Baillieu's renewables blockade

Just before Christmas, the Victorian government released a new Economic Statement, including 73 “Action plans” intended to create jobs and revive the state's flagging economy. Either due to the timing or the general lack of new measures and funding, the statement got minimal coverage in the daily media.

The only initiative to catch attention was a proposal to accelerate the sale of land to fund new infrastructure. However, hidden within the statement are a series of commitments that will undermine these objectives and tend to kill off green jobs and renewables investment.

The Baillieu government's antipathy to wind power is well documented, including the planning veto given to all residents within two kilometres of any proposed wind farm. This has effectively plugged the pipeline to any project not approved or under construction. The government has an equal distaste for solar, having slashed feed-in tariffs, axed the solar hot water rebate and sat on its hands as the two large solar proposals have foundered.

The Victorian Economic Statement brings more bad news for renewables as the government turns its attention to overturning federal policies rather than initiating any measures of its own. The two Action Plans concerning renewables are both negative. They seek to hamper new developments by advocating:

-- A review by the Productivity Commission of the RET to ensure that it produces “net benefits to consumers and taxpayers ahead of vested interests”.

-- Annual reporting by the Australian Energy Market Commission on the price impact of the carbon price, RET state-based feed-in tariffs and energy efficiency schemes.

The proposal for a new RET review will cause many shudders. It runs contrary to the Climate Change Authority recommendation that the next review should happen in four rather than two years time in order that there be some stability in the investment outlook.

However, this stratagem may enable Tony Abbott to ‘have his cake and eat it'. He could take up the Baillieu policy for a new review whilst still holding to the line that the Coalition would support the RET in government. A new review could then provide him with cover to gut the RET by reducing its target and making the other changes sought by generators.

Getting a report on the price impact of renewable schemes may not deliver the result the Baillieu government expects. Recent analysis has tended to show that the marginal costs of the grid with renewables are not vastly different from the costs without their contribution. This is because the recent growth in renewables has increased competition whilst also reducing demand and lessening the need for distribution investment.

The statement also commits the government to keep pushing three paper shuffling reforms “to protect the long-term interests of consumers”, namely:

-- Reform of the Electricity Network Regulatory Framework;

-- Deferral of the National Energy Customer Framework; and

-- Structurally separate the Australian Energy Regulator from the Australian Competition and Consumer Commission.

These measures are dressed up as “helping families and businesses deal with rising energy prices”. None of these were accepted at COAG in late 2012 and there was lukewarm interest from other Coalition states. Apart from the election commitment to extend pensioner concessions to year round, there is precious little that will actually impact on household bills.

The government is bound to be disappointed if it is relying on the reduction in solar feed-in tariffs and advocacy for these relatively minor changes in regulatory arrangements to have any measurable impact on electricity prices.

Ironically, a much bigger benefit will flow from the Baillieu government's decision to continue the roll out of smart meters and ‘time of use' pricing in Victoria – despite its trenchant criticism when in Opposition. The Victorian Economic Statement reveals this turnabout happened after a new cost benefit analysis showed the new meters would provide a $713 million net benefit to consumers.

Other states are now slowing their smart meter implementation timetables following COAG. This means Victoria will now have a competitive advantage on electricity prices as its early adoption of smart meters will reduce future increases in distribution charges compared to other states. Although the public and the media have turned against smart meters, the evidence is that they will have a significant positive impact.

The mainstream energy initiatives in the statement are fairly limited. The government will:

-- Establish a taskforce to report by the middle of 2013 on policy options to improve the east coast gas market to “ensure that rising demand can be met at competitive prices despite the shift towards international LNG prices”.

-- Continue the previous government's commitments of $100 million to carbon capture and storage (CCS) and $430 million for the Energy Technology Innovation Strategy (ETIS) program.

Overall, the Economic Statement lacks any energy commitments that create substantial employment and really boils down to more talk and continuation of previous strategies.

The Victorian Labor Opposition had released its own “Jobs and Growth Plan” a month earlier – and it too was widely ignored by the media. It was focused on 12 major investments – mostly concerned with infrastructure including ports and the expansion of Melbourne Airport. It was notably silent on energy policy and renewable energy in particular.

Rather than develop green jobs as a point of difference, building on its leadership in government, Labor has stuck with safer, traditional ground.

The silence from both sides of politics suggests that ‘green jobs' have lost the political appeal it held several years ago. The popular idea that Australia could create thousands of new ‘green' jobs by putting in place policies and training programs to become an early adopter of new technology has fallen victim to the pink batts fiasco and the bitter public debate on climate change and the carbon price.

The challenge for renewables advocates is to measure the green job outcomes from the numerous renewables projects underway and recapture the public imagination.

Andrew Herington is a Melbourne freelance writer.