24 July 2015
by Giles Parkinson
Labor picks a winner with 50% renewable energy target
It seems that the Labor Party has finally had enough of joining with the Coalition in the policies of the lowest common denominator, at least in respect to renewable energy. Labor leader Bill Shorten has finally found a major issue to make a point of difference with Tony Abbott.
The announcement by Shorten that he would ask Labor to adopt a 50 per cent renewable energy target – following a major push among grass-root branches – is a real breakthrough for the political debate in Australia, possibly as significant as the bipartisan deal to pursue a 20/20 renewable energy target way back in 2007.
That 2007 deal led to the rebirth of the Australian renewable energy industry and billions of dollars of investment, that only came to a crashing halt when the Abbott Coalition government came to power in 2013. It wallows in uncertainty since Abbott himself declared that he doesn’t even like wind energy.
The past two years, when Labor was forced by the Coalition’s incumbency to come to the table and negotiate a reduced renewable energy target, has seen an investment drought that has tainted Labor nearly as much as it has the Coalition. Finally, it is looking to gain clean air on this critical issue.
Shorten confirmed the target on Wednesday, saying that Labor wanted to see more solar panels on the roof-tops of Australian homes and businesses, and it wanted to see battery technology “developed to the point that electricity from solar panels can be stored in our homes and small businesses.”
He continued: “We want to make sure that investors in windfarms can be confident about investing in wind power. There is an absolutely clear cut choice between Labor and the Liberals when it comes to renewable energy.”
A 50 per cent renewable energy target by 2030 serves four good purposes.
Firstly, as Shorten points out, it creates a clear difference between Labor and the Coalition government, and may help Labor recapture some of the middle ground (yes, middle ground) lost to the Greens in the past two years. In turn, it pushes the Coalition to further extremes.
If the Coalition really were to take climate change as seriously as they say they do, they will have no choice – at some stage – but to backflip on the climate policy, and reverse their attempt to kill the renewable energy industry. Or they could push for nuclear, which would be so unpopular and so ridiculously expensive it would be political suicide.
Not that they are ready to admit that. Environment minister Greg hunt’s initial response – “this will push up electricity prices for families and pensioners” – suggests that their rhetoric and political engagement will remain in the basement for the time being.
The Greens, by the way, have a 90 per cent renewable energy target by 2030. The ability to meet that target might be questioned by many, but energy spokesman Larissa Waters makes the valid point that – considering Australia was headed towards 30 per renewables by 2020 under the previous policy – a 50 per cent target by 2030 does not exactly reflect an acceleration from where we were before.
Indeed, Tasmania is already at 100 per cent renewables, ACT has a 90 per cent target by 2020, South Australia has a 50 per cent target by 2025, but will get there much earlier, and Queensland has a 50 per cent target by 2030.
The second strength of the Labor position is that it provides a positive element to the suite of climate policies. Carbon pricing is toxic, at least on talk-back radio and in the Murdoch press, but as the poll results revealed below illustrate, renewable energy is popular.
Somehow, the renewable energy industry was ignored in the last two elections, despite the fact that more than two million homes have solar PV or solar hot water, and even incumbent utilities concede that a revolution in the way we produce and use energy is upon us. Within a few decades, half of all electricity needs will be produced and stored by consumers – households and business. Labor has finally realised that renewable energy is a powerful and positive issue in the electorate.
Thirdly, a longer-term target gives confidence to the renewable energy industry. Right now, the industry is facing a policy suite that finishes at 2020, and goes no further. As we wrote last week, this would not only bring investment in large-scale renewables (with the exception of large behind-the-meter rooftop solar arrays ) to a halt once the 2020 target is met, it is creating uncertainty and investment risk for projects that are being contemplated now.
If Labor did get into power, the industry could move forward with certainty. That would create added competition for projects, and it would lower the cost of finance. The ACT government has shown exactly how a liberal dose of policy certainty can benefit consumers and get things done.
Fourthly, it provides a solid signal to the coal industry that the transition is happening. Bloomberg New Energy Finance provided data last week that showed that, if nothing else occurred, Australia’s energy mix would change little from 2020 to 2030, and few coal-fired generators would close.
The Labor target would provide the policy signal to the ageing fleet of inefficient and highly carbon intensive coal-fired generators that they should exit the market.
Polling confirms the popularity of the move. A public opinion poll commissioned by Future Super and conducted by Lonergan Research finds that 73 per cent of Australians support lifting the renewable energy target to 50 per cent or higher.
The poll also found that 94 per cent of the 1053 surveyed thought that the renewable energy target should be higher than it currently is (it was recently slashed from 41,000GWh to 33,000GWh) and 15 per cent actually thought that the target should be 100 per cent renewables. The support for 100 per cent renewables increases to 20 per cent in regional areas (memo LNP).
Future Super managing director Simon Sheik said: “Lifting the renewable energy target is a no brainer. It is a policy supported by a large majority of the Australian population.”
This suggests that the mainstream debate over the renewable energy target could be framed between the positions of Labor and the Greens, with the Coalition as the outlier.
Australian homes and businesses are poised to add four or five times as much solar as exists now, as well as battery storage. The emphasis should be on ambition, and the scale of that ambition, and how the transition is managed, and not slowed by artificial barriers such as tariff changes.
The Future Super poll also revealed that the community is reacting to the issue of fossil fuels in Australia, the development of fossil fuel resources, and the issue of divestment.
The poll found that Australians see investing in coal as risky, with half associating the risk of coal investments as high. Forty-one per cent want banks and superannuation funds to stop investing in coal.
This sentiment is strongest among young Australians (18-24 years old) where more than half (56 per cent) have indicated they to want to see banks and superannuation fund companies stop investing into coal.
Chris Lonergan, the head of Lonergan Research, said: The climate issue has never been more important. Australians are moving away from traditional energy sources such as coal, and looking towards a future reliant on a renewable energy industry.” And so are the majority of political parties, if not the majority of MPs.