On 18 February 2014, the Australian Government announced the terms of reference for the review of the Renewable Energy Target (RET) scheme.
Established under the Renewable Energy (Electricity) Act 2000 (Cth) (the Act), the RET requires 20% of electricity supply in Australia to come from renewable energy by 2020. Based on predictions of future energy demand, this target was fixed at an additional 45,000 gigawatt hours (GWh) in 2009. This is split between a large-scale renewable energy target of 41,000 GWh (the LRET) and a small-scale renewable energy scheme of 4,000 GWh (the SRES).
The review could have significant implications for the operation of the RET. As a result, we encourage our clients who are active in the renewable energy market to consider making a submission as part of the review process.
Under the draft terms of reference, the review will consider and provide advice to the Government on:
the economic, environmental and social impacts of the RET scheme and, in particular, the impacts on electricity prices, energy markets, the renewable energy sector, the manufacturing sector and Australian households;
whether the objective of the RET scheme to deliver 41,000 GWh of large scale renewable generation and encourage small scale solar generation by 2020 is still appropriate;
the extent of the RET’s impact on electricity prices and the range of options available to reduce any impact while managing sovereign risk;
the operation of the small-scale and large-scale components of the RET and their interaction;
implications of projected electricity demand for the 41,000 GWh target; and
implementation arrangements for any proposed reforms to the RET, including how to manage transition issues, risks and any adjustment costs that may arise from policy changes to the RET.
The review is also to consider the Government’s election commitment to reinstate native forest wood waste as an eligible renewable energy source.
It is expected that one recommendation of the panel will be to lower the target to reflect the lower revised demand forecasts for energy in 2020.
Under the Act, the Climate Change Authority (CCA) is responsible for conducting a review of the RET scheme every two years with the next review due in December 2014. However, given the Government has introduced legislation to abolish the CCA, the Government has said that the review is to be undertaken by an expert panel, headed by Mr Dick Warburton AO LVO and will include Mr Matthew Zema, Dr Brian Fisher AO PSM and Shirley In't Veld.
The panel will be supported by a Secretariat from the Department of Prime Minister and Cabinet and specialists from the Departments of Industry and Environment.
Details regarding the process for making submissions have not yet been released. We will provide a further update once the review is operating and accepting submissions.
The panel is expected to deliver its report to the Government by the middle of the year.