Aug. 28 (Bloomberg) -- Australia should weaken or phase out its renewable-energy target in favor of a lower-cost approach to cutting greenhouse-gas emissions, a panel appointed to review the plan recommended.
The government should close the program to new entrants while protecting current investment until 2030, or scale it back to 20 percent of electricity generation as originally intended, according to the review led by Dick Warburton and released today. Scrapping the small-scale renewable energy target, including subsidizing solar panels on rooftops, should be considered, it said.
Speculation that Australia will dismantle the target is unsettling an industry that has brought in A$20 billion ($19 billion) since the country set goals for clean energy in 2001. The report comes after Prime Minister Tony Abbott last month fulfilled his election pledge to scrap the nation’s price on carbon, leaving Australia without an approved mechanism for limiting emissions.
While Australia’s government has indicated it wants to see the target reduced, it has yet to confirm what parts of Warburton’s report it will support. Any changes to the RET would need to be legislated, and a bloc of Senators whose support would be needed have indicated they oppose changing the target.
The government will consider it’s response to the report over the coming weeks, Environment Minister Greg Hunt said in an interview on Sky News television today.
“We have a long-term commitment to renewable energy in Australia, but it’s about finding balance,” Hunt said. “What was intended to be a 20 percent renewable energy target, because of the collapse in some areas of manufacturing, is now inadvertently by law heading toward being 26 percent, and that could come with some very high penalties.”
Infigen Energy and Guohua Energy Investment Co. are among companies with Australian investments at risk as the government reconsiders the RET, according to Bloomberg New Energy Finance. Closing the program to new entrants would probably destroy the value of renewable-energy certificates traded by companies, BNEF said in a report.
“The renewable-energy target is popular,” Australian Conservation Foundation spokeswoman Victoria McKenzie-McHarg said in an e-mailed statement. “It is supporting the growth of an exciting new industry, and it is cutting pollution –- it should be maintained.”