a year a good enough reason to consider scrapping the Renewable Energy Target, if that is indeed one of the factors at play here?

BURCHELL WILSON: Look, the problem with the Renewable Energy Target is it’s a very inefficient way of abating carbon. The Productivity Commission’s told us – told us this. It’s costing up to $525 per tonne to abate carbon under the renewable energy target. There are low-cost alternatives available and, effectively, we’re undermining our emissions reduction effort by persisting with the Renewable Energy Target.

SARAH FERGUSON: Would you like to see it scrapped?

BURCHELL WILSON: Ah, we need to see it wound back in terms of its ambition and gradually phased out would be desirable from the perspective of industry and energy users.

SARAH FERGUSON: Phased out over what period? What are you actually calling for here?

BURCHELL WILSON: Look, this has to be examined as part of the review. There needs to be some provision made for the sunk investment under the scheme, but over time we should be winding this back, allowing the sunk investment to naturally decay and fall away and allow the renewable sector to compete on an even – on a level footing with baseload generators and efficient sources of energy.

SARAH FERGUSON: And is that something that you can realistically expect, were you to wind back the Renewable Energy Target in the short term, as you propose?

BURCHELL WILSON: Look, if people want to consume renewable energy, there are schemes available for them to opt in on a voluntary basis, but mandating this cost on consumers without providing any sort of level of clarity around the costs they’re imposing is bad policy and it’s bad for energy users.

SARAH FERGUSON: Let’s just have a look at the make-up of the panel who are going to consider this review. Dick Warburton is a self-avowed sceptic. His views on the subjects are well known. Is he an appropriate person to be leading this review?

BURCHELL WILSON: Absolutely. Dick led the charge against Australia having the highest carbon tax in the world. You’ll realise that Australians per capita pay $380 per head under the carbon tax, whereas Europeans under the ETS, they’re paying about $1.50. So there is no comparison between what we’re doing domestically and the efforts that are taking place abroad. We are an outlier.

SARAH FERGUSON: Just stay with the make-up of the panel for the moment. We’ve also got Brian Fisher, who has a long history of being opposed to pricing mechanisms in this area. It does sound as though the outcome of the review is to some extent preordained?

BURCHELL WILSON: Brian Fisher is a first-rate economist, one of the best in the country. If he – I don’t think he has any predetermined views on the matter, but he will approach this like an economist and he will …

SARAH FERGUSON: But a long history of opposition to pricing mechanisms for tackling climate change.

BURCHELL WILSON: Well, I don’t know if that’s true, but what he will tell you is the Renewable Energy Target is high-cost, it’s inefficient as a means of abating carbon, and if that’s your primary objective with respect to the RET, then we should scrap it altogether.

SARAH FERGUSON: What do you expect the outcome of the review to be?

BURCHELL WILSON: Look, we’re hopeful that at least the scale of the ambition for the Renewable Energy Target will be scaled back, but also hopeful that there’ll be some provision made for phasing the thing out over time and putting the renewable sector on a competitive footing with other forms of generation.

SARAH FERGUSON: It’s not going to be an an even footing though because if you remove the mandated target, that’s going to harm investor confidence in the renewable sector, isn’t it?

BURCHELL WILSON: Look, the Renewable Energy Target is – it’s corporate welfare on a massive scale directed towards the renewable sector. I don’t know why anyone would have any level of sympathy for businesses that – they don’t employ many people, that they don’t export anything and they’ve surreptitiously imposed these massive costs on energy consumers for the sake of lining their own profits.

SARAH FERGUSON: Do you have any sympathy for investors in the renewable energy sector in Australia tonight?

BURCHELL WILSON: Ah, well, they’ve run quite a disingenuous campaign in recent years, they’ve hidden the cost of the RET and they’re finally experiencing a level of accountability. I think that’s entirely appropriate and it’s strong leadership from the Prime Minister, the Industry Minister and the Environment Minister in putting the RET on the table and having an honest examination of the issue.

SARAH FERGUSON: Thank you very much indeed, Burchell Wilson, for joining us. We’ll see how the review pans out.

BURCHELL WILSON: Thanks very much.
ABC 7.30

STT says: “Hats off Burchell.”