The RET-go-round

Joe Hockey got a helluva lot of coverage for his small outburst to Alan Jones on wind farms – “a blight on the landscape” and “utterly offensive” – and it really wouldn’t matter except that he will be sitting at the federal cabinet table at some stage this year, contributing to the judgment on the renewable energy target review, for which submissions closed last Friday.

I gather the report from Warburton and his panel will be delivered “towards the end of June,” which means after the energy green paper appears (allegedly 28 May).

If I was out and about boosting the case for the existing RET (which I am not), I’d be suggesting that the Treasurer might care to visit the south-west of Victoria and specifically Ararat.

I see it reported from Warrnambool that a $200 million wind farm, scheduled for completion in October, has paused work and three others mooted for this corner of Victoria are now up in the air, so to speak.

Their development has local economic value.

In Ararat, local government leaders are trying to get a meeting with Hockey’s colleague, Environment Minister Greg Hunt, a Victorian MP, to explain that the prospect of the RET being much reduced or uprooted altogether (something I think unlikely although the green commentariat is playing the ‘threat’ like a violin) would mean a loss of $22 million in expenditure in their neck of the woods during the construction phase of a $450 million, 75 turbine development.

The project will make RES Australia their largest ratepayer by a long way and see $75,000 a year contributed to local clubs by the firm.

Of course, this is not the “big pitcher,” as one of Hockey’s more famous modern predecessor’s was wont to say, but it just goes to demonstrate that what one politician says when trying to make nice to a radio shock jock is rather easily countered from other perspectives.

The overall context is multi-layered and pretty darned complex.

The Warburton panel report is far from the last word and the political context is already made more complicated by the reactions to Hockey’s budget and assertions of government deceit in the last election campaign.

There are plenty of quotes from Hunt and others from the run-up to last September’s poll that can be used to underline the charge of duplicity from a fresh angle.

And there is the tricky path through the Senate woods post 1 July for the government to negotiate in achieving any changes to the RET legislation.

I see the Prime Minister already tip-toeing away from double dissolution threats related to the budget’s parliamentary passage in media interviews this weekend.

Abbott claims we should expect the next election in “mid-2016.”

All this said, there is a large amount of effort going in to the more serious submissions to the RET review – papers that will be disseminated far more widely in the political arena than Warburton and his three panelists.

(I differentiate these from the multitude of parroted submissions from the green army that flood in to each and every review of carbon policies and are essentially ignored by the recipients. “Never mind the quality, feel the width” is the game for these lobby groups and it is well past its use-by date.)

At the mature end of the scale you will find submissions from the Clean Energy Council (27 pages) and the manufacturing lobbies (who bear the brunt of RET costs rather than the mass market, whose weekly burden is more less the price of a middy of beer, to use the Treasurer’s apparent metaphor of choice.

(New South Wales readers will understand a middy, which is 285 millilitres; Melburnian barmaids will only understand your order if you ask for “a pot” and I gather it has other names elsewhere. The average Australian price is $3.74.)

Players in the electricity market are in there pitching, too, raising the wide range of concerns they have about how the RET impacts on the viability of the NEM (or helps improve it, according to renewables supporters).

Hence the CEC’s 27 pages as it stretches to cover all bases from its particular angle.

Rather far removed from the casual observer’s eyes but well worth reading if you are deeply interested in the topic is a quite lengthy commentary on the WattClarity website by GLOBAL-ROAM managing director Paul McArdle.

(You can find it by putting “A few thoughts on the RET review process” in to Google Search.)

McArdle makes an observation that certainly resonates with me: “I have to wonder about the way in which market modelling seems to have developed its own mystique to the point where the results of exercises are increasingly used to ‘prove’ a particular party’s point of view (which often-times seems to be predetermined). This seems to be devolving in to Consultants at 20 Paces.”

Quite.

And he adds a thought that I also share and that keeps me reading this stuff: “The fact that the outputs of (such) modelling are almost guaranteed to be wrong does not mean the process is worthless. (It) can be enormously valuable.”

McArdle suggests that what Warburton & Co could do usefully is to invest in a project to collate and evaluate the material published to date from established modelling firms “so that we can actually learn from them and not start from square 1 again and again and again.”

Unless, of course, as he points out, the market and policy settings have changed so much to make all this stuff invalid……..

You may recall former Prime Minister Fraser, who seems to have spent his retirement recanting everything conservative he ever espoused, once lecturing us that “life is not meant to be easy.”

McArdle’s further point is that, as the energy landscape continues to shift and remains so unclear today, it follows that current modelling purporting to stretch out to 2030 may be a vain exercise.

Which, of course, should bring one, at least in my book, to the thought that responsible governance in this environment should be to set the ground but not seek to dictate the play.

In what may turn out to be the shortest submission to Warburton et al, the Energy Policy Institute has written a five-paragraph letter urging it (and the Abbott government) to adopt three key principles:

First, technology neutrality is a fundamental principle of energy policy and all energy production options should be able to compete on a level playing field with predictable rules.

Second, all discriminatory and market-distorting measures should be eliminated.

Third, the lowest-cost carbon emission reductions should be delivered by an efficient market mechanism on a technology-neutral basis.

The multi-billion dollar question is how to embrace this without materially disadvantaging investment made in good faith up until now?

Grandfathering and drawing a line, I guess, but, as just one example, given that rewriting the network tariffs rules is an imperative, there is no escaping that there will be significant losers in this game – eg the two million or so voters who have jumped at all the solar PV program populism of recent years and invested billions of dollars in arrays on more than a million roofs.

(In passing, for the love of your nominated deity, could “journalists” on the ABC and elsewhere per-lease stop writing “rooves” – it is, for me at least, the single most irritating aspect of the modern media. Well, second most irritating: smart-arse, tin-eared headline writers are a greater bane, a classic new example being the “Sydney Morning Herald” greeting Hockey’s budget with a banner “A world of pain.”)

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