POWER February 2015 - 13

Warburton's review report released in
August 2014 concluded that the cost of
the RET essentially outweighed its benefits
and that significant change was required.
Specifically, it called for the LRET
to be either closed to new entrants or for
targets to be halved by 2020 to around
27,000 GWh. It also called for the SRES
to be either terminated immediately
or phased out by 2020 (rather than by
2030, as originally planned). Renewables
proponents railed against the findings,
saying they represented the " worst case
scenario. " The Clean Energy Council, the
national trade group, warned that the proposals
would " shut down the future of the
industry. "
By the start of December, despite several
negotiations between the government
and the opposition Labor Party, the stalemate
over the future of the RET continued.
The Energy Supply Association of Australia
(ESAA), a self-described " fuel and technology
neutral " industry body, warned
that Australia's full electricity generation
sector, not just renewable generators, had
become " almost unbankable as a result of
ongoing policy uncertainty and intervention
over the past decade. " It is imperative
that major political parties develop
a comprehensive national energy strategy
for the 21st century, said ESAA Chief Executive
Matthew Warren.
" [T]he most conservative estimates
suggest the generation industry alone
will need to reinvest around [A]$230 billion
by 2050 to meet the challenges we
face this century, " he said. " It is clearly
in the national interest to return confidence
to our energy markets and embrace
the energy transformation which
has already begun. Not because you do
or don't believe in climate change, but
because it is a risk that needs to be
managed, " he warned.
On Dec. 22, finally, the CCA released a
much-anticipated updated review of the
RET. But in the document, the CCA admits
it had limited time to conduct the review,
lamenting at the outset that its own existence
faces an " uncertain future. "
Yet, among the CAA's findings is that,
although as currently legislated, the RET
arrangements are " not perfect, " they are
" effective in reducing emissions at reasonable
cost in the centrally important
electricity sector. " Moreover, they are " currently
the primary policy instruments for
electricity sector decarbonisation, and no
more cost-effective and scalable measures
are in prospect at this time. " Without effective
alternative measures, the CCA says
it would not favor " significant " scaling
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back of the 2020 LRET target of 41,000
GWh. However, given the " sharp decline
in investor confidence, " the CCA recommends
that the government should defer
the 2020 target for the LRET by about
three years and that the SRES should be
left as is.
However, the CCA's approach hasn't
been palatable to the energy sector.
The ESAA almost immediately responded
that the review " fails to acknowledge
that the scheme as designed is no longer
working and that a more strategic
review of energy is needed if we are to
deliver an efficient reduction in greenhouse
gas emissions. " Confidence cannot
be restored simply be returning to
bipartisan support for the policy as the
review suggests, the group said.
" Removing the [carbon] price and expecting
the supporting policy to work is
like removing the foundations of a house
and expecting the walls not to fall over, "
Warren cautioned on Dec. 22. " Banks are
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POWER February 2015

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