Dick Warburton’s 10 minutes of woe

In an interview that went from trouble to farce, the chair of the renewable energy review fumbled questions about coal's windfall before admitting he has no figures to support his argument to slash the renewables target because Direct Action is cheaper.

Dick Warburton, chair of the government’s review of the Renewable Energy Target, had a horror interview with Fran Kelly of ABC’s Radio National a day after his report was released. In just under 10 minutes, Warburton found himself tied up in knots as he tried to justify his recommendation to shut the renewables scheme.

The trouble started at the beginning of the interview, with Warburton disputing Kelly’s suggestion that coal generators would be big winners out of his recommendations. Kelly promptly responded: “But doesn’t your own modelling estimate the value of the existing coal-fired power generators would increase by $9.1 billion?”

“Um ... yes,” Warbuton replied. But he then bizarrely asserted this $9.1 billion windfall was of “neutral benefit to them [coal generators]”.

Subsequently, after Warburton admitted the RET would act to reduce retail electricity bills and was also successful at decarbonising electricity supply, the discussion moved to the nub of the review panel’s argument. Warburton explained that even though the RET might be effective at reducing emissions, the government’s proposed Emissions Reduction Fund – the centrepiece of its Direct Action policy – “would be a far less expensive” way of doing the same thing.

What followed was almost farcical.

Kelly, rather puzzled, pointed out that we don’t actually know the cost of reducing emissions under the ERF because the government is yet to release any costings of the scheme (see Hunting for Hunt’s Direct Action costings for background). She then noted that Warburton’s recommendation to cut the RET would pass costs onto, via the ERF, taxpayers to fund achievement of the 5 per cent emission reduction target.

Warburton then appeared to reveal he doesn’t understand the ERF is funded by taxpayers, and oddly disputed her assertion. He then continued to argue that there were “less expensive means of reducing emissions [than the RET].”

Kelly then asked the obvious: “What are those less expensive means, have you modelled those?”

Warburton: “Well, we just said the Emissions Reduction Fund.”

Kelly: “But we don’t know yet how much that’s going to be.”

Warburton then gave the game away, admitting “we don’t know the figure” for the abatement cost of the ERF.  But he then confidently asserted it would be way short of the cost of the RET.

While the discussion seems farcical, this is actually quite important.

Basically, Warburton is proposing that the government make a drastic change to a policy that his own review acknowledges is unlikely to save energy consumers money, which will undermine the value of several billion dollars in investment and considerable project development effort, and send a large proportion of renewable energy businesses bankrupt, with their staff made redundant.

This should all be done on the basis of an assertion that the ERF scheme will be cheaper than the RET, yet neither the RET Review team nor the government has actually costed the ERF.

Now, to be fair to Warburton if you refer back to the actual review report, it references work by ClimateWorks to support its assertion that the RET be abolished, or at the very least cut by 60 per cent, because there are cheaper options for reducing emissions. Unfortunately for Warburton, ClimateWorks have rejected his review  panel’s interpretation of their research. Yesterday they sent out the following statement:

The panel cited ClimateWorks' Low Carbon Growth Plan as evidence that there are lower cost abatement measures available than renewable energy. However, our research also clearly shows that we need all of those measures plus renewables if we are to achieve the emissions reductions that scientists … have advised are necessary. In looking beyond 2020 to 2050, ClimateWorks' new research … shows that ultimately full decarbonisation of the electricity system is necessary. And the most cost effective way to achieve this is with a majority of our electricity coming from renewable energy. For this transition to occur, the RET or an equivalent should be retained and increased over time, not reduced.

One wonders how Warburton can be so confident the ERF will achieve anything meaningful when it is still an unlegislated skeleton. Evan Stamatiou of sustainability advisory firm Net Balance echoed the views of a number of carbon market analysts and lawyers, observing:

While some overarching design elements [of the ERF] have been laid out, the detailed design has not been agreed upon, and there are still numerous and fundamental design challenges that technical experts and bureaucrats are trying to understand and resolve.

The one analyst that has been imaginative enough to attempt to cost the ERF, RepuTex, believes it will involve a cost per tonne of abatement that isn’t cheaper than what the RET Review estimates for the large-scale Renewable Energy Target.

The Abbott Government will be fooling no one about the insincerity of its concern for climate change if it chooses to substantially cut the Renewable Energy Target while arguing that it will all be taken care of by the uncosted, unlegislated and underfunded Emission Reduction Fund.

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