Australia’s Renewable Energy Target –Judgements on PolicyDevelopment Processes

GENEVIEVE SIMPSON, PHD CANDIDATE

The University of Western Australia

Outline

Outline Renewable Energy Target Review processes Analysis of Review submissions Issue 1: RET Target Value Issue 2: Appropriateness of Review processes Issue 3: Solar Credits Multiplier Issue 4: Maintenance of status quo Conclusion

Victor Habbick, FreeDigitalPhotos.net

The University of Western Australia

Renewable Energy Target Annual Renewable Generation

Mandates a percentage of annual electricity generation from ‘clean’ sources

Supports small and large-scale generation

Initiated 2001– 9,500 GWh Expanded 2009 – 45,000

GWh Separated 2011 – 41,000

LGC, 4,000 STC Incr. renewable capacity

from 10,650 to 19,700 MW BREE, 2012 Australian Energy Statistics, Canberra, 2012Climate Change Authority, Renewable Energy Target Review -

Final Report, Canberra, 2012

The University of Western Australia

Legislated Review of RET

‘Tambling Review’ in 2003:• Recommended increasing RET Target Value• Noted harmful effects of concurrent/repetitive review processes• On-going commitment to status quo

‘Potentially the most comprehensive overview of the status of Australia’s renewable energy industry’

(Kent & Mercer, 2006, Australia's Mandatory Renewable Energy Target (MRET): An Assessment, Energy Policy, 34, 1046-1062)

‘Climate Change Authority Review’ in 2012:• Same issues?• New issues?

The University of Western Australia

Review Stakeholder Submissions

8,660 submissions 160 unique, 2 campaigns Stakeholder details recorded Issues of interest:

• Support or reject value of RET

• Review of Target value• Effects of continual

review processes• Uncertainty in legislation• Perceptions of

embedded policies, e.g. Solar Credits

Limitations?

The University of Western Australia

Issue 1: RET Target – Fixed or Variable Percentage?

RET Target Value can be:• Fixed GWh, flex %• Fixed %, flex GWh

17% requested increase 14% requested reduction

to new demand 63% requested no change 6% requested abolishment

(N=132) ‘Policy certainty required!’ Why was it reviewed?

The University of Western Australia

Issue 2: To Review or not to Review?

Review required in legislation Length of time between reviews optimal? 77% respondents – more than 2 years between reviews 9% respondents – no change to legislation 60% respondents – future reviews should maintain policy certainty

(N=70) ‘Review fatigue’ - 10 reviews related to RET in 5 years Interaction with Carbon Price still unclear

‘Constant review is not reform’

The University of Western Australia

Issue 3: Solar Credits Multiplier for small-scale solar

Replaced Commonwealth rebate Initiated 2009 – 5 x multiplier, reduced yearly Scheme oversubscribed Multiplier reduced ahead of time 18% respondents noted scheme resulted in substantial investment

(N=68) 87% noted negative impacts / would not support use of multiplier Issues include:

• Phantom Certificates• Boom-bust cycles• Certificate overhang

The University of Western Australia

Issue 3: Solar Credits Multiplier for small-scale solar

Phantom Certificates

Multiplier creates certificates with no renewable potential

26% noted concern with phantom certificates

‘Target should be increased to account for phantom certificates’

The University of Western Australia

Issue 3: Solar Credits Multiplier for small-scale solar

Boom-bust cycles

Rushed purchasing behaviour to take advantage of high rebates

13% experienced boom-bust cycle

Reduced installation quality

Bankrupted businesses

The University of Western Australia

Issue 3: Solar Credits Multiplier for small-scale solar

Certificate overhang

Increased small-scale adoption = reduced demand = reduced price for certificates = mass purchasing by retailers

26% noted overhang

‘Certificate overhang expected until 2016’

The University of Western Australia

Issue 4: On-going commitment to status quo

34 recommendations by Climate Change Authority

11 proposed changes Only 6 accepted:

• 3 administrative• 1 to be enacted 2017• 1 helpful to industry• Years between

reviews doubled

The University of Western Australia

Conclusions:

Stakeholders were most concerned with maintaining policy stability• Maintain Target value• Reduce the number of review processes

Solar Credits Multiplier:• Increased adoption• Had negative outcomes for small and large-scale industry, environment

Government chooses to maintain status quo Scheme would be improved by:

• Maintaining policy consistency for industry certainty• Only consulting where there is an intention to change• Removing embedded schemes

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