While Australia’s mining companies are no doubt delighted by Abbot’s election victory over the weekend, a Coalition government is likely to hamper the development prospects of the renewable energy sector.
The mining industry will derive major benefit if Tony Abbott follows through with his plan to annul both the mining and carbon taxes introduced by his Labor predecessors. The introduction of the mining tax in particular triggered fervent opposition from Australia’s cash-rich resources sector, and played a pivotal role in Kevin Rudd’s internal ousting in 2010.
Coalition resources spokesman Ian Macfarlane also mentioned tax breaks for smaller exploration companies in the lead up to the election, saying that the Exploration Development Incentive scheme would be introduced on July 1st 2014 in the event of a Coalition victory.
The scheme will permit investors to deduct mining exploration costs from their taxable income, and focus on particular on smaller players undertaking the risky business of mineral exploration.
“Our scheme will target small exploration companies by limiting eligibility to companies with no taxable income and will be capped at $100 over the forward estimates,” Macfarlane said.
In stark contrast to the potential benefits of a Coalition win for the mining industry, the clean energy and renewables sector could face major difficulties with Abbott at the helm – particularly given his past record of climate change skepticism.
While the Coalition has been very emphatic about its plans to overturn the carbon price, its other policies with respect to renewable energy still remain uncertain.
The coalition released its policy on resources and energy last week, which contained no mention at all of the renewable energy target (RET), which serves as a key spur for major investments in wind and other forms of clean energy.
Members of industry have already long fretted that a Coalition government could dilute or even scrap the renewable energy target. The Coalition has said it wants RET to be reviewed again in 2014, while indicating it may also amenable to pressure to reduce the goal of achieving 41,000Gwh of electricity supplied by renewable sources by the 2020.
Uncertainty surrounding the fate of RET caused paralysis in the industry even prior to the Coalition’s win, bringing most large-scale renewable energy projects to a stand-still.