Labor’s Martin Ferguson: time to scale back RET

Martin Ferguson: calls for time-out on the RET.

Labor’s Martin Ferguson bowed out of Parliament (gracefully) last year amid the brawl over the leadership between Julia Gillard and Kevin Rudd. His departure was lamented on both sides of the House as Canberra lost a seasoned policy advocate for mining, industry and enterprise.

Martin has just come out swinging about the scale and market distorting cost of the current RET. Here’s The Australian’s take on what he clearly considers has gotten out of control.

Scale back distorting RET, privatise power assets: Ferguson
Sid Maher
20 March 2014

FORMER energy minister Martin Ferguson has called for the scaling back of the renewable energy target, arguing that the scheme is distorting proper price signals and undermining the resilience of the national electricity market.

He has called for the scheme, which is being reviewed by the federal government, to be scaled back to a “true” 20 per cent by 2020, instead of its current 41,000 gigawatt hours fixed benchmark.

Electricity industry leaders have warned that lower-than-expected demand for electricity means the 41,000GWh target will be more like 25 per cent or more if the current subdued demand continues.

In a speech to be delivered today, Mr Ferguson will also back the privatisation of electricity assets and call on state governments to back the development of coal-seam gas or risk higher prices.

“I acknowledge that privatisation is politically unpopular, yet with so many benefits to the community it should be possible to persuade voters that it is in their interest,” he will tell the Energy Policy Institute of Australia.

Mr Ferguson, who was the energy and resources minister in the Rudd and Gillard governments, says the revenue from electricity privatisations should be partly preserved through a sovereign wealth fund for the benefit of future generations and the remainder invested in new infrastructure to lift the state’s productivity.

He says the additional benefits of privatisation “are a more competitive generation and retail market that encourages innovation and drives efficiencies to bring down costs”. He also calls for deregulation of electricity prices to create competition for retailers to offer better prices.

Mr Ferguson wants state governments to overcome the “misleading” campaign against coal-seam gas. “If state governments fail to back development of GSG then they will need to explain to an angry electorate why they haven’t taken action to allow additional supply that could have moderated the price of gas,” he says.

Calling for changes to the RET, he will argue that the current scheme is producing a carbon abatement cost of $30-$290 a tonne.

“In my view, the best outcome for electricity consumers would be for the forthcoming review to change the RET to be a true 20 per cent by 2020 while appropriately grandfathering for investments already made,” he says.

“This would protect sovereign risk of investments, whilst curtailing investment in new capacity until the market . . . requires it.”

Mr Ferguson backs the policy the Rudd government took to the last election on climate change: an internationally-linked emissions trading scheme with a floating price. If it had been introduced, and emissions were capped, there would have been no room for people to pick winners in terms of their favourite energy technologies, he says.

“Indeed, we would be unlikely to see a short-term change to our energy mix because any shift to cleaner energy technologies will occur according to proper price signals over a long period of time,” Mr Ferguson says.

“But as long as your annual emissions are capped that does not matter because we are achieving least-cost abatement where the market determines.”
The Australian

The cost of “abating” CO2 through the RET (if that is indeed what is happening) is colossal. At an estimated $290 per tonne the RET blows the cost of the carbon tax out of the water. Wind power leads the pack and drives the cost: as Oxford Don, Dieter Helm put it “wind power is the most expensive way of marginally reducing CO2 known to man” – a fact not lost on Martin Ferguson.

One thing is for certain the 41,000 GW/h target will not survive the RET review. Not with Dick “RET slayer” Warburton firmly in charge.

Dick Warburton – RET Slayer.

2 thoughts on “Labor’s Martin Ferguson: time to scale back RET

  1. The grubby wind weasel and greentard goons should be hung out to dry until they wither away to nothing, for all they have done to the citizens that live around the useless fans.

    Our PM Tony Abbott should not have any concern at all for the GRUBS.

  2. ‘Sovereighn risk’ is a major concern of the Abbott governments turfing of the RET. Generally it means concern for risk investors of a government defaulting on a loan or secondly causing a default. It is often confused with ‘policy’ or ‘ regulatory’ risk . We need to point out to politicians that none of these applies to investment in wind farms subsidised by the REC scheme. The RET and REC have always been a regulatory risk, BUT clearly spelt out in the legislation was the two yearly review, therefore everyone knew it was a gamble. AGL,for example, went to Canberra in 2009 arguing for the big increase it received and thinking it could then wedge future governments into keeping it, the company then built a business plan around scamming consumers (with full knowledge wind power was a flop), building wind farms and open cycle gas turbines knowing the system could be rorted with REC’s one end and massive peaking power spot prices at the other. All wind industry players knew the risk and took the punt, not one of them deserves protection or ‘grandfathering’. Barry O’Farrell has fallen for the ‘sovereign risk’ argument. We need to make sure the current federal government doesn’t fall for the same argument.

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