Why everyone sighs at Warburton's RET review

The RET review has become clouded by a crisis of legitimacy amongst key stakeholders. It's seen a bit like the recent Egyptian election where you are free to vote but the end result is already fixed.

A few days ago I received a concerned phonecall from someone in the renewable energy industry. She told me, “You know how the Minerals Council has been citing modelling from some outfit called Principal Economics to say the Renewable Energy Target will cost consumers $21 billion and should be abolished?”

TE: “Yep, saw the front page of The Australian. But have had no luck getting a copy out of the Minerals Council” (I’d made six requests with no reply).

“Well”, she said, “I’ve been trying to track it down too, but all I can find is a LinkedIn account of a Sabine Schnittger who is listed as a director of Principal Economics. I then Googled her name to find she’s also listed as an associate of BAEconomics, the firm owned by Brian Fisher. There is surely a conflict of interest here!”

Dr Brian Fisher is a member of the four-person panel the government has appointed to review the ongoing future of the RET. I’d just written an article outlining how Dr Fisher found himself in the difficult position of being lobbied by the oil and gas industry to abolish the RET on the basis of the findings from a report they’d paid him to produce.

I dutifully followed this up and Dr Fisher reassured me that Ms Schnittger was not an employee of BAEeconomics. Instead she runs her own business which he occasionally subcontracts to do work with his firm. He explained that he had no involvement whatsoever in the Minerals Council work undertaken by Ms Schnittger and received no commercial benefit. 

So no conflict of interest in this case. But the concerned phonecall I’d received is symptomatic of a broader deep mistrust of the integrity and independence of this entire review process among those concerned about climate change and engaged in renewable energy.

In the end there’s no need to find any conspiracy of financial payments. Dr Fisher’s views about the wisdom of the RET and policies to control emissions in the near-term are in clear display on the public record, as detailed in a prior article.

In addition, in a speech he made less than a year ago to a Minerals Council seminar he explicitly criticised the RET (as well as the carbon price). It’s worth quoting this at length to illustrate his disdain for the policy:

“The carbon tax and the Renewable Energy Target, … drive up the cost of electricity, therefore, drive up input costs in Australia and make us less competitive …. I think the remaining point that I would like to make …is that when you design a policy that ends up protecting an industry so effectively, giving a subsidy to a particular industry, you are picking a winner, basically. Governments have decided to pick a winner.

When you do that, you distort the relative prices that everybody sees and we've talked about that already….  But you also then create an industry designed to protect the ‘protected species’ that lives inside the artificially created industry. So, you create a group of lobbyists and other people who spend their time doing nothing but pretending that this distortionary policy is a good thing.

All of those people are in fact a complete dead weight loss to society. They are imposing a cost on you. … those people are a dead weight loss and they would be much better employed in helping you do useful things in terms of enhancing the exports of Australian minerals instead of wasting their time protecting an industry that’s imposing more costs on you."

I don’t think you can interpret this any other way than Brian Fisher would dearly like to see the RET dead and buried. 

In spite of this, if you take the time to review Dr Fisher’s CV you’d be deluded to argue that he is not well qualified to participate in a review of the RET. He has written extensively on energy and agricultural economics – both areas highly relevant to climate change policy. He was a lead author on not one but, rather, three editions of the IPCC assessment reports (not a section dedicated to climate change science but rather the economics surrounding emissions mitigation).

The reality is that it is almost impossible to find someone well qualified to evaluate a given policy area who doesn’t at the same time hold some strong views about what government should do.

The prior review of the RET by the Climate Change Authority included both Clive Hamilton and John Quiggin, who aren’t exactly shrinking violets on government climate change policy.

But at the same time the Climate Change Authority board also included some people with counterbalancing perspectives.  

This included John Marlay, who has held senior management or board positions across some of the most energy and emissions intensive manufacturers in the country (Alumina Limited, Boral, Incitec Pivot, Esso Australia, Tomago Aluminium). It also contained an economic dry in Lynne Williams with a background at the Productivity Commission and Victorian Treasury and Finance. And Heather Ridout who had been chief executive of the main industry lobby group for Australian manufacturers and had made public statements critical of the both the RET and carbon pricing. 

In addition the chief executive of the CCA, Anthea Harris, could hardly be described as some radical left-winger having cut her teeth as an economist at the Productivity Commission.

Meanwhile, this government’s review panel has no one with any credible expertise in renewable energy technology (unlike John Howard’s Tambling Review). And it has no one displaying much of a concern for the risks associated with climate change – in fact it’s the complete opposite, with chair Dick Warburton.

Beyond the choice of personnel, the current review’s choice of economic modeller in ACIL-Allen also doesn’t help its credibility. ACIL-Tasman (one of the predecessors of ACIL-Allen) has a track record as long as my arm working hand-in-glove with heavy emitters to create scenarios of doom surrounding the RET and carbon pricing.

This review confronts a crisis of legitimacy among stakeholders because it lacks any veneer of independence and impartiality. Instead it is viewed a bit like the recent Egyptian election where you are free to vote, but the end result is already fixed.