Farcical start to Abbott’s renewable energy review

By Giles Parkinson, RenewEconomy

Tony Abbott’s controversial review of Australia’s renewable energy target (RET) made a ‘farcical’ start to its public deliberations last Wednesday, attracting new accusations of bias and of having a pre-determined outcome.

Clean energy representatives were shocked by the panel’s appointment as chief advisor and modeller of ACIL Allen, a consultancy seen as close to the fossil fuel industry, and whose highly contested research formed the basis of the coal industry’s attempts to dismantle the RET in 2012.

Not only will ACIL Allen do the modelling for the RET Review panel, some of the assumptions that will form the basis of that modelling have also stunned the clean energy industry, and been branded as a farce.

This includes an apparent refusal to measure the benefits of renewable energy – including the health benefits, job benefits, and the network benefits – which the panel has dismissed as ‘too hard to model’ and little more than a ‘transfer of wealth’, presumably away from the coal generators and network providers.

There is concern about how it will model the reduction in wholesale prices – the main complaint from the existing fossil fuel industry.

Around 50 people who attended the RET Review panel’s modelling forum at the Mercure hotel near Sydney’s international airport were also told that the modelling will assume that there will be no carbon price out to 2030, and will not factor in any abatement targets.

In other words, it is assuming there will be no carbon restrictions on the sector for another two decades.

John Grimes, the CEO of the Australian Solar Council, echoed the thoughts of many who attended the meeting and were interviewed by RenewEconomy when he said it appeared clear that the RET Review will serve only to protect the vested interests in the current electricity market.

‘I’ve got to say – this is much worse than we had anticipated,’ Grimes said.

‘This entire review process needs to be revealed for the sham that it is, we can only conclude that the RET Review process is heading to a biased and predetermined outcome.

‘Instead of making customer benefits the key measure of a successful energy market, this review is set to side with big business, giving little or no weight to the benefits of solar for householders, business and the community.

‘Clearly any model that fails to consider a carbon price (in any form) up to 2030, in the face of international action on climate change, is negligent and lacks any credibility.

‘The RET review was already controversial because of the Abbott government’s decision to by-pass the Climate Change Authority (which dismissed the ACIL Allen modelling and the coal industry’s protestations in its 2012 review), and appoint a panel led by climate change denier and pro-nuclear advocate Dick Warburton (pictured right).

He will be supported by fossil fuel lobbyist and former ABARE chief Brian Fisher, and Shirley In’t Veld, the former head of WA’s biggest coal generator, Verve Energy. The secretariat will be housed in Abbott’s own department.

Clean energy attendees said they were shocked by some of the statements – including Warburton’s apparent ignorance that the Abbott government went to the election with a ‘million solar rooftops’ commitment, as well as assumptions by the panel that the current 41,000GWh could not physically be met.

The panel reportedly claimed that no large renewable energy projects would be able to be built for another 18 months, and no more than 1,000MW to 1,200MW of wind capacity would be possible in a single year, making it impossible to reach the current target.

Both these claims were reportedly vigorously contested by the representative of the Clean Energy Council.

However, it was ACIL Allen’s appointment that confirmed the worst fears of the renewable energy industry.

In 2012, the energy consultancy produced a report for EnergyAustralia, one of the fiercest opponents of the renewable energy target, that suggested the cost of the RET amounted to a subsidy of $53 billion – a number it said could be halved if the RET was adjusted from its fixed target of 41,000GWh to a ‘real 20 per cent’.

This is the very argument that the fossil fuel industry continues today, and one that ACIL Allen, farcically, has been asked to adjudicate and model.

The figures produced by ACIL Allen in 2012 were ridiculed by the industry, and rejected by the CCA, which said that diluting the RET would save little for consumers, although industry analysts noted that doing so would destroy the price of renewable energy certificates currently held by clean energy developers and banks.

ACIL Tasman – as it was then known – was labeled by academic Guy Pearse in his book ‘High and Dry’ as the coal industry’s favourite consultant.  Read this New Matilda report on the links between Fisher’s ABARE, ACIL Tasman and the fossil fuel industry.

Even the Murdoch-owned Business Spectator made a spectacular demolition of ACIL Allen’s research, pointing to its previous reports that claimed that carbon pricing would eradicate the LNG industry, would force the closure of all brown coal generators by 2020, its predictions that geothermal would account for 30 per cent of the Renewable Energy Target, and how on two occasions it grossly miscalculated the uptake of rooftop solar.

On its website, another study undertaken for the Electricity Supply Association of Australia – another body that wants the RET diluted – recommended a ‘pricing or regulatory response’ to try to prevent the widespread uptake of rooftop solar and the potential ‘islanding’ of electricity consumers.

In yet another study, for the Department of Resources and Energy, ACIL Allen in 2010 was asked to assess various energy technology cost estimates. ACIL Allen made this extraordinary prediction for solar – saying its capital cost would be around $4,650 a kW by 2015, possibly falling 30 per cent to $3,255/kW by 2030. (See the table here, page 16, table 8).

Even in 2010 this prediction was patently absurd. Solar PV prices were falling 30 per cent a year, not every 15 years.

By the end of 2013, capital costs for utility-scale PV are already at 1,500/kW – less than half what ACIL Allen predicted would be the cost two decades hence. Still, the ACIL Allen estimates formed a crucial part of the government’s commitment to fossil fuels.

This largely reflects the problem that the renewable energy industry faces – incumbents and ageing engineers and business people who reject the science, simply do not understand or accept that renewable energy sources can be effective and cost competitive, and cannot imagine an energy system any different to the centralised model that has dominated for the past 100 years, and/or who are merely seeking to protect their vested interests.

The problem is that not only do they now have the ear of the current government, they have their hand on the wheels – and their foot on the brakes.