Macfarlane threatens: take my RET deal or else

The confusing saga on the Renewable Energy Target continues with Environment Minister Greg Hunt sounding optimistic (as he seems to be about everything) that there will shortly be an agreement on the level of the target, and one that he said will “go significantly further” than 20% market share for renewable energy. Meanwhile Industry Minister Ian Macfarlane on the same day delivered a message of a rather more belligerent and less optimistic tone.

In an interview with David Speers of Sky News, Greg Hunt provided the clearest indication on the public record so far that the government has abandoned its original position of slashing the RET to cap renewables’ market share at 20%:

GREG HUNT: ...we won't just achieve 20% renewable energy. Our commitment is to go significantly further than that. I think we can achieve a middle path and I'm pretty pleased with progress of recent weeks.

DAVID SPEERS: So, what gives you that confidence? Your opening bid was 26,000 gigawatt hours of renewable energy by 2020. Labor's saying 35,000 and no less. Are you willing to now say, today, that you are willing to get closer to that 35 - get above 30,000 gigawatt hours, for example?

GREG HUNT: You can understand that I won't negotiate positions in public out of good faith to the ALP. But I have said and we have said that we're looking at a middle path and I think there are good grounds to believe that that is achievable.

Hunt stated similarly optimistic views about a deal being imminent in an interview aired this morning on the ABC’s AM radio program while still refusing to be drawn on what the ‘middle path’ might precisely be.

However Hunt’s increasing optimism that a deal is near is a little confusing because a spokesperson for Mark Butler’s office told Climate Spectator:

We have not had any further discussion with Hunt since late January and as of yesterday there was no meeting scheduled for March. We're happy to meet with them as soon as possible, we just need to be asked.

Also tempering this optimism was another interview given by Ian Macfarlane, also to Sky News, on the same day.

In this interview he confirmed that the government has shifted ground away from the original position of cutting the large-scale target to 26,000GWh (it is presently legislated at 41,000GWh):

JOURNALIST: Is that offer that you have extended to the [renewable energy] industry, above 30,000 gigawatt hours?

IAN MACFARLANE: I’m not going to get involved in that discussion, but look, yes it is.

However, the Clean Energy Council’s chief executive Kane Thornton explained to Climate Spectator that they are yet to receive any formal response from the government to their letter sent in December last year (covered here). So far the shape of the government’s offer has been slightly vague and informal and lies outside the parameters the CEC outlined back in December as ones which the industry were willing to consider. This essentially involved a target for the large-scale scheme that was in the range of 35,000 to 39,000GWh for 2020 with a willingness to accept something closer to 35,000GWh in 2020 if the government was willing to consider further increases in the target after 2020. According to the Thornton, “suggestions of a target of around 30,000GWh would be devastating to the industry and its future, and therefore not something it would be prepared to accept.”

Minister Macfarlane in his interview seemed rather unimpressed with the CEC’s current position. He told Sky News that if they take his offer then they’ll have the bi-partisan regulatory certainty essential for investment in large-scale renewable energy projects,

“Now I’ve offered them a process of certainty, I’ve offered them a number and I’ve offered them a guarantee that this will be the last review before 2020 … I’ve offered them a scheme where we will deal with the overhang of credits in the market, so the industry can get on and build.”

However if they refuse it, he’ll leave them in a form of regulatory limbo land with a sword hanging over their head that will act to freeze any investment:

“The industry will have to understand that we are not going to build way more generation capacity then we need …

"… the situation is we’ve got a scheme that everyone agrees is going to go into default, is not going to be sustainable … If they don’t want compromise … then I’ll give them what they’ve got. I’ll give them what they asked for. That is the current scheme. But I know that is going to end in tears and I know the people that will lose out of that will actually be the renewable energy industry.”

What Macfarlane is essentially saying here is, 'take my offer or I’ll leave you with scheme that we will make clear to investors does not have Coalition Party support. And in the event that it looks like the target will not be met, we will use that as a mechanism to overcome Senate obstruction to cut the scheme back by even more than what is currently on the table'.

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