The great renewables backflip competition

There’s a lot of toing and froing in response to the RET Review, but the biggest backflip doesn’t actually belong to TRUenergy or Origin… at least not directly.

When it comes to Australia’s renewable energy target there’s more backflipping being done than seen at London’s North Greenwich Arena during the Olympics – but who are the biggest backtrackers?

Origin Energy never really liked it, but its rhetoric has been pretty confused at times. International Power and TRUenergy have recently performed incredible U-turns. TRU’s has been especially impressive considering its CEO was also the chair of the Clean Energy Council when it was pressing the government to follow-through on its election commitment to expand the RET in 2008. But in a frantic battle the title for biggest backflip might best be awarded to an unlikely source – the former boss of Australia’s leading clean energy representative.

Matthew Warren, former head of the Clean Energy Council, has been forced to make an about face in his (relatively) new position leading the Energy Supply Association of Australia by its members (or at least those members without strong renewables interests).

ESAA, which represents the energy sector and has the likes of AGL, Origin, TRU, Pacific Hydro and International Power among its membership, has taken arguably its firmest stance in a submission on the renewable energy target – and it’s a negative one.

Contradictions

The ESAA submission contends the costs of the scheme are too great, with the fixed figure for the large-scale target (LRET) being too high in the wake of weaker-than-expected electricity demand. This leads to its conclusion the target should be altered to a variable target, although with the caveat that the Climate Change Authority must be able to do this without undermining investor confidence.

This call has caused great division within its membership base, with the industry body acknowledging there was a minority in favour of maintaining the scheme in its current form. The majority however, have pushed for the body to call for the target to be cut to a 20 per cent by 2020 figure rather than stick with the fixed target.

"The esaa considers that the RET should be amended so that it represents 20 per cent of electricity generation at 2020 rather than the current fixed target which is considered likely to deliver a greater proportion than 20 per cent," its submission reads.

The ESAA website, meanwhile, still outlines a position of qualified support for the RET, particularly the LRET:

“…As the RET has been legislated as part of a package that has bipartisan support, the principles of ensuring investor certainty and minimising the administrative burden for energy industry liable entities should be paramount in the design of the Renewable Energy Target.

While esaa supports the establishment of the Large-Scale Renewable Energy Target following the government’s announcement splitting small-scale generating units from the RET, significant uncertainty remains regarding the implementation of the Small-Scale Energy Scheme.”

In other words, backing for the LRET as it stands and stressing the need for investor certainty – something you surely can’t have if the target is to be changed once again.

In ESAA’s submission in response to plans for the current RET in 2010 it stated:

“[The government] should resist the temptation to make wholesale changes to the RET, particularly to deliver social or environmental policy objectives and which would serve to introduce further distortions into energy markets.”

It also said it “supports the proposal to establish a Large Scale Renewable Energy Target,” a claim made in response to a document from the government that clearly delineated the plan to have a 41,000 GWh large-scale target in 2020.

Great policy… until a few weeks ago

Warren was CEO of the Clean Energy Council when the enhanced RET legislation was passed and upon the scheme’s approval through Parliament, he proclaimed:

“The enhanced RET meets the fundamental aspiration of all the major parties: effective, affordable and tangible action on climate change.”

In an interview with ecogeneration upon his departure to head up ESAA at the beginning of the year, he said the RET legislation was his proudest achievement at the CEC.

“The most important thing we achieved was getting the Renewable Energy Target legislation through the parliament and then getting it improved a year later. It is very rare in anyone’s life as a politician or as a lobbyist that they have the chance to get legislation through that delivers $25 billion worth of investment over a decade. The legislation was passed by the Labor government and supported by the Coalition. This is reflective of both major parties recognising the importance of getting this legislation through.”

He did add that the RET Review would present an opportunity to “refine it slightly”, but a reduction to the LRET is hardly that.

What is most surprising however, is that Warren’s position didn’t shift when he took control at ESAA – the industry body was in fact publically supportive as late as July.

"The RET has enjoyed bipartisan support since it was introduced in 2009. Further changes will only increase uncertainty at a time when policy stability is paramount," he told The Australian in July (while in charge of ESAA).

A lot must have changed since then – most likely the changes to the viewpoints of ESAA members TRUenergy and International Power.

Indeed, caught between Origin, TRU and International Power on one side and AGL on the other, ESAA and Warren appear to have played the numbers game.

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