Ministers for the Department of Industry, Science,
Energy and Resources

9 April 2015

Michael Brissenden

Subject: Renewable Energy Target, Energy White Paper

E&OE

JOURNALIST:  Business groups are urging the Government to accept the latest offer on the table that would break the deadlock over the Renewable Energy Target. Labor has backed a proposal by the Clean Energy Council to cut the target to 33,500 gigawatt hours by 2020.  But the Government has rejected the offer and says it will continue to pursue a deal with crossbenchers in the Senate for a target of 32,000 gigawatt hours. The industry says the uncertainty has already cost jobs and resulted in a huge drop in investment.  Ian Macfarlane is the Industry Minister and he joins me now, Mr Macfarlane good morning.

MINISTER: Good morning Michael.

JOURNALIST:  Why hold out?  Labor says it’ll agree to 33,500 gigawatt hours and you’re holding out for 32,000.

MINISTER: Well it’s good that Labor’s finally got involved in the debate after six months, and this is their first offer and that’s commendable, but the Government has been involved in discussions for over six months, we have moved our position three times.  32,000 is the top limit that we can move to and still be confident that the renewable energy scheme is sustainable. If we go higher than that then we put at risk the ability of the scheme to actually build the amount of generation that’s required and therefore make the high likelihood that the scheme will default, both costing consumers dearly and pushing the price of electricity higher and also causing the scheme to collapse.

JOURNALIST:  But surely getting an agreement of any sort is important for the industry – can you understand why the public and the industry might be getting a bit cynical?

MINISTER: Let’s be clear – the people in the industry who are calling for a deal at any price are the people who are going to benefit in terms of the exemptions that a deal will give them.  So the aluminium industry’s out there very vocally saying we want a deal because we want to be exempted and we want our costs passed on to householders. I don’t believe in a deal at any price that makes the scheme not sustainable. The Government’s view is that we need a RET that is sustainable. We introduced this scheme, we’ve had a bipartisan approach to it in Opposition, it’s now up to the Labor Party to come up with a sensible offer.

JOURNALIST:  But no deal is clearly unsustainable as well – nearly 90 per cent of investment in some states has dropped off completely.

MINISTER: Well let’s be clear here, the Government is offering a scheme that is 45,000 gigawatts, that is 23 per cent of electricity use coming from renewable sources.  To go any higher than that will make the scheme unsustainable and bring the whole thing down around us. This is a responsible position, as I say, we started at 26(000), we’ve moved to 32(000) – that is a very generous offer in  terms of where we believe the sweet spot is, but on that basis we’re prepared to stand by 32(000), the Labor Party needs to go away  and reconsider their position.

JOURNALIST:  Well, why not scrap it altogether and leave it to the market to decide?

MINISTER: Well, because without a renewable energy system then obviously there wouldn’t be support to build these renewable energy projects in the first place – they require literally tens of billions of dollars worth of subsidies over the life of the scheme.  And this scheme will be successful, provided we set realistic targets.  Now the original target, set by Penny Wong and I, was 45,000 gigawatts.  That is exactly what the Government has got on the table. What we want is a sensible response from the Labor Party.

JOURNALIST:  And it was originally legislated at 41,000 wasn’t it? Surely….

MINISTER: No, the overall target was originally legislated at 45,000 gigawatt hours.  That is the target and that is exactly what we’re offering – 45,000 gigawatt hours. The original policy proposal was that 20 per cent of energy produced in Australia would be renewable…

JOURNALIST:  Surely that figure is…

MINISTER: …no, we’re offering 23 per cent and we need to be clear on that.  So we are offering above the original proposal.

JOURNALIST:  But the 20 per cent figure surely is going to change, year by year isn’t it?

MINISTER: Well only rise, and that’s the opportunity of getting this deal done.  Now as I say, the Government wants a sustainable scheme.  If you make the target too high – and remember that a target at 45,000 gigawatts means that the renewable energy industry has to double the current capacity of renewable energy in five years, which has already taken 15 (years) to build. So in the next five they have to build as much again as they’ve built in the last 15. The higher we make the target, the harder it is to achieve that target and the more likelihood the scheme will default and collapse.

JOURNALIST:  Ok, but even some on your own side, like for instance backbencher Dan Tehan says that it’s in the national interest to find a compromise and he’s warned that jobs are on the line. What do you say to him?

MINISTER: Well we’re all fully aware of that, and as I say we’ve moved our position above from where what I believe is the sweet spot in this scheme.  So we are at the very top limit of what we can offer.  Any more simply sets up a scheme set to fail.

JOURNALIST:  So there is no more compromise on your part?

MINISTER: We’ve compromised three times Michael. The Labor Party’s entered the field yesterday for the first time.  We’re saying to them it’s good to see them actually making an offer on this, but they need to come back with a better offer.

JOURNALIST:  Can we move to the Energy White Paper which was put out yesterday – that hasn’t exactly been greeted warmly either.  How can you have an Energy White Paper and only mention climate change once?

MINISTER: Because there is going to be a separate process to ensure that Australia has a realistic position at the Paris conference at the end of this year.  The White Paper is more than flexible enough to accommodate that.  A taskforce has been set up within Cabinet, and I’m part of that taskforce, that will develop our position for Paris.  But this is an Energy White Paper and that’s what it was focussing on.

JOURNALIST:  Does this reflect your policy priorities though, because the 2004 White Paper under the Howard Government had an entire chapter devoted to climate change?

MINISTER: This will see more than an entire chapter devoted to climate change, it will see a whole proposal prepared to take forward to Paris. In 2004 which was literally five years before Copenhagen, the climate change debate was being framed within a different paradigm.  We’re now in a situation where everyone knows the process, Paris is a very clear process, we will spend the next six months developing a well-defined quite complex position in regard to our position on climate change.  And, as I say, that’ll be prepared in the context of Cabinet and the taskforce within it.

Media contact: Mr Macfarlane's office 02 6277 7070