Who wins if the RET is cut?

You may recall that recently the Federal Government’s own modelling (from ACIL Tasman) showed that dumping the Renewable Energy Target would cost consumers a lot more in the long run. More modelling along those lines arrives today via Paddy Manning at Crikey:

There are tens of billions of dollars and perhaps hundreds of millions of tonnes of CO2 abatement at stake. Without a carbon price, Australia’s commitment to reduce greenhouse gas emission by 5% by then is getting harder and harder to keep, and the possibility of deeper cuts in line with increasing international effort is receding altogether.

On the one side is the upstart clean energy industry, which wants the estimated $15 billion of new investment that will — finally — come in a rush if the existing “20% reduction by 2020” RET is retained with certainty. Cheering them on are consumers, who, all the modelling shows, will get cheaper electricity from increasing penetration of wind and solar. When he attacks renewable energy for raising prices, as he did this week, the Prime Minister is being deliberately misleading.

Respected consultant Hugh Bannister of Intelligent Energy Systems has modelled the winners and losers from repeal of the RET over the next decade. The results (pictured in the graph below) are crystal clear: the interests of renewable energy providers and consumers are directly opposed to the interests of the incumbent thermal (coal- and gas-fired) generators. Adding up the figures over the decade, repeal of the RET would cost electricity users an extra $554 million in higher electricity bills (short-term gains are eroded longer term), and renewable energy providers miss out on sales worth $7 billion. On the other hand, thermal generators stand to make $13 billion, as there is more reliance on expensive gas and, longer term, a small amount of new gas plant is built, with the rest of us bearing the extra abatement cost.