Coalition LRET Deal Rejected: Labor Determined to Kill Jobs in Australian Mining, Manufacturing & Industry

bill shorten

Bill Shorten: Natural Born Job Killer.


Renewable energy target deal key to ‘saving jobs’
The Australian
Sid Maher & Andrew White
23 October 2014

Labor caught between workers, Greens ahead of talks with coalition

THE controversial renewable energy target faces cuts to save jobs in energy-intensive industries, under a Coalition plan to break the political impasse over the scheme, but wind, solar and other alternative energy companies warn it will put at risk investments worth $10 billion.

Labor last night agreed to negotiate with the Coalition in “good faith’’, creating hopes a deal is possible but it rejected the government’s opening bid that would have cut the current target by 40 per cent.

The proposal, from Industry Minister Ian Macfarlane and ­Environment Minister Greg Hunt, would exempt all emissions-intensive industries from the RET and leave the current solar rooftops scheme untouched. It would also end biennial reviews of the scheme. It would cut the large-scale renewables target from its current 41,000 gigawatt hours to a “real 20 per cent’’, or about 27,000 GWh.

The government says it wants to reach an agreement with Labor over the RET’s future to provide renewable energy companies investment security.

The government’s offer to exempt all emissions-intensive, trade-exposed industries increases political pressure on Labor which will be caught between green renewables supporters and its traditional union base in industries such as aluminium.

The RET was set up to encourage the entry of renewable energy, such as wind farms, solar and hydro, into the electricity market to cut emissions.

The government has accepted a recommendation by the Warburton review of the scheme to lift the target if electricity demand rises by half the increase in demand.

The large-scale target was set at 41,000 GWh in 2008, which was projected to be 20 per cent of demand in 2020. The subsidy is paid through renewable energy certificates, which are bought by large energy users or retailers from generators with the costs passed to consumers.

However, electricity demand has fallen instead of risen, leaving the 41,000 GWh target more likely to represent 27 per cent.

Mr Macfarlane said the Coalition had only ever signed up to a 20 per cent RET. He said the proposal would protect “jobs in industries that are under pressure” and provide confidence to the renewable energy industry. “If the Labor Party and the Coalition are able to negotiate an outcome then the industry can go forward and invest confidently; if we can’t, it’s the renewable energy that can get hurt,” Mr Macfarlane said.

The renewables sector warned of a collapse in the price of renewable energy certificates, savage writedowns of existing assets and the shelving of planned projects if the RET was cut.

Opposition Treasury spokesman Chris Bowen said that while Labor wanted to negotiate constructively, a 40 per cent cut to the RET, which would be the result of the “real 20 per cent’’ scenario, was “completely unacceptable”. “We will not be agreeing to a 40 per cent cut but we will be working to ensure that if at all possible both of Australia’s major political parties can return to a position of bipartisanship in what is a very important area for Australia’s economic and environmental future,” Mr Bowen said.

He said Labor would “defend and ensure a good and proper RET” but it accepted there were issues to be worked through for Australia’s energy-intensive industries. Industry insiders are predicting a deal on the scheme may end up being reached at around 31,000-33,000 GWh.

The Aluminium Council of Australia called for a deal before Christmas to avoid high energy users having to pay the RET again in 2015.

ACA chief executive Miles Prosser said a failure to reach a deal by the end of the year could put the future of some smelters in doubt as the RET wiped out the profit of some smelters.

Mr Macfarlane played down the chances of a quick legislative change to the RET declaring there was not enough time left in the year to complete negotiations and have legislation through parliament. He said he would not put a deadline on negotiations but if a deal could not be reached with Labor he would turn to the crossbenchers.

He said the government would deal with the large overhang of renewable energy certificates, which has been in the scheme since Labor made change to the solar rooftop scheme in 2010.

The Clean Energy Council warned that a so-called “real” 20 per cent target would be a broken promise that would lead to the decimation of the renewable energy industry and drive up power prices for consumers.

Acting CEC chief executive Kane Thornton said the Coalition’s pledge to reduce the RET to a “real” 20 per cent was a death warrant for large sections of the industry, and would destroy the value of both future and existing investments.

“Over $10 billion worth of investment has been made in large-scale renewable energy projects, and those investments were made based on the legislated 41,000 GWh target,” Mr Thornton said.

Infigen Energy chief executive Miles George predicted a collapse in the price of renewable energy certificates and a halt in investment in new capacity.

Mr George said a 65 per cent cut in the new investment target — from 24,000 GWh to 8000 GWh — would cut the investment case for many companies operating in Australia.
The Australian

The wind industry and its parasites will never be accused of running a consistent story.

One line being chanted like a Buddhist monk’s mantra is that wind power is cheaper than coal and gas fired power (for an example, see this piece of fantasy from Ruin-economy).

But, when free-market push comes to shrinking-subsidy shove, this once merry band of charlatans and spin-masters wilt: moaning about how dreadful “uncertainty” threatens their hopes of spearing giant fans all over this wide brown land. Apparently, “uncertainty” is what ordinary businesses get to face, all businesses that is, except of course, the wind industry.

The wind industry and its parasites wail that the proposed LRET changes “will put at risk investments worth $10 billion” as if that were some kind of loss to Australian power consumers, in an already over-supplied market.

An “investment” NOT a “gift”

The wind industry spin-masters trot out the line about “investment” being threatened, as if wind power outfits are lining up to make an outright, “no-strings-attached” gift of $10 billion to Australian power consumers.

Any investor naturally looks for a return on a capital investment. Ideally, that return exceeds bank interest and – if there is any risk involved – accounts for that risk by way of higher returns. Investors in wind farm projects aim for a gross return on the capital invested in the order of 20% per annum.

That means that the investors stumping up $10 billion to build new wind power capacity will be looking to recover $2 billion from power consumers each and every year to achieve that level of return: returns on wind power investments can only be recouped via income received from power sales – there is NO other source of revenue.

So, rather than being the objects of $10 billion in wind industry largesse, power consumers are being lined up for an enormous, additional and – because there is already ample generating capacity to meet (declining) demand well into the future – completely unnecessary $2 billion hit in the hip pocket each and every year.

A fair slice of the $2 billion annual return on investment required by investors would be recouped via power bills in the form of Renewable Energy Certificates (RECs): a Federal Tax on all Australian electricity consumers (see our post here) – which effectively underwrite every wind farm investment. RECs are issued to wind power generators and transferred to retailers under the Power Purchase Agreements signed between them and constitute the subsidy upon which the whole stinking rort depends (see our post here).

But – hold the phone? We started our analysis with their line about wind power being altogether cheaper than coal or gas fired power. In the very next breath, however, this bunch of hypocrites tells us that they won’t find anyone mad enough to “invest” if the LRET gets the chop.

So which is it?

Is wind power stand-alone competitive with conventional generation sources?

Or is it just a perpetual infant that doesn’t run on wind, but on a massive stream of guaranteed subsidies filched from power consumers and taxpayers?

The answer is made pretty plain by the whingeing coming from beleaguered Infigen chief, Miles George and spin-king, Kane Thornton (for a detailed analysis of just one aspect of wind industry hypocrisy – see our post here).

Labor determined to kill mining, manufacturing & industry

As part of its alliance with hard-left nut jobs, the Greens, Labor lurched so far to the loopy left it’s now unrecognisable as the “Workers’ Party” it once used to be (see our post here).

Worse, its bet on preventing changes to the LRET reveals an outright hostility to hundreds of thousands of Australian workers whose employment prospects depend on cheap energy inputs to allow the industries they serve to have any hope of being internationally competitive; and, therefore, being able to survive and provide meaningful employment for generations to come. The aluminium industry is only one industry among many under a direct threat from the LRET (see our post here).

As former Nationals Senator for Queensland, Ron Boswell put it: “We can have a carbon price and renewable energy targets or viable manufacturing. We can’t have both” (see our post here).

Even the most basic of economic principle is lost on the ideologues and apparatchiks that front up Labor these days: the “Workers’ Party” has become anything but.

In this post we saw how Labor’s climate change spokesman, Mark Butler was quick to come out swinging in favour of maintaining the ludicrously expensive and utterly pointless RET.  The RET has already cost Australian power punters more than $9 billion in RECs – added to their spiralling power bills – since it began in 2001 – and will go on to cost power consumers a further $50 billion in RECs to be issued and added to power bills until the scheme comes to an end in 2031.

Labor’s Treasury spokesman, Chris Bowen and his boss, Bill Shorten – are obviously much more concerned about protecting the $billions invested by their mates running Union Super funds in wind power outfits – like Union heavy, Gary Weaven’s Pac Hydro – outfits that profit from the $billions in RECs that have been channeled via the RET to wind scammers from struggling power consumers.  These boys are well aware that if the RET goes they will not only lose their financial shirts, they’ll also lose their ability to control the “game”: in modern politics, money is power.

Which provides reason enough for Labor to slam the door on the Coalition’s offer to wind back the LRET: the Coalition’s plan brings with it an inevitable collapse in the price of RECs.

With Union Super funds heavily exposed to wind farm investments – if the REC price plummets, they’ll lose $billions; and the promised $50 billion subsidy bonanza will evaporate and deny them the opportunity of reaping massive returns at power consumer expense. And any financial loss suffered by (or profit opportunity denied to) a Union Super fund deprives Labor of its ability to fund election campaigns and much else besides.

As Labor legend, former NSW Premier, Jack Lang pithily put it: “In the race of life, always back self-interest; at least you know it’s trying”.

So, with $billions to be lost or made on wind farm investments, the chances of Labor ever agreeing to cuts in the LRET are slimmer than a German super model.

While the (newly acquired) Green heart of Labor is guiding its recalcitrance on the LRET, its lapse of policy reason will come back to bite it with a vengeance very soon.

Following the Coalition’s announcement to slash the LRET, there is no way retailers will sign any more Power Purchase Agreements with wind power outfits; and, without a PPA, hopeful developers will never get the finance needed to construct any new wind farms.

This means that – in a few short years – as the annual target for the LRET starts to rocket towards its ultimate 41,000 GWh target – power prices will skyrocket under the weight of the $65 per MWh shortfall charge – simply because there will be a shortfall in renewable energy production of around 18,000 GWh (see our post here).

With the Coalition putting up a plan to avoid that prospect (see our post here) the blame for power prices spiralling due to the imposition of the shortfall charge will fall squarely on Labor’s narrow shoulders.

By rejecting the Coalition’s plan, Labor will be pilloried for setting up the addition of some $15 billion to power consumers’ bills by way of the shortfall charge levied on retailers – but doing so with: NO additional renewable energy; NO “break-through” on-demand renewable energy technologies; and NO reduction in CO2 emissions. Once businesses and households realise that the Feds are going to collect $billions in fines via retail power bills, a swathe of angry voters are going to belt Labor at the ballot box. It was Labor that upped the LRET to 41,000 GWh in the first place; and is now doggedly defending what was always an unsustainable policy.

Now that the Coalition has come out in favour of rooftop (domestic) solar – confirming its intention to maintain the Small-Scale Renewable Scheme (SRES) – Labor’s rejection of any deal involving cuts to the LRET can be seen for what it is: an effort to protect the wind industry, in which it holds a financial interest.

The Coalition will win plenty of political traction in backing the SRES – avoiding any backlash from middle-class voters hoping to cash in on the Scheme, adding to a growing suburban-sea of shiny new panels – and the thousands of installers keen to slap them on houses all over the Country (see our post here).

But – in the political battles to come – Labor has much more to lose than it will ever hope to gain in taking a policy position that is nothing more than a naked attempt to prop up its mates running Union Super funds and near-bankrupt cowboys like Infigen – at the expense of the poorest and most vulnerable; struggling businesses; and cash-strapped families. Not to mention wrecking a whole raft of jobs in energy intensive industries like mining, mineral processing and manufacturing in the bargain (see our post here).

But – in politics – as in life – you reap what you sow.

polling booth

Last time around Labor pulled a woeful 33.9% of the primary vote: it’s
worst result since 1903. On current form, it’s set for more of the same.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.


  1. David Mortimer says:

    The fools in government and the fools who host industrial wind power generators are short sighted, gullible hypocrites.

    Short sighted, in that they seem to have forgotten that these things only have a life span of around 18 years and are certainly not likely to outlive the 25 year lease, in which case, they will be left with an infestation of steel and fibreglass weeds to eradicate at the end of lease or turbine life span.

    Gullible in that they swallow the wind weasel spin and actually believe that wind farms produce meaningful power and effectively reduce the production of green house gases. They never stop to question!

    Hypocrites, because they almost all burn fossil fuels in their cars, are quite happy about hopping on a plane, which consumes inordinate amounts of fossil fuel (1000 huge jet planes throughput daily in Hong Kong alone), waste power on large screen TVs.. and the list goes on.

    All the while, thousands of humans world wide are being forced to suffer the sonic torture inside our homes that is caused by these creatures from hell and what do we hear from our governing bodies? Do we hear them establishing a royal commission to get to the bottom of the issues relating to health or cost benefit of wind farms such as urgently recommended by a Senate investigation only a few years ago? No, of course not! All we hear is how much investors stand to lose particularly the industry super funds and foreign wind power companies who operate under nice friendly sounding local names as if to lend the wind farm some sort of credibility.

    And, the turbine hosts think the developers are going to dismantle the monstrosities at the end of their use by date? That brings us back to gullible again!

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