In Canberra over the past two years we have witnessed what happens when agreement can’t be reached on an issue to the nation as crucial as renewable energy – our countries capacity to develop a viable clean energy industry has been stymied and fossilized.
Yet there is still a way – and it relies more on the role being played by state-based renewable energy targets.
The Abbott government’s review of the national RET and its push to cut the scheme by 20 per cent has resulted in an investment freeze and the loss of possibly as many as 2,500 jobs. But as the RET negotiations have come to a head in Canberra, a sleeper issue has emerged at the state level.
With a political resolution on the RET almost upon us, the push is on to have a little-known clause in the legislation – Section 7c – removed. Why?
In the mid-2000s, when the Howard government refused to expand the national RET, the states were free to set their own targets. This saw Victoria and New South Wales set up state Renewable Energy Target schemes.
“If not us, who? If not now, when?” challenged Minister John Thwaites when commending the Victorian Renewable Energy Target bill to the state Parliament in 2006. “Today is the day for Victoria to assume its rightful place in leading the nation towards a sustainable energy future.”
Leading renewable energy players such as Pacific Hydro, Vestas, and West Wind set up shop in Victoria because of the VRET.
The Victorian scheme kick-started the construction of wind farms and allowed Keppel Prince Engineering to gain a foothold manufacturing turbine towers in the state’s south west. The firm is poised to create 150 direct jobs manufacturing 150 turbine towers each year. With the right policy framework in place, it can ramp up production to 250 towers a year.
When the Rudd government put an ambitious national RET scheme on the table in 2009, the states agreed to hand over their power to have RET schemes using tradable certificates. The Section 7c clause is the mechanism by which the states gave up their power.
History repeats. Fast-forward to 2015 and we’re facing a similar dynamic. The Federal Coalition government wants to cut the country’s renewable energy ambitions while several state and territory governments want to drive growth in the sector.
In early May Daniel Andrews’ still new government announced its commitment to reinstate a Victorian Renewable Energy Target.
The Victorian government has called on Federal counterparts to remove Section 7c to allow for the VRET to be quickly reactivated—securing investment and jobs in the state’s burgeoning renewable energy sector.
With at least 15 shovel-ready wind farms on the books, reinstating the VRET would unleash an estimated $5 billion worth of investment across regional Victoria. It would create thousands of manufacturing and construction jobs while generating drought-proof income for farming communities.
The case for removing Section 7c is strong. When the states agreed to handover the right to have their own RET schemes it was to meet the increased national target to 41,000GWh – equivalent to at least 20 per cent of electricity generation.
The Abbott government’s decision to cut the RET to 33,000GWh means the spirit of the original agreement between the federal and state governments has been broken.
There’s consensus that a single national scheme is best. But if Victoria is determined to grow its renewables investment, it is surely best for all parties that it’s done in harmony with the national scheme, rather than creating policies to go around Section 7c.
By blocking repeal of 7c there’s a risk of creating policy inconsistencies.
While there are creative ways for the Andrews government to set its own state RET, the removal of Section 7c would give it the full suite of tools needed to foster the growth of renewable energy in Victoria. Crucially – it would allow the state government to use a mechanism that is familiar to investors and industry.
Poll after poll shows strong public support for renewable energy. There’s a strong appetite in the community to end the RET uncertainty so we can get on with rolling out renewables. Leadership from Federal politicians would be welcome.
All eyes will be on Canberra during the finalizing and passage of Renewable Energy Target legislation. Removing Section 7c from the bill and paving the way for state renewable energy policies would provide a much needed shot in the arm to a sector that is struggling to survive in the midst of swirling political turmoil.