Abbott: RET adding 'significant price pressures'

By a staff reporter

In a press conference today about assisting the manufacturing sector in light of the closure of Holden, Prime Minister Tony Abbott was asked about the review of the Renewable Energy Target.  In response he said it was inducing, “pretty significant price pressures”. He then went on to say that Australia had few competitive advantages in manufacturing other than energy, stating, “we should be an energy superpower...cheap energy ought to be one of our comparative advantages”.  

Industry Minister Ian Macfarlane also commented that with coal fired power stations operating well below capacity there was a need to review a scheme that would induce further additional supply into the electricity market. 

More from Business Spectator

Comments on this article

Comments Policy
Anonymous,

Uhh, isn't the whole idea of a RET to reduce coal use?

Anonymous,

aren't large energy users largely exempt from paying for the RET (using PECs)?

http://www.factsfightback.org.au/is-the-ret-responsible-for-the-decline-of-australian-manufacturing-check-the-facts/

it'd be interesting to know how many firms are experiencing significant price pressures caused by the RET. are there many firms where the RET (especially LRET) impost represents more than say 0.1% of input costs?

Anonymous,

“we should be an energy superpower...cheap energy ought to be one of our comparative advantages”.

We are already an energy superpower but we have not yet put in place the means to realise the advantages. We have the need we have the resources we just need the the leadership.

Anonymous,

Abbott is correct that the RET causes pricing pressure - he's just wrong about which way it pushes.

http://www.businessspectator.com.au/news/2013/8/9/renewable-energy/cut-renewable-target-would-cost-power-consumers

Bloomberg New Energy Finance has released a study finding that cutting the Large-scale Renewable Energy Target to levels recommended by some energy retailers would increase costs to consumers by $1.3 billion.

The study analyses the effects of reducing the target from the current legislation of 41,000GWh down to 27,000GWh, which Origin Energy and Energy Australia have advocated would be consistent with 20% of Australia's like electricity demand in 2020.

It finds that while there would be savings from retailers having to buy less renewable energy certificates, this is outweighed by an increase across all electricity sold in the wholesale market of $5 per megawatt-hour. This is because extra renewable energy supply tends to depress the overall electricity market price because of its low operating costs.