The RET Review’s $22 billion conveniently misses key context Media Release

Aug 29, 2014 - 12:32pm

The Warburton Renewable Energy Target (RET) Review’s finding of a $22 billion resource cost has been inflated in significance and conveniently ignores key facts about fossil fuel subsidies, power prices and the climate reality of needing to decarbonise, not re-carbonise, our energy system, said The Climate Institute today.

“The Warburton Review is pushing a one-eyed view of the economic costs of the Renewable Energy Target. It ignores comparative fossil fuel subsidies and the value of that investment in cleaning up our economy,” said Erwin Jackson, Deputy CEO of The Climate Institute. 

  • The  Review ignores existing fossil fuel subsidies. Based on International Monetary Fund analysis, subsidies to the coal, oil and gas industry in Australia, including their broader negative health and climate change effects, amounted to around $23 billion in 2011 alone. Even taking the Review’s estimates at face value would see the renewable energy industry being subsidised over 15 years to the tune of what the coal, oil and gas industry get in one year.
  • Is  $22 billion to 2030 at lot? Based on Treasury estimates of the size of the economy over the next 15 years, $22 billion amounts to less than 1/10th of one per cent of the total value of the economy over this period (approximately $18 trillion, NPV).
  • The  Review avoids Australia’s energy decarbonisation challenge. Based on independent modelling by Jacobs, the current RET would reduce the overall emission intensity of the electricity to 2030 by around 10 per cent. The Warburton Review acknowledges that stopping the RET will increase emissions by almost 300 mega tonnes of carbon to 2030, effectively recarbonising our energy system. Yet ClimateWorks, ANU and CSIRO estimate that in order for Australia to meet credible pollution targets consistent with internationally agreed goals of avoiding dangerous climate warming of 2C, the emission intensity of electricity sector needs to be reduced by over 95 per cent by 2050. The head of the OECD and others have acknowledged the need for a decarbonised global economy to achieve this goal. No assessment was undertaken to examine the long-term costs and benefits of the RET in this context. 
  • Ch anges to the RET benefits big polluters, not consumers. The Review highlights that big polluters will be the main winners of any changes to the RET, with a windfall of over $9 billion, while consumers won’t benefit from a decrease in power prices.
“The Renewable Energy Target’s success in mobilising investment in clean energy should be maintained so that Australia’s electricity sector can play its full role in achieving our long–term national interest in avoiding dangerous climate change,” Jackson said. “If we are concerned by growing renewable energy in an oversupplied market, we should focus on retiring some of the highly polluting coal plants.”

“Ultimately, our electricity market needs a policy framework that incorporates a decarbonisation goal with bipartisan political support. Anything less merely maintains the risk of steeper, swifter emission cuts in future. Without this our electricity sector will not be able to adapt and our economy will become increasingly vulnerable to the relentless global drive towards clean energy.”

The Climate Institute’s initial response to the RET Review from Thursday August 28 can be found here.

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For more information

Kristina Stefanova, Communications Director, The Climate Institute, 02 8239 6299 

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