Spin from the Fin

It is getting to the point that the Fin cannot be regarded as a serious financial newspaper when its lead story essentially picks up the press release of rent-seeking wind farm operator Infigen Energy, which arose from the ashes of one of the satellites of Babcock and Brown (say no more).

And quoting ‘research’ (independent modelling – hahahahaha) by the Climate Institute – pleeease.

My guess is that Abbott is far too gutless to ditch the RET, although it would be great, but this front page story by the effectively hired gun Phil Coorey is designed to frighten some horses so that the costly and artificial government construct on which these faux environmentalist spivs make their excessive margins will not be much touched.

Oh and I just love the bit about overseas investors will not be prepared to invest in any other infrastructure assets if the RET is touched.  Pull the other one.

Read the piece and weep:

The federal government is moving towards abolishing the Renewable Energy Target rather than scaling it back in a move that will cost almost $11 billion in proposed investment and which is at odds with the views of its own Environment Minister.

The Australian Financial Review understands Prime Minister Tony Abbott has asked businessman Dick Warburton, whom he handpicked after the election to review the RET, to do more work on the option of terminating the target altogether. This was after Mr Warburton’s review leant towards scaling back the RET.

Sources said Environment Minister Greg Hunt, who advocated scaling back the RET as a compromise, has been sidelined from the process and is understood to be unhappy. They said Mr Abbott, Treasurer Joe Hockey and Finance Minister Mathias Cormann are pushing the issue now.

A government source said when the government announced its decision, possibly before the end of this month, it was now “more likely’’ the RET will be abolished under a so-called “closed to new entrants scenario’’ in which existing contracts only would be honoured.

Given Clive Palmer has vowed to block any change to the RET until after the 2016 election, it remains unclear when the government could declare the RET terminated.

Independent modelling commissioned by the Climate Institute and other environmental groups, and which will be released Monday, found that under the termination scenario, coal-fired power generators would reap an extra $25 billion in profits between 2015 and 2030.

There would be no reduction to household power prices and carbon emissions would climb by 15 million tonnes a year on the back of a 9 percent increase in coal-fired power.

DIMINISHED INVESTMENTS

 

Abolishing the RET would diminish investment in renewable energy by $10.6 billion, said the modelling, conducted by consulting firm Jacobs.

Conceived under the Howard government, the RET mandated that 20 per cent of Australia’s electricity be ­generated from renewable sources by 2020. The Abbott government has been lobbied heavily by the business and energy sectors to abolish or water it down as renewable energy gained a larger than expected share of the ­electricity market.

When the RET was first conceived, it was envisaged 20 per cent of total power production by 2020 would equate to 41,000 gigawatt/hours of renewable energy produced each year.

Under the scaleback favoured by Mr Hunt, annual production of renewable energy in 2020 would be reduced to 27,000GWh. But this would still amount to 20 per cent of total energy production because forecast total energy production for 2020 had been downgraded due to the decline in ­manufacturing, especially the collapse of the car industry and the closure of two ­aluminium smelters. This is known as the “real 20 per cent” option.

The abolition proposal would reduce renewable energy production in 2020 to 16,000GWh.

It is understood Mr Abbott’s office was briefed on the recommendations of the Warburton review in late July. The review found the RET did not add ­significantly to household and commercial power bills, as its critics, including Mr Abbott, had argued, and that it should be scaled back to the real 20 per cent model as advocated by Mr Hunt.

With the government favouring ­termination, Mr Warburton was asked to give the option more consideration and his report is expected this week.

ENERGY OVERSUPPLY

 

The government source said the market was oversupplied with energy and there was no longer any cause for a mandated use of any specific type of power. The source said while there would be investment losses if the RET was abolished, or even scaled back, investors “would have to have been blind to know this wasn’t coming’’.

Miles George, managing director of renewable company Infigen Energy, said either scaling back or terminating the RET “would be devastating”.

He said the creation of sovereign risk would be significant and the very issue had been raised by prospective foreign investors, including Canadian pension funds which Mr Abbott sought to woo when abroad in June.

“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,’’ Mr George said. “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.”

 

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44 Responses to Spin from the Fin

  1. Rabz

    It is getting to the point that the Fin cannot be regarded as a serious financial newspaper

    The Fin reached that point a long time ago, Judith.

  2. entropy

    So to clear, 15 per cent of the cost of electricity, even using the rent seekers’ figures, is 15 per cent? Just to make some people fell noble?

    In biblical days, tithe was only 10 per cent, and that effectively covered government, such as it was, too.

  3. Farmer Gez

    Institutional investors investing in a government subsidy scheme. I think they deserve all they get. As usual, the investment money will find a new home just not in the pockets of snake oil salesmen.

  4. entropy

    Actually Judith, this statement is correct:

    “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.”

    Because it would be a different set of investors altogether. Investors in RET based investments for ideological reasons and that talk to the Climate Institute aren’t the types that would be investing in power generation in the usual sense.

  5. Bruce of Newcastle

    Independent modelling commissioned by the Climate Institute and other environmental groups

    Independent modelling? By Clive Hamilton’s Climate Institute and enviro groups?

    AHAHAHAHAHAHAHAHAHA!!!

  6. john constantine

    Finally dropped my fin. subscription this year, for a while they were trying, but their target demographic is now people in the high spending demographic, not the ‘invested’ demographic.

    Advertisers want trendies that emotionally shop for new stuff and live or die according to how right or ‘not quite right’ they get their display of status artifacts.

  7. Alfonso

    Hee, hee…only derivative traders and beneficiaries of gift carbon indulgences weep at the loss of a huge profit centre based on the RET fiction. Coorey can rest easy, we’ll get over it matey, hope you have some Super in Hot Rocks.

  8. Token

    It is getting to the point that the Fin cannot be regarded as a serious financial newspaper

    I’ve seen the types who love the Fin across a few places now.

    It influence the mid to lower level types sheep who really don’t have the capacity for deep thinking but are extremely ambitious, so will believe the pap presented by the “free” paper their employer provides.

    Low talent beta males love the glow-ball warming crap. Wymmynses love “they keep you down” crap. The minorities love the whole “you are kept down coz there racist” crap.

  9. Elwood

    Serious question.

    If the government does scrap the RET, or materially reduce it, don’t they need Senate agreement?? (Or is there some way around that)? Does anyone know?

  10. entropy

    Yes they would need senate approval. Personally, I reckon if the government did the groundwork it should be doable (the RET costs this single mother and her five kids at Nambour the same as their school uniforms), but at present they seem incapable of mounting an argument for anything.

  11. C.L.

    ‘research’ … by the Climate Institute

    Ahahahahahahahaha.

  12. John Comnenus

    That $11 bn in lost investment, is that actually a saving in Govt expenditure? Or is the saving a percentage of that?

  13. The Honourable Scrutineer

    Judith’s always speaking truth to power. It’s very impressive.

  14. Mike of Marion

    Adelaide Advertiser pushing same themes on Page 5 of 18 August edition

  15. Charles

    This report is full of the sins of omission as you would expect from anything that emanates from the ACF and the Climate Commission, etc. Of course they have blithely ignored the fact that there is a latent cost to the RET which is presently siting with banks and other rent -seeking organisations such as hedge funds who are waiting for the price of REC’s (Renewable Energy Certificates) to rise when they can redeem them. It has been determine the cost of these certificates once redeemed will cost the electricity consumers anther $ 15 – 20 billion extra on top of they have already spent. So, a nice little earner waiting for someone, and a nice little debt for the rest of us.

    Additionally, investment in RET is not investment, it is just future latent cost because they produce something which has no value (an intermittent supply of electricity) and which can’t produce any goods or services from its supply, just a cost which must be absorbed by electricity consumers. So, when they say companies won’t invest $5 billion in RET in the future, draw a deep breath of relief, because you have just avoided $ 5 billion of future unnecessary expense, plus whatever profits they decide to take from the process.

  16. James of the Glen

    “Miles George, managing director of renewable company Infigen Energy, said either scaling back or terminating the RET “would be devastating”.

    Let’s hope so.
    Given the devastation Infigen has wrought, an immediate catastrophe for this company is long overdue.

  17. ProEng

    There is not one person associated with the Climate Institute that is qualified to make an estimate on the cost of electricity generation. Capital costs and operating cost can only be made by experienced professional engineers. Getting rid of RET and allowing generation for the cheapest supply source will reduce the cost of electricity and help Australian Industry be more competitive resulting in more employment.

  18. thefrollickingmole

    They had one of these tools on the ABC this morning, now see if you can square this circle..

    “The big energy companies will increase their profits by up to 10 billion dollars a year” (Ie: wont be taxed 10 billion)
    Energy costs will rise more over a ten year forward estimate than if we use renewables because coal miners keep having to buy coal whereas renewables is free.

    So on the one hand the companies will have profits, and on the other hand they wont use that profit to purchase energy systems that will increase their profits because its all “free”.

    All swallowed unquestioningly by the ABC Muppet.

  19. Shy Ted

    Coal shares – buy buy buy?

  20. cohenite

    Renewables are free; fucking pixie dust between the ears of these maggots.

  21. Mater

    Causes of residential electricity bill changes in Victoria, 1995 to 2013

    The cost of wholesale electricity and retail services accounted for 22.1% of the increase experienced by the average residential electricity customer, while the costs of policies that are recovered in the retail portion of the bill – namely, the VEET, the RET and the carbon price – accounted for 44.8% of the increase.

    Rather, it is the cost of government policy initiatives associated with improved environmental outcomes, energy efficiency and advanced metering – and that are recovered through either the network or retail portion of the bill – that has been the most significant cause of the increases that have been experienced in residential electricity bills, accounting for 75.8% of the increase between 1995 and 2013.

  22. cohenite

    So, green programs are responsible for 75.8% of the electricity price increases in Vic; fancy fucking that; and you can bet the same is the case in NSW.

    The green filth has done this to Australia with the connivance of the alp and the coalition haven’t yet extracted their collective head from their arse.

  23. Ant

    The thing that hurts the most is that, if Abbott does baulk, there’ll be no effective way to punish these hucksters, liars and frauds – in and out of the media.

    The fact that something as monumentally disastrous and corrupt as the realisation of Victoria’s desal plant barely raises a whimper in the Victorian Liberal Party, let alone the Labor bastards that rammed it down everyone’s throat, is a very bleak sign.

  24. Cynicmonster

    Independent modelling commissioned by the Climate Institute and other environmental groups, and which will be released Monday,…

    It’s all good. Modelling conducted by climate and environmental groups. Given the history of previous modelling from these groups, everything points to cheaper power across the board.

  25. peter of Melbourne

    The other issue is the supply side of the equation – demand for electricity has fallen significantly due to manufacturing ceasing in Australia – there is no need to build new power stations in Australia and we have a surplus of supply over demand. We don’t need renewables, although I would argue that coal is also a renewable, if you take a long term view!

  26. Elwood

    I very much doubt the RET will go. Baron Harkonnen promised the Goracle we will keep it.

  27. Dr. Sir Fred Lenin

    How can it be an “investment” if it relies on grubbermint subsidy to make profit? It is hardly an investment if profit percentage is guarenteed by grubbermint,there is no risk factor as there is in normal investment.The only way you can lose is if the people throw your mates out of office mand install some honest politicians ( now there is an oxymoron but you all know what I mean).
    The libs are somewhat honest ,if you keep them away from developers and merchant wankers.
    Another point ,who are these charitable overseas investors? Fat al and mates,goldman sachs with malcolm as rep here,corrupt unions , current and retired politicians ? Sounds about right.

  28. cohenite

    The libs are somewhat honest

    The libs are somewhat fucked.

  29. Rob MW

    “If the government does scrap the RET, or materially reduce it, don’t they need Senate agreement?? (Or is there some way around that)? Does anyone know?”

    Yes there is. The Government can keep all or any of the RET and at the same time not introduce an appropriation bill that would fund it. If there is no appropriation bill then there is nothing that either the lower or upper house can do except introduce a private members bill which would be defeated in the lower house by the Government of the day.

  30. James of the Glen

    Misery Milne was on ABC Radio news at lunchtime today reciting the outrageous lie, through her ratty little teeth, that “renewable energy” had brought down the price of electricity! It does not come much more blatant and disgusting than that.

  31. Chistery

    3-4 years ago a 3KV solar system cost $10K after the $2K of RET certificates was deducted by the installer.

    Today a 3KV solar system costs $6K.

    With the change in feed in tariffs the return on investment is similar at around 5 years.

    The purpose of the RET was to establish the industry to drive down costs.

    The fact is that solar installations have dramatically come down in price so there is no further need to continue government assistant.

    Abbott should be able to make that case to now abolish the RET. I suggest he doesn’t get Smokin’ Joe to deliver the message.

    By the way, here is the Climate Change Authority’s report on the RET. Search for the word ‘temporary’ and you will see on pages VII and 73 it defines the purpose of the RET as temporary to establish the renewables industry

  32. Rabz

    “renewable energy” had brought down the price of electricity

    In what bizarre parallel universe?

  33. Elwood

    Milne would believe things like that. She isn’t actually lying.

  34. Yohan

    Another hidden cost, the increased use of solar systems is what had driven a portion of the poles and wires network upgrade. The DC converters feed back into the grid noisy and unstable power, which has required all the main sub stations to be upgraded in ways to cope with this problem.

    A problem that would not even have existed without the Rudd governments massive subsidies to the solar industry.

  35. stackja

    Liberty Quotes
    Yep, it’s the small underfunded band of free market think tanks who are stifling the U.N. Intergovernmental Panel on Climate Change, the U.S. Global Change Research Program, the National Academy of Sciences and their numerous brethren overseas, the European Environment Agency, the U.S. Climate Action Partnership, the EPA, NRDC, Greenpeace, etc. etc.
    — Marlo Lewis

  36. Squirrel

    Clearly, some rentseekers are far more equal than others – the mainstream commercial media, has by and large, been happy to write off the “old” manufacturing industries by cheering on, or at least rationalising the elimination of tariffs and subsidies, but this fashionable “industry” is somehow different. John Constantine’s comment at 8.19 am about the target demographic for the Fin probably goes a long way towards explaining this.

  37. stackja

    Squirrel
    #1421416, posted on August 18, 2014 at 6:44 pm

    The whole Fairfax have the same target demographic.

  38. gabrianga

    The United Nations rent seekers are meeting again at the Climate Change Conference in December

    Look forward to a plethora of statements from Solar/Wind companies, ACF ,Greenpeas, Hamilton even NASA e.g.

    Betsy Edwards, OCO-2 program executive at NASA headquarters in Washington, D.C., told reporters during a pre-launch press briefing Sunday

    Atmospheric carbon dioxide levels have risen from about 280 parts per million (ppm) before the Industrial Revolution to 400 ppm today, the highest concentration in at least 800,000 years.

    Humanity is primarily responsible for this increase, researchers say. The species pumps 40 billion tons of CO2 into the atmosphere every year, chiefly by burning fossil fuels such as coal and gasoline.

    In other words….scrap coal and buy a bicycle

    .

    Just who was fiddling the monitoring 800,000 years ago .Lord Wentworth’s ancestors?

  39. Bons

    Getting to the point of becoming
    It never was! All it needs is Kohler and its true cultural destiny will be achieved.
    I used to giggle on the ferry watching the finance fingerlings earnestly studying every page prior to a day of modelling and forecasting. Don’t they have the internet? It would save them $3.50 and provide far more insightful content.
    Meanwhile, back to the Sports pages – yeah, they are idiots but everyone recognises that reality.

  40. mmamster

    I notice PVO has Mark Butler on. Would you believe PVI is quoting the fin article as gosple to Butler, esp the 3% figure. Does PVO not do any of his own research? Of course no alternative view put.

  41. John Mc

    The Fin has degraded so much over the last 10 years or so that it’s no longer worth buying. Even the weekend Fin isn’t worth the flick through anymore.

  42. gabrianga

    Well f>>> me! John Connor puts me straight about the rent seekers from solar and wind power

    Climate Institute CEO John Connor said the push by power companies to weaken the RET was cynical and motivated by self-interest rather than by savings to customers.

    Waiting for this wanker’s explanation of “savings to customers” when he closes all the coal fired power stations

  43. Lawrie Ayres

    Infigen used to be BBI and we lost heavily when it went bust during the GFC. Obviously no one there learnt much from that experience and failed due diligence, went for government money and excessive profits forgetting the adage ” if it sounds too good to be true it probably is”. If they go bust again I say good riddance.

  44. classical_hero

    Only in climate circles is giving money to the rich as the expense of the poor is acceptable. If I were rich I’d love these schemes because they are a big cash cow and I would be up in arms if they decided to change the rules. I like free money, which is basically what investors are getting form the RET.

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