Australia’s conservative Liberal-National government has been warned that if it scraps the country’s Renewable Energy Target (RET) it will costs thousands of jobs, billions of dollars in investments and push up electricity prices.
Financial news and data firm Bloomberg New Energy Finance (BNEF) has analysed the effects of such action and warned the federal government that the move would lead to the shelve $12-21bn of investment in clean energy.
BNEF said it would also see a cut of 7000-11,000 future jobs in wind and solar industries every year, lead to higher power prices for consumers and deliver power companies $6-12bn of extra revenue from 2015 to 2020.
Australia’s pledge to use renewable energy sources to produce 20 per cent of its power by 2020 is currently being reviewed by an expert panel.
The lead author of the BNEF report, Kobad Bhavnagri said any changes to the target would have a devastating impact on the clean energy industry.
“The current renewable energy target, as currently in place, is expected to drive about $35 billion of investment in clean energy by 2020,” he said.
“If that was cut, $21 billion of that would not get spent, and if it was reduced we’d expect that about $12 billion less would be invested.”
The report suggests that renewable energy sources provide a low-cost alternative to fossil fuels, and contribute to cheaper wholesale electricity prices.
Mr Bhavnagri said those benefits flowed through to consumers in the form of greater competition and lower costs.
“If you cut or reduce the renewable energy target and the amount of renewable generation in the system, there’s less competition among the existing fossil fuel power generators, and also more energy will need to be supplied by coal and gas-fired generation which is expensive at the time of production,” he explained.
“That puts upward pressure on wholesale electricity prices.”
BNEF said although costs to the average household would fall by $10 a year for the first four years if the target is cut, prices would surge after that due to less supply and competition in the power markets.
Existing electricity generators would then receive an extra $11.5bn in revenue between 2015 and 2020 if the target were scrapped, and a massive $70.2bn between 2015 and 2030, the study found.
If the target is reduced, existing generators would receive an extra $6.1bn between 2015 and 2020, and $40.3bn between 2015-30.
BNEF said the majority of this extra revenue would flow to coal-fired power stations, which dominate Australia’s current power mix.
Even if the target ultimately remains intact, the report says uncertainty over Australia’s RET, has led to a drop-off in investment within the country’s renewable energy sector.
Mr Bhavnagri said investors were unsettled by the coalition’s dismantling of a number of clean energy or climate-related policies that were put in place by the previous Labor government.
“We speak to investors and people involved in the energy industry overseas and locally,” he said.
“What we can see is that all of them are very concerned and watching very closely as to what happens in Australia and, right now, aren’t really prepared to make any decisions, because the policy environment is in a state of flux and high uncertainty.”
