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Dick Warburton, chair of the government’s review of the Renewable Energy Target, had a horror interview with Fran Kelly of ABC’s Radio National a day after his report was released. In just under 10 minutes, Warburton found himself tied up in knots as he tried to justify his recommendation to shut the renewables scheme.
The trouble started at the beginning of the interview, with Warburton disputing Kelly’s suggestion that coal generators would be big winners out of his recommendations. Kelly promptly responded: “But doesn’t your own modelling estimate the value of the existing coal-fired power generators would increase by $9.1 billion?”
“Um … yes,” Warbuton replied. But he then bizarrely asserted this $9.1 billion windfall was of “neutral benefit to them [coal generators]”.
Subsequently, after Warburton admitted the RET would act to reduce retail electricity bills and was also successful at decarbonising electricity supply, the discussion moved to the nub of the review panel’s argument. Warburton explained that even though the RET might be effective at reducing emissions, the government’s proposed Emissions Reduction Fund – the centrepiece of its Direct Action policy – “would be a far less expensive” way of doing the same thing.
What followed was almost farcical.
Kelly, rather puzzled, pointed out that we don’t actually know the cost of reducing emissions under the ERF because the government is yet to release any costings of the scheme (see Hunting for Hunt’s Direct Action costings for background). She then noted that Warburton’s recommendation to cut the RET would pass costs onto, via the ERF, taxpayers to fund achievement of the 5 per cent emission reduction target.
Warburton then appeared to reveal he doesn’t understand the ERF is funded by taxpayers, and oddly disputed her assertion. He then continued to argue that there were “less expensive means of reducing emissions [than the RET].”
Kelly then asked the obvious: “What are those less expensive means, have you modelled those?”
Warburton: “Well, we just said the Emissions Reduction Fund.”
Kelly: “But we don’t know yet how much that’s going to be.”
Warburton then gave the game away, admitting “we don’t know the figure” for the abatement cost of the ERF. But he then confidently asserted it would be way short of the cost of the RET.
While the discussion seems farcical, this is actually quite important.
Basically, Warburton is proposing that the government make a drastic change to a policy that his own review acknowledges is unlikely to save energy consumers money, which will undermine the value of several billion dollars in investment and considerable project development effort, and send a large proportion of renewable energy businesses bankrupt, with their staff made redundant.
This should all be done on the basis of an assertion that the ERF scheme will be cheaper than the RET, yet neither the RET Review team nor the government has actually costed the ERF.
Now, to be fair to Warburton if you refer back to the actual review report, it references work by ClimateWorks to support its assertion that the RET be abolished, or at the very least cut by 60 per cent, because there are cheaper options for reducing emissions. Unfortunately for Warburton, ClimateWorks have rejected his review panel’s interpretation of their research. Yesterday they sent out the following statement:
The panel cited ClimateWorks’ Low Carbon Growth Plan as evidence that there are lower cost abatement measures available than renewable energy. However, our research also clearly shows that we need all of those measures plus renewables if we are to achieve the emissions reductions that scientists … have advised are necessary. In looking beyond 2020 to 2050, ClimateWorks’ new research … shows that ultimately full decarbonisation of the electricity system is necessary. And the most cost effective way to achieve this is with a majority of our electricity coming from renewable energy. For this transition to occur, the RET or an equivalent should be retained and increased over time, not reduced.
One wonders how Warburton can be so confident the ERF will achieve anything meaningful when it is still an unlegislated skeleton. Evan Stamatiou of sustainability advisory firm Net Balance echoed the views of a number of carbon market analysts and lawyers, observing:
While some overarching design elements [of the ERF] have been laid out, the detailed design has not been agreed upon, and there are still numerous and fundamental design challenges that technical experts and bureaucrats are trying to understand and resolve.
The one analyst that has been imaginative enough to attempt to cost the ERF, RepuTex, believes it will involve a cost per tonne of abatement that isn’t cheaper than what the RET Review estimates for the large-scale Renewable Energy Target.
The Abbott Government will be fooling no one about the insincerity of its concern for climate change if it chooses to substantially cut the Renewable Energy Target while arguing that it will all be taken care of by the uncosted, unlegislated and underfunded Emission Reduction Fund.
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I cannot believe what I just read and if it’s true Mr Warburton should be ashamed of himself for being led right royally down the garden path at best, showing his complete ineptitude on the subject and brief he’s been dealing with and more bizarrely allowing him and his reputation to be abused by the government in what is clearly a sham panel review with an planned outcome from the very beginning……and I’m seeing my business go down the drain because of this? I think not. There will be repercussions!!
Even the star commentator Mr Swill (or shrill) cannot be happy with this!!
Why thank you. In truth I doubt many people read these comments – and given my views are unlikely to cut it with most of Tristan’s entourage, they are likely the least read. I like Fran by the way. She is a good journalist with a feisty no nonsense way about her.
Warburton’s behaviour is entirely consistent with the Coalition’s actual position on climate change, which was most accurately described by Malcolm Turnbull in this article –
http://www.smh.com.au/federal-politics/political-opinion/abbotts-climate…
It just goes to show what a waist of time and money this review has been. The government thought this review would have given them a just reason to break yet another promise and scrap or reduce the RET. Even their own hand picked bias mates couldn’t fudge the facts and figures to suite the government’s agenda. Warburton has been caught with his pants down and shown to be a bias fool who should never have been involved in this RET review.
The government may have scrapped the carbon tax but they are showing no decisive action to meet their carbon reduction targets. They are running around in circles and their “direct action” policy is just what most expected from this lying mob “no action.”
A storm in a teacup. Probably just nerves from the poor old duffer.
But he is clearly on the right side of history by searching for the most effective means of abatement and suggesting that it is unlikely to come from a policy that preferences renewables above the cheapest available means.
Dragging down someone who is seeking the best bang for the community’s buck is an unlikely popular cause. He may be a skeptic but he appears to have a degree of common sense about him that is sadly lacking in his critics.
You commented quite a bit that the RET isn’t the cheapest way to achieve cuts in greenhouse gasses. Just wondering what you think the other options are…
haha, nice one “Utility PR Shill”!
Utility PR Shill is right – not many people read this rag or the comments. You can tell because of the dramatic decline in the Comments section since the LNP was elected and particularly since the Carbon Tax was blown away with the dust of Labor history. And today the Mining Tax went, so Labor’s massive negative footprint is being gradually filled in. Soon the RET will go, taking with it the beggars who benefited from it. Now that we have years of measurement showing that dangerous Climate Change exists only in the minds and the models of the anti-Carbon zealots, there is less reason to monitor the “debate”. In fact there is no longer a debate. Rational people are able to confidently shrug and walk away from the placard carriers like the writers in this journal. The one area where this journal and the departed readers can agree is that we all hope the Government drops the “Direct Action” plan. Labor’s opposition will be an accidental force for good if the DA plan is also consigned to the dust of history.
Rational people eh? I’d actually put the people with those kind of views in the same boat as creationists and other such flat earth believers. Bill Maher’s program last night where he interviewed a lot of the religious leaders from these groups was entertaining viewing, and in fact I hope he does a similar one on climate sceptics such as yourself. Be good for a chuckle.
I do like the beggar reference too. How does that comment fit with the Billions of dollars in subsidies that flow to the coal and gas industries? In reality, the RET has merely leveled the playing field for renewable energy, and the main reason they are trying to remove it is because the renewable energy industry does not have the political pull, lobbying power or tax base of the fossil fuel energy sector.
Yours truly – A dedicated anti-carbon zealot (should we call the the church of climatology?!).
Are you encouraging the Coalition to break their promise on Direct Action?
I would suggest caution regarding the use of ClimateWorks work for anything at all until they have released their final report, detail of the actual work done, and responded to our critique. At this time, we are very concerned about that work and the implications it may have treated seriously.
A critique of the draft is published here http://decarbonisesa.com/2014/08/28/critiquing-deep-deep-decarbonisation…
Should “unlikely to save energy consumers money” be “likely to save energy consumers money”?
I like the way Nivek writes. If he wrote for this “rag” maybe some of the ex readers would come back.
Shill – you don’t need to be an apologist for Tricky Dicky – more than capable of handling himself or so he thinks……….or maybe its brain drain, followed closely by his report !
– currently Chairman of Westfield Retail Trust, Magellan Flagship Fund and Citigroup Pty Ltd.
He also serves as Chairman of the Commonwealth Studies Conference, Vice Chair of the Council on Australian Latin American Relations and a Member of the Advisory Council of the Centre for Social Impact.
Dick is a former Chairman and CEO of Dupont Australia and New Zealand, and worked with Dupont for 30 years in marketing, manufacturing, technical and management roles in Australia, USA and Thailand.
He was a Board Member of the Reserve Bank of Australia, Chairman of the Australian Board of Taxation and Chairman of Caltex Australia Ltd, David Jones Ltd, Goldfields Ltd, Tandou Ltd and Wool International and a Director of Southcorp Ltd, Tabcorp Holdings Ltd, Nufarm Ltd and other companies.
Mr Richard Warburton is an advisor to government – yet doesn’t seem to know his way around a financial report!
He tells us in his May 8 interview :
CHRIS UHLMANN: What kind of effect is it having? Just give us a sense of the cost of power and how the renewable energy target has driven that up over time.
DICK WARBURTON: Well, we’re looking at emission, we’ve got a target for an emission control of 5 per cent. That’s a bipartisan approach. And certainly renewables have their place in that particular equation.
I’d like to believe that we’ll look at this and say, now, is the cost of the RET worth the economic pain that you get by imposing it on the electricity consumers?
CHRIS UHLMANN: And there’s no doubt that there is economic pain because of that?
DICK WARBURTON: Yes there is, yes there is economic pain. It is one part of the equation. It is not the whole part of the equation.
CHRIS UHLMANN: Is the cost of energy doing damage to business in Australia?
DICK WARBURTON: Depends on the business, Chris. Some of the businesses that use relatively small bits of electricity, obviously it hasn’t got a great effect. But there are industries that use large quantities of electricity and in those place they’ve been telling us this is having a major impact on their cost side of the balance sheet.
–> Dick – There is NO “cost side” of a balance sheet, you are looking at the P&L.
The RET was killed about 18 months ago when Abbott first flagged he was not completely supportive. The RET will only work when investors are confident re durable bipartisan support. The Senate can’t enforce durable bipartisanship any more than a change of government at the next election will revive the RET.
We have to look at things like the ACT solar auction scheme (which doesn’t need bipartisanship) to drive investment in utility scale renewables. See: http://www.climateplus.info/2014/08/13/replacing-the-ret/