Renewable Energy Target has no Place in Australia: Economist 4

Tuesday, May 19th, 2015
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If government gave away free Mars Bars, they would be cheaper but it wouldn’t necessarily benefit Australians.

Regulation Economics free-market advocate Alan Moran believes that’s how clean energy subsidies mask the cost of schemes like the renewable energy target that appear to make power cheaper.

“You can always get cheap electricity if you subsidise it,” he told a Senate inquiry into wind turbines.

The federal government’s RET review last year found the scheme was putting downward pressure on wholesale electricity prices.

But Dr Moran says that doesn’t always benefit society because the money still has to come from somewhere and highlighted that the review also found the aggregate cost of the scheme would be about $30 and $50 billion.

Dr Moran believes the RET, which requires 20 per cent of all energy to come from renewables by 2020, has no place in Australia and detracts from job creation and economic growth.

The government and Labor agreed to slash the RET on Monday from 41,000GWhs to 33,000 after a year-long political impasse that stalled clean energy investment and cost jobs.

Dr Moran said the only economic benefit is that the scheme is not as bad as it might have been if the target hadn’t been cut.

“Any substitution of high cost electricity for low cost, which is the intent of the present scheme, will leave us worse off,” he said.

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  1. Barry

    And here comes another free market fundamentalist preoccupied completely with short-term cost while losing sight of long-term imperatives – like stymieing the immense potential damage of anthropogenic climate change.

  2. Tom Chandler

    None of these subsidies would be necessary if we just put a price on climate change. We had a scheme in place which was being written about in leading economic journals as a shining example for the world in how to respond to climate change in a real, meaningful and efficient way, but the current government has got rid of it and is instead handing billions of dollars worth of taxpayer money away through a scheme which might make some difference at the margins but does not represent anything near what is needed to produce the kind of economy-wide response needed for a serious climate change response. If you have one economy-wide price on carbon, you don't need these inefficient subsidies because the carbon price does the work instead but does so in a more efficient, market based, way.

  3. John Blair

    Interesting that Dr Moran did not mention the (indirect) subsidy on conventional energy produced by fossil fuels, especially coal. Not to speak of the clean up costs of a dirty industry which the industry itself rarely pays for.

    • Matthew Wright

      He won't do that as he has a history of being an apologist and evangelist for free markets A.K.A. the fossil fuel sector.

      I debated him once and he tried to tell a porky about China's growth in energy demand and construction of power stations. At the time I was a young person with the internet on my phone and I read the riot act in the form of a statement from the NRDC who are the goto for the Chinease government stats on these things – he tried to obfuscate and widdle his way out of it but it failed.