Bob Debus. A breach of faith on renewable energy.

Jul 13, 2015

Well, this is just getting stupid. We are entitled, after events last week, to ask if the Federal Government has the capacity any longer to act in good faith when the interest of the coal industry is at stake.

Tony Windsor and Barnaby Joyce, whatever their manifest differences, reflected the opinion of local people, the normal application of the precautionary principle and everyday common sense when they protested last week’s approval of the giant Watermark coal mine immediately adjacent to the aquifers and rich farmland of the Liverpool Plains in northwest New South Wales. In any event, no conditions of approval can prevent the destruction on site of 800 hectares of highly endangered box-gum woodlands, their associated rare bird and animal life.

Australian scientists were also correct last week to wearily dismiss the ‘embarrassing’ support offered by Dennis Jensen MP and other members of the Liberal Party for the establishment of yet another ‘review’ of climate science. It is certain that no country representative at the UN Climate Change Summit in Paris later this year will be questioning established climate science.

Indeed international concern about the Australian Governments’ climate policies is increasing and condemnation has been coming from some unexpected quarters for a while now. Lord Deben, a former Thatcher Government Minister and head of the Committee on Climate Change in Britain, said last year that, “Mr Abbott is recklessly endangering our future as he is Australia’s”. A leading advisor to the conservative chancellor of Germany described Tony Abbott’s single-minded promotion of the coal industry as an ‘economic suicide strategy’.

In the last fortnight an exceptionally broad coalition of Australia’s peak business and social groups have come together to support emissions reductions far deeper than anything proposed so far by the Government. They specifically pointed out that “delayed, unpredictable and piecemeal action will increase the costs and challenges of achieving goals and maximising the opportunities” for doing so.

Unrepentant, Abbott Government Ministers last week moved to take unpredictable and piecemeal action to undermine an agreement reached only in May, which had the acknowledged purpose of returning some certainty for investment in the renewable energy sector. Here is the background.

The Abbott Government came to office promising to abolish the demonised Emissions Trading Scheme, actually very similar in substance to the scheme previously proposed by John Howard and in principle advocated by Milton Friedman. Last July it became the only Government anywhere in the world to abolish a carbon-pricing scheme: emissions from electricity generation have begun in consequence to climb again.

Over 60 countries have established renewable energy targets and the Abbott Opposition promised to maintain Australia’s already established, bipartisan 20% Renewable Energy Target (RET) when it came to office. However, in the event it moved quickly to establish a Review of the RET headed by a well-known climate sceptic, an initiative that caused large-scale investment in renewables to freeze almost entirely. Nevertheless, the Review found that the RET was succeeding in cutting emissions and that it would benefit electricity consumers into the future. That is to say, it was made clear that the only beneficiaries of a reduced RET are coal fired generators.

The Government however, would not relent. Without coherent explanation it conducted protracted negotiation over 15 months before the Opposition reluctantly agree to legislate a reduction in the RET from 41,000 GWh to 33,000 GWh, held steady until at least 2018. Australia became the only country in the world to have reduced a renewable energy target but it seemed at least that an industry that already employs 20,000 people could at least resume growth in a more certain investment environment. But not so.

The Gillard Government had established the Clean Energy Finance Corporation (CEFC) in 2012 for the same purpose: to assist the application of capital ‘through a commercial filter to facilitate increased flows of finance into the clean energy sector, thus preparing and positioning the Australian economy and industry for a cleaner energy future”. The CEFC has typically contributed funds as part of a consortium, encouraging private banks into the field, across a range of technologies, while ensuring a solid return on its own investment. At any other time in Australia’s political history it would have been regarded as a welcome success.

However, it too is a victim of the clumsy mash up of anti-regulation neoconservative political ideology, technical error, inconsistency and idiosyncratic prejudice with which the Abbott government approaches the world. The Government’s free market ideals have not caused it to curtail massive subsidies to the fossil fuel industry but it did come to office promising to abolish the CEFC: at first making the demonstrably incorrect argument that its activity crowded out private finance. However, the Senate has frustrated its intention.

Now, unable to delay investment by stalling the RET or abolishing the CEFC, the Treasurer and the Finance Minister are doing what they see, presumably, as the next best strategy to dampen investment in renewables.

They have instructed the CEFC not to invest in small solar or wind technology, the two areas which are at present most easily rolled out on a large scale and therefore most likely to bring about rapid increase in actual renewable energy production. The government seeks to suggest that the CEFC should be used only for developing emerging technologies, but this is disingenuous.

The essential point of the CEFC is to increase the amount of capital investment flowing into technology that increases the production and use of renewable energy. The action of the government is calculated to stop it and if anybody has an explanation that does not involve a breach of good faith I’d like to hear it.

Bob Debus AM was an ALP member of the NSW Parliament and Attorney General, Minister for the Arts and Minister for the Environment. He was also a member of the House of Representatives and Minister for Home Affairs in the Rudd Government.



















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