The Renewable Rort and its Friends

The RET issue is coming to a head.  Bear in mind, the rationale for the scheme is a reduction in carbon dioxide emissions but it does this to a trivial extent and at a very high cost.  The real rationale is now how to soak consumers for a dud product that could not survive in the absence of subsidies.

Today in the Fin David Leyonhjelm points out

Renewable electricity generators have received $9 billion in industry subsidies over the 15-year life of the RET, in addition to the price they receive for the electricity they produce.  Without change, a further $22 billion will be paid by 2030. In the words of the Warburton Review, the RET is “a cross-subsidy that transfers wealth from electricity consumers and other participants in the electricity market to renewable energy companies”.

The renewable permits currently cost about $40 per MWh (roughly doubling the cost of raw energy available form fossil fuels) and the Senator notes that the fall back is a penalty charge of $65/MWh. (Actually that cost is $91 per MWh since it is not tax deductable). The more renewables are required the closer the price moves towards its $91 de facto ceiling.

Originally the plan was to have 41,000 GWh of renewables which was posited on a forecast 20 per cent renewable share of supply, including the commercial Tasmanian and Snowy Hydro, by 2020.  As the carbon tax, renewables and other imposts have sharply reduced electricity demand, the 41,000 GWh level (45,000 including the roof-top installations) would now amount to a 27 per cent share.  Given that we are only at 16,000 now with just five years to go it is probably not possible to get to 41,000 GWh .  The rent seekers are therefore reconciled to some reduction.

Leyonhjelm has his own plan, which  involves some sleight of hand.  He advocates retaining the 41,000 but conditionally including within it hydro.  This amounts to a reduction to about 26,000 GWh.  He argues the small scale (rooftop) solar is likely to expand to 13,000 GWh (provision is in place for only 4,000 GWh) so wind is suddenly squeezed out.

Maybe.  But the notion of 13,000 GWh small scale is dependent on the subsidy to renewables (it is paid up-front on the notional savings and goes to defray the installation costs).

Meanwhile over at Business Spectator, Tristan Edis, the chief spruiker for the renewable rent-seekers, is suggesting that Minister Macfarlane is isolated – the Minister has said he’d settle for 32,000 GWh as the upper limit.  According to Edis the Business Council of Australia; the Aluminium Council; the Australian Industry Group; the Energy Users Association; and the cement industry have all got behind a proposal for 33,500 GWh. All have been bought off with concessions or have firms within their associations that are feasting off the swindle being perpetrated onto the consumer with the crippling costs this impost means for businesses that are not beneficiaries.

In a nutshell the options are:

  • Abolish the scheme altogether with no further costs – this is my favourite and the Warburton report toyed with it but baulked.  It would remove all costs.
  • Freeze requirements at the 16,000 GWh, the Warburton recommendation.  This would mean a cost, at $40 per GWh, of $600 million a year.
  • Shift to something like the Leyonhjelm plan of 26,000 GWh at a cost of about $1 billion a year.
  • Go to the Minister’s proposed 32,000 or the industry “compromise” of 33,500 and the costs escalate, partly because this would push the permit prices up – probably to $60 plus, especially since the better understanding of the nature of the rort leaves it vulnerable to being cancelled in future years, something that requires a risk premium. Costs to consumers and other users become over $2 billion a year.

There is considerable money resting on the outcome and, as the product is intrinsically valueless, the marketing effort is focused on the political dimension.  There are a great many politicians gullible enough to lap up the message and others happy to receive financial support from the looters who are wearing out the floor tramping through Parliament House.

One option is for the Minister simply to say that he will not issue any new permits for the current year as they are not needed and to keep on saying that indefinitely.

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36 Responses to The Renewable Rort and its Friends

  1. Leo G says:

    One option is for the Minister simply to say that he will not issue any new permits for the current year as they are not needed and to keep on saying that indefinitely.

    Ruinous Excrescent Targets only benefit malignant parasites.

  2. Snoopy says:

    RET is government enabled theft. Pure and simple.

  3. Rabz says:

    In a nutshell the only option is:

    Abolish the scheme altogether with no further costs

    Nothing further needs to be considered. The RET is simply criminal extortion of taxpayers that leads to an inexcusable misallocation of resources, as well as higher electricity prices for no acceptable reason whatsoever.

    Enough, FFS.

  4. Mike of Marion says:

    Abbott will roll over – it’s a new rent seeker industry being incubated and think of the reduction in unemployed stats

  5. Bruce of Newcastle says:

    Speaking of big green boondoggles:

    Another Electric Car Bites The Dust

    People don’t want what these charlatans want to make. Nor do they want the electricity prices to go up like a Tesla battery fire. Which they will unless the ALP gets its brains back from green fairyland.

  6. . says:

    Leyomhjelm ought to debate Edis on Sky or on Ch 7/9 morning trash TV.

    The RET needs to go soon or it will hammer our productivity and living standards.

  7. Robert O says:

    I installed 3Kwh of rooftop solar panels a couple of years ago. My usage figures for the period 13st. March 2014 to 31st. March 2015 are:

    Use of grid electricity

  8. ACTOldFart says:

    “The real rationale is now how to soak consumers for a dud product that could not survive in the absence of subsidies.”

    It is the 21st century’s equivalent of the Australian car industry. No doubt if you went back and looked at the arguments which were peddled then, for Australia to have a car industry, you would find just as much noble-sounding but ultimately specious and self-serving guff as we get from the renewables carpet baggers and parasites today.

  9. Econocrat says:

    Theft, pure and simple.

  10. Ant says:

    “Renewable electricity generators have received $9 billion in industry subsidies over the 15-year life of the RET,…”

    This is naked thievery of the criminal kind.

    The media works itself into a lather about big companies “not paying enough tax”, pretending it’s ripping off the “have nots”, yet obnoxiously applauds the RET bullshit which really is ripping off the “have nots”.

    I don’t care what anyone says about shooting messengers, etc, it comes down to the leftist media’s agenda.

    They work from 3 essential principles:

    1. If they like something they either actively support it or turn a blind eye to the damage that that something actually does. The RET is a first rate example.
    2. If they don’t like something they focus intense attention on it, editorialise away, lie and smear those they disagree with. Anyone challenging the wisdom of the RET comes to mind again.
    3. When they occasionally get caught out being nakedly partisan, they default to the “oh, all politicians are as bad as each other…” line.

    Frauds the lot of them.

    Given that, it still rips my guts to see the supposed conservatives running the federal government cosying up to the ABC; the one huge elephant in the messaging room that they actually have real power to fix – but are too yellow-bellied to do it.

    And by “fix” I mean they way you would fix an old mongrel dog that had just been run over by the scarifier.

  11. Robert O says:

    Sorry, I’ll try again:

    Use of grid electricity 1512 Kwh
    Solar production 4496 Kwh
    Solar use by me 878 Kwh
    Solar to grid 3618 Kwh

    I asked the question where does my surplus go and is it used by the grid? The answer from an electrical engineer is a tiny amount.

    Surprisingly, but the reason is this; to maintain the grid one has to produce excess supply over demand otherwise you will have blackouts. So essentially rooftop solar production goes into the surplus of production over demand because the power stations have to maintain enough power to keep the grid working at all times and cannot rely on intermittent low intensity production; in my case from about 10.30 am to 5.00pm on sunny days. If it is cloudy only 5o% is produced, say 7-8 Kwh instead of 13-15 Kwh.

    If you don’t want to use coal, oil,gas, for power generation and hydro is at capacity the only answer is nuclear for 24/7 electricity, so I would tend to think that renewable energy is somewhat an expensive green myth. The exception being isolated communities as long as they have diesel back-up.

  12. jupes says:

    ?Abolish the scheme altogether with no further costs – this is my favourite and the Warburton report toyed with it but baulked. It would remove all costs.

    A no-brainer.

    If the government feels squeamish about abolishing the scheme rort, it should ask the renewable scammers to explain exactly how much the scheme will lower global temperature.

    Once people realise that it won’t make any difference, they won’t be so keen to keep paying for it.

  13. . says:

    The media works itself into a lather about big companies “not paying enough tax”, pretending it’s ripping off the “have nots”, yet obnoxiously applauds the RET bullshit which really is ripping off the “have nots”

    Amen.

    Econocrat
    #1652334, posted on April 10, 2015 at 8:52 am
    Theft, pure and simple.

    Snoopy
    #1652316, posted on April 10, 2015 at 8:37 am
    RET is government enabled theft. Pure and simple.

    Truly, nothing more needs to be said.

  14. Fred Lenin. says:

    We financial wizards in the green/ alp/ communist / union mafia Pardee will legislate more of this wonderfull crap ,to aid our comradesin tge Union mafia super funds ,makes it easy for the boys to run them without worrying about market fluctuations about which we all know Bugger All ,we make new laws so the boys get more money ,and the donations to party funds and backhanders are appreciated so don’t whinge ,Gerbil Worming are real comrade Shortass said.

  15. jupes says:

    ?Shift to something like the Leyonhjelm plan of 26,000 GWh at a cost of about $1 billion a year.

    WTF is Leyonhjelm doing advocating for a tax on cheap energy?

  16. . says:

    With this problem looming and negotiations between the government and opposition stalled, late last year I developed a detailed reform package for the RET. Since most opposition to reform is based on cuts to the 41,000 GWh large-scale target, my plan is to maintain this but to recognise established hydro-generation in the calculations – essentially Snowy Hydro and Hydro Tasmania – which together produce about 15,000 GWh. There would also be no cap on small-scale solar generation, which is expected to grow to 13,000 GWh.

    My proposal would ensure the renewable target is achieved, with no penalty charges kicking in.

    So the cap stays but it would be basically made ‘obsolete’. The problem is it is only a temporary fix. The RET needs to go.

  17. Use of grid electricity 1512 Kwh
    Solar production 4496 Kwh
    Solar use by me 878 Kwh
    Solar to grid 3618 Kwh

    Now’s the time, Robert O, to grab yourself a couple or four of those batteries the Chevy Volt use and go off grid!
    🙂

  18. incoherent rambler says:

    The RET.
    Issue 1. Domestic consumers get ripped off and when they wake up to it the political fallout will start.
    Issue 2. It is an industry killer

    #2 is a disaster for Australia

  19. Bruce of Newcastle says:

    China is cutting electricity prices while we are massively increasing them.

    China cuts power price to benefit enterprises

    Will the last business out the door please turn the lights off.

  20. Mr Rusty says:

    Here’s an option. On the next tax return include an checkbox option along the lines of the one you get when buying an airline ticket – e.g. “I wish to be included in the renewable energy scheme – Y/N.”
    All those responding ‘Yes’ have their details handed over to the power providers who then add on an RET charge to every bill. The swampies then get $3000 bills every quarter and the “deniers” don’t pay a cent towards the RET.
    Problem solved.

  21. goatjam says:

    If Abbott and his team of jellybacks do not squash the RET entirely then this country is truly stuffed and the Liberals will have proven themselves to be totally unworthy to hold office now or ever again (as if they haven’t already done that before)

  22. H B Bear says:

    Mr Rusty – they used to do that for “Green Energy” over here in WA. Of course the take up rate was completely negligible. Hence the government just comes in over the top, makes it mandatory and we all end up paying the rent seekers.

  23. Ralph says:

    The only think that keeps this government from becoming a laughing stock is the complete lack of credibility of Labor. Zinger Bill, the cardboard cut-out, and his policy free team are keeping Abbott somewhat re-electable.

  24. Sydney Boy says:

    Stop subsidising Big Green. If it were truly “cheaper” as claimed by the Greens then let it stand on its own two feet – let the market decide.

  25. Memoryvault says:

    If Abbott and his team of jellybacks do not squash
    the RET entirely then this country is truly stuffed

    So it’s settled then.
    We’re truly stuffed.

    Next subject.

  26. Cogito says:

    As I recall, the fattest rent takers in power markets in Australia are the aluminium smelters. Didn’t Kennett’s audit commission show that Alcoa cost the public $6 billion or something? They have a cheek buying into the RET issue!

  27. stackja says:

    ALP supporters like the RET money. I do not expect any change from the media or the ALP.

  28. Yohan says:

    The government should to hold off doing any deal on the RET, and wait for the scheme to come into non compliance. The spector of bill shock prices rises and fines for the energy retailers would create a public narrative of the RET being just another price hiking carbon tax. We could then push to dump it altogether.

    But of course, such a political strategy requires nuance, skill and talent, something that is in very short supply in this government. Instead of the RET and its proponents being seen as bad, no doubt the Liberal party would end up owning all the damage.

  29. Roger says:

    China is cutting electricity prices while we are massively increasing them.

    China cuts power price to benefit enterprises

    Will the last business out the door please turn the lights off.

    Don’t be so pessimistic, Bruce – there’ll be a lot of good jobs opening up for our grandkids courtesy the boom in Chinese tourism [sarc off].

    Lee Kuan Yew was partly right – we’re on track to be the poor Green trash of Asia.

  30. Empire says:

    One option is for the Minister simply to say that he will not issue any new permits for the current year as they are not needed and to keep on saying that indefinitely.

    That would’ve been a sensible approach is adopted early in the life of this government. A death of a thousand cuts would be great to watch. The LNP has about 18 months to run and will probably lose the next election. There isn’t enough time to inflict serious pain with this approach, but sure, do it anyway.

  31. Mark from Melbourne says:

    If Abbott and his team of jellybacks do not squash the RET entirely then this country is truly stuffed and the Liberals will have proven themselves to be totally unworthy to hold office now or ever again (as if they haven’t already done that before)

    That is easy to say (and I agree) but not so easy to do. The Senate will surely block any attempt to do that??

    Which is to say they ought try, and use that as a DD trigger… along with all the other boondoggles the Senate refuses to pass. Then go to said DD post haste.

  32. Jim Simpson says:

    I’m on ‘Sydney Boy’s frequency – time to now “let the market decide”!

    We taxpayers have done our bit in providing seed funding to the tune of $9B to give the renewables a leg up. The ‘Renewables’ now need to stand on their own two feet & compete in the open market place in fair and open competition with the established power generation industry (eg; Coal, Gas, Hydro & hopefully in the not too distant future nuclear).

    Hows about a future energy policy along the following lines that each of the current &/or future power generation technologies must;

    • Compete on a level playing field with no taxpayer subsidies,
    • Deliver reliable 24h energy to the grid in accord with a clearly defined specification (eg 99% availability).
    • Meet any shortcoming (in minimum power generation) from elsewhere (most likely from within their own energy mix and/or from competitors), but at their own expense, not taxpayers!
    • Attract financial penalty in the event that any energy provider fails to meet their minimum power generation obligation.

    All must compete on a fully transparent, level playing field where approved energy providers clearly understand their mandatory obligations.

    Consumers should then gain from fair & open competition among the energy providers, with no more tax payer funded subsidies.

  33. buckshot says:

    So who gets the $65 per MWh penalty? Is this a ‘cunning plan’ by the government to turn the RET into a tax on electricity, and use it to supplement revenue?

    It would lie somewhere between the best option (getting rid of the RET altogether), and the worst option (using the RET to help build useless wind and solar generation). My understanding is that all grid-connected wind and solar generation is 100% surplus to requirement i.e. the grid can operate without it.

  34. mem says:

    The RET should go totally.
    Put a due amount into renewable research
    If and when the researchers come up with a way to store it then it can be commercialised.
    Halt all other subsidies, grants and concessions.
    It is the biggest rort in history and is so dangerous to our economy and infrastructure.
    As an environmentally aware person I also condemn what the renewable industry is doing to our environment .
    Abbott should bite the bullet. He will not lose votes. But he will, within a short time, gain votes as domestic electricity prices come down and the international community also recognises his pragmatism and courage in facing up to the Green monster .
    It is time for him to lead.

  35. tomix says:

    WTF is Leyonhjelm doing advocating for a tax on cheap energy?

    He’s covering all bases in his search for votes at the next election. It’ll be Dave in Blackface, with the Minstrel Show, next month.

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