The threat highlights the risks hanging over $30 billion of expected investment needed to reach a target of obtaining 20 per cent of power from renewable sources by 2020.
The managing director of AGL, Michael Fraser, said the Government’s approach was a fraud that threatened the industry’s ability to meet the target.
To encourage investment, energy companies receive renewable energy certificates in return for building green power stations. But the value of these certificates has almost halved, from near $60 to about $30 since the Government began issuing them to consumers who install solar hot water systems and other products that do not generate power.
Because of the price fall, Mr Fraser said, plans to build the $800 million Macarthur wind farm in Victoria were under enormous pressure. The project is expected to create 500 jobs during construction and Mr Fraser said up to seven other wind farms being considered were also under threat.
The only new wind farms AGL would definitely build were those required under contracts to supply power to desalination plants for the Victorian and South Australian governments.
”Beyond that, you simply won’t see us invest until this issue gets resolved,” Mr Fraser said.
A spokeswoman for the Climate Change Minister, Penny Wong, said a Council of Australian Governments review of certificate prices was expected this month. The spokeswoman acknowledged prices had been affected by the uptake of solar water heaters but said uncertainty about the ETS was understood to be lowering prices.
Yesterday Mr Rudd ruled out boosting reduction targets to more than 25 per cent, which might enable the Government to reach common ground with the Greens’ more ambitious goals.
Amid calls from the Australian Aluminium Council and Australian Chamber of Commerce and Industry for more delays to a scheme, Mr Rudd said the Government’s approach had not wavered. ”Some will oppose it, others will support it. But it’s clear cut,” he said.
The Opposition Leader, Tony Abbott, has written to Mr Rudd, asking him to commission and release further Treasury modelling on the impact of an ETS, after previous modelling had assumed a global trading system.
Mr Abbott appeared to signal that the Opposition would oppose attempts to increase emissions reductions targets beyond 5 per cent.