20 March 2013
Australian Financial Review
The federal Coalition has promised the energy sector it will review the renewable energy target within six months of the election if it wins power to determine whether it should be reduced to reflect falling demand.
The prospect of a review so soon after the election has prompted major backers of clean energy projects to warn that they will delay new investments in the sector. Later this week, Climate Change Minister Greg Combet is set to announce the government's response to a review of the RET by the Climate Change Authority and is expected to sign off on its recommendations.
The CCA recommended there be no change to the target for large-scale renewable energy projects but called for changes to the scheme for household solar panels… Under the RET legislation, the scheme must be reviewed every two years, but the CCA also recommended that the 2014 review should be scrapped to provide investment certainty.
But opposition climate action spokesman Greg Hunt has flagged that the RET will be reviewed in the light of falling demand particularly in the industrial sector early next year if the Coalition wins government. Origin Energy managing director Grant King this week renewed his call to cut the RET to a "real" 20 per cent of total energy supply, warning that the current fixed target of 41,000 gigawatt hours in 2020 equated to 27 per cent.
Mr Hunt is under pressure from the Nationals and some Liberal backbenchers to scrap the target. He has pledged to keep the RET but has not ruled out reducing it after the review…
Investor Group on Climate Change chief executive Nathan Fabian, who represents a number of large superannuation funds and fund managers, said it was likely that investors in clean energy projects would delay new investments as a result of the prospect of an early review.
"We supported the next review being in 2016 so investors will have some confidence in the stability of the scheme," Mr Fabian said.
"If there is a review in the near term it will introduce new uncertainty. If there is a material reduction in the RET it will impact the earnings of existing projects and will undermine appetite for further investments in the sector."