This is the Climate Change Authority's second review of the Renewable Energy Target (RET). The RET targets reductions in greenhouse gas emissions from the electricity sector and thereby contributes significantly to reducing Australia's overall emissions.
In its 2012 review of the RET, the Authority found that the RET was stimulating considerable investment in renewable energy and argued that a stable and predictable policy was essential to sustain this investment. It concluded that no major changes were warranted to the overall RET design, but suggested some minor operational changes.
The uncertain future of the Authority until recently has limited the time available to conduct this review. Largely for that reason, the Authority has focused on what, it its view, are the most important issues. The Authority has also drawn on both its 2012 Authority review, and on the review conducted this year by a panel headed by Mr Dick Warburton AO LVO.
The RET and Australia's emissions reduction goals
In 2010, when the Large-scale Renewable Energy Target (LRET) was set at 41,000 GWh, it was estimated that this contribution, with contributions from the Small-scale Renewable Energy Scheme (SRES) and other pre-existing renewables (notably hydro), would together represent at least 20 per cent of Australia’s (then) projected total electricity demand in 2020. Given that electricity accounts for approximately one-third of Australia’s emissions of greenhouse gases, renewable sources were seen as making a significant contribution to Australia’s broader emissions reduction goals.
Reducing emissions in the electricity sector plays a pivotal role in climate change policies around the world. Unchecked climate change is widely seen as posing serious risks for the Australian community and its economy. Together with the broader international community, Australia has agreed to a goal of limiting global warming to no more than 2 degrees Celsius above pre-industrial levels to avoid the worst impacts of climate change. This requires concerted action by all countries— including Australia—to reduce their greenhouse gas emissions. The RET, as currently legislated, is a significant part of Australia’s policy response to that challenge.
The RET arrangements were envisaged to deliver ‘at least 20 per cent’ of Australia’s electricity from renewable sources by 2020 and are projected to reduce Australia's emissions by 58 million tonnes of carbon dioxide equivalent (Mt CO2-e) over 2015–20, and by much larger amounts in later periods.
The RET arrangements are not perfect but, in the Authority’s view, they are effective in reducing emissions (at reasonable cost) in the centrally important electricity sector. Given the absence of effective alternative measures bearing upon this sector, the Authority does not favour any significant scaling back of the 2020 LRET target of 41,000 GWh.