Like the U.K., Australia is trying to insulate questions regarding climate change and energy policy from politics — emphasis on trying — and that could help save the country’s renewable energy target. It’s an approach the United States might want to consider.
The expert Climate Change Authority, analogous to the U.K.’s independent statutory body the Committee on Climate Change, released a draft paper late last week recommending Australia stand firm on its 2020 target, commonly referred to as 20 percent renewables, in order to maintain investor confidence in the clean energy sector.
Some politicians and business and energy interests in Australia have been pushing for a pullback on the target – which is actually a gigawatt-hour amount – saying that Australians were headed for skyrocketing power bills because the incentives that underpin the target will actually push Australia well beyond 20 percent renewables, mainly because the country is projected to use much less electricity than had been previously forecast.
In its paper, the CCA agreed that renewable energy generation could very well end up surging past 20 percent; it estimated that with current policies in place Australia will be getting about 25 percent of electricity supply from renewables in 2020. But the committee said ratepayers would gain little if the target were reworked:
The Authority considers that the projected resource cost savings to society overall that might be achieved by reducing the target would not be large enough to offset the damage to investor confidence that such a change could entail.
In terms of the impacts on electricity prices paid by energy users, taking into account both the cost of certificates and the decrease in wholesale electricity prices, modelling to date suggests that the difference between the scenarios is likely to be small, and the net present value of the impact on average household bills between now and 2030 would not be significant.
And perhaps more importantly, the committee feared the damage a shift in policy might do to investment in clean energy:
The Australian electricity market is already facing considerable uncertainty, particularly in relation to the future of the carbon price. The Authority is concerned that adding to these uncertainties by recommending major changes to current policy settings at this time could increase risk premiums required by lenders and investors in renewable energy, and may affect perceptions of risk for investors in clean technologies more broadly.
This point is particularly interesting from an American perspective; with energy and climate change policy highly politicized, governments – the federal government, and state governments as well – are finding it increasingly difficult to establish or maintain long-term policies that investors, entrepreneurs and the scientific community can act on. Witness the debate about the wind energy production tax credit; it’s due to expire in two months. Will it? Nobody knows. A lame duck Congress might rescue it. Or it might not. Meanwhile, the industry is stalled and workers are being laid off.
Ultimately, Australia’s government will make the decision on climate and energy policy, but with an independent body providing ballast in the roiling waters of debate, the likelihood of stable, considered and ultimately more effective long-term policy decision-making does seem to be enhanced.
The CCA’s 185-page discussion paper “Renewable Energy Target Review,” is available online as a PDF.