Abbott's RET review compromised by conflict of interest

The oil and gas industry has called for the renewables target to be abolished based on modelling work it paid for from one of the members of the government panel in charge of reviewing the scheme.

The Australian Petroleum Production & Exploration Association has called for the Renewable Energy Target to be scrapped using economic modelling work they paid for from a firm owned by Brian Fisher. Dr Fisher has been appointed by the Federal Government as one of four members of its panel in charge of reviewing the target.

APPEA released a statement to the media on Wednesday saying that the RET should be scrapped because it supports high cost greenhouse abatement that will, “inhibit the natural gas industry’s capacity to reduce greenhouse gas emissions”.

APPEA’s submission to the RET Review panel cites work it commissioned by Brian Fisher’s firm, BAEconomics:

“BAEconomics found that a mandated renewable energy target such as the RET is less efficient at achieving a given environmental outcome because it forces higher cost renewable energy into the electricity generation mix at the expense of exploiting lower cost emissions abatement opportunities from gas generation”

The submission complains that:

“The RET has the potential to influence wholesale electricity prices as it affects the balance between electricity supply and demand by stimulating investment in renewable generation capacity that would not otherwise be forthcoming. Referred to as the ‘merit order effect’, the RET, particularly the LRET, is likely to adversely impact existing non-renewable generators and producers of low carbon fuels (for example, natural gas).”

APPEA’s submission subsequently notes that the work by BAEconomics finds that the RET: “causes substantial switching away from gas-fired generation compared with an ETS, by 3,824 gigawatt hours (GWh) in 2020.”

In the end this modelling work by BAEconomics to some extent supports the claims of the renewable energy industry that the RET is unlikely to have significant cost impacts on electricity consumers. That’s because it will reduce wholesale electricity prices by displacing the need for additional generation from expensive gas-fired power.

However, at the same time the modelling work prepared in 2012 is almost irrelevant, bar its implications for conflicts of interest. That’s because it assumes gas would not just take up growth in electricity demand, but also significantly displace existing coal fired generation. Given the price of gas has skyrocketed and the carbon price will be abolished, industry participants including AEMO and Origin’s Grant King see coal growing at the expense of gas. It appears that based on more up-to-date data that the RET will displace a combination of new entry gas and inhibit coal from gaining greater market share of the electricity market.

This is not the only example of where Brian Fisher has provided consulting work to heavy carbon emitting business interests, which has been used to undermine carbon reduction policies. He has been paid to provide modelling work for mining and oil and gas interests to support their claims in  other policy development processes in the past, particularly around carbon pricing.

However, in the past this work was not being used when he was in charge of the policy review process. This particular case puts Dr Fisher and the government in a rather difficult position.

It is likely to irreparably compromise stakeholders’ faith in the independence of this policy review process.