January 16, 2017





HAMISH MACDONALD: The Turnbull Government is rejecting Tony Abbott’s provocative intervention on renewable energy. Over the weekend the former Prime Minister urged the Coalition to dump the renewable energy target, which mandates that about 23 per cent of electricity generation be derived by clean sources from 2020. Tony Abbott says that if left in place the target will push up power prices and will be the death kneels for heavy industry in Australia. Mark Butler is the Shadow Minister for Climate Change and Energy, he joins us from Adelaide. Mark a very good morning to you.



MACDONALD: Tony Abbott wants the dumping of the 2020 renewable energy target to be the first order of business for Parliament this year. The Energy Minister, Josh Frydenberg it must be said then slapped him down. Do you accept then the target is now safe?

BUTLER: Well unfortunately no, not yet. We saw Josh Frydenberg himself in December be slapped down by the Prime Minister because of some moving’s from Tony Abbott and others in the hard right of the Liberal party over a very important element of electricity policy which was the emissions intensity scheme - which was being considered by energy ministers at the time.

Now this was a reform which was supported by the Energy Markets Commission, by the Chief Scientist, by all State Governments and very reasonably I think Josh Frydenberg said the Federal Government would considerate it as well. But after only a couple of rumblings from Tony Abbott and Cory Bernardi the Prime Minister overrode his own Energy Minister and really caved to the hard right of the Liberal Party in a way which the Energy Market Commission says will push up power bills by about $15 billion. So –

MACDONALD: But let’s be clear here, on the renewable energy target nothing has changed has it?

BUTLER: Well we certainly hope not. This was a very hard fought battle after Tony Abbott launched an attack on the renewables industry in 2014. We thought - and when I say we I mean everyone with an interest in good, sound energy policy particularly the industry itself – thought that finally we had some stability in this area at least until 2020. Because of course the Turnbull Government has no plans for renewable energy development beyond that year. But at least we had something that was stable until at least 2020, so we would like to see the Prime Minister actually come out given the role he has played only a few weeks ago in overriding Josh Frydenberg on energy policy, and confirm the existing renewable energy target will remain in place.

MACDONALD: This whole debate though goes to the cost of living pressures. Tony Abbott states quite correctly that the first rule of government should be to do no harm, which I think you would all agree on that. That is the philosophy which is underpinning his call to freeze the renewable energy target where it is now and not pursue the policies that would see it double by 2020. He wants to keep power prices down, this would be a more honest conversation more broadly wouldn’t it if we acknowledged that there is a price impact of moving towards renewables.

BUTLER: Well Tony Abbott tried this in 2014 when he launched his first attack on the renewable energy target, where he put in place –

MACDONALD: No, sorry I’m going to pull you up, that’s not my question. Would this not be a more honest conversation if we acknowledged the price impact of moving towards renewables?

BUTLER: Well as I was about to say, the review panel that Tony Abbott put in place headed by Dick Warburton, found that the renewable energy target actually put downward pressure on wholesale power prices and concluded to remove the renewable energy target would see power prices go up rather than come down. That power prices would be higher without the renewable energy target, then they would be with the target. So frankly, Tony Abbott tried this in 2014 and his own hand-picked panel said that he was simply wrong.

MACDONALD: South Australia though head of the pack, already sourcing 40 per cent of its power from renewables. Consumers there are paying more for their power than people in other states.

BUTLER: Yes and this myth I think has been exploded by a number of experts over the last several months who have all pointed to the fact that South Australia’s power prices going up is really a product of the Gas Market. The chaotic Gas Market over the last few years which this Government has done nothing about. Gas prices have sky rocketed across the country but that has a particular impact on South Australia which for decades has always had a much heavier reliance on gas-fired power stations than other states as well.

So I think we need to be honest about this debate as you said Hamish, there are very significant things happening in the electricity industry but every time there is a hiccup in the industry the hard right of the Liberal party tries to blame it on renewables. Even when frankly renewable energy has nothing to do with the problem people are focused on.

MACDONALD: So when one night after Christmas wholesale electricity prices spiked in South Australia above $550 per megawatt hour compared to about $40 in Victoria, that’s got nothing to do with renewables in your view?

BUTLER: Well what it would have to do with is demand through the course of the summer and will have a lot to do with as I said gas prices –

MACDONALD: Sure but anything to do with renewables or not?

BUTLER: Frankly no. One price spike over the course of the summer cannot be laid at the seat of renewable energy; we’ve seen price spikes over the last six months happen in every other state including Queensland which has about 4 per cent renewable energy compared to South Australia’s 40 per cent. So I think there needs to be a bit of honesty about what is happening in the energy industry here.

We have about three quarters of our fleet, our coal and gas fired fleet, operating beyond its design life. The industry needs to replace it. Now we would like to see as much of that as possible replaced with modern, clean renewable energy, but until this Government actually has a plan for investment in the electricity industry that gives investors’ confidence, we are going to see this sort of chaos. And as Danny Price, Malcolm Turnbull’s old energy adviser said we are going to see higher prices without the sort of scheme that I think the industry wanted the Government to put in place in December.

MACDONALD: The Government sticking clearly with its 2020 target. It wants to contrast its 23 per cent target with Labor’s plan for 50 per cent renewables by 2030. Could you assure us that we wouldn’t pay more because of that target of 50 per cent renewables by 2030 if indeed you implemented it?

BUTLER: Well what I can assure your listeners about is that Labor has a plan to replace three quarters of the current electricity fleet that is already operating beyond its design life. I mean even without renewable energy, without the climate change imperative we have, Australia now needs to think about replacing all of those generators that were built in the 1960s and 1970s.

Now Matt Canavan, the Resources Minister and some others in the Government have said they would like to replace those generators with new coal-fired generators. First of all we think that is going to be a more expensive option, and that is laid out in all the studies that show solar and wind power increasingly are going to be the cheapest option, but also if we do not look at a 50 per cent renewable fleet by 2030 then we will simply not be able to achieve the commitments we made to the rest of the world and to future generations at the Paris Conference to start reducing our carbon pollution levels.

MACDONALD: But you are declining the opportunity to grant us that assurance?

BUTLER: We are going to have to rebuild our electricity fleet and as I said, study after study has shown that over the coming 10 to 15 years solar and wind power will be the cheapest option available to countries wishing to replace existing fleet. That’s why around the world renewable energy investment is absolutely soaring. Over the last couple of years, renewables investment across the developed and the developing world has dwarfed the combined investment in new gas, coal, hydro and nuclear power.

MACDONALD: Mark Butler thank you very much for your time this morning.

BUTLER: Thanks Hamish.