Of course Abbott doesn’t care, but the Renewable Energy Target makes economic sense for Australia

The economic case for renewable energy  Brisbane Times,December 25, 2014 –  Andrew Leigh “………Let’s start with electricity prices. This year, the Warburton review commissioned modelling by ACIL Allen showing that the RET delivers lower electricity prices for consumers. If the Abbott government cut the RET, the modelling showed, Australian consumers would pay more for their electricity. Puzzlingly, after presenting this evidence, the Warburton review recommended cutting the RET anyway.

How about employment? The RET creates jobs because it opens up new fields of activity: installing solar panels, building and maintaining wind farms, researching and developing new ways to capture wave and geothermal energy. More than 24,000 Australians were employed in the renewable energy sector in 2012. The Clean Energy Council estimates that a further 18,400 new jobs will be created by 2020 if the RET is retained in its current form.

Recent surveys put the jobless rate at about 6 percent, the highest rate since Tony Abbott was employment minister. Right now, more than 700,000 Australians are looking for work. In such a tight employment market, 18,000 more jobs should drive down the unemployment rate. If the government scales back the RET to what it calls a ‘true’ 20 per cent target (in reality, a 40 per cent cut), the Clean Energy Council’s modelling suggests 6200 less jobs will created over the next six years. Scrapping the RET altogether will see us lose the opportunity to create 11,800 new jobs.

Then there’s investment. Since the RET was introduced, more than $10 billion has already been invested in large-scale renewable energy projects like First Solar’s huge plants in the NSW towns of Nyngan and Broken Hill. First Solar says it has already invested about $142 million in its plants, creating more than 600 jobs in the process.

By contrast, scrapping the RET altogether will put at risk $11 billion of additional investment between now and 2020. Even scaling back the RET to the government’s preferred level has been modelled as leading to a $6 billion drop-off in investment. The renewable energy business is a good one to be in right now as countries and companies around the world look for ways to grow the supply of alternatives to coal and gas. It is perplexing that the Abbott government wants Australia to get out of this business just when there is the potential for a major international investment boom.

All this new investment and the jobs created as a result are clearly good for Australia’s economic growth. But the RET also has the potential to support growth in places where the decline of other industries would otherwise see them go backwards. In Geelong, IXL used to make components for the auto industry, but since Ford and other car companies announced their withdrawal from Australia, the company has switched to manufacturing steel mounting structures for solar farms. IXL is now a major supplier to First Solar’s two NSW plants, and has recently opened an Adelaide factory to keep up with the demand…….

By stimulating demand for this kind of manufacturing, the RET also has the potential to help communities such as Geelong and Elizabeth grow economically in the future.

For a government that once declared Australia ‘open for business’, it’s puzzling to see Mr Abbott putting a ‘closed’ sign on the renewable energy industry. Whether you want lower electricity prices, more jobs, or more investment, keeping the RET makes sense. Oh, and by the way, it’s good for the environment too.

Andrew Leigh is the shadow assistant treasurer and Member for Fraser.  www.andrewleigh.com



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