CLIMATE SPECTATOR: TRUenergy RET confessions
TRUenergy has used modelling from economic consultant ACIL Tasman to justify its push to weaken the RET. But given ACIL's past track record, it’s hard to take the analysis seriously.
Earlier this month, TRUenergy used modelling work by ACIL Tasman to spearhead an effort to have the Renewable Energy Target watered down. This analysis suggested that the cost of the RET would be an eye popping $53.3 billion (strangely expressed in nominal dollars when just about everyone normally adjusts for inflation).
Yet why would anyone take analysis from economic consultancy and energy modellers ACIL Tasman seriously?
Let’s consider its track record.
– In a 2010 report for the Department of Climate Change it forecast that cumulative installed capacity for solar PV would reach 1348MW by 2029-2030. We actually reached that amount around the end of 2011.
– In a 2008 report for the oil and gas companies Chevron, ConocoPhillips, Exxon Mobil and Woodside Petroleum, ACIL tried to suggest that the carbon pricing scheme would put at risk LNG project development in the country. Since that report was issued, over $150 billion has been committed to construction of LNG investments including by Chevron, ConocoPhillips and Exxon Mobil.
– In modelling for the ESAA, ACIL Tasman predicted that just about all Latrobe Valley coal generators would shut by 2020 as a result of the emissions trading scheme. Perhaps that should have happened if we were genuinely worried about climate change, but now the government can’t even pay these guys to shutdown.
– In that same study for the ESAA the consultancy also predicted that geothermal would take up 30 per cent of the Renewable Energy Target.
– On not one but two occasions in work for the Clean Energy Regulator (formerly the Office of the Renewable Energy Regulator) it underestimated the amount of solar renewable energy certificates (STCs) that would be created by the order of 100 per cent.
ACIL Tasman does have an excellent understanding of operating costs for existing large electricity generators in Australia. It also has several staff who have an excellent understanding of the Australian energy sector. But its predictive ability, like that of just about every other energy market modeller, is appalling.
Often these studies only require subtle tweaks to assumptions to change conclusions quite dramatically, which is why they should be treated extremely warily. For example, in the study for oil and gas companies, ACIL chose an offshore field as the basis for their analysis which had very high levels of CO2 in it, relative to other sites under development. This acted to make the impact of the carbon price look more significant. What the company strangely left out of the analysis was that this field was also very rich in liquid hydrocarbons (oil), not just gas. This highly lucrative revenue stream would make a huge difference to the economics of the project, but wouldn’t have really helped the conclusion the project sponsors were after: free carbon permits.
Also let’s face it, sometimes it’s hard to know where the polluters end and ACIL Tasman starts.
This is an organisation that used to share the same office as the chief umbrella lobby group for large emitters of greenhouse gases – the Australian Industry Greenhouse Network (aka the Greenhouse Mafia according to ABC’s 4 Corners). In addition, the AIGN’s last two chief executives were also consultants at ACIL Tasman, one of them being a director at the firm.
What I think tops it all off was a story told to me by Ric Brazzale, head of Green Energy Markets. Back when Mark O’Neill was the head of the Australian Coal Association, he was unable to make it to a government-industry stakeholder meeting on climate change policy. Not to worry, an ACIL Tasman staff member attended in his place to represent the coal industry.
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