Download Document (516.38 KB pdf)

Submission to the Renewable Energy Target Review Panel
May 2014
Executive Summary
1. The Electrical Trades Union (ETU) is the Electrical, Energy and Services
Division of the Communications, Electrical, Electronic, Energy, Information,
Postal, Plumbing and Allied Services Union of Australia (CEPU). The ETU
represents approximately 65,000 workers electrical and electronics
workers across the country and the CEPU as a whole represents
approximately 100 000 workers nationally, making us one of the largest
trade unions in Australia.
2. The ETU welcomes the opportunity to participate in the review of the
Renewable Energy Target (RET).
3. Policy settings in the energy industry such as the RET impact directly on
our members through job opportunities, work environments and job
satisfaction. Additionally the ETU broadly have strong organisational
views, built on that of our members, in relation to supporting greater
sustainability in the energy sector, particularly through the deployment of
renewable energy.
4. We believe that Australia needs to meet its obligations as part of the global
effort to address climate change and reduce greenhouse gas fugitive
emissions, and that renewable energy is a key component of achieving
that goal.
5. The RET scheme, comprised of the large-scale and small-scale schemes,
is aimed at increasing renewable energy generation and reducing
greenhouse gas emissions from the electricity sector. It is designed to
deliver 45 TWh of electricity from renewable sources by 2020.
6. Since commencing operation in 2001 the RET has been the main driver of
investment and growth in the clean energy industry and made it cheaper
and easier for individual households and community groups to gain the
benefits of generating their own power.
7. Renewable energy policy and regulatory stability is a substantial factor in
maximising and protecting the long term employment opportunities in the
clean energy sector. Consequently the current review of the RET will carry
massive implications not just for the renewable and energy sector, but all
of Australia.
8. Any reform, no matter how modest, will carry cost implications. Constant
chopping and changing of government policy at short notice can have a
profound impact on levels of employment within the clean energy sector,
as well as the overall development of the industry.
9. Electricity from renewable sources can reduce health and environmental
impacts as well as greenhouse gas emissions, provide security of supply
and long-term, stable energy prices.
10. However, increased understanding of the socio-economic issues related to
renewables is needed. Policies and measures to support deployment of
renewable energy sources must include a stable policy framework,
financial and fiscal incentives, continued research and development to
lower costs, educational programmes for professionals and the trades, and
consumer information campaigns.
Key Points
 Repealing or reducing the RET will drive up electricity prices.
 Continuing policy support move towards renewable energy is economically
sustainable.
 Without the RET Australia would be in serious danger of not meeting its
responsibilities as part of the global effort to address climate change.
 Given the Government’s actions in related policy areas, such as removal of a
price on carbon and massive reductions in clean energy funding – maintaining
the RET is now of absolute importance.
 Policy stability is key to maintaining renewable energy market investment
confidence and keeping costs down.
 Reducing the RET will push potential future renewable investment overseas.
 The clean energy industry is now a major employer and is delivering
significant economic benefits to Australia.
 The federal government’s recent budget decision to slash renewable energy
funding will send jobs and innovation offshore and put billions of dollars of
development at risk.
 Many of the base assumptions that have been used to justify a revision of the
RET may turn out to be incorrect.
Recommendations
Recommendation 1 - The ETU does not support any reductions to RET targets, and
consider the current objectives of the RET scheme represent a minimum baseline for
future RET objectives.
Recommendation 2 - Given the demonstrated economic and environmental
benefits delivered by the RET to date, consideration should be given by the review
panel to raising RET targets.
Recommendation 3 - New RET reporting measures be developed and introduced
aimed at supporting renewable energy workforce development, training and industry
standards with the aim of building a skilled workforce to meet the needs of the
growing Australian clean energy industry.
Recommendation 4 - That the panel consider in great detail the potential for the
RET review and its outcomes representing significant sovereign risk in the
renewable energy sector future energy market diversity by stalling the development
of emerging projects and technologies.
Recommendation 5 – That a dedicated stand-alone agency devoted to renewable
energy in Australia is essential, and as such, the Australian Renewable Energy
Agency should continue operation into the foreseeable future.
11. By any objective analysis of the facts, as provide by a plethora of domestic
and international reports over recent years, has found that renewable
energy, and the RET in particular, has been responsible for excellent
economic, environmental and social outcomes.
12. Since its implementation the RET has delivered over 7000 MW of new
renewable energy capacity, contributing to a total renewable energy
capacity of 14,000 MW, or over 13 per cent of the electricity generated
across Australia in 2012.
13. The RET has also delivered:
 The installation of over 2 million small scale solar systems in Australian
homes.
 More than $20 billion investment in renewable energy technologies.
 Lower wholesale electricity prices by up to $10/MWh.
 Emissions 22.5 Mt CO2e lower as a result of the RET.
 1000 MW less gas fired generation capacity is expected to be required
with the RET in place.
 Generation from gas-fired power stations is expected to be 13% less with
the RET in place.
 Generation from coal-fired power stations is expected to be 12% less with
the RET in place.
14. So effective has the RET been, without its introduction Australia would not
have met its emission reduction target under the Kyoto Protocol.
15. Should this review deliver reforms that lead to any reduction or deferral of
current RET targets there will be a number of negatives outcomes on the
Australian economy and energy consumers, including:
 Household electricity bills $50 higher per year by 2020, if the RET is repealed.
 Over $10 billion worth of investment in large-scale renewables would be
impaired if the LRET target was to be significantly reduced.
 Repealing the RET is projected to lead to the loss of between 4800 and 5400
jobs in the short term.
 Lost job opportunities across the economy. Repealing the RET would also
mean that by 2020 8000 fewer jobs would be created in large-scale
renewables and 3800 fewer jobs in small-scale renewables.
16. The RET is required to deliver 41 TWh of renewable electricity by 2020
and while there is no specific target for the SRES component, projections
estimate it will provide at least 4 TWh of renewable electricity. The
combination of the two schemes would deliver the 45 TWh required to
achieve the 20% target by 2020.
17. The unrelenting rise in coal use without deployment of carbon capture and
storage is fundamentally incompatible with climate change objectives and
while gas can in the short term play a dual role of replacing coal and
supporting integration of renewable energy, in the medium to longer term
gas must be seen for what it is – a transitional fuel, not a low-carbon
solution or substitute for renewable energy.
18. Renewable energy is crucial to meeting future energy needs while
decarbonising the power sector. Deployment of renewable technologies
has expanded rapidly in recent years and it is expected that this trend will
continue for decades.
19. In a recent report 1, the International Energy Agency confirms that
integrating high shares – i.e., 30 percent of annual electricity production or
more – of wind and solar PV in power systems can come at little additional
cost in the long term. Costs depend on how flexible the system currently is
and what strategy is adopted to develop system flexibility over the long
term.
Pricing
20. The RET affects wholesale electricity prices because creating renewable
energy once the infrastructure is in place is relatively cheap. Sources like
solar and wind power are produced from elements that are free - unlike
coal or gas power, which have higher ongoing production costs.
21. The RET can result in additional supply entering the market earlier than
would otherwise have been required to meet demand. Secondly, this extra
capacity is likely to be characterised by low marginal costs of production –
it sits at the bottom of the supply curve, and means that the dispatch of
generators with higher short run supply costs is sometimes avoided.
22. Without the RET, most parts of the national energy market would have
experienced higher wholesale energy prices than has been the case with
the RET. This is most evident in South Australia where a greater
proportion of renewable energy has been deployed.
23. Modelling indicates that an average reduction in wholesale prices of
$4/MWh, with a maximum price reduction exceeding $10/MWh, could have
occurred on the wholesale market in South Australia as a result of the RET
scheme.
1
International Energy Agency, ‘The Power of Transformation’, 2014.
24. Retail prices have decreased slightly as a result of the RET with the
average change since inception estimated to be -$0.63/MWh to $4.41/MWh. The costs of purchasing certificates have averaged around
$0.06/MWh in 2001 to $3.13/MWh in 2012.
25. The uptake of solar water heaters and small scale roof top PV systems
contributes to the reduction in electricity demand by displacing the need for
grid based electricity. Similarly the uptake of solar water heaters may have
also reduced the demand for gas for residential use. Spreading the
location of generation to a greater range of regions, in some cases
improving the efficiency of use of transmission systems and reducing
system losses.
26. Modelling conducted by the Climate Change Authority2 has indicated that
power prices from 2012-13 to 2020-21 with the current RET in place, and
including the impact of the wholesale price drop, would be roughly $15
higher each year than what prices would be with no RET.
27. Each Australian household will pay over $50 more for electricity in 2020 if
the Renewable Energy Target is dispensed with. The total cost would be
half a billion dollars extra for electricity in 2020 and up to $1.4 billion extra
each year beyond that if the policy is removed.
28. Removing the RET would mean more of Australia’s electricity will come
from coal and increasingly expensive gas-fired power, forcing up both
power prices and emissions. For the Federal Government to meet its
target of reducing emissions by 5 per cent, it would need to find an extra
34.7 million tonnes of emissions abatement from other sectors.
29. Much has been made politically of the impact of renewable schemes, such
as the RET, placing upward pressures on residential electricity prices
through the Small Scale Renewable Energy Scheme (SRES), which
2
http://climatechangeauthority.gov.au/caps
provides financial incentives, on a reducing sliding scale, for small scale
renewable deployment suck as solar PVs and water pumps.
30. The reality is that the contribution of SRES to electricity bills is small. Costs
are forecast to fall by 25 per cent in real terms in 2015-2016 and then stay
low out to 2019-2020. In proportional terms the retail price contribution of
SRES has already peaked at 3 per cent of the average retail bill in 20122013 and will continue to decline to between 0.9 and 1.0 per cent out to
2019-2020.
Economic Impacts
31. Historically the policy debate that surrounds clean energy is often crudely
summarised as ‘the environment versus the economy’, but nothing could
be further from the truth.
32. The recent IPCC3 climate change report, produced by 1,250 international
experts and approved by 194 governments, found that averting global
catastrophe is eminently affordable and that a global roll-out of clean
energy would shave only a tiny fraction off economic growth and that
moving to renewable energy is achievable. This completely dismisses
fears that slashing carbon emissions would wreck the world economy.
33. Domestically within Australia it can be demonstrated that the RET has
delivered substantial positive economic outcomes. Between 2001 and
2012:
 The RET has delivered $18.5 billion of investment in renewable energy
infrastructure.
 Wholesale energy prices are as much as $10/MWh lower as a result of the
RET being in place.
 Emissions are 22.5 Mt CO2e lower as a result of the RET. Without the RET
Australia would not have met its emission reduction target under Kyoto
3
https://www.ipcc.ch/report/ar5/wg1/
 Between 2012 and 2030 the RET is expected to deliver an additional $18.7
billion of investment in renewable energy infrastructure.
34. In addition to the investment already generated, the Renewable Energy
Target will drive a further $14.5 billion of investment in large-scale
renewable energy out to 2020, as well as many billions more in household
renewable energy such as solar power. If the policy is removed, most of
this simply won’t happen.
35. Any reduction of repeal of the RET will simply discourage renewable
investment and drive many billions of potential investment elsewhere.
Renewable Investment in Australia since 2001 RET
Source: SMK Consulting
36. The uncertainty created simply from the RET review itself has already had
negative economic impacts with the company building the southern
hemisphere's largest solar plant reconsidering future investments in
Australia because of uncertainty about the Government's Renewable
Energy Target4 multinational solar panel maker First Solar concerned
4
ABC News, ‘First Solar reconsiders Australian investments amid uncertainty over RET’, 8 April 2014.
about the domestic policy environment with regards to its plans to build a
$450 million plant in the far west of New South Wales.
37. Any reduction to the RET will also result in lost job opportunities.
38. Victoria alone could lose 6400 jobs according to data from the Clean
Energy Council5, with 17 Victorian wind farm projects that have received
state government approval unlikely to go ahead if the RET target is cut.
39. Reducing or removing the policy would mean fewer opportunities for
construction workers and contractors, as well as all the industries that
support them
40. The fact is that the RET will save the Australian economy billions in
avoided future climate change impact costs. The science is clear: the more
you wait, the more it will cost the more difficult it will become to take
corrective action.
Employment Benefits
41. The number of employees in the renewable energy industry has grown
significantly in the past decade. At the end of 2012 more than 24,300
people were directly employed by the sector, but the true impact of the
industry in economic terms is expressed through its indirect benefits 6.
42. Into the future, the RET will generate approximately 18,400 new jobs by
2020 if retained in its current form. This is made up of 9700 jobs in largescale technologies such as wind power and bioenergy and 8700 in
household systems such as solar power and solar hot water.
5
6
Sydney Morning Herald, ‘Renewable energy cuts could cost 6400 jobs in Victoria’, 9 May 2014.
Clean Energy Council, ‘Building on the employment benefits of clean energy’, 2013, p3.
Renewable Jobs by Region
*Source – ROAM Consulting
43. Much of the work needed to design projects, supply parts, and build
renewable energy generators is done by partners to the main contractor
and this often obscures the true magnitude of the flow-on employment
benefits of clean energy.
44. Many examples exist of partnerships between the clean energy industry
and other parties. For example, in the bioenergy sector, much of the fuel
for bioenergy plants is sourced from agricultural waste (for example, sugar
cane bagasse) which provides a new and stable income stream for
farmers to diversify their business during tough environmental or market
conditions.
45. For example, the solar PV industry provides thousands of direct jobs in
nearly every part of Australia through system installation, plus office-based
retail and administrative jobs. It provides jobs for all skill levels, from the
low-skilled to the tertiary-qualified while supporting diverse indirect jobs in
installing the metering, research and development (an area in which
Australia has substantial expertise), manufacturing in balance of system
components and distribution.
Jobs in Australian Solar PV Industry
Source – Solar Power Australia
46. The multi-faceted flow-on benefits from renewable energy investments are
further illustrated in the wind industry. Analysis of the deployment of wind
energy in Australia reveals that 0.7 jobs are created per megawatt of
locally installed capacity, and a flow-on of a further two indirect jobs for
every direct job7.
47. But the most substantial factor in maximising and protecting the long term
employment opportunities in the clean energy sector is the need for stable,
investment-grade policy support.
7
SKM, ‘Wind Farm Investment, Employment and Carbon Abatement in Australia’, 2012, p.28.
48. Such support can give confidence to businesses and their investors to
increase production and ultimately commit to employing and developing
their most critical asset – their people.
49. Constant chopping and changing of government policy at short notice can
have a profound impact on levels of employment within the clean energy
sector, as well as the overall development of the industry and its constant
pursuit of cost-reducing innovation.
Funding Cuts to Renewable Energy
50. The Government’s changes to existing climate change policies would cost
the budget as much as $40 billion by 2020 and the cost will blow out even
further if it weakens the renewable energy target.
51. The delivery of the 14/15 Federal Budget has seen Australia's climate
change action has effectively ground to a halt with the budget revealing big
cuts to research and renewable energy. Budget papers show funds for
climate change-related programs will shrink from $5.75 billion in the
current fiscal year to $1.25 billion by 2014-15 and to $500 million by 201718.
52. A range of industry assistance programs will be cut or axed, including the
axing of the Australian Renewable Energy Agency and Carbon Capture
and Storage Flagships Programme by de-funding $124.7 million over five
years by reducing funding to Clean Technology (Investment and
Innovation) programmes and Cooperative Research Centres.
53. Additionally, there have been savage cuts to renewable energy and
research funding slashing $338.5 million over the forward estimates, and
$1.3 billion over the five years starting in 2017-18 by:
 Abolishing the Australian Renewable Energy Agency.
 Slashing funding to the Carbon Capture and Storage Flagships Program by
$459.3 million
 $16.8 million cut to funding for the National Low Emissions Coal Initiative.
 CSIRO's funding cut by $111.4 million over four years
54. In essence, the action of reducing pollution can complement with job
creation and overall prosperity of Australia’s commitment to environmental
priorities. It has been reported that simply taking strong action to reduce
pollution by 2030, Australia can easily create more than 770,000 extra
jobs.8.
55. These jobs would be embedded in various sectors such as in agriculture,
mining and manufacturing and in service sectors such as the electricity
industry. This would be a result of expanding in green technologies and
methodologies which will develop more job opportunities. The strong
action suggested is to have a price on greenhouse pollution and have
complimentary policies to ensure that Australia meets its targets.
56. Residual policies from the RET should engage in number of scopes.
Firstly, it should entail strategies to enhance energy efficiency for
households, industries and commercial buildings. This aspect will require a
large skilled labour force to facilitate to assist entities to cut down on
emissions and also save money.
57. Over the past decades the contribution of manufacturing to Australia’s
gross domestic product manufacturing industry has slowly reduced. 9 To
improve and maintain this industry and to fabricate more jobs, the
machinery and equipment for clean energy technology can be
manufactured here in Australia. More than 140,684 additional jobs can
Creating Jobs –Cutting Pollution the Road map for cleaner, stronger economy, Australian
Conservation Foundation and ACTU 2010, p5.
9
Australia Country Report- Growing Green and Decent Jobs – ITUC < http://www.ituccsi.org/IMG/pdf/australia_country_report_growing_green_and_decent_jobs.pdf>.
8
come about if policies encourage manufacturing firms to diversify and
make the change also to employ clean technologies. 10
58. The second capacity is that relevant polices should assist large injection of
funds or an investment program to facilitate a rapid expansion of clean
energy infrastructure. Utilising where our renewable resources are located,
these projects can provide new employment and inject diversification of
economic activity. Extending from this idea of pooling funds and already
launched programs cleaning up the automotive manufacturing industry and
public transport infrastructure; further development in biofuel production
can be encouraged.
59. With the falling demand for electricity and economies shift away from
dependency on fossil fuel generated electricity, broad and strategic plans
will be needed to support workers. Within these strategic plans existing
skilled people in the workforce need some consideration to minimise the
negative impact of economic restructuring. However, from the perspective
of the services sector such as the electricity industry, a minimum of over
400,000 jobs can precipitate from transitioning and re-skilling current
workers into clean industries.11
60. It also very important that re-skilling workers with clean energy
technologies that safety is adopted and that workplaces adhere to the
appropriate practices of occupational health and safety codes. With this in
mind and effective resourcing strategies, policies implemented and
enshrined in the RET would assist the successes of balancing employment
growth, the economy and the environment.
61. Already the rising cost of electricity is impacting households causing
energy poverty. Energy poverty is defined as requiring to pay more than
ten per cent of household income on energy. A recent finding states that
10
11
Creating Jobs, p 7.
Ibid.
already 20 per cent of Australian households are now energy poor.
12 To
look at it on a broader scale, the living standards of Australians and the will
be much higher where there is a price on pollution which is paired up with
suitable targeted policies. We are looking at a much stronger economy
where the average the GDP in 2010-2030 period will be 3.2 per cent as to
a 2.8 per cent (only with a price on pollution).
62. With a solid action plan, a price on pollution and strong policies, Australia
will gain additional fiscal benefits by 2030. Australia would save $240
billion from lower imports of international permits. Australia would
additionally save $181 billion from lower imports of oil and $53 billion from
improved energy efficient homes. This highlights the duel importance of
the policies that principate from the RET and the price on emissions.
Australia Country Report- Growing Green and Decent Jobs – ITUC < http://www.ituccsi.org/IMG/pdf/australia_country_report_growing_green_and_decent_jobs.pdf> p
12

Download Report