Abolishing RET could cost billions

abolishBILLIONS of dollars and thousands of jobs could be lost if the Federal Government ditches the Renewable Energy Target (RET), according to a Bloomberg New Energy Finance (BNEF) report.

A White Paper put together by Bloomberg’s Sydney branch estimated the RET would inject $35 billion int clean energy by 2020, employ 25,000 workers each year in construction and operations, reduce emissions by 5 per cent and prevent surges in power prices by supplying between 20 and 25 years worth of electricity with no ongoing fuel costs.

However, if the RET was abolished or reduced it could halt between $12 billio and $21 billion of investment in clean energy, slash 7000 to 11,000 future jobs, lead to higher power prices and deliver power companies between $6 billion and $12 billion of extra revenue from 2015 to 2020, according to research from BNEF.

The RET was established in 2011 with the goal of expanding renewable energy by 45,000 gigawatt hours by 2020. The scheme was divided into small scale and large scale components to create a financial incentive for owners and businesses to install renewable energy. “Cutting or reducing the Renewable Energy Target is likely to result in less competition among fossil-fuel power generators and strong future increases in the price of electricity,”BNEF head Kobad Bhavnagri said.

“This helps to explain why many of Australia’s largest power companies are now pushing for a reduction in the target.” The BNEF report said scrapping the RET would benefit companies rather than consumers.
The study found that the RET would cost the average household between $9 and $14 each between 2015 and 2019, but then reduce bills from 2019 onwards. From 2010 it would save the average household $44 per year,
rising to $142 in 2030.

“This is because renewables like wind and solar – which have no fuel costs – push down the price of producing power from coal and gas on the wholesale markets,” Mr Bhavnagri said. “In only four years, this more than
offsets the cost of building the new wind and solar power stations under the Renewable Energy Target.” The Australian Petroleum Production and Exploration Association (APPEA) stated that it believed the RET would
inhibit the natural gas industry and drive up the cost of meeting the 2020 greenhouse gas reduction target.

“As several reviews in recent years have found, an RET is not the most efficient way to achieve emissions reductions because it forces higher cost renewable energy into the electricity generation mix at the expense of lower cost emissions abatement opportunities from gas generation and elsewhere in the economy,”APPEA said in a statement.

“As such the RET is an economically inefficient policy that should be discontinued.” An expert panel is currently reviewing the scheme and is expected to submit its findings to the Federal Government mid-year.