Big renewables safe from Combet

In many respects this heated debate over watering down the renewable energy target is a bit like a phony war. In the end when you balance up all the various factors at play it is highly unlikely that Labor would act to implement Origin's call to slash the large-scale component of the RET to what they term a “real” 20 per cent.

What many involved in the politics and policy of clean energy are saying is that the real intended audience for all this bluster is the Coalition opposition, not the Labor government. The hope is that the Coalition continues to use the language of percentages and avoids committing to the hard gigawatt-hour numbers within the actual Renewable Energy Act legislation. 

Once elected, the Coalition could then act to largely cripple the RET while claiming it hadn't broken any promises. So most eyes will be on the Coalition rather than Labor, to see whether its response to the RET Review is an unambiguous commitment to leave the legislation as is, rather than any talk of a commitment to “20 per cent”.

So why would you be confident that Combet won't also act to water down the large-scale renewables target?

Here are four reasons:

1- It won't make any difference to electricity prices in the lead-up to the next election

Labor knows the Coalition's attack in the federal election will centre on trying to pin the blame for all the electricity price rises on the carbon tax, even though most of the hikes are due to network expenditure. Most of the electorate have no clue about the underlying reasons for the major hikes in their power bills. All they know is they don't like it and the tabloid newspapers have been telling them that it's the carbon tax that is largely to blame.

This is why the Coalition has described the carbon tax as an “Electricity Tax”.

For that reason Labor is understandably keen to keep price rises low in the lead up to the election even if they have nothing to do with the carbon price, because it will get the blame.

That's why Combet pulled the surprise move of dropping the solar multiplier. While its impact on the average bill is small, it will reduce costs within months and removes a gripe for electricity retailers.  

Yet in terms of the large-scale target for renewable, there's too much inertia. Most retailers have already covered their liability and incurred the costs for the target up to 2015. So while Combet could reduce the target for 2016 to 2020, this won't do a thing to help him in lowering electricity prices around election time.

2- It will perpetuate the perception the carbon price is just a revenue raising tax

The government is trying to sell the carbon price with lots of images of wind turbines and solar panels and even features the CEO of Infigen Energy. Even though it's the renewable energy target that is driving all this kit, the pitch is that the carbon price is about developing a “Clean Energy Future”. The government certainly doesn't think it'll be able to sell the carbon price as being a great environmental boon by featuring images of coal seam methane drilling wells and gas turbines.

If the government were to do what Origin is asking, the whole sales pitch around a clean energy future will be down the gurgler. The renewable energy industry, including probably Infigen Energy, will be telling anyone who'll listen that the clean energy future is a crock.

This is bad for the mortgage belt marginal seats, not so much because of their concern for the environment, but because it will play into their suspicion that this carbon tax is really about raising revenue rather than helping the environment. This suspicion is completely groundless, but it's perceptions rather than reality that count in politics.

3- It will hinder Labor's effort to fend off the Greens and push out Adam Bandt in the inner city

While Labor's primary focus is fending off the Libs in the mortgage belt, it needs to protect its flank from the Greens in the inner city such as the seat of Melbourne they lost to the Greens' Adam Bandt. The environment and support for renewable energy figure high amongst these voters' concerns and watering down the LRET would be a gift to the Greens.

4- They couldn't get the changes through parliament anyway

There is not a hope in hell that the Greens would vote for amendments that would reduce the renewable energy target.

The Coalition would be more favourably disposed, but knowing Abbott, he'd oppose them. Instead he'd exploit this as an opportunity to paint Labor as a green vandal thereby further reinforcing the perception of the carbon price as being all about raising revenue, rather than helping the environment.