Australasian Science: Australia's authority on science since 1938

Finally, some light relief for the Renewable Energy Target

By Iain MacGill

The Australian government has just received a vitally important report to guide their decisions on the future of Australia’s Renewable Energy Target.

But it’s not the RET review report of the Coalition-appointed expert panel, led by Dick Warburton, which was released last week.

Rather it is the draft final report of the Intergovernmental Panel on Climate Change Fifth Assessment Report, which has just been sent to the governments of the IPCC’s 195 member countries. The report integrates the three previous reports on the science, impacts, and mitigation of climate change already released over the past year.

Its intent is to provide policymakers with a scientific foundation, based upon the work of the thousands of researchers volunteering their time to the IPCC, to tackle the challenge of climate change.

Carbon emissions need to rapidly decrease starting now

The report will be publicly released in November but a draft copy for review was recently leaked to the media. Its language is considerably more forceful than the previous report of 2007, noting that:

Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems.

The report also highlights the growing challenges already posed by climate change including extreme weather such as heat waves, flooding and droughts, and its potential to worsen violent conflicts, refugee flows and food production.

A key focus of the report is on the growing risks of climate change – the synthesis report apparently uses the term “risk” 351 times in just 127 pages.

In 2009 countries around the world, including Australia, made a commitment to keeping global warming below 2C. However, the report says that it is looking more likely that the world will shoot past that point. Limiting warming to this level is possible but would require dramatic and immediate cuts in greenhouse emissions.

Indeed, the IPCC’s work on mitigation options suggests that near-complete decarbonisation of the electricity sector by 2050 will likely be required and that renewable energy has a key role to play, particularly given the evident challenges facing other low-carbon generation options including carbon capture and storage and nuclear power.

Renewable energy to reduce risk

By comparison, the report of the Warburton review gives almost no consideration of these climate change challenges, and the Renewable Energy Target’s contribution to addressing them. This is surprising given that the RET is, after all, one of the most significant greenhouse emission reduction policies that Australia has implemented to date, and has already started to transform the Australian electricity industry towards a lower carbon future.

The review, however, framed its climate change considerations in terms of the Australian government’s current 5% emission reduction target from 2000 levels for 2020 — a target which the government’s own Climate Change Authority has determined is entirely inadequate given the scale of the climate challenge, and the efforts of other countries to date.

Furthermore, the Warburton review assumes that the target can best be achieved by the government’s proposed Emissions Reduction Fund — part of the Direct Action plan — a measure that remains largely unspecified and hasn’t yet been modelled, let alone legislated.

Instead, the main modelling undertaken by the review towards its first term of reference — the need to consider the economic, environmental and social impacts of the RET scheme — assumes there are no costs associated with the greenhouse emissions of fossil fuel generation out to 2030.

How, then, do they consider the future uncertainties associated with international action on climate change? They don’t, other than the inclusion of one scenario in their analysis featuring a token shadow carbon price of A$10 per tonne of carbon dioxide starting in 2021. Such a shadow price is not meaningful in terms of the climate challenge - even oil multinationals like BP and Shell are using a shadow carbon price of US$40 per tonne for their own investments.

Modelling work by groups including our Centre for Energy and Environmental Markets here at the University of NSW has highlighted that increased renewable generation provides an excellent hedge against the risks future international gas and carbon price increases currently pose for the Australian economy.

The other RET review

Fortunately, the Australian government does have before it an excellent and highly detailed report on ways to reform some of the present inadequacies of the RET.

Unfortunately, that’s not the Warburton report either.

It’s the 2012 report from the government’s Climate Change Authority on the RET. It rightly argues against changing the current target for renewable generation and highlights the importance of providing some measure of investment certainty to facilitate timely and least-cost renewables deployment. It also suggests a series of useful suggestions on how the scheme’s operation and performance might be improved. By comparison, the Warburton review offers two possible ‘reform’ options that both would pretty much kill the existing renewable energy support provided by the scheme.

Some light relief

After reading the IPCC and Climate Change Authority work, members of the government may well be needing some light relief.

And fortunately, they also have a report for that — yes, the Warburton review. The review was specifically asked by the government to consider the impact of the RET towards rising household and business prices. Its modelling, however, found — in broad agreement with other modelling exercises including again work here at UNSW — that the RET is likely to reduce these prices by increasing market competition.

Rather than households paying for the emission reductions delivered by the scheme, it is the incumbent fossil-fuel generators.

Seeing the panel tie themselves in knots trying to explain why they recommend ending or greatly reducing the target even though it will increase emissions, increase household and business electricity prices and deliver windfall profits to the large fossil-fuel generators is quite something to behold.

But after this light relief, the work of the government to actually address our climate change challenges still remains to be done. Confirming that the RET target will not be reduced is the place to start. Expanding the target for 2030 and beyond should come next.

Iain MacGill is an Associate Professor in the School of Electrical Engineering and Telecommunications at UNSW Australia, and Joint Director of the University's Centre for Energy and Environmental Markets. The Centre receives funding from a range of government sources including the Australian Research Council and ARENA. He contributes unpaid expert advice to a number of government organisations, industry associations and not-for-profit groups in the clean energy area within Australia and internationally. This article was originally published on The Conversation.

The Conversation