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

The most sustainable outcome for the large-scale renewable energy target, or LRET, is an achievable target of a true 20 per cent—a 20 per cent without spin and manipulation and which recognises all renewables. The LRET was intended to drive a range of large-scale generation technologies including geothermal, hydro and even wave energy. In reality, it has become a source of massive subsidies for the wind industry. More than 50 per cent of the revenues of wind farms comes from these subsidies In contrast, rooftop solar is reliant on rising network costs, particularly in rural areas. With the narrowing of sources of supply to reach the target, and a reduction in demand for electricity, the current target of 41,000 megawatt hours by 2020 now threatens the future of the scheme. Policy overreach is always a killer.

In 2013, there were about 3,200 megawatts of wind capacity in Australia This equates to around 1,600—mostly smaller—wind turbines. Achieving the current target requires a growth rate of more than 600 new turbines each year, or a near tripling of total turbines by 2020. This is not realistic. First, new wind developments require extensive consultation with local communities in a climate of increasing opposition. Much of this opposition is a response to larger turbines, over 150 metres high, and bigger wind farms of 100 turbines or more, and their impact on land values, amenity and even health.

Second, financing new investments has become extremely difficult under the current scheme. Investment in wind is dependent on long-term contracts with electricity retailers. The retailers do have an alternative, which is to avoid long-term contracts and buy renewable electricity as they need it. This means no new investment and an epic policy failure as the price of certificates and, of course, the subsidies skyrocket. This is great for companies that already have wind farms like Infigen, which saw its share price collapse well before this debate started, and is run by the chairman of the Clean Energy Council, Miles George. But this would be a terrible outcome for households and businesses.

Between now and 2020, if we do reach penalty rates then the total costs of subsidies passed through to electricity consumers will equal almost $4 billion per year, without corresponding investment in renewables. Everybody loses. Even without penalty prices, Deloitte tells us that the current target is costing households and businesses billions—killing jobs and reducing real incomes for all Australians. That is why the government is proposing exemptions for the most exposed industries, like aluminium.

Meanwhile, the LRET is an expensive way to reduce carbon emissions. There are ample cheap options across the globe, including switching from coal to gas, avoiding deforestation or driving energy efficiencies in households and businesses. Beware the gluttony of rent seekers. Vested interests always have a loud voice.