The move to lower the renewable energy target has already claimed the jobs of 100 workers at a major wind farm manufacturer. This is just the beginning if Labor doesn't successfully put up a fight, writes John Hewson.

Now that the Abbott Government has broken its election commitment to keep the Renewable Energy Target, it becomes a real test of whether Bill Shorten has courage to stay the course with his total opposition to this decision.

Clive Palmer has already provided a lead, having taken a very firm position that he will not support a change to the target prior to the next election.

The Government's attempt to dress up its decision as a "real 20 per cent" target is totally indefensible, and will go a long way to killing off the renewables industry, at a time where it is not clear where the new jobs will come from as our economy makes a transition from the resources boom.

Specifically, for example, billions of dollars of new wind projects, promising thousands of new jobs, have just been sitting there with the necessary approvals, simply waiting for the Government to honour its election commitment. These will be lost if Shorten weakens.

The essence of the RET has been the commitment to an absolute number - 41,000 GWH - as the target. This was the basis on which long-term investment decisions were made. Since inception some $20 billion of investment has been made. A further $15-20 billion in investment through to 2020 is now at risk.

Sure, when set, the 41,000 GWH represented about 20 per cent of electricity generation. It never contemplated adjustment to reflect a fall in the demand for electricity. To now suggest that the target should be adjusted to keep it at 20 per cent of a reduced supply of electricity represents a cut in the target of some 40 per cent, to about 25-26,000 GWH.

Shorten has said that the so-called "real 20 per cent" target is "false" and "fictional". Let's see whether he has the strength of character and conviction to stick with that argument.

Clearly, the Abbott Government has been planning this backdown all along. Why else would they have appointed Dick Warburton, an admitted climate sceptic, to head the review, especially when the Climate Change Authority was already scheduled to do its legislated review?

Yet, the Warburton Review fails to make the case that the RET should be reduced. Warburton's hand-picked modeling firm in fact found that closing the scheme to new entrants would:

increase greenhouse gas emissions by 520 Million tonnes through 2040, resulting in huge budget funded costs for Direct Action to meet the Government's emission reduction target

increase greenhouse gas emissions by 520 Million tonnes through 2040, resulting in huge budget funded costs for Direct Action to meet the Government's emission reduction target decrease investment by $13.6 billion, at least half of which would be in regional areas, in manufacturing wind turbine towers from Australian steel, and for other Australian products and services, and

decrease investment by $13.6 billion, at least half of which would be in regional areas, in manufacturing wind turbine towers from Australian steel, and for other Australian products and services, and Increase costs to electricity consumers by over $300 (NPV) through 2040

Cutting the RET would be a lose-lose-lose proposition, and yet Warburton recommends the two scenarios with the most pollution, the least investment and jobs in regional areas, and the highest electricity prices.

Six independent reports have been released in the past two years looking at the impact of the RET on the electricity market. Reports undertaken by SKM-MMA (now Jacobs), ROAM Consulting, Schneider Electric, Intelligent Energy Systems, Bloomberg, and ACIL Allen (for the RET Review panel) all found that maintaining the RET at its current level of 41,000 GWH* would result in a small increase in electricity prices in the short term, followed by a larger decrease in prices in the medium and longer term.*

The only study that has arrived at a different conclusion is a study commissioned by Burchell Wilson of ACCI, and undertaken by Deloitte. This outlier study assumes low (and undisclosed) gas prices, wind farm prices 30 per cent higher than the Government's Bureau of Resource Economics and Energy, and inexplicably higher wholesale prices for the reference (no change) case. Using these biased assumptions predictably results in a forecast of higher electricity prices for the reference case - but only about $1/week for a typical household.

A key Warburton argument against the RET is the so-called "value transfer" within the energy sector which they try to make to look as if it's a "government subsidy", when value transfer within the energy sector is precisely the effect you want to encourage renewables at the expense of dirty coal.

Of course, if you start with the view that climate change is not caused by humans as Warburton does, then you will naturally conclude that you don't need a RET at all! If we follow Warburton we will see the recommissioning of previously mothballed, most dirty and inefficient, coal-fired power stations.

Let's be clear; the only winners from reducing or ending the RET scheme are the incumbent electricity generator-retailers who already control over three quarters of the National Electricity Market. Even Warburton's modeling agrees on this point.

Repealing the RET would deliver a windfall gain to coal-fired generators of over $16 billion NPV. Cutting the RET reduces competition, increases greenhouse and particulate pollution in our air, and does not reduce electricity prices.

Vigilant attention to the facts by the Government will ensure a policy outcome satisfying the national interest objectives of tackling climate change, having cleaner air and lowering electricity bills.

It's up to you, Bill Shorten.

While the RET is not a climate change policy, and falls well short of an adequate response, its importance cannot be underestimated in an environment where the Abbott Government has become a global "laggard" on the climate issue, and especially given the significant questions hanging over the likely effectiveness of Direct Action.

Let's see whether Bill genuinely understands the magnitude and urgency of the challenge of climate change, whether he truly has a "jobs strategy", and whether he can really operate in the national interest.

*Editor's note: An earlier version of this sentence incorrectly referred to "reducing the RET" rather than "maintaining the RET at its current level of 41,000 GWH".

John Hewson is Professor in the Crawford School ANU and former leader of the Liberal Party and the federal opposition. He is the chair of the Asset Owners Disclosure Project which analyses how superannuation funds are managing the risk of climate change. View his full profile here.