The power sector is collateral damage in our culture war

Well, the speculation continues on government plans to amend the Renewable Energy Target with The Australian newspaper suggesting the Warburton RET Review, set to be released on Thursday, has put forward a range of options – not just concentrated on complete closure – and that the Prime Minister is not wedded to any one option at present.

One new wrinkle, reported in Wednesday's The Australian, is an option put forward by the review panel to tie increases in the level of the target to growth in the level of overall electricity demand. According to the report, the RET would be frozen at its current level until electricity demand stopped declining.

It does not explain whether this would separately identify declines in grid electricity demand due to rooftop solar versus declines associated with absolute reductions in electricity demand. Also, it doesn’t explain how the trajectory of annual gigawatt-hour targets would adjust in light of changes in electricity demand or whether, indeed, the target might be changed to be specified as a percentage of demand rather than fixed units of energy.

Either way, whether it turns out the government will go for closure of the scheme or slash it downward to reflect reductions in expected electricity demand growth, it faces a great big brick wall in the Senate.

If the government does, indeed, pursue an aggressive cut of the scheme we could end up in the worst of possible worlds, and at a complete impasse.

Electricity retailers and independent power project developers will withdraw from the market for new renewable energy capacity because of excessive uncertainty. This would lead to a shortfall in certificates to meet targets, as soon as 2017. At the same time legal obligations and associated penalties will remain in place, leading to greater costs passed on to consumers. Furthermore, while consumers will face the cost of shortfall penalties, there will be no offsetting benefit in reduced wholesale electricity prices from extra supply of renewable energy. In addition, the electricity system fails to be modernised, remaining heavily reliant on ageing and highly polluting coal power stations.

There is little point in the Coalition pursuing an aggressive attempt to close the scheme because there is no way that other parties could agree to such a change without facing a huge backlash for abandoning their prior policy positions.

The Australian Industry Group’s Innes Willox was spot-on in observing that bipartisanship on this policy may be a long shot “but the alternative is paralysis” and without it “energy policy would be a total mess”.

We can’t run our energy system dictated by some kind of Pyrrhic culture war, where 30- to 50-year-old coal generators are treated like some kind of protected species.

As much as some within the Coalition would like to believe that 97 per cent of the scientific literature on climate science is a fabrication, they won’t be able to overwhelm those on the other side of the argument.

Abbott will have to rise above his own core supporter base to make pragmatic choices that are acceptable to his opponents, not just his friends.