CLIMATE SPECTATOR: Where does the Coalition stand on renewables?

Shadow energy minister Ian Macfarlane has stressed Coalition support for the RET but refused to be drawn into the fixed vs variable debate. And there's at least one renewables technology Macfarlane is increasingly bullish about.

Climate Spectator

Late this week, the Coalition spokesman for energy, Ian Macfarlane, offered continued support for the renewable energy target while warning of the threat of a public backlash against renewables.

The RET has been a key topic of discussion at Clean Energy Week – the largest clean energy conference in Australia – and while most have come out in firm support of the current fixed target, Macfarlane said the Coalition would be "guided by the review.”

The Coalition minister notably left open the prospect of embracing the concept of a variable 20 per cent by 2020 target, pushed by Origin Energy CEO Grant King. When asked about his opinion on a fixed versus variable target, Macfarlane said: "We’ll wait to see the outcome of the review. The target is a 20 per cent target, we’re not stepping away from that.

"At the moment we’re saying 20 per cent – 20 per cent is 20 per cent.”

The problem is realistically 20 per cent is not always 20 per cent. While that sounds confusing, the difference between fixed and variable is significant.

Fixed offers clarity on the investment required to get to the target, even though realistically, come 2020, with the fixed target you could over or undershoot 20 per cent given alterations in electricity demand from forecasts. Variable, on the other hand, might give you 20 per cent, but it offers no certainty for investors and the waters will be muddled time and time again in the lead up to 2020 as demand forecasts consistently change. That is the widely considered problem with moving to a variable target: the goalposts keep shifting.

Incidentally, King has previously argued that the current 2020 RET scheme be modified but then enhanced toward a 25 per cent by 2025 target. Talk of an enhanced RET has been quashed by several key industry players this week, however, including climate change minister Greg Combet, AGL chief executive Michael Fraser and Bloomberg New Energy Finance’s Australian boss, Seb Henbest.

Carbon pricing

While Macfarlane was non-committal on the fixed versus variable RET argument, he was forthright in his approach to the price on carbon. The Coalition stand against the legislation was not just for show he maintained, with the MP adamant it will be repealed if they win the next election.

"The Coalition will repeal the carbon tax. No ifs, no buts, no maybes,” Macfarlane told delegates.

He insisted that if Labor didn’t help to rescind the carbon price, the Coalition would be "very much prepared” to go to a double dissolution.

The shadow energy minister did add that if there was a global carbon price, the Coalition "would look at that.” But he was not expecting that to be the case anytime this decade.

Where there is starting to be a strident debate regarding carbon pricing is in the impact it has on the RET, a rare piece of bipartisan policy. Earlier in the week, Combet said forecasts from the Australian Energy Market Commission showed that a RET of 20 per cent by 2020 would cost $20 billion more by 2030 if there was no carbon price. He also noted that the AEMC found that without carbon pricing, the RET legislation would fail to deliver on the 20 per cent target.

"This is the same view that has been presented in the Australian Energy Market Operator's scenario modelling and in the modelling the consultant ROAM carried out for Treasury,” Combet said.

This is a point on which Macfarlane disagreed on the basis that the RET was introduced without carbon pricing in place and has a mandatory component to it.

"It doesn’t rely on a carbon price. It relies on the mandatory component.

"(We will repeal the carbon tax) but we are not concerned it will have an impact on the mandatory RET.”

Direct action

Macfarlane said the Coalition was "still working on policies” although the Direct Action Plan is "already in the public domain.” Earlier this month, Coalition leader Tony Abbott insisted his party was still set on the plan – part of direct action – to get one million solar roofs by 2020.

Australia is already well on the way to achieving this, with Greg Combet outlining just how far we had come with rooftop PV and solar hot water systems:

"So far the Renewable Energy Target scheme has been successful in supporting over 750,000 households and businesses installing rooftop solar and over 740,000 solar hot water systems and heat pumps,” he advised.

Wind vs solar vs wave vs geothermal

While many in the clean energy sector are concerned about the potential for policy shifts after the next election, if a Coalition government does assume power we can safely say that it will at least have enthusiasm for one renewable energy technology: wave power.

Macfarlane outlined yesterday his confidence in wave’s long-term potential following a recent visit to the ASX-listed Carnegie Wave Energy, where he was "impressed by progress.”

Wave is a long way from playing a significant role in Australia’s energy mix, a point Macfarlane acknowledged, but it has been riding a bit of momentum in recent weeks thanks to two significant events. The signing of a deal between Carnegie and the Australian Navy and a report from CSIRO showing wave could provide 11 per cent of Australia’s energy by 2050.

Macfarlane’s comments will further fuel positivity in the wave sector, especially his assertion that "wave is fast catching wave and solar in acceptance.”

The technology is "likely to be the next breakthrough in Australian renewable energy” as Macfarlane sees a great need for the future of renewable energy to be "more diverse” and not just about wind and solar.

It is not a fresh view from Macfarlane as he has long held the belief that we should be looking beyond wind and solar.

Back in 2007, the minister, as a member of the Howard government, said, "Geothermal aside, it’s difficult to see how wind and solar could provide electricity 24-hours a day, seven days a week unless they can develop some very new technology in terms of storing that energy for the days when the sun doesn’t shine and the wind doesn’t blow.”

The difference now is Macfarlane’s confidence in geothermal has been replaced with faith in wave, with the minister admitting he had "grown impatient” with geothermal’s progress and now has his doubts about the technology’s future in Australia.

State schemes and public support

A significant focus of Macfarlane’s speech was on the need to keep the costs of renewable energy growth low or risk the backlash of a public that has long been, and remains, supportive of clean energy sources.

"There is no guarantee Australians will continue to support renewable energy,” he warned. "(It must be developed) without major cost burns.”

An area he pointed to where there were challenges in providing low cost growth was through state schemes, many of which he argued were "political quick fixes” to get a polling boost. The one focus was on solar feed-in tariffs, which are now starting to be wound back across the country, with Macfarlane contending they were "unaffordable and unsustainable” policies.

Expect further scale-backs in the future as well, with Macfarlane advising that Abbott was "working with the states” to bring down the cost of state renewable schemes.

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