Tony Abbott warned to fix political uncertainty over RET

Victorian Business Editor
Melbourne

A FORMER environmental adviser to US President Barack Obama has called on the Abbott government to end the political uncertainty over the Renewable Energy Target (RET), warning that international investors in renewable energy projects had a right to expect clearer policy on the issue.

Daniel Esty, now a Professor of Environmental Law and Policy at Yale University, said the government’s approach to the RET had simply “added uncertainty to the marketplace’’. Mr Esty was an adviser to President Obama during his 2008 election campaign and a member of the Obama Transition Team.

“One of the most fundamental elements of policy in the 21st century is to have a framework of clear incentives and the government is absolutely required not to create added uncertainty in the marketplace. Which the Australian government has done and continues to do and that is very disappointing,’’ Mr Esty said during a visit to Australia this week ahead of the ADC Forum’s annual Australian Leadership Retreat at Hayman Island this weekend.

“One of the key elements of success going forward is to recognise that the key flow of resources into clean energy needs to come largely from the private sector.’’

GE vice-chairman John Rice warned in June that its $3.5 billion pipeline of investment in green energy in Australia was at risk because of possible changes to the RET and called on the Abbott government to end the political uncertainty.

A review of the RET headed by businessman Dick Warburton is expected to be handed to the government this month, but the renewable energy industry believes that some $15bn in future projects are now at risk.

The RET would see 20 per cent of electricity generated by renewable sources such as wind and solar by 2020, which is expressed as 41,000 gigawatts per hour of large-scale renewable energy.

But falling electricity demand means the current target will dramatically exceed this, with some estimates putting it as high as 27 per cent.

A “true’’ 20 per cent target could see the RET reduced to 26,000 GwH or lower.

The Environment Minister, Greg Hunt, has said the government will look for a balanced outcome when it decides on the RET.

But the Palmer United Party has vowed to oppose any changes to the RET before 2016 and to block the government’s plans to scrap Labor’s $10bn Clean Energy Finance Corporation and Climate Change Authority.

Mr Esty — who was also a classmate of Prime Minister Tony Abbott at Oxford University in 1981 — said companies like GE had “every right to expect a clearer and more forward looking structure of government policies”.

“What you are seeing from countries around the world is that creative policies will allow them to achieve a renewable energy target without it being an economic burden,’’ he said.

“For example in Connecticut, it was shown that the use of a proper incentive structure can deliver significant job growth and economic success in the clean energy arena. There we saw a ten-fold increase in the deployment of renewable energy by using a new set of policy tools,’’ he said.

He also questioned the government’s decision to abolish the carbon tax and questioned its direct action plan.

Reflecting on the positives of an emissions trading scheme, he said: “There is a 21st century approach to the challenge of clean energy, which is really a focus on sustainability. It is disappointing to see Australia walking back from some of the very principles that I think are going to be the very hallmark of the 21st century strategy of sustainability.’’

Mr Esty will be marketing messages from his prizewinning book, Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage during his visit.

www.adcforum.org/australian-leadership-retreat/