RET slashed, jobs go

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Sigh…from Farifax:

Australia’s $20 billion alternative energy sector has been plunged into fresh uncertainty after the federal government indicated further policy changes to reduce the reliance on wind and solar power, potentially leaving billions of dollars invested in the sector stranded or devalued.

Signalling it wants to reduce the 20 per cent renewable energy target by 2020 to what it calls “a real 20 per cent”, the Abbott government has proposed reducing the agreed green energy target of 41,000 gigawatt hours of baseline power by 2020 to closer to 26,000 gigawatt hours.

I couldn’t bring myself to write on this yesterday there it is in black and white. In defiance of its own economic modelling, the Renewable Energy Target Review is recommending cutting the target almost in half. Remember what the Review’s own modelling concluded:

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The federal government’s hand-picked economic modeller to evaluate the impact of the Renewable Energy Target, ACIL-Allen, has found that a wind-back of the scheme’s target would end up costing electricity consumers money, to the benefit largely of fossil fuel suppliers and generators.

This is even though the modeller was instructed by the government to attribute no monetary value whatsoever to carbon emissions.

Also, the modelling suggests that the renewable energy industry should be able to meet the current level of the target without a blowout in the cost of renewable energy certificates to the price cap.

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The review found that raising the target would decrease energy costs further with the optimal blend being a raised 30% target.

The Opposition has rejected the Government’s aims so it’s not all over yet, except for some in the market, from the AFR:

Wind turbine manufacturer Keppel Prince has laid off 100 people and blamed the government’s proposed changes to the Renewable Energy Target.

The company said the decision was a “direct result” of the uncertainty following the review carried out by businessman Dick Warburton.

…At the peak of business in 2008, Keppel Prince employed approximately 520 people.

Ironically, Keppel Prince also does maintenance work for the nearby Alcoa aluminium smelter, which the government announced on Wednesday would be exempt from the renewable energy target under its proposal.

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Nobody is going to accuse me of failing to support Australian manufacturing but picking winners that are in the clear path a global energy steamroller and shedding those that will replace them is not very sensible.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.