Australia Seeks to Reduce Renewable Energy Target to ‘Real’ 20%

Prime Minister Tony Abbott’s government will negotiate with the opposition to cut Australia’s renewable energy target and exempt industries such as aluminum and copper smelting.

Industry Minister Ian Macfarlane said he was “reasonably confident” the target would be reduced from the current 41,000 gigawatt hours of electricity from renewable projects to between 26,000 and 28,000. While negotiations with Labor will start today, legislation is unlikely to be passed this year, Macfarlane said.

A government-appointed panel recommended in August that Australia weaken or phase out the target in favor of a lower-cost approach to cutting greenhouse-gas emissions. Speculation that Australia will dismantle the RET has unsettled an industry that has seen A$20 billion ($17.6 billion) of investment since the country set goals for clean energy in 2001.

Origin Energy Ltd. and other large utilities have opposed the requirement that Australia produce 41,000 gigawatt hours of electricity from large-scale renewable projects by 2020. The government says the gigawatt-hour figure, which was supposed to represent 20 percent of the market, is actually heading toward 26 percent amid shrinking electricity demand.

“We’ve advocated a return to a true 20 percent” target, Origin Managing Director Grant King told reporters today in Sydney before Macfarlane’s comments.

The real 20 percent target “is I think what Australia signed up for,” Macfarlane told reporters in Canberra. The government doesn’t intend to stop subsidizing solar panels on rooftops, he added.

Opposition Lawmakers

Any changes to the RET -- which requires electricity retailers to buy renewable certificates from wind and solar farms or generate clean power themselves -- needs the support of opposition lawmakers in the upper house Senate to become law.

Labor leader Bill Shorten today described the real 20 percent target as a “fraud 20 percent,” the Australian Associated Press reported.

“Renewable energy is part of our energy mix,” he was cited as saying.

The move to lower the RET comes after Abbott in July fulfilled his election pledge to scrap the nation’s price on carbon, leaving Australia without an approved mechanism for limiting emissions.

The Australian Conservation Foundation said in a statement the proposal to scale back the RET would crush growth in the nation’s clean energy industry.

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