Why you can’t take the BCA too seriously

The BCA says Labor will hurt consumers by refusing to cede to government demands to slash the RET. But delving into their history and that of RET critic and Liberal MP Angus Taylor reveals a rather different story.

In the frenzy of political developments that have unfolded over the past week in climate change, the Business Council of Australia stuck at it suggesting the reason they want long-standing emission reduction policies unwound is not because it serves their dominant energy producer memberships’ commercial interests but, rather, a deep concern for the welfare of electricity consumers.

According to the BCA’s chief executive, Jennifer Westacott, “keeping the Renewable Energy Target unchanged will lock in the problems of the RET and add costs to consumers”.

She noted Labor’s decision to refuse to agree to the government demands to cut the LRET by 40 per cent, meant:

“The Opposition is taking a gamble – it is locking in a broken scheme putting at risk higher electricity prices for consumers, for the short term glory to be seen as the saviours of the RET.”

So is the RET a horrible impost that increases prices for consumers?

Clearly the BCA were upset that expert energy analysts from SKM-MMA (now Jacobs), ROAM Consulting, Intelligent Energy Systems, Schneider Electric and even their usually reliable pro-fossil fuel go-to guys in ACIL-Allen had all landed on the same result: cutting the RET would increase power prices.

So Burchell Wilson, formerly of the Australian Chamber of Commerce and Industry (he – like his like-minded right-wing crusader against all things different to the status quo, Alan Moran – was a little too enthusiastic on social media) got together with the BCA to commission someone who’d give them the answer they wanted. Deloitte, macro-economists who no one knew apparently had an electricity market model, dutifully delivered with a report that had everyone else scratching their head as to how they calculated their answer.

But what’s funny is that the BCA already had some modelling work that came to a similar conclusion as all the other modellers. What’s really amusing is that the report was authored by Port Jackson Partners, of whom vociferous critic of the RET and now Liberal Party MP, Angus Taylor, was a partner of the firm at the time the report was released.

The chart below, taken from page 134 of the report, tells the story. Under either scenario without an emissions trading scheme or with one, the extra supply of renewable energy via the RET would act to reduce wholesale electricity prices. 

Source: Port Jackson Partners (2008) 'Bringing specific company economic perspectives to bear on the ETS design'

Now, yes, a lot of time has passed since that analysis was done. But the subsequent decline in demand and greater excess supply of power only reinforces the likelihood that the extra supply via the RET would act to reduce wholesale prices, and therefore offset the cost of paying a premium for extra renewables.

In the end the important thing is not to take these guys or any other lobbyist too seriously. They sound earnest and deeply serious, but it’s really just a game; a job they’re paid to do just like everyone else. One day they’ll be doing their act for timber companies, another day it will be food and grocery manufacturers, and then another it will the Australian Chamber of Commerce and Industry, or even the BCA if you play your cards right.

This isn’t personal, it’s strictly business. 

So sometimes it’s best to laugh and not take this too seriously.  

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