Reducing the national Renewable Energy Target (RET) would generate $10 billion in extra profit over the next 15 years for owners of coal and gas-fired power plants while consumers pay more, according to new analysis commissioned by green groups.
EnergyAustralia and Origin Energy, which have led calls to cut the RET from its current mandatory goal of supplying 41,000 gigawatt-hours of renewable energy by 2020 to a precise 20 per cent, would be among the biggest winners.
A move to a 20 per cent goal would deliver $1.9 billion in extra profit to Energy Australia during 2015-2030, in current-dollar terms, while Origin would pocket $1.5 billion, according to modelling by Jacobs Group for The Climate Institute, Australian Conservation Foundation and WWF-Australia.
AGL’s gains would swell to $2.7 billion if its bid to buy NSW state-owned Macquarie Generation plants succeeds.
Fossil fuel generators would gain largely from the removal of downward pressure on wholesale prices from additional wind or solar energy sources, which have near-zero marginal costs. A weaker RET would cause wholesale prices to rise an average 15 per cent and retail prices 2.5 per cent by 2030.
A typical NSW household annually using 6.5 megawatt-hours of electricity would pay $35 more a year. The cost would rise to $80 if the RET were abolished.
“Power producers don’t want to change the RET so they can charge less for electricity,” said Erwin Jackson, deputy chief executive of The Climate Institute. “The reason they oppose it is that they want to make more money.”
Fairfax Media sought comment from the three big producers, which had been briefed on the report.
The Abbott government is likely to receive the recommendations of its hand-picked panel reviewing the RET this week. The clean energy industry says cutting or axing the target would halt new investment in large-scale wind, solar and other renewable sources.
The Jacobs modelling found Australia would forgo $8 billion in current dollar terms in new renewables investment by 2040 if the RET were reduced.
Increased fossil fuel use would swell Australia’s carbon pollution by 154 million tonnes – or 12 million tonnes a year – by 2030, with emissions rising to 200 million tonnes if the RET were abolished.
The report estimated the global warming impact on society of the additional carbon dioxied to be more than $60 a tonne. Weakening the RET would have social costs of at least $14 billion and stall the inevitable decarbonisation of the energy sector, Mr Jackson said.
“Opponents of the RET say it is a market-distorting subsidy,” he said. “But that’s only true if you don’t believe in climate change.”
Meanwhile, almost 90 per cent of submissions received by the Abbott government’s hand-picked panel reviewing the Renewable Energy Target back its goals.
Analysis by the Clean Energy Council of the 865 detailed submissions found 754, or more than 87 per cent, in favour of the RET being retained or expanded. Of the rest, 55 were mixed or neutral, and 56 called for it to be abolished.
When the 23,272 community submissions are added, support swells closer to 99 per cent, the council said.
“Five years ago when the [RET] was expanded with bipartisan support, Australians overwhelmingly wanted more clean energy – and that is more apparent now than ever,” Kane Thornton, the council’s acting chief executive, said.
Meanwhile, a separate Senate inquiry into the government’s plan to scrap the Australian Renewable Energy Agency, found 125 of the 127 submissions in favour of retaining the body, the council said. ARENA provides grants to emerging clean energy technologies.