E&OE….
Topics: Renewable Energy Target
ROSS GREENWOOD:
Another story that’s out today and I think it’s worth following and that is the Coalition and the Labor Party, everyone says that they can’t agree on anything. Well, today they agreed to a revised Renewable Energy Target but this has taken two years of negotiations and genuine uncertainty as to whether it would take place or not. Let’s go to the Environment Minister Greg Hunt, he’s organised this with the Opposition Environment Minister Mark Butler.
Many thanks for your time Greg.
GREG HUNT:
Oh, it’s a pleasure Ross.
ROSS GREENWOOD:
So, can you explain exactly what you’ve agreed?
GREG HUNT:
Sure. There are really three big things that we’ve agreed and it’s all about a combination of certainty, protecting consumers and also ensuring that jobs are protected in non – well, in non renewable sectors such as aluminium and zinc and areas dependent on electricity.
And the three big things are the Renewable Energy Target which is the equivalent of 23.5%, not 20%, protection of the small scale solar sector by making no changes so it’s the market can run to its own extent and then the relief for what’s known as the trade exposed sector which had been facing international competition from companies which didn’t have those sorts of pricing implications on their electricity so therefore a level playing field for our trade exposed sector.
ROSS GREENWOOD:
Can you just explain to us how it is that the Renewable Energy Target which was that within, by 2020 the amount of electricity, let’s call it that, being generated would be 20% from renewable energy sources, that was the idea. So, 20% by the year 2020.
You’ve now said that the target will eventually end up being some 23.5% and yet at the same time, the amount of gigawatt hours is going to be reduced from 40,000 gigawatt hours to 33,000. So how is it that you can increase the target, yet the amount of gigawatt hours produced is going to be reduced. What happens there?
GREG HUNT:
Sure. So, the way it was done back in 2009, the Labor Party didn’t legislate a percentage but they talked about it as the percentage. They legislated a fixed amount of renewable energy, this – just over 40,000 gigawatt hours, 41,000 gigawatt hours and what that means is that they presumed that there would be a massive growth in electricity consumption and that that fixed figure would then represent along with small scale and existing hydro, about 20% of renewable – well, renewable energy at about 20% of the total market.
Instead, not only did we not get the growth, we got an actual decline in electricity consumption in Australia. We were heading for 27%, we’re going right to the middle here of 23.5%. There’s still significant growth, lots of stability for the sector but we’re taking the pressure off the trade-exposed manufacturing businesses, protecting blue collar jobs by giving them a level playing field and saving households money which would otherwise have been added to their electricity bills. So, it’s pretty good balanced outcome.
ROSS GREENWOOD:
Okay, so let me get through my head so as I can totally understand it and everybody else can understand it, in other words, because Australia’s economy slowed down and many of those areas that were very big electricity users, such as the smelting industries and so forth, they also slowed down, our demand for electricity has dropped…
GREG HUNT:
Correct.
ROSS GREENWOOD:
…and so therefore to be able to achieve these Renewable Energy Targets it’s actually easier to do so because there is less electricity required across the marketplace, is that pretty much it?
GREG HUNT:
That is exactly the case. In other words, we had a lot of spare capacity from generation and then we were going to be pouring more and more capacity in and everybody said well, we’ve still got a long way to go to build to reach this 41,000, that’s unlikely to happen.
Let’s set the target at 33,000 or 23.5%, there’s still significant growth opportunities in the renewable sector, they’ll have a job to achieve that but at the same time we can protect those sectors which would otherwise have faced pressure and protect householders from additional costs and the risk of playing a de facto penalty or carbon tax of about $93 a tonne. So that’s a good outcome.
ROSS GREENWOOD:
Okay, one last thing about this, because we know that renewable energy, broadly, is higher cost than traditionally generated electricity that comes from coal fired power stations, to create that base-load, so from wind or from solar is generally higher and also the actual distribution costs are – the cost to network it is more expensive as well.
Does that mean because there is going to be potentially more as a percentage of the renewable energy inside the total amount that’s consumed, that it means that the wholesale price of electricity is going to be higher because there’s more renewable energy inside that? Or is it likely that it’s going to be lower long term because they’re going to become more efficient, which way does that sit?
GREG HUNT:
So, the advice that I’ve got and the estimates of the Warburton Review as well as from the Government’s own analysis is that there should be a decrease of $20 per family against their 2020 bill as a result of this deal compared with where it would otherwise have been.
Look, it’s not a massive change but it is building on the fact that we’ve had the biggest drop in electricity prices on record as a result of repealing the carbon tax. We’re taking additional pressure off but what we’re doing is trying to do everything we can to keep household bills lower.
ROSS GREENWOOD:
Greg Hunt, the Environment Minister, we appreciate your time. Who said they couldn’t agree anything in Parliament House in Canberra? Well, they’ve agreed something here which is not a bad thing at all. Greg Hunt we appreciate your time.
GREG HUNT:
Cheers mate.
(ENDS)