Australia’s A$20bn clean energy industry is at risk of being undermined as the country’s government deliberates on whether to abolish or significantly cut its renewable energy target.
Developers are already considering pulling out of investments in advance of the decision. Australian Prime Minister Tony Abbott’s decision to appoint Dick Warburton to lead the committee responsible for advising on the policy has fed the consensus that a negative outcome awaits for the industry.
Mr Warburton is on record as saying he is “sceptic that man-made carbon dioxide is creating global warming”.
Kane Thornton, acting chief executive of the Clean Energy Council, told Bloomberg: “There’s been a lot of speculation whether the government will shut down the scheme altogether or cut the target substantially. Investments have been made on the basis of the government’s policy remaining until 2030. If there are major changes, those investments will be damaged.”
Meanwhile Chris Judd, chief executive officer of Suzlon Energy Ltd. (SUEL)’s Senvion SE unit in Australia, told the news agency that dismantling the renewable energy target would be “catastrophic” for the industry.
“If the government headed down that path and changed what is meant to be a stable, bipartisan supported policy platform, it creates red flags everywhere, not just for this sector,” Judd said.
The industry has brought in A$20 billion ($19 billion) since the country first set goals for clean energy in 2001 but Abbott is motivated to tackle renewables as a means of reducing electricity bills and has tilted Australia away from wind and solar power in favour of coal and gas-fired options instead.
Australia’s spending on large-scale renewable energy projects fell to A$58 million in the six months through June from almost A$1.3 billion a year earlier, said Kobad Bhavnagri, head of research at Bloomberg New Energy Finance in Sydney.
Meanwhile Suzlon said it will reconsider investment in the A$1.5 billion Ceres wind farm while Solar Systems Pty suspended plans for a 100 MW photovoltaic plant in the state of Victoria, as the day of reckoning for the decision draws closer.
Infigen also stated that 1,000 megawatts of projects won’t go ahead if the government scraps its target.
Keeping the renewables target would shrink coal’s share of the energy mix as the fuel for Australia’s power market from about 74 per cent to 64 per cent by 2020, according to the Climate Institute. Repealing it would add about $8 billion in profit to coal plant operators including Origin Energy Ltd. (ORG), AGL Energy Ltd. and EnergyAustralia Holdings Ltd.
Energy Australia is in favour of recalibrating the RET to equate to the original 20 per cent by 2020 policy commitment as the most balanced approach.