Michael Fraser, AGL CEO calls for the total abandonment of the Renewable Energy Target.
His company, once the ‘greenest’ retailer in Australia, but now the biggest producer of coal-fired energy, has moved to scrap the renewable energy scheme completely.
Amidst the speculation in the country’s capital as well as media outlets that the present government led by Tony Abbott and Labour would agree on a compromise which would result in a considerable slashing of the present 41,000 GWh target, AGL wants to arbitrate in the debate by claiming that bargaining is not good enough. Fraser said the RET must be totally abandoned.
‘RET is broken’ according to Fraser
Fraser’s argument is that investors have already lost faith that the settings of the renewable energy scheme will be left in a state that ensures a viable return for investments in large-scale renewable energy projects.
According to Fraser, this will be the scenario even if the government and Labour reach an agreement on any changes in the scheme. He recommended that the government has to look for a new framework that will not only inject new renewables in the system, but also encourage existing old fossil fuel generators to quit.
AGL lack of confidence in RET is nothing new
But some have observed that this position is not new to AGL. They say that without resorting to this radical change, the underlying issue can still be successfully resolved.
The fact is: Fraser has overseen the change in AGL Energy’s business model from green to black. He is now saying that the RET is broken and is now endorsing the controversial Warburton Review’s more extreme conclusion that the RET should be scrapped altogether.
In an interview on Radio National recently, Fraser suggested that Australia should ‘go back to the drawing board’ and think about alternative mechanisms such as feed-in-tariffs, or tax incentives – and then study how much renewable energy it wants to have in the system.
But some have found several issues with Fraser’s current statements. For instance, all the studies to date have found the RET has actually worked. Solar power investment became viable. In fact it spurred billions of dollars of investments, thousands of jobs and dramatic reduction in emissions.
Others say RET not to be blamed for slump in solar
The factor that caused the slump in solar power investment in the last two years is the vacillation showed by the Abbott government and the inability of the developers to obtain power purchase agreements from companies like AGL Energy and others.
Thus they are not able to secure funding for their developments. Still, the Abbott government uses the ‘target is impossible’ argument.
However, Fraser is right in saying that any kind of compromise around the RET; investor confidence will be shaky because of the shenanigans of the Coalition Governments’ Warburton Review.
To even discuss that the RET would be left high and dry and that it would be scrapped completely is really shocking. But the fact is, as many have correctly observed, once the RET scheme is abandoned, and the certificate revenues dry up, income of large-scale projects will likely dive down as well.