Australia to review renewable energy's impact on power prices

Australia's government has announced on Monday to review the Renewable Energy Target (RET) scheme's impact on retail electricity price, a move that is expected to clear the way for the government to make significant changes to the scheme. Minister for Industry Ian Macfarlane and Minister for the Environment Greg Hunt made the announcement on Monday, saying that the Coalition is delivering an election promise to review the RET to make sure it is working efficiently and effectively. "In particular, the review will consider the contribution of the RET in reducing emissions, its impact on electricity prices and energy markets, as well as its costs and benefits for the renewable energy sector, the manufacturing sector and Australian households," the ministers said in a joint media release. "Australia's diversity of energy sources is one of our greatest national strengths. Renewable energy has contributed to the energy mix, but we must ensure that the program is operating effectively, " they said. The review will be undertaken by an expert panel, headed by Dick Warburton, former head of Manufacturing Australia, a vocal anti-carbon tax lobby group. The review's report will be provided to the government by the middle of the year, which will in turn be an important input into the Energy White Paper process. The Climate Institute, an environmental group in Australia, commented that RET review should focus on a clear objective of the policy, that is, reduce Australia's emissions. "Australia's power sector emissions are among the highest in the world. Reducing emissions brings economic and environment benefits and these must be clearly examined or the outcomes of the review will lack balance and credibility," said John Connor, CEO of the Climate Institute. "Attempts to remove the current legislated emission limit and price mean that the RET only grows in its importance to help achieve Australia's emission reduction goals. With no emission limit and price to make major emitters responsible for the pollution they cause, sectoral policies like the RET become much more important in meeting the government's emission reduction commitments." The Australian Chamber of Commerce and Industry (ACCI), Australia's largest and most representative business organization, welcomes the announcement of the terms of reference for the review of the RET. ACCI said RET is already imposing considerable costs on businesses and households. The scheme now accounts for around 5 percent of an average household's electricity bill and along with the carbon tax has left green schemes as the fastest growing proportion of a consumer's energy bill over the past two years. "The direct cost of the RET across the economy in 2012 was 1.6 billion AU dollars (1.44 billion U.S. dollars), second only to the carbon tax in terms of the impact of green schemes," ACCI said. However, Connor tuned down the cost of RET to ordinary households. "Contrary to many claims, the costs of renewable energy are minor," said Connor. "In 2015, probably the earliest any major changes to the policy could be made, the RET would cost the average household around 1 dollar a week. He warned that a one-sided review would benefit no one.