Angus Taylor (Hume, Liberal Party) Share this | Hansard source

Religious belief is based on faith not facts. The new climate religion, recruiting disciples every day, has little basis on fact and everything to do with blind faith. The new theologians of the green Left are not focused on the hilltop at Calvary, but on hills closer to home—many in my electorate, near Lake George, Gunning and Crookwell. And heaven help the heretics who question them. If you listen to Labor and the Greens, an immediate shift to renewable energy is necessary to avoid Armageddon.

At the other extreme, some believe, we do not need any of this. Of course, the coalition is taking a middle path. We have concluded that well-targeted emissions reduction via Direct Action is good policy. The great virtue of Direct Action is that it provides incentives, not penalties, for emissions reduction across the country. But the hard work starts now. As policymakers, our job is to minimise the cost of reaching our emissions-reduction target, particularly given our economy relies on energy-intensive exports.

Today's The Australian reports on definitive economic modelling of the Renewable Energy Target recently completed by Deloitte. It tells us what should be obvious: the scheme is poor policy in its current form. The massive subsidy we single out for the wind industry via the LRET is one of the biggest but least understood corporate welfare programs ever conceived. Wind energy typically costs well over $90 to $100 per megawatt hour. The alternative is conventional energy, currently priced about $30 to $40 per megawatt hour, in the absence of a carbon tax. To make things worse, the electricity grid needs extra investment to absorb the intermediate supply from wind.

Deloitte tells us that the cost of reducing carbon emissions via the Renewable Energy Target is a $125 per tonne, more than five times the cost of Labor's job-destroying carbon tax. The total cost to the economy is expected to be $34.1 billion, in today's dollars. The extravagance of these massive subsidies to the wind industry is being paid for directly by electricity consumers and generators. Indeed, we have hardly begun. For large-scale renewables, which has come to mean wind, the current target of 16.1 terawatt hours moves to 41 by 2020. At the same time, the market price of delivering those renewables will increase sharply, reaching a legislative cap in the near future.

According to Deloitte, by 2020, the RET will cost the economy $3.4 billion per year. It will destroy almost 5,000 jobs and will drive a substantial reduction in investment and real wages. That is what bad policy does. It wastes money, costs jobs, costs investment and reduces income across the nation. It is true that the cost of renewables will come down over a period of time, but solar will trump wind easily on this count.

Across much of the Western world, policy makers are focused on one easy option to begin decarbonising our electricity grids, while the cost of renewables comes down: natural gas, because it is abundant and because it halves emissions. The United States has presided over a game-changer, achieving rapid reductions in carbon emissions, containing the price of electricity and putting manufacturing back on the map—all on the back of cheap gas. It has given Obama an incredible political opportunity. He is claiming this is a triumph of his new direct action policy when, in fact, gas has done most of the work.

But there is a hitch for us. In Australia gas is more expensive than in the US, because we export it. Of course, there are strengthening calls from the left for a reservation of gas for domestic purposes. We should ignore these calls because we have alternatives. Bear in mind that the electricity grid is responsible for less than half of our emissions. Land use, transport, fuel, agriculture and industry are all responsible for the rest. Indeed, these areas have been central to delivering our Kyoto obligations and will be central to Direct Action.

Burchell Wilson, chief economist of the Australian Chamber of Commerce and Industry, said in today's TheAustralian:

The renewables industry has been standing over the graves of Australian manufacturing concerns, crowing about the jobs the RET is creating in the wind industry.

In short, by 2020, if the renewable energy target is not restructured, the costs will explode and we will all pay for it.

That is why this government is conducting a review of the target and why we committed to this review before the election. Fixing the RET is the next step towards ending the age of entitlement—in this case, wind-industry entitlement.

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