For Renewable Energy
The Renewable Energy Target was set up by the Howard Government in 2001 to reduce pollution from Australia's emission-intensive power sector and develop Australia's clean energy sector. The Labor government expanded the target, with support from the Coalition, to ensure at least 20 per cent of Australia's electricity comes from renewable sources by 2020.
And it's working. Since 2001 the Renewable Energy Target has generated some 24,000 jobs and $20 billion of investment. It has enabled Australia to develop skills and expertise in one of the world's key growth industries. It has made our electricity system more diverse and resilient by reducing our reliance on coal and gas. Over a million households have seized the opportunity to go solar and many more will follow.
If the Renewable Energy Target was to be weakend or removed it would break 14 years of cross-party support for renewable energy and would threaten the livelihoods of thousands of wind and solar workers. It would also be a kick in the guts for the businesses, large and small, that have invested in renewable energy and hurt the 5 million Australians who have invested in renewables through their superannuation. And, over time, cutting renewable energy will drive up energy prices for every Australian.
The most recent modelling suggests Australian households will pay over $50 more for electricity in 2020 if the renewable energy target (RET) is dumped, and beyond 2020 household bills would be up to $140 more per year1. This is in part because fewer renewables mean more gas, which is skyrocketing in price. In short, dumping the target will mean fewer renewables and less competition in the energy market – "and as in any market from cars to bananas, less competition means higher prices"2.
For more on how renewables are actually lowering energy prices for everyone, check these out:Explaining electricity markets to dummies, Business Spectator.
The Price of Power. ABC Radio National: Background Briefing.
Renewable Energy Target: The Facts. Clean Energy Council.
 Fighting off a gas price spike. Business Spectator. 30 April, 2014.
 The Renewable Energy Target: The Facts. Clean Energy Council.
Fossil fuels such as coal make up the majority of Australia's electricity sector, and are the major cause of dangerous climate change. The solution is to replace fossil fuels with clean renewable energy like solar and wind.
With no price to make major emitters pay for the pollution they emit, policies like the Renewable Energy Target become much more important in meeting the Government's emission reduction commitments.
Under current settings, the target will deliver around 76 million tonnes of emission reductions by 2020 – about 18 per cent of Australia's minimum five per cent target [ ]. If the target is weakened or scrapped, the government is going to have to find other, perhaps much more expensive, ways of achieving those emission reductions. Reducing the RET will only increase the amount the Federal Government has to spend under its Direct Action plan to meet commitments to cut greenhouse gas emissions.
It has now been clearly established that the main factor was unnecessary spending on network costs — so called 'gold plating'. Richard Denniss from The Australia Institute explains, "the main reason that electricity has been getting dearer is the overinvestment in poles and wires, and the fundamental inefficiency in the way that the national electricity market's working."1
Australians are understandably concerned about the rising cost of energy bills, which have risen hugely in the last five years. But the main factor in that was lots of unnecessary spending on network costs1, and the main factor going forward is rising gas prices. Few people realise we are in competition with the rest of the world for gas – and higher demand doubled prices in Australia in 2011-12. The price of gas is forecast to triple this decade, leading to even more power price pain for households. Depending on how much gas you use in your home, experts are predicting your gas bill could increase by $50 to a staggering $500!2
>Meanwhile, renewables like solar and wind not only push down the market price of electricity during peak demand, but are doing so for a lower cost each year as technological advances and major investment overseas are rapidly developing the sector. If we lose the Renewable Energy Target, we increase our reliance on fossil fuels that are getting more expensive, and lose access to clean energy that is getting better, smarter and lower cost. That's why despite what the big power companies would have our politicians believe, weakening or abolishing the Renewable Energy Target won't do anything to reduce power bills. In fact, weakening the target looks set to actually increase our bills. The Price of Power. ABC Radio National: Background Briefing. 27 April, 2014.
[2} Explainer: Why gas prices are set to increase. ABC. 23 April, 2014.
Over three million Australians have solar panels on the roofs – that's more than 1 in 6 of us. Support for solar is independent of demographics and political affiliations. In fact, most Australians who have solar are in rural and regional areas, or postcodes with lower median incomes.
The Renewable Energy Target provides a huge opportunity for households to slash their electricity bills through solar panels and solar hot water. Australian households are turning to solar power as a way of saving money by generating our own clean energy from the sun. Support for solar makes it an affordable and accessible option for households feeling the power price pain.
According to a study by the Renewable Energy Certificate Agents Association, those most exposed to rising power bills are also the most likely to invest in a solar system. In fact, the study states that 53% of all solar systems are in regional and rural communities, and most systems installed in capital cities are mostly found in the outer metro 'mortgage belt.'
Renewables like solar are also driving down the market price of electricity during peak times – which is great news for all of us (except the big, traditional power companies). As Richard Dennis of The Australia Institute explains: "Solar panels are actually pumping quite a lot of energy in during these periods of peak demand, and that's pushing down the peak price. Now that's great for everybody, except the so-called base load power stations."1. The Price of Power. ABC Radio National: Background Briefing. 27 April, 2014.
Renewable energy needs support because it's competing in a market that has been distorted for decades by subsidies to fossil fuels. The mining industry gets $4.5 billion in federal government subsidies every year. Meanwhile, all the uncertainty around government policy in Australia has made it difficult to get renewable projects off the ground.
Most of the fossil fuel generators and their poles and wires were built with government money and have been paid off many years ago. But their subsidies haven't stopped.
A strong, stable target is needed to send a signal to cleaner industries that Australia is a safe place to invest. It shows that Australia is open for business in one of the world's fastest growing sectors, and gives business the long term certainty needed to attract investors build the energy infrastructure Australia will need in the future.
The Renewable Energy Target has already generated $18.5 billion of investment, and if left alone to do its job under stable policy settings is projected to generate a further $18.7 billion to 2030.
Some of the big power companies are attacking the Renewable Energy Target because it threatens their monopoly and because renewables cut into their profits.
We know the world is moving inevitably towards renewable energy. It's cleaner and takes advantage of our natural assets like the sun and wind. It doesn't require a finite supply of expensive, dirty fuel. Yet a handful of big energy companies are still trying to squeeze as much profit out of consumers as they can before their old business model is completely broken.
These big power companies typically own huge coal and gas reserves as well as gas and coal-fired power stations, which stand to claw back market share if renewable energy loses out. But while it suits them to weaken support for renewable energy, it's certainly not in the best interests of the rest of us.p>
Richard Denniss from The Australia Institute explains how it doesn't take a huge percentage of renewable power to drive down prices on the market. "[I]t's been estimated that [traditional power companies] make around 25% of their annual profit from around 36 hours of electricity supply. Now there's a new kid on the block, and that is solar, and from the coal-fired power station point of view you couldn't have a worse competitor – because solar is at its best when the market is at its most profitable." 1 The Price of Power. ABC Radio National: Background Briefing. 27 April, 2014.
In its independent review of the target just 18 months ago, the Climate Change Authority determined that the Renewable Energy Target will reduce emissions by about 100 million tonnes by 2020 and 200 million tonnes by 2030, at a cost of about $40 a tonne.
>Conservative estimates used by the United States government would put the economic cost of carbon pollution from Australia's fossil fuel sector at about $7 billion a year, and possibly up to $19 billion. Allowing fossil fuel generators to pollute for free for so many years has pushed the costs of pollution off the company balance sheet, onto the public, and given fossil fuels an unfair advantage over cleaner forms of power.
The Renewable Energy Target tilts the playing field back toward fairness and the public good, by making clean energy more competitive.
The Renewable Energy Target has already attracted $18.5 billion in new investment to Australia by national and international companies in large solar and wind projects because these investors feel confident in our renewables policies. It also has the potential for $18.7 billion more if the government leaves the scheme alone as the Climate Change Authority recommended in its 2012 discussion paper.
This is good news for small towns around Australia that may have missed out on the mining boom or struggled through years of drought. Small-scale renewable energy like rooftop solar has also seen the rapid growth of a new industry in Australia that now employs thousands of people.
Renewable energy has a large role to play in attracting investment into Australia to ensure our economic security, and creating highly-skilled jobs for people in regional areas. Changing the target would mean a reduced investment in Australian towns and cities – which means less jobs and less industry, as well as less choice for consumers.
This is an old myth peddled by the fossil fuel industry who have a vested interest in stopping Australia from harnessing renewable energy.
South Australia has shown that existing technologies can easily generate a third of the power needed to run the state without driving up prices. In the rest of Australia, wind and solar make up less than 6% of the energy mix, so there's a long way to go before the rest of the country catches up. Meanwhile energy storage systems and baseload renewables are rapidly dropping in price.
The reality is that many smart countries and states around the world are already a long way down the path to 100 per cent renewable energy and study after study has shown that the only thing standing in Australia's way is pressure from coal and gas companies, who are lobbying hard to persuade the government to water down a target that is working. Last year, a peer-reviewed study from the Universithy of NSW found Australia's main electricity market could source all of its electricity from renewable energy with the help of a carbon price of as low as $50 a tonne.1 Switch to fully renewable energy within reach: report. Sydney Morning Herald. April 3, 2013.
Every region in the world is investing in renewables. 138 countries have renewable energy targets. In the United States a new home or business goes solar every four minutes. China and Japan are the fastest growing investors in clean energy. Japan installed twice as much solar PV last year as Australia has in total. China installed nearly 4 times as much.
Reducing the target would be a massive step backwards, against global trends and against our own interests. Companies have already warned that if Australia cuts the target they'll invest in markets where the environment for renewables is better. Australia has world-class wind and solar—we'd be crazy not to make the most of this competitive advantage. More practically, we're in danger of sending investment elsewhere.
Despite having unparalleled potential for to harness renewable energy, Australia really risks lagging behind. Killing this industry would be especially bad timing, just as many are concerned we're losing our manufacturing sector and the mining boom won't last for much longer.
Can you make a submission?With less than a week to go before the submission period closes we need to get the facts in front of the review panel. We need a bigger, strong Renewable Energy Target to:
- Grow our economy and create new jobs
- Generate cheaper power and more options for consumers
- Build a clean energy future and end the dirty power monopoly