Abbott leads Australia’s green rollback


July 18, 2014

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It is some feat to turn a country from a global leader into a global embarrassment within ten months. But, on green energy, Australia’s Tony Abbott has managed it.

The potted version is that Abbott became prime minister on 18 September 2013 and immediately set about dismantling Australian green laws. Hardly surprising for a man who derided the science of man-made climate change as ‘crap’ in 2009. His views clearly haven’t changed much.

Earlier this week, his government scrapped carbon pricing that seeks to reduce carbon emissions, and other plans include cutting A$435m from the budget of the Australian Renewable Energy Agency (ARENA). It also appointed climate change sceptic Dick Warburton to advise on the future of renewable energy targets.

Debates over the wisdom of these policies are raging, but the effect on investors in wind power is already showing. Over the last ten months, Australia has dropped from fourth to ninth in Ernst & Young’s ranking of nations based on how attractive they are for investors in renewable energy.

This reflects uncertainty over the Renewable Energy Target, which has left wind and solar projects worth A$1bn in limbo. RET mandates that 20% of electricity used in Australia by 2020 must come from renewable sources. It has been a key factor in wind’s growth and, if it is scrapped, then it will make the country more hostile to investors in the sector.

And it will also force investors to turn their attention to opportunities elsewhere.

That is not to say that the government will have an easy ride in making the changes that it wants to. For example, earlier this month rookie senator Ricky Muirblocked the proposed repeal of Australia’s carbon pricing mechanism by voting with Labor and the Greens. This was a setback for Abbott, but only delayed this week’s scrapping of carbon pricing rather than de-railing it.

Now, we agree with reviewing policies to ensure they work properly and see if they can be improved. This is necessary for the evolution of a sensible policy regime.

But hostility from Abbott and his government to the RET is not sensible. The prime minister says the renewable energy sector is driving up power prices “very significantly”, although this looks like it is based on skewed logic. The Australia Institute, for example, has argued that power price rises follow A$40bn spent upgrading the electricity grid in recent years.

Politically, it puts Australia out of step with most other developed countries before a United Nations conference on climate change, which is scheduled for Paris in November 2015. It shows Australia is pinning its hopes on coal and, on green energy, it is moving backwards at a time when most nations are moving forwards.

And, economically, it sends a clear message to developers and investors that they aren’t wanted, and that Australia is supportive of neither green projects nor green products. If Abbott doesn’t want money from these investors then others will.

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