In a less than enthusiastic endorsement, Lenore Taylor in the green left Guardian addresses the Renewable Energy Target, quoting at length from my IPA submission. She says
But the Institute of Public Affairs (IPA) thinktank – which has long lobbied against the RET – has used a submission to the Warburton review to argue for its abolition, dismissing concerns that abolishing the RET would constitute “sovereign risk”. Like Warburton, the IPA suggests businesses should not have based investments on government “favours”.
“Sovereign risk involves a ‘taking’ of property and should be avoided because, ethical issues aside, it creates great uncertainties for investment, especially investment with long payback times. But sovereign risk from the government withdrawing a favour is different from when it takes a property. No investor can reasonably expect a subsidy to prevail for 15 years as is notionally the case with windfarms and other exotic renewable facilities. And there would be few precedents for a government committing its successors to what would become 24 years of worthless expenditure,” the IPA says in its submission.
“If removal of such favourable and lengthy regulatory provisions was considered to constitute reimbursable sovereign risk, the motor vehicle manufacturers now abandoning production in Australia would have a case for compensation … The termination of the renewable energy requirements should be done immediately.”
According to the IPA, there are three options for modifying the RET scheme:
• Reduce it to a “real” 20% of the current electricity market. It says this would reduce the amount of renewables from 41,000 gigawatt hours (20% of what was the estimated size of the market in 2020) to a maximum of 33,000 GWh.
• Allow only the existing and committed projects to proceed as subsidised. This would mean about 15,000 GWh.
• Totally abandon the RET and force “renewables to immediately compete without subsidy, as their adherents always claimed they would eventually be able to do”.
The climate commission, which became a crowd-funded independent body after it was abolished by the Abbott government, will release a report on Tuesday arguing that “the least-expensive zero-emission option available at scale for deployment today in Australia is wind, closely followed by field-scale solar PV”.
“These costs are falling fast as take-up globally accelerates. Wind should be 20% to 30% cheaper by 2020, solar PV is expected to halve in cost,” the report says.
Assuming Australia does need to reduce emissions from its power sector, the report says moving to renewables would be cheaper than trying to “clean up” coal-fired plants.
I have heard the forecast that within a few years renewables will be competitive continually for over 20 years. The corollary, that we should therefore cease subsidising them, is never welcome. Now the income wasters are simply saying it will be 20 per cent cheaper – and still nigh-on three times the cost of coal, even wind, the cheapest of the exotic renewables.
Taylor lays into those like the RET review’s Chairman, Dick Warburton, for allegedly stating the bleedin’ obvious that a business model built on mooching from the consumer and backed by compulsion, offering a product that is not remotely competitive is a poor basis for building a viable future. She is voicing the fall-back view of the industry that should have been strangled at birth – namely that we should honour the subsidies that have been given for those who are already receiving them. That would have been a nice solution to the motor vehicle assemblers’ distress at writing off billions as a result of the recognition that they were not and could not be competitive!
More importantly, it is cheap energy that has built the modern high living standards that we enjoy. Forcing its abandonment will lower those standards except of course for the administrators and the beneficiaries of the subsidies.