New Australian PM Could Give Renewables Sector The Boost It Needs

With a successful businessman at the helm, Australia’s renewables development could be accelerated like never before.
Published: Fri 15 Jan 2016

Debate around the development of renewables in Australia has been strong. In fact, uncertainty around it has seen the renewable energy industry face a challenging and frustrating period under the former prime minister Tony Abbott who was adamantly against renewables. 

This negative stance was reflected in Australia’s less than adequate AUD$240 million investment in large-scale renewable energy in 2014- less than a tenth of 1% of the global US$310 billion in investment on offer. It was a dismal year for a country that boasts some of the best renewable energy resources in the world.

Renewables is big business

The new Australian Prime Minister Malcolm Turnbull, a successful businessman, has strongly emphasised the need to find a new direction to secure Australia’s future economic prosperity. He listed agility, disruption and innovation as his focus points, along with the importance of Australian businesses being able to leverage the many opportunities in an ever-changing world.

The message has deep resonance for the country’s ailing renewable energy sector because as a businessman he will understand that there is huge economic potential just waiting to be tapped into. 

The new PM has already created a sense of optimism in the sector, and this can only translate into business confidence with a few well-chosen words – and without the need for any major policy change. 

Harnessing the potential

Australia’s opposition leader Bill Shorten told the Labour Party conference last year that the party’s policy should support the development of 50% renewables by 2030. This is highly ambitious considering that Australia is working towards 23.5% by 2020 and the sector is still trying to recover from the great deal of uncertainty created during the Abbott regime. [Australia’s Renewables Development Paralysed by its Government’s Uncertainty and Engerati - Australia’s Government Unsettles Renewable Energy Developers]

If this goal can be reached, it will bring Australia in line with international competitors like California (with its target of 50% electricity from renewables by 2030) and Germany (with its Energiewende plan which commits the country to 40-45% clean energy by 2020 and 55-60% by 2035.)

Australia certainly has the renewable resources to carry it out. Even without a solid policy in place, solar PV became Australia’s number one source of renewable energy in 2014, passing 4GW of installed capacity, and overtaking wind’s 3.8GW. With a strong government backing, clean energy development will accelerate even further. [Australian Households To Lead the Energy Revolution]

Already, recent leadership changes have bolstered renewable energy’s role in the future of Australia’s energy policy and energy mix. The government recently announced the revised Renewable Energy Target (RET) to support emission-intensive industries and slightly reduced the RET from 41TWh to 33TWh.

While this is promising, there is still a long way to go and the new government can do this through the creation of certainty in the form of sound policy.

Renewables for Australia’s energy security

A policy that promises to build a power sector focused on clean energy, eventually eclipsing the current fossil fuelled sector that has always dominated the industry, will hopefully reduce the current obsession with using carbon pricing – either in the form of a carbon tax or a cap and trade scheme.  

Renewable energy offers the more politically straightforward approach of boosting investment in the renewables sector, providing the business certainty that Abbott tried to wreck.

A new policy could mean a switch from a 20th-century obsession with fossil fuel mining and export, to a 21st-century focus on creating energy security through renewables.

Already, support for coal seems to be waning. 72-77% of voters recently polled in conservative electorates support Australia becoming a 100% renewable energy powered nation by 2030.

A ReachTEL-conducted survey of thousands of residents across the federal electorates of New England, Page, Warringah and Dickson in December revealed just 14% to 18% opposed a renewables powered Australia.

The polling of these voters also indicated a global moratorium on new coal mines had strong support; at 50 – 57%.

It’s been done before

The transition to renewables in Australia is not going to be an easy one but ambitious renewable targets around the world such as Denmark’s 50% by 2020 and China’s 30% by 2020, is an indication that renewable energy promises to be a leading industry of the 21st century. In addition to providing a secure and reliable source of energy, the industry also offers industrial and manufacturing strength, export potential, technological innovation and employment.

And the energy transformation is not inconceivable as many critics may think. Germany, China and emerging Japan are good examples of this.  Germany and China, through their commitment to large-scale renewable energy, have been driving down costs. Solar panel prices globally have dropped by 80% over the past few years, driven largely by scaling up production in China and to some extent in Germany. [China’s Growing Need for Electricity Storage]

Australia stands to benefit from these cost decreases as policy moves to support a renewables-driven power system. These costs refer to production costs, or wholesale costs, driven by the learning curves that are a feature of all manufacturing industries.

As the political debate begins to focus on the real production costs of electricity, critics will begin to understand the real value of renewable energy. And, with a businessman like the new PM, it won’t be long before some serious changes are made in support of renewables.

 

Further reading

Australian Government-Department of the Environment-The Renewable Energy Target (RET) scheme

The Australian Business Review-How Malcolm Turnbull can revive the renewable energy industry