[Igor Antunov]

Tony Abbott's push to ditch renewables could hand coal and gas industry $10bn

Research shows bills would not fall, but the coal industry would reap a massive windfall if renewable energy target was scrapped



Coal and gas generators will reap $10bn in extra profits over the next 15 years if the Abbott government pares back the renewable energy target (RET), and the nation’s electricity bills will not fall, according to new research.

Coal and gas generators have been among the most vocal supporters of reducing the RET, which requires 41,000 gigawatt hours of power to be sourced from renewables by 2020, but the research by Jacobs found reducing the target would also be in those companies’ interest.

Reducing the RET – one of the most likely options being considered by a review that is about to report to the government – would deliver $8bn in additional profits to coal generators and $2bn to gas generators.

This would include $1.9bn for EnergyAustralia, which runs the Yallourn brown coal power stations in Victoria, $1.5 billion for Origin, owner of the huge Eraring black coal power station in NSW and $1 billion for AGL, which owns the brown coal Loy Yang A station in Victoria. AGL’s windfall would be much larger if it acquired Macquarie Generation. In that event AGL would gain by $2.7bn.

The RET policy was intended to deliver 20% renewables by 2020, but is set to deliver about 28% because of an unexpected fall in electricity demand. The estimates of windfall profits are based on the policy option of reducing the RET to deliver a “real” 20% when measured as a proportion of the current market.

The research, commissioned by the Climate Institute, WWF and the Australian Conservation Foundation also confirms several previous studies which found that winding back the RET would not reduce household power bills – the ostensible reason for the government’s review and likely changes.

Tony Abbott took control of a RET “review” after the election and appointed businessman Dick Warburton – a self-professed climate sceptic – to head it, arguing the RET needed to change because it was pushing up power prices.

“We have to accept that in the changed circumstances of today, the renewable energy target is causing pretty significant price pressure in the system and we ought to be an affordable energy superpower … cheap energy ought to be one of our comparative advantages,” the prime minister said last year.

But according to the new research, reducing the RET would not cause power bills to fall and may make them rise in the longer term.

This is consistent with ACIL Allen modelling done for Abbott’s own review which shows the current target will increase the average household bill by an average of $54 a year between now and 2020, but will reduce bills by a similar annual amount over the following decade compared with what they would be if the RET were repealed. That modelling used assumptions highly unfavourable to renewable energy, including that coal and gas prices would remain almost unchanged until 2040.

Separate modelling for the Clean Energy Council by Roam Consulting – with different assumptions about gas prices – found that bills would be $50 a year lower by 2020 if the RET were retained.

Another modelling exercise, commissioned by three business groups from Deloitte, found household bills would rise by at most about $50 a year.

John Connor, chief executive of the Climate Institute, said the Jacobs modelling “highlights the cynical self-interest behind power companies’ calls to weaken the Renewable Energy Target”.

“Companies like Origin and EnergyAustralia are pushing to weaken the target not, as they like to claim, because that would be good for customers, but because a weaker target is better for their bottom line,” Connor said.

Kelly O’Shanassy, Australian Conservation Foundation chief executive, said the research showed “power companies have 8 billion reasons to attack clean energy and they have actually forgotten about their customers – and the air we all breathe”.

The additional share for fossil fuel generators would also mean an additional 150m tonnes of carbon emissions by 2030 and $8bn less investment in renewables, the Jacob research found.

EnergyAustralia’s former managing director Richard McIndoe has called for the RET to be reduced to “a real 20%” to “strike the right balance between driving more investment in renewable energy and keeping costs down for consumers”. Origin Energy has also called for a “real 20%”.

Abbott’s top business adviser, Maurice Newman, wants the RET scrapped altogether and has said that persisting with government subsidies for renewable energy represents a “crime against the people” because higher energy costs hit poorer households the hardest and there was no longer any logical reason for them. Many backbenchers are also determined to stop the RET from assisting any further investment in wind energy.

http://www.theguardian.com/environment/ ... ustry-10bn

[Rei Murasame]

That is the only explanation that makes sense. Swagman has to be cravenly invested in this thing.

That said, it almost makes me want to join in for the sheer comedy of it, which companies on which exchanges will be seeing this windfall? I mean, if they are going to be that polluting and that retarded, they might as well let everyone in on it from the start so that everyone can ride the crest together.

I want a bullet-point list of the corruption, guys.

[Swagman]

“Companies like Origin and EnergyAustralia are pushing to weaken the target not, as they like to claim, because that would be good for customers, but because a weaker target is better for their bottom line,” Connor said.

Some news for comrade John Connor, companies are actually in business to improve their bottom line and make money for the shareholders that have risked their hard earned investing capital.

Coal and gas generators will reap $10bn in extra profits

$3 Billion of that to be reaped in by the tax man. $3 Billion to fund welfare and other Govt handouts to the down-trodden. Sounds like a good deal to me.

But according to the new research, reducing the RET would not cause power bills to fall and may make them rise in the longer term.

Well then if that statement is true then that makes the decision easy for the consumer. If renewable energy is cheaper and more efficient what do you reckon the consumer is going to buy?

We don't need stupid targets or elitists acting as nannies telling us what to do. Market forces will decide unless of course John Connor is telling porky pies about these things?

[redcarpet]

Lol, there ARN'T any 'market forces' in our energy sector. Not even our retail sector, anymore

[Saeko]

Well then if that statement is true then that makes the decision easy for the consumer. If renewable energy is cheaper and more efficient what do you reckon the consumer is going to buy?

We don't need stupid targets or elitists acting as nannies telling us what to do. Market forces will decide unless of course John Connor is telling porky pies about these things?

Wow, this is hilariously naive. The average consumer has no choice whatsoever when it comes to choosing his electricity provider. The local government decides from which company everyone in their jurisdiction will buy their electricity, and, of course, the companies bribe the local government for the exclusive right to monopoly in that area. At least, that's how it works in America.

[Swagman]

Well then if that statement is true then that makes the decision easy for the consumer. If renewable energy is cheaper and more efficient what do you reckon the consumer is going to buy?

We don't need stupid targets or elitists acting as nannies telling us what to do. Market forces will decide unless of course John Connor is telling porky pies about these things?

Wow, this is hilariously naive. The average consumer has no choice whatsoever when it comes to choosing his electricity provider. The local government decides from which company everyone in their jurisdiction will buy their electricity, and, of course, the companies bribe the local government for the exclusive right to monopoly in that area. At least, that's how it works in America.

You should maybe do a bit of reading up on Edison versus Rockefella.....

Link

To illustrate …

Back when Tesla and Edison were warring with each other to determine if AC or DC would win out to become the dominant form of electricity, John D. Rockefeller was desperately trying to stop electricity from ever becoming mainstream. The reason? Widespread use of electricity had the potential to destroy Rockefeller’s Standard Oil’s stranglehold on the kerosene market, as it ultimately did.

It didn’t matter how efficient or dominant Standard Oil was in kerosene – or how well Rockefeller competed in the kerosene market. It was just a matter of time before electricity would eliminate the need for kerosene to light homes..

Does this sound familiar?

[Saeko]

@Swagman

The two situations are not comparable. In the first, we're talking about different providers for the same good, and in your example, you're talking about two very different goods.

[Swagman]

@Swagman

The two situations are not comparable. In the first, we're talking about different providers for the same good, and in your example, you're talking about two very different goods.

Yes Saeko, two very different products or goods (electricity and kerosene) BUT both products / goods were used for lighting homes and as the linked article mentions...

John D. Rockefeller was desperately trying to stop electricity from ever becoming mainstream. The reason? Widespread use of electricity had the potential to destroy Rockefeller’s Standard Oil’s stranglehold on the kerosene market, as it ultimately did [because of market forces ]

Electricity 'ultimately' replaced burning kero for lighting because it was more efficient and cheaper, ergo the two situations are very compatible indeed.

If Renewable energy is more efficient and cheaper than its rival energy providers (gas / coal ) then 'ultimately' it will destroy the fossil fuel industry's stranglehold on the energy market and therefore John Conner's RET comments are incorrect (porkies)

[Saeko]

Yes Saeko, two very different products or goods (electricity and kerosene) BUT both products / goods were used for lighting homes and as the linked article mentions...

Electricity can be used for a heck of a lot more than just lighting homes. Electricity provided by renewable energy sources cannot do anything more than electricity provided by gas/coal can. More importantly, consumers could have chosen to either buy kerosene lamps or electric light bulbs, and in that situation market forces did indeed lead to the obsoletion of kerosene lamps because there was a direct link between consumer choice and the profit of the respective industries. However, the situation is very different with regard to renewable energy and gas/coal, as I've explained in a previous post.

[Swagman]

Electricity can be used for a heck of a lot more than just lighting homes

True. So if it is cheaper and more efficiently generated by coal / gas or indeed nuclear sources renewables cannot compete. Why? Because the consumer is influenced by value for money (market forces)

Electricity provided by renewable energy sources cannot do anything more than electricity provided by gas/coal can.

Apparently renewables can produce electricity without polluting the planet? Isn't that something more?

More importantly, consumers could have chosen to either buy kerosene lamps or electric light bulbs, and in that situation market forces did indeed lead to the obsoletion of kerosene lamps because there was a direct link between consumer choice and the profit of the respective industries. However, the situation is very different with regard to renewable energy and gas/coal, as I've explained in a previous post

Well I'm afraid you have not explained it adequately. Electricity has a price. If coal / gas / nuke generated electricity is cheaper to produce than renewable sources then buyers of that electricity will be influenced by value for money (market forces) just as buyers preferred electricity to kero

[Saeko]

Well I'm afraid you have not explained it adequately. Electricity has a price. If coal / gas / nuke generated electricity is cheaper to produce than renewable sources then buyers of that electricity will be influenced by value for money (market forces) just as buyers preferred electricity to kero

Are you even reading my posts at all?

Electricity provided by renewable energy sources cannot do anything more than electricity provided by gas/coal can. More importantly, consumers could have chosen to either buy kerosene lamps or electric light bulbs, and in that situation market forces did indeed lead to the obsoletion of kerosene lamps because there was a direct link between consumer choice and the profit of the respective industries. However, the situation is very different with regard to renewable energy and gas/coal, as I've explained in a previous post.

The average consumer has no choice whatsoever when it comes to choosing his electricity provider. The local government decides from which company everyone in their jurisdiction will buy their electricity, and, of course, the companies bribe the local government for the exclusive right to monopoly in that area. At least, that's how it works in America.