Renewable Energy

In 2001 the Australian Government introduced a Mandatory Renewable Energy Target of 9,500 gigawatt-hours (GWh) of new renewable generation 2010, with the scheme running until at least 2020. The MRET legislated a requirement on electricity retailers to obtain two per cent of total electricity generation from renewable energy sources. 1

As part of the Rudd Government’s 2007 election platform, the MRET was significantly expanded and modified; in August 2009, the Government implemented the Renewable Energy Target (RET) scheme, to deliver its commitment to ensure that 20 per cent of Australia’s electricity supply comes from renewable sources by 2020, with the scheme ending in 2030. The Government set a fixed target of 45,000 GWh on the basis of official forward estimates of electricity demand in 2020. 2

The Commonwealth Parliament passed legislation in June 2010 to separate the RET into two parts, which commenced on 1 January 2011 — the Large-scale Renewable Energy Target (LRET), which legislated a 41,000GWh target, and the uncapped Small-scale Renewable Energy Scheme (SRES). The RET was reviewed by the Climate Change Authority (CCA) in 2012 according to its mandate; it recommended the RET continue and retain the existing target. 3

The Coalition Government initiated an independent review of the RET in 2014, chaired by Mr Dick Warburton. In addition, the CCA performed, as required, a further statutory review of the RET. 4 The Warburton Review recommended amending the LRET in light of lower than forecast electricity demand and the availability of lower cost abatement, and either abolishing or bringing forward the phase-out of the SRES. 5 The CCA Review favoured no changes to the LRET target or SRES rules, but did recommend a rescheduling of the target after 2017, so that the target would be reached about 3 years later than planned; together with an extension of the RET by at least 3 years to help investors recover costs. 6

After long and difficult negotiations between the Coalition Government and the Opposition, agreement was eventually reached to reduce the LRET target from 41,000 GWh to 33,000 GWh. Legislation encompassing this and other minor amendments passed Parliament in June 2015. 7

The RET is the primary policy vehicle for encouraging renewable energy growth in Australia. While it has been acknowledged to be an expensive approach to reducing emissions, 8 it has the relatively rare distinction among climate change policies of bipartisan support. In spite of regular changes (some of them significant) and an objective to increase renewable electricity generation (as opposed to reducing emissions), the RET is the most stable emissions reduction policy to date.

Additional initiatives to support renewable energy growth come from:

  • the Australian Renewable Energy Agency (ARENA) – streamlines and coordinates the administration of support from research, development, demonstration and commercialisation of renewable energy technologies; 9
  • the Solar Towns program – supports local renewables instalments, improving local environments and encouraging a sense of community ownership and self-reliance 10 ; and
  • the Solar Communities program – supports local responses to climate change and helping to lower electricity costs for community organisations. 11
  • The Centre for International Economics (CIE) prepared a report for AIGN on the cost and operations of the RET (see Related Files).

    Sources
    1 www.environment.gov.au/climate-change/renewable-energy-target-scheme/updates
    2 ibid.
    3 ibid.
    4 www.environment.gov.au/climate-change/renewable-energy-target-scheme
    5 retreview.dpmc.gov.au/list-recommendations
    6 climatechangeauthority.gov.au/reviews/2014-renewable-energy-target-review
    7 www.cleanenergyregulator.gov.au/RET/About-the-Renewable-Energy-Target/History-of-the-scheme
    8 “The Authority noted in its 2012 review that the RET was not a ‘first best’ approach to reducing emissions in the electricity sector.” Climate Change Authority, Renewable Energy Target Review Report, December 2014, p 3: climatechangeauthority.gov.au/sites/prod.climatechangeauthority.gov.au/files/files/CCA-RET-Review-published-updated.pdf
    9 arena.gov.au
    10 environment.gov.au/climate-change/renewable-energy/solar-towns
    11 www.environment.gov.au/climate-change/renewable-energy/solar-communities

    Related files


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