Download SUBMISSION TO THE REVIEW OF THE RENEWABLE ENERGY

SUBMISSION ON THE
VICTORIAN RENEWABLE
ENERGY TARGET
September 2015 by G King
Thank you for this opportunity to contribute to the setting of the Victorian Renewable
Energy Target (VRET). This submission supplements my earlier short-form one.
SUMMARY OF RECOMMENDATIONS
The VRET should be at least 20% of all energy, not just electricity.
The objective of the VRET should to provide a clear signal to markets in order to
support an orderly transition to clean energy and deliver 100% electricity from
renewable energy within 10 years.
The VRET’s contribution to security of electricity supply should be factored into setting
of the VRET.
Fossil gas (including ‘unconventional’ gas) should not be included in the VRET.
Native forest wood (including ‘waste’ must not be included as an eligible renewable
energy source under the VRET.
DETAIL OF SUBMISSION
I commend the Victorian Government’s initiative of having a Victorian Renewable
Energy Target of at least 20%. The VRET should be at least 20% of all energy, not just
electricity.
Victoria’s policies in the 21st century must reflect the issues and opportunities that we
face in the 21st century. And the primary issue for the 21st century is mitigating
climate change and its twin, ocean acidification. This is the greatest problem that has
ever faced humanity. It is not just another discreet economic or political problem. It is
a systemic crisis that requires concerted action locally and globally. It is about this
planet and its ability to support life as we know it. It is about our children and our
fellow humans.
We are living in times that are very dangerous for the future of our planet's ability to
support life. Because of built-in lag times, our children and grandchildren, and our
ecosystems are already facing a very different world to previous generations. They will
experience much more extreme weather and worse food and water shortages.
And – if we continue to dig up, export and burn fossil fuels like coal, oil and gas –
those impacts will only get worse...to the extent that planet Earth will be uninhabitable
for humans and most other species.
It is the current climate that allows us to have our civilisation, including our economy
and standard of living: if the climate changes, so does human civilisation – and that
will make economic challenges like the Great Depression and the Global Financial Crisis
look miniscule. If we do not change the way we live, the economic security systems
on which most political leaders focus will no longer be there. And that is without even
looking at the human toll, through such things as dramatically increased deaths,
adverse health impacts and population displacement. What we face now is a Global
Future Crisis, and it needs serious action.
‘Continued growth in global emissions creates real risks for all countries, including
Australia. It is in Australia's interests to contribute to global action to limit the increase
in global average temperature compared with pre-industrial levels.’1
The latest science underscores this imperative to act quickly and boldly to reduce
emissions : we are beyond the stage where we can take a ‘gently, gently’ approach.
The IPCC Working Group I report released in September 2013 made clear, yet again,
that the world is warming rapidly, humans are the primary cause, and very substantial
action is immediately required2. Evidence is increasing that climate change is
accelerating. The IPCC Working Group III report released in April 2014 advises that:

‘decarbonizing (i.e. reducing the carbon intensity of) electricity generation is a
key component of cost-effective mitigation strategies’ for stabilising the
atmosphere

‘Substantial reductions in emissions would require large changes in investment
patterns.

‘The stabilization of GHG concentrations at low levels requires a fundamental
transformation of the energy supply system, including the long-term
substitution of unabated fossil fuel conversion technologies by low-GHG
alternatives... Concentrations of CO2 in the atmosphere can only be stabilized if
global (net) CO2 emissions peak and decline toward zero in the long term.
Improving the energy efficiencies of fossil power plants and/or the shift from
coal to gas will not by itself be sufficient to achieve this. Low-GHG energy
supply technologies are found to be necessary if this goal is to be achieved.’3
The decisions that governments, including the Victorian Government take now and the
actions all stakeholders take under their leadership are vital if life on Earth as we know
it is to survive. We can stop this march to our own destruction...if we all work
together to ensure quick and decisive action to reverse this march. That's the call of
The Elders. In an article on 24 January 2014, Kofi Annan challenged governments,
businesses and citizens across the world to step up and take bold action on climate
change.4
The majority of Australians want stronger action on climate change. This majority
1
Australian Government. Climate Change Authority. (2013). Reducing Australia’s greenhouse gas
emissions – Targets and Progress Review: Draft Report, October 2013.
2
IPCC, 2013: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the
Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K.
Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA, 1535 pp.
3
IPCC. (2014). Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to
the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.
4
Annan, K. (2014). A united call for action on climate change. available at
http://www.theelders.org/article/united-call-action-climate-change
support has been repeatedly reaffirmed in many polls and research.
Ensuring that our world remains habitable means that we need to transform current
human-made systems from ones that are destroying our planet’s resilience and ability
to support us to ones that sustain life.
All this means that Victoria, and its energy sector in particular, needs to take bold
action to transform itself from being a major contributor to the climate change and
ocean acidification problem to being a major contributor to the solution. Tackling this
problem will require everyone – including the electricity sector – to reduce emissions of
greenhouse gases to zero. And the later we leave reducing greenhouse gas emissions
to zero, the harder it will be to turn around our changing climate and oceans, the more
drastic the actions will need to be and the greater the costs will be.
I recognise that this is a big ask. But it is one that the VRET plays a significant part in
delivering.
That’s because the main causes of the greenhouse gas emissions that are causing
climate change are extracting and burning fossil fuels like coal, oil and gas. Most of
Australia’s electricity is generated using fossil fuels such as coal. This is worst in
Victoria, which is currently mainly using brown coal. Fossil fuels are the major cause of
dangerous climate change, and we have far more fossil fuels available than can be
safely burnt. So, we need to keep fossil fuels like coal (starting with brown coal), oil
and gas in the ground and switch to renewable energy.
It is vital that the means of providing energy to end-users takes place within the
Earth’s ecological limits and do not destroy the environment on which we as humans
depend. We will only be able to continue to have high living standards if we continue
to have a physical environment that supports us living to those high standards and life
on Earth as we know it. We have a finite Earth and must respect its ecological limits.
This means that we (our species, our economies, etc) cannot grow forever; in fact, the
human species has already well outgrown the capacity of the Earth to support us in our
current numbers and with our current way of living – and climate change is one of the
results.
Leading economists continue to point out that it is cheaper to take action to reduce
emissions earlier rather than later. The Climate Change Authority points out that ‘the
evidence suggests international action on climate change is strengthening, particularly
in some of the world's largest economies’.5 Australia already has to do to more to
make our industries ready for a carbon-limited future, because Australia’s economy –
and the electricity sector in particular – is more greenhouse gas emissions-intensive
than many of our trade partners and comparable countries. Every year of slow,
ineffective action means we are missing opportunities for benefitting from innovation
and transformation – and higher costs from the consequences of inaction or slow
action are substantial.
All this simply strengthens the case that Australia – and Victoria in particular – needs
to take strong action quickly to transform our economy and energy sector from being
focussed on fossil fuels to being focussed on renewable energy. Only this path will
enable us to live within the ecological limits of the Earth and avoid major climate
disruption.
The only truly reliable sources of energy are ones that are always available without
5
Australian Government. Climate Change Authority. (2013). Reducing Australia’s greenhouse gas
emissions – Targets and Progress Review: Draft Report, October 2013.
new sources and/or supplies having to be found, i.e. renewable energy. Several
publications such those by Beyond Zero Emissions6 and Mark Diesendorf and his
colleagues7 show how renewable energy can supply day-to-day reliability and meet the
ongoing needs of consumers.
Unlike many other places in the world, Victoria has plentiful energy resources,
especially renewable energy. The question is how to make best use of those resources
that can ensure sustainability without massive detrimental side-effects such as
catastrophic climate change and collapse of marine ecosystems due to ocean
acidification. Victoria’s renewable energy resources like wind and sunshine meet the
test – unlike fossil fuels. Victoria can meet (and even exceed) its energy requirements
using renewable energy. That is why Victoria needs to urgently transform its economy
and energy infrastructure from being highly reliant on fossil fuels to being based on
renewable energy.
Australia also has some of the best researchers in the world. We are a nation of
innovators, world leaders in relevant technologies such as renewable energy. Many of
these clever people are based in Victoria. Furthermore, Victoria has had a strong
manufacturing sector. This is now in transition and looking for industries of the future
– industries like renewable energy.
We need to foster, care for and profit from these natural advantages, rather than to
ignore them or hobble them. In that way we can position our economy so it is
sustainable in the long term – and is in harmony with Earth being able to support life
as we know it.
Other countries around the world have already moved to rapidly expand renewable
energy. As a result of recent government decisions in Australia (including in Victoria),
we have squandered a lot of our natural advantages and are now playing catch-up.
RETs are a proven mechanism for transitioning Australia’s electricity sector from
dangerous fossil fuels to clean renewable energy, thus reducing our greenhouse gas
emissions.
Policies such as RETs are also much more important in reducing greenhouse gas
emission in the absence of any price on greenhouse gas emissions.
Energy generation from renewable sources such as wind and solar is readily available
and proven. All that is needed is investment. RETs have proved their success in doing
just that: facilitating investment in electricity generation from renewable energy. As at
early 2014, the national RET had attracted $18.5 billion of investment from local and
international companies, which had invested in large solar and wind projects because
they felt confident in our renewables policies, and had the potential for $18.7 billion
more; a higher target would attract even more investment.
Business dislikes uncertainty and frequent change. Uncertainty is not good for anyone.
In individuals, it leads to stress. In business, it leads to ‘battening down the hatches’
and deferral of investment.
Maintaining market certainty (as far as possible) and sustainability is important to give
6
The University of Melbourne Energy Research Institute & Beyond Zero Emissions. (2010). Zero Carbon
Australia: Australian Sustainable Energy Stationery Energy Plan. 171pp. Melbourne Energy Institute,
University of Melbourne.
7
See, for example, Diesendorf, M. (2014). Sustainable Energy Solutions for Climate Change. 356pp.
UNSW Press: Sydney.
confidence for long-term investment and innovation. This is the case for both energy
suppliers and users. It is particularly the case for renewable energy, where investors
have had to deal with ongoing uncertainty and changing policies.
There are considerable opportunities for growth in Victoria, Australia and overseas for
renewable energy, energy-related products and services. Capitalising on our natural
assets that will enable us to make the change to zero greenhouse gas emissions from
energy supply will provide a range of benefits, including giving Victoria an international
trading advantage. These natural assets include:

our abundance of sunshine, wind and other renewable energy resources (which
allows us to be a leading supplier of electricity based on renewable energy);

our world leaders in development of many relevant technologies (such as
photovoltaic and solar thermal technologies); and

Australia being a nation of innovators with sought-after project managers
(which allows us to export expertise in helping other countries transform too –
as long as we are in a leadership position in the first place).
Furthermore, moving away from fossil fuels (particularly liquid and gas fossil fuels) will
lead to an increase in electricity use if plans to move to renewable energy along the
lines outlined by Beyond Zero Emissions and others are followed – with resultant
benefits to electricity suppliers and the wider community.
Such change requires investment. The various RETs around Australia were introduced
in recognition that investors need the security of clear policy goals and policy stability
so that they can be sure that capital costs can be recovered over time. For this
stability, it is therefore essential, that the VRET be set at a high level, with milestones.
The ACT provides a good model for this. This will provide ongoing certainty for
continued investment in renewable energy and phasing out of fossil-fuel based
electricity that is needed to reduce our greenhouse gas emissions in order to stabilise
our climate. The rest of the world is moving to reduce emissions from fossil fuels, so it
will also be important for helping energy businesses make the transition away from
fossil fuels and ensuring that new electricity generation assets are not left ‘stranded’.
Subsidies and other assistance (for example, current structural arrangements) for fossil
fuels create remove market distortions that provide a huge barrier to the further uptake
of renewable energy. Some distortion of the market toward renewable energy may
also be needed to remedy the long-term systemic discrimination against renewable
energy.
While many of the distortions in favour of fossil fuels occur at national level, a strong
VRET provides some remedies in favour of renewable energy. It allows newlyinstalled renewable energy to compete directly – and successfully – with fossil-fuelled
power stations that have been built and operating in a market distorted by support for
fossil fuels, that have already paid off their capital costs and that are nearing
retirement.
Victoria needs an ambitious, strong and stable VRET to signal to renewable energy
industries that Victoria is a safe place to invest. It would show that Victoria is ‘open for
business’ in one of the world's fastest growing sectors, instead of looking back to the
future. Such a target would give the long term certainty needed to attract the
investment needed to build the energy infrastructure Australia will need in the future.
The move to renewable energy encouraged by the VRET plays an important role in:

increasing community health and safety, particularly through avoiding fires,
pollution and high risk of trauma and eliminating (or at least minimise) use of
water, both of which are associated with fossil fuel use;

reducing destruction of farmland and natural environments for the extraction of
fossil fuels.
These issues will become increasingly important as climate change progresses.
Locally-owned clean energy enterprises with huge benefits to the local communities
concerned have been built as a result of the RET.
Between 2001 and 2014, the national RET delivered tens of thousands of muchneeded jobs as well as $18.5 billion of investment, much in regional Australia, with
flow-on economic and social benefits to the communities concerned. In early 2014
there were about 4,500 businesses in the solar industry, mostly small to medium-size
enterprises, and some 18,500 Australians worked in the solar industry alone. Policy
instability and reversals meant that some of those jobs and enterprises were lost. A
strong VRET offers the opportunity to grow those jobs because, unlike fossil fuel
industries, renewable energy is labour-intensive during both installation and
maintenance.
New renewable energy projects also provide diversification for regional economies,
revitalising communities and co-existing with existing rural businesses. The Waubra
Wind Farm has injected $346m into the local economy, provided an extra 1680 fulltime-equivalent jobs over 10 years, enabled the employment of specialist school
teachers and funding for local sports teams.
An ambitious VRET would allow the substantial renewable energy employment base to
continue and expand, particularly in regional communities.
RETs have also helped the development of community energy generation. Many
communities have taken or are taking up the opportunity to benefit from communityowned renewable power.
An ambitious the RET will facilitate community-owned power, increasing communitybuilding.
A large majority of Australians like renewable energy and want to see our renewable
energy program dramatically expanded.
Moving the energy sector to zero greenhouse gas emissions very quickly is not only
desirable, it is possible and could benefit Australia tremendously. And an ambitious
VRET is vital for achieving this goal.
About 13% of Australia's electricity is now generated from renewable sources, so we
still have a long way to go to reach 100%.
We can make the transformation. And, hopefully, we can do it in the timeframe
required to ensure a habitable planet.
In summary, the objective of the VRET should to provide a clear signal to markets in
order to support an orderly transition to clean energy and deliver 100% electricity from
renewable energy within 10 years.
If the VRET is set to 100% (as I recommend), then projected electricity demand
becomes irrelevant. Any ‘over-supply’ of electricity capacity that may result from the
VRET would result in lower electricity prices for consumers, or demand increasing to
meet supply – while also delivering the most important goal of zero greenhouse gas
emissions from electricity generation.
Fossil gas (including ‘unconventional’ gas) should not be included in the VRET. With
domestic gas supplies being made available on the export market that currently pays a
higher price than the domestic price, this will cause electricity prices – as well as
greenhouse gas emissions – to rise.
Adding unconventional gas will not remedy the situation, because of the move to bring
domestic gas prices in line with international prices. Unconventional gas also adds to
the problems of climate change and ocean acidification and causes immense,
irreparable damage to local environments, soil and water resources and people’s
health and livelihoods – at a time when all these are under increasing stress as climate
change progresses. Flaring from unconventional gas wells also increases the risk of
fires, which are already on the increase as a result of climate change.
Native forest wood (including ‘waste’ must not be included as an eligible renewable
energy source under the VRET because doing so would:

perpetuate the model of burning fuel to create heat to create electricity, which
continues to add greenhouse gases to the atmosphere;

subsidise and further encourage logging of native forests, which:
o
releases greenhouse gases;
o
removes substantial carbon sinks that help reduce climate change;
o
reduces the resilience of native flora, fauna and ecosystems to the
impacts of climate change;
o
would probably re-create tensions in communities near native forests,
tensions that took years to overcome;
o
would doom Victoria’ faunal emblem, the Leadbeater’s possum, to
extinction.
Some of Australia’s forests are the most carbon dense forests in the world. This makes
excellent stores of carbon.8 Given the climate impacts we are facing, these very high
value stores of carbon must be kept as such and not destroyed through logging and
deforestation. The IPCC Working Group III report released in April 2014 pointed out
that reduced deforestation is one of the most cost-effective ways of mitigating climate
change.9
Furthermore, there are perpetual problems with definitions and their interpretation,
particularly with terms open to interpretation such as ‘native’, ‘forest’ and ‘waste’.
They in turn bring the problems of people looking for ways around definitions so that
they can profit in the short term.
8
Keith, H., Mackey, B.G. & Lindenmayer, D.B. (2009) Re-evaluation of forest biomass carbon stocks and
lessons from the world's most carbon-dense forests. Proc. Nat. Acad. Sci. (USA), v.106, no.28, March
2009.
9
IPCC. (2014). Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to
the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.
The original definition of what constituted ‘native forest wood waste’ and under what
conditions it could be used hinged on whether or not the ‘waste’ resulted from
production of a higher value product from the native forest wood. The forest
industry’s definition of waste includes standing trees. This allows any timber that is
not extracted for ‘higher value’ uses to be classified as waste.
In turn, ‘higher value’ has been assumed to be higher economic value. This ignores
the intrinsic value of forests, such as the environmental beauty and services they
provide – which often have valuable economic benefits such as tourism.
The argument that native forest biomass relies on only ‘waste’ product is same
rationale that was used to promote wood chipping for exports. However, that industry
expanded rapidly from the late 1960s and wood chipping for exports became the main
driver for logging native forest and, from that, causing environmental damage and
community conflict.
It is also widely recognised that logging of native forests is only financially viable if
there is a market for the so-call ‘waste’.
With increasing strains and threats from climate change, now is a time when we must
protect our forests and community harmony – not destroy them.
Effect on electricity prices
Renewable energy, facilitated by a RET – reduces peak demands for energy, reducing
prices and increasing reliability of supply. This was clearly demonstrated in the midJanuary 2014 heat wave in south-eastern Australia.
By providing a guaranteed market, RETs have also helped electricity customers to
invest in renewable energy to help control their electricity prices and source of supply.
That has been a major driver behind the recent rapid uptake of photovoltaic energy.
Customers have made these investments despite other policies that have distorted the
market in favour of fossil fuels for decades and that have lead to the crises of climate
change and ocean acidification that we now face. Major reasons for customers making
these investments have been:

to play an active part in reducing greenhouse gas emissions because they
understand the need to urgently transform our energy sector; and

to attempt to future-proof their electricity bills from further increases.
In assessing electricity prices, care is needed to look at the underlying drivers. This is
illustrated by this breakdown of the average Victorian electricity bill.
Fig. 1: Breakdown of average Victorian power bill.
Source:
http://www.windalliance.org.au/submission
A major cause of rising electricity prices is currently due to significant investment in
network infrastructure. Other reasons include:

reduced demand as a result of increased prices;

improvements in energy efficiency;

moves to less greenhouse gas-intensive energy for heat; and

reduced demand from energy intensive industries as major electricity users
close down.
Higher consumer costs in the past have also been due to suppliers having to install
extra generation capacity to cope with peaks in demand due to extreme weather, and
heat waves in particular. These demands are likely to increase because extreme
weather increases as climate change progresses unless alternatives to air-conditioning
powered in peak times by grid-supplied electricity are pursued. Such alternatives
include:

reducing the likelihood of extreme weather by mitigating climate change;

using solar-powered air-conditioning;

having more energy efficient buildings;

cooling buildings naturally, through, for example, external shading or good
design; and

changing consumer behaviour, for example, to change when they use airconditioning or to cooling down by other means (e.g. water).
Cost savings should first be pursued in the most expensive components of electricity
bills. This means reductions in network costs arising from ‘gold plating’ rather than a
low VRET.
More than 1 million Australian households have photovoltaic arrays on the roof or
other small generation. Most Australians who have solar are in rural and regional
areas, or postcodes with lower median incomes. That is because Australians are
turning to generating their own renewable power in order to save money and control
their costs. An ambitious VRET increases this opportunity for households, businesses
and community organisations.
Private and community investment in generating electricity from renewable energy,
using a RET reduces the need for public utilities to invest in new generation and it
increases robustness of the supply grid by increasing distribution of generation.
RETs effectively empower households and other electricity consumers. They have
helped them to make personal contributions to changing Australia’s electricity sector so
that it is more sustainable (in every sense of the term) and to take substantial control
over their expenditure on electricity by installing their own generation. In some cases
it has also provided additional income. That the highest rate of penetration of smallscale renewable energy is in areas worried about their household costs spiralling out of
control demonstrates the importance of this to consumers.
As well as reducing greenhouse gas emissions, an ambitious VRET will allow net
economic benefits to continue to increase for all Victorian electricity users.
Investment in energy transmission and distribution infrastructure to meet peak
demands is only needed if energy is not supplied at the point of use. Encouraging
reduced energy demands (through, for example, greater energy efficiency) and energy
supply at point of use will reduce the need for investment in infrastructure to transmit
and distribute energy.
Electricity prices are, in part, a reflection of demand for security of supply. The VRET’s
contribution to security of electricity supply should be factored into setting of the
VRET. Distributed renewable energy can improve security of electricity supply
particularly during the increasingly extreme summers we are experiencing as a result
of climate change,
Single or few sources and transmission routes for meeting consumers’ energy
requirements carries a much higher risk of failure or disruption through, for example
terrorist attack, than multiple, dispersed sources and transmission routes.
Further, there are sizable population areas and existing and potential supply sites that
are not linked to other sites. They cannot, therefore contribute to or benefit from
energy connections to other parts of the country.
These shortcomings reduce the robustness, reliability and security of Australia’s
energy supply system, particularly in regard to electricity.
This vulnerability has been demonstrated in the past when, for example, South
Australia has suffered brown outs because of its weak single link to the Victorian
electricity grid.
More recently, in the mid-January 2014 heatwave in south-eastern Australia the
capacity of electricity cables between Victoria and Tasmania and between Victoria and
New South Wales was constrained.10 If it wasn’t for the contribution of small
renewable generators distributed throughout the region, consumers would have been
left without power when they most needed it for cooling (which, with our current
10
Keen, L and Macdonald-Smith, A. (2014). Mega temperatures push power watts. The Australian
Financial Review, 16 January 2014.
building stock, mainly comes from electricity). According to modelling by the REC
Agents Association, photovoltaic energy was meeting nearly 25% of South Australia’s
afternoon electricity demand and 6% of Victoria’s. This played a significant role in
lowering demands on the electricity system and reducing energy prices for the entire
community during the heatwave. Importantly, it also demonstrated the value of
having multiple, dispersed sources (particularly from renewable energy) and
transmission routes for supplying electricity.
Transition
Workers currently in the fossil fuel-based electricity supply will need to be supported,
re-trained and re-deployed in the transition away from fossil fuels. In most cases,
though, that training will be minimal for workers in electrical trades and marketing,
sales and trading roles. The move to renewable energy that the RET facilitates will, on
the other hand, increase the sustainability and healthiness of work for many workers in
the electricity supply industry.