The Wind Industry’s Worst Nightmare – Angus Taylor – says: time to kill the LRET

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Member for Hume, Angus “the Enforcer” Taylor has taken the lead on behalf of the Coalition in Tony Abbott’s quest to bring the wind industry to its knees. While there’s been a lot of huff and puff emanating from energy dimwits, Ian “Macca” Macfarlane and his youthful ward, Gregory Hunt about saving the mandatory RET with magical “third ways”, STT says keep your eyes focused on Taylor and the PM.

To give you some idea of where Taylor is coming from – and where the wind industry is headed – here’s an interview he gave last week (9 September 2014) on Sky News (transcript follows).

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Graham Richardson: Angus Taylor is the member for Hume, and he’s in our Canberra studio. G’day Angus how are you?

Angus Taylor: G’day Graham.

Graham Richardson: Now I’ve got to say that if I was a minister, I’d be looking behind me and saying there’s a Rhodes scholar on the backbench, we can’t have him there for long. I mean, you’d have to get, you’d have be promoted – I don’t see how they can keep a Rhodes scholar on the backbench.

Alan Jones:  He is a patient man, he’s a farmer’s son. He’s a patient man. Angus, just explain to us would you, in layman’s language, what is the Renewable Energy Target.

Angus Taylor:  Alan, it’s a scheme designed to increase the level of renewable electricity in Australia. And the way it works in practice is it gives big subsidies to renewable projects and it builds those subsidies into our electricity prices ….

Alan Jones:  Sorry to interrupt you – go even simpler – the Renewable, Angus, a renewable project – just explain what a renewable project is.

Angus Taylor:  Well, so there are two schemes, the large scale scheme, which is essentially wind – there is a bit of hydro in there but no new hydro. So that’s the large-scale scheme and that is the majority of it. That’s about 90% of the total. And then there is the small scale scheme which is largely rooftop solar. So they’re the two schemes, and we pay for those big subsidies in our electricity prices, in our bills – they’re not transparent.

Alan Jones:  And that energy is infinitely dearer to produce than coal-fired power so isn’t it fair to say that without massive subsidies, these outfits couldn’t survive. Now if the government is not going to give money to the motor vehicle industry, and it’s not going to give money to SPC Ardmona, why is it giving billions of dollars to Qatari owned wind turbines?

Angus Taylor:  Well that’s a good question. I mean we’ve just had a review of this, led by Dick Warburton, and what the review concluded was that these are expensive schemes, very expensive schemes, but as importantly they’re very expensive ways to reduce carbon emissions. They did come to different conclusions on solar and the large-scale, the wind subsidies, and what we know is rooftop solar in remote areas can be economic, but large-scale wind it’s very clear that it’s not economic on any grounds.

Graham Richardson: If it is not economic, tell me how uneconomic is it? How much dearer? You know, is it 50%, is it 80% dearer than coal-fired power? How much?

Angus Taylor:  Well, put it in perspective. A wind project to get investment will probably need a price somewhere in their long-term contract of somewhere close to $100. And we’re buying electricity now, wholesale electricity at about $30 a megawatt hour. So say three times is a good rule of thumb … What we also know is the cost of reducing carbon emissions this way – it’s something like $60-70 and of course the carbon tax was far less that and we think still way too high.

Alan Jones:   Let’s just go  … just go to where our viewers are involved in all of this. Let me just ask you a simple question, right, I’m a big Qatari investor, because I know that Australians are suckers, we know the Australian government is just shelling out money, now I come from Qatar and I want to build wind turbines and I’ve found this farmer, Angus Taylor in Goulburn and he’s got this a big hill out there – and I think this would be a good place to build wind turbines, so go to Angus Taylor and I say to him I want to put 70 wind turbines on your property. Just basically rule of thumb, how much would you expect to get from me, the big Qatari Guru, how much would you expect to get from me per wind turbine? And I want 70 of them on your farm.

Angus Taylor:  You’d get about 10 to 12 thousand dollars so if you going to have

Alan Jones:  So I kick in $700,000 to you, that’s right. So I build the 70 wind turbines. Enter the taxpayer. So I’m from Qatar, I’m a big wind power man, what’s the taxpayer going to fork out to me in order that I so-called ‘produce’ this wind power?

Angus Taylor:  Look on average you’d expect it to be about $400,000 per year, per turbine.

Alan Jones:  For 30 years.

Angus Taylor: In fact in the next few years – yes for 30 years (GR Wow). 400,000 per turbine.

Alan Jones: Start again

Angus Taylor: So if you had 70 turbines, that’s $28 million a year.

Alan Jones:   28 million on his farm – on his farm – 28 million – so the people watching you – say it again – I’m a Qatari I’m not even an Australian – $28 million a year for one farm. How the hell can this be sustainable?

Angus Taylor: For 70 turbines – and of course we are all paying for that in our electricity bills that’s how it’s coming through.

Graham Richardson:  Can I ask you Angus – at the moment what is the energy target and how close have we got to it?

Angus Taylor:  Right so the energy target is supposed to be 20% of total demand. It’s turning out that it is way above that. The unit is 41 terawatt hours – but what’s important is we’re overshooting the 20% target by a long way. Now the problem with that, the problem with that is from here on in, we would have to build a Snowy Mountains Scheme every year for the next 5 years to reach the target. That’s a Snowy Mountain every year, for the next 5 years to reach the target. And the target will take us well over the 20% mark. The reason it’s going to take us way over the 20% mark, which was the original target, we were originally set ourselves a target of 20%, the reason we’re going way over is that electricity demand has actually been going backwards in Australia and the expectation was it would keep growing. So we’ve got this very high target, huge amount of renewable capacity to be built to reach it, and it’s going to take us way over what we originally expected to do.

Alan Jones:   And Angus isn’t t fair to say that written into the budget there is an expenditure figure of $17 billion – 17 thousand million dollars, to build between 700 and 10,000 of these. Now can I just ask this? If the Abbott Government is not going to give money to SPC Ardmona, and if it’s not going to give money to the car industry – and out there is tax payer land they say, nor should they, why the hell are we subsidising Chinese and Qatari wind farmers jacking up the price of energy, pushing manufacturing out of business? Why are we doing it?

Angus Taylor:  Well, look this is the good question. We are paying these massive subsidies out in our electricity bills we are going way over the target we originally set ourselves and really what this is becoming now is just industry assistance, it’s becoming industry assistance and primarily for the wind industry.

Alan Jones:   It’s industry welfare on steroids.

Graham Richardson: How much investment goes into it? How much private investment goes into it?

Angus Taylor:  Well look, you know, it depends on what’s being built Graham but it is a big number, 17 billion is probably not a bad number to go with, which is the number that Alan mentioned earlier. So there’s a lot of investment- but remember what’s happening here – it’s not creating jobs, we’re actually taking jobs away from other places. In fact, Deloitte tells us that we’re actually going to lose in total 5000 jobs as a result of this – now we gain some in one place and lose them in the other, but the net, we are going to lose 5000 jobs and the reason for that is that it is inefficient investment – we are actually replacing electricity generation we don’t need to replace because demand is going backwards, not forwards. So this is costing us a lot.

Alan Jones:   Yes, it is costing us. Isn’t it valid to say – and it may be an oversimplification, you can either have a manufacturing industry, or a Renewable Energy Target – you can’t have both.

Angus Taylor:  Well, the other part of this, of course, is if it’s pushing electricity prices up, and in the next 5 years it’s likely to push them up quite a lot, if it’s pushing electricity prices up, not only is that hurting households, it’s hurting businesses in exactly the same way that the Carbon tax was hurting businesses. There’s no difference. It’s pushing up electricity prices and that’s hurting all of us.

Alan Jones:  But you said …

Angus Taylor: We’ve gone from being a low cost energy country to a high cost energy country and this is continuing to be one of the contributors. So if all of this was for a good purpose, if it was a cheap way to reduce carbon emissions, depending on your view on whether that’s a good thing to do, then you might be able to justify it. But it’s not and the Review Panel told us that very clearly.

Alan Jones:   Terry McCrann, the very experienced economist said many many years ago, if you want to de-carbonise the Australian economy, your writing yourself a national suicide note. Now here we are forcing manufacturing overseas, forcing jobs, Deloitte said that, up to 6000 jobs. Now at what point do we say to Macfarlane, you said it in the party room, Macfarlane is the Energy Minister, he said this week, there’d be no changes, there’ll be no changes, we’ll make no changes that damage or end the Renewable Energy Target. This is the Energy Minister. You’ve got a Rhode scholar here saying – hang on – this is an inefficient use of resources, this is welfare on steroids and you’ve got the Minister – don’t ask me what I think of that bloke – but you’ve got this Minister saying the exact opposite. What is the party room saying about this?

Angus Taylor: Look, there’s clearly some concerns about solar in the party room, but the overwhelming view of the party room has always been that we have got to contain electricity prices. There’s no question about that. I think, to be fair to the Minister, in the last 48 hours he’s made it very clear that he’s concerned about the rise in electricity prices we’re likely to see in the next few years. He’s made that very clear. You know, look if there’s one cause that we took to the last election, aside from stopping the boats, it was that we needed to contain electricity price increases. That was a view that the party room held…

Graham Richardson:  But the argument was … Angus , the trouble is you ran the argument about the Carbon tax being the cause and it was only a small part of the cause, so you actually didn’t really tell the truth about the Carbon tax, because I think it was about 9% and everybody tried to make it sound like it was a great deal more.

Angus Taylor:  Well, 10% on someone’s electricity bill Graham is a big number for the average Australian and remember the people who are hit hardest here are those are least well off, and energy-intensive businesses which have been the core of Australia’s strength over the years. So 10% impact on electricity bills, and we are seeing that come off now, now that the Carbon tax is gone, that’s a big deal, it’s a big deal for your average Australian and it’s a big deal for Australian businesses.

Graham Richardson:  If we dropped these massive subsidies, which by the way are far greater than I’d ever believed, what would be the effect on electricity prices then?

Angus Taylor:  Well look, it depends but it will be 3-5% over the next few years, but the real problem is this, over the next 5 years, we are not likely to reach the target that was set. We’re not likely to reach it. Now when that happens, the price of these subsidies, they’re caught up in these certificates, the price of those certificates, which goes into your electricity bills, will go sky rocketing.

Alan Jones:  Correct.

Angus Taylor:  And this is the worry – and to be fair to the Minister – he has voiced this concern in the last 48 hours – the real worry is that the sky rocketing price of these subsidies because we can’t get enough of this large scale renewable capacity coming on, the wind turbines, we can’t get them on fast enough, the cost of this scheme is going to go right up in the next few years. And that’s the real concern and it’s a concern that I think the Labor party should share too, I mean they know. You only have to go door knocking in the less well off parts of my electorate or in any other electorate, to know that electricity prices and cost of living are right at the top of the list – so anything that’s pushing that up they’re concerned about.

Alan Jones:   But manufacturing is moving offshore. Jobs are being lost all over the place. Deloitte said that. But you talked at the beginning of this program Graham ‘what’s this bloke doing on the back bench?’ What kind of an Energy Minister would he make? You’re being very charitable to Macfarlane – I will tell you what Macfarlane said about the Renewable Energy Target. These are his exact words. ‘Anything the government does, will not effect any existing investment in renewable energy’. ‘Any existing investment’. I mean, is this bloke off his head? Manufacturing is closing down, jobs are being lost people out there can’t turn on their electric blanket because of the escalating cost of electricity and there should be a comprehensive movement by the Abbott government to reverse all of that.

Angus Taylor:  Look the concern the Minister voiced there is that people have invested to this point in good faith and we should respect investments they’ve made in good faith. I think what he has also said in the last 48 hours is the real issue is here is do we want more of this investment, accelerating over the next 5 years and costing us all a great deal and I think that is the real concern – I mean, do we want to just keep going – and do we want to miss this target.

Alan Jones:  But the real concern, just finally, Angus, isn’t the real concern if there is no money for Holden in the car industry, and no money for SPC Ardmona, why are there billions and billions of dollars for this industry?

Angus Taylor:  I think that’s a good question. I think unfortunately a lot of these schemes set out with the best of intentions and end up being industry assistance, industry pork-barrelling on steroids, as you say, and that’s the concern here. And it’s why there is a legitimate debate – a very legitimate debate in my view, about scaling it back. The Review Panel has said to us that that’s its preferred option. It gave us 2 options on the large scale, on the wind subsidies, and you know, I have made no secret of the fact that I think that we should scale it back. I think, as I say, to be fair to the Minister, he knows that if we don’t scale it back, we have a very serious risk of big increases in electricity prices and escalating subsidies.

Graham Richardson:  I’ve really got to say we have to leave it here. Now I am not concerned about being fair to the Minister. If the Minister is fair dinkum, then he’ll do something about it, and he will do it quickly. Because this is a debacle. And it is just something that you can’t wait. You can’t sit and look at it. It’s got to be addressed immediately. And I don’t understand why he doesn’t. I can’t get it. But we have got to leave it there. Well go on have one last word, very quickly…

Angus Taylor: I was just going say we need the Labor party to help us, we’ve got to get this through the Senate. Either the Labor party or the cross-benchers have got to help us as it needs legislative change so it is incredibly important.

Graham Richardson: Well we will see what we can do.

Alan Jones: good on you Angus

Graham Richardson: I don’t actually hold out a great deal of hope on that front – but I will see what I can do because I think you are right.

Alan Jones:  Hope of the side – this bloke.

Graham Richardson: Certainly is – as I said if I was a Minister looking behind, I’d be on my toes. Angus Taylor, a pleasure to have you on the show. I hope to talk to you again soon.

Alan Jones:  Thanks Angus.

Angus Taylor: Thanks Graham.