This paper outlines the ramifications for the renewable energy industry, electricity consumers and the Australian economy if the current uncertainty surrounding Australia's Renewable Energy Target (RET) is not resolved.
Since 2001, investment in renewable energy in Australia has been underpinned by bipartisan support for the RET. This enduring investment confidence was shattered in 2014 by the uncertainty created by an additional RET review, chaired by Dick Warburton.
After the publication of the Warburton review, the government began negotiations with Labor in an attempt to reach a bipartisan agreement. These negotiations have since broken down following the government’s unacceptable proposal to lower the LRET to 27,000 GWh by 2020.
The consequences of an ongoing absence of bipartisanship on the RET policy include:
- An ongoing freeze in investment in renewable energy projects. Bloomberg New Energy Finance reported that investment for the first three quarters of 2014 (while the Warburton Review was underway) was just $238 million, compared to $2 billion for the whole of 2013.
- A substantial negative impact on more than $10 billion worth of investments in large-scale projects already made on the basis of the operation of the scheme out to 2030 at currently legislated levels. An unresolved RET review would cause a further collapse in the value of Renewable Energy Certificates, which would result in revenue cuts for existing renewable projects of $400 - $500 million per year. This is likely to result in the devaluation of assets and, in some cases, the default and collapse of projects and businesses.
- The closure of some of the thousands of businesses directly involved in renewable energy, and thousands more third party suppliers and contractors.
- Significant job losses. The sector employs 21,000 people directly and tens of thousands more indirectly through renewable energy projects and installation. Many of these jobs would be put at risk as a result of a prolonged freeze on investment.
- A damaging halt in clean energy deployment in Australia at a time when many of our major trading partners are pushing for greater use of zero and low emissions energy technologies.
- The loss, or postponement, of more than $14.5 billion in future investment out to 2020.