Clean energy industry calls for investment stability

Clean Energy Council
12 Sep 2012

Australia's clean energy industry today called for the Federal Government to ensure the 20% Renewable Energy Target remains unchanged in order to retain its investment-grade stability and drive job creation along with lower costs for consumers.

The Federal Government's Climate Change Authority is currently undertaking a review of the target, to source 20% of Australia's energy from renewable sources by 2020. "The Renewable Energy Target is the single most important policy measure for the entire Australian renewables sector", Clean Energy Council Chief Executive David Green said.

The Renewable Energy Target was introduced by Liberal Prime Minister John Howard in 2001 and increased by Labor Prime Minister Kevin Rudd in 2009 with the support of the Coalition. "Since its introduction, it has generated some $18.5 billion of investment and thousands of jobs-many of them in regional and rural areas where most of Australia's abundant clean energy resources are found", Mr Green said. "It has seen more than 1.7 million Australian households moving to protect themselves from fossil fuel-driven price rises by installing small-scale systems such as solar panels and solar hot water.

"In addition, the equivalent of more than 2.1 million households is now powered by large-scale renewables such as hydroelectric and wind. "To date, it has also been the single largest carbon abatement scheme in Australia and without it Australia would not have achieved its emissions reductions target under the Kyoto Protocol".

Mr Green said the Renewable Energy Target in its current form stood to generate up to $30 billion more in investment and a total reduction of 380 million tonnes in carbon emissions over the life of the scheme. But the Renewable Energy Target's ability to deliver more investment, jobs, carbon abatement and energy security would be severely undermined if fundamental changes are made to it or the legislative and economic mechanisms underpinning it, Mr Green said.

"Of overriding importance is the need for policy stability and investment security to secure the funds that will deliver clean energy for Australia. "Any changes to the Renewable Energy Target will shatter this stability and remove investor confidence in clean energy, negating the industry's ability to support Australia's shift to clean energy sources and to reduce energy costs for consumers in the long-term. The fact a review is even being held is already contributing to uncertainty in the market. "Further, any change would likely damage the returns on billions of dollars of renewable energy investment already made under the current policy settings and in turn damage Australia's reputation as a safe place to invest in energy infrastructure".

Mr Green said acting on recent suggestions from some quarters that the target in total GWs should be reduced to match forecasts of lower energy demand would only serve to decrease investor confidence. "Future electricity demand is inherently difficult to predict, particularly at a time when the Australian energy market and the production and consumption of electricity are undergoing quite substantial reforms and change. "But investing in a 15 year-plus energy project requires long-term clarity about policy settings that will affect revenue sources. This security is provided by the current fixed GW target".

Mr Green said the cost of renewable energy was small compared to other considerations such as poles and wires-and it was dropping all the time. "The cost of the Renewable Energy Target contributes just 7% to the average Australian electricity bill, and this is forecast to drop to just 4% by 2020 with even greater potential savings as we all become smarter about how we use our energy".