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Tuesday 28 March 2017

Time to scrap RET

Today's article in The Australian by Maurice Newman "The ever-receding mirage of cheap renewables just faded from view" provides a sobering review of the consequences of ideological climate action. The consequences of decisions made when Climate Change was the "greatest moral challenge of our time".

The results of policies enacted just a few years ago are having some inconvenient consequences. In Europe and Worldwide the hysteria that led to aggressive retirement of fossil fuels in favour of renewables has gone into reverse with some 1500 coal fired plants planned or under construction today.

For Australia there is a stark reality; higher energy costs and blackouts. South Australia the champion and trailblazer of renewables has had a rude awakening. Without sufficient base-load power there will be blackouts. Even if the inter-connector could magically provide back up base-load power whenever it was required, the cost would always be high. Suppliers would always charge a premium giving priorty to their long term contracts, and only surplus energy would be made available to the 'spot' market. Given the intermittent nature of renewables this rise in costs was predictable and inevitable. Perhaps battery storage will, over time, help to address this, but it is very much at an experimental stage, while South Australia needs real solutions today.

Australia was once the envy of the world, with abundant cheap energy to power its industry and even to export. Today with its national Renewable Energy Target (RET) as well as even more ambitious, ie fool hardy, state government targets, this has all changed. The RET has distorted our energy markets. It is no longer economic to maintain or invest in new fossil fuel generation if no one is willing to commit to long term supply contracts. Our aging coal fired plants are being phased out, decreasing base-load capacity and increasing prices. The impact is on all industry through higher costs and uncertainty of supply. All this for no measurable reduction in global CO2 emissions. Australia is crippling its economy for symbolism.

It is time the government bit the bullet and scrapped the national RET and let the markets operate to provide the abundant low cost energy that gave Australia its kick-start in the industrial era.

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