Deal or no deal? Renewable energy target negotiations hit tipping point

The future of the renewable energy industry has come to this.

So is it deal or no deal? What is the current state of the renewable energy target negotiations between the government and the Senate?

Last week a split appeared to form in the previously rock-solid front put forward by the organisations lobbying on behalf of the renewable energy sector. The break was instigated by the Clean Energy Council which called for the target to be reduced to 33,500 gigawatt hours from the promised figure of 41,000 as an acceptable compromise.

The CEC’s figure, contained in a letter to the Prime Minister, is in itself a reduction from its own bargaining position of the “mid to high 30,000s” according to the Sydney Morning Herald.

“This proposal represents a major compromise for the clean energy sector, the government and the opposition,” said the council’s chief executive Kane Thornton in the correspondence.

“I believe it is in the national interest that both major parties support this proposal and finally resolve this issue.”

It’s fair to say that the Council’s move has been controversial, with many supporters insisting on retaining the original RET target. The break appears to have generated opposition however it can’t be ruled out as a deliberate ploy as these negotiations always carry a high level of wider considerations.

Indeed the letter also suggested that the Coalition put aside plans to axe renewable energy groups such as the Clean Energy Finance Corporation and the Australian Renewable Energy Agency. The CEC also called on the government to kick start the renewable energy industry which has been waiting for some certainty in the marketplace.

Latest reports have government chief negotiator Ian MacFarlane saying he was “confident” that he could secure crossbench support for a reduced target, meaning he would not need the Labor Party’s support. Coincidentally this leak came as the Coalition announced they were “considering” a change in the Senate election to reduce the power of the crossbench.

Was this an attempt to rein in the “feral” Senate as described by Tony Abbott? Or just a nasty little threat at a crucial time in the renewable energy target negotiations to get the crossbench senators onside?

At the time of writing the renewable energy negotiations are in a state of flux with a reduced level (despite government promises) appearing to be on the cards. As Senator Xenophon, one of the key crossbenchers from which the government needs to get support, pointed out that the Coalition still needed to win over a number of the independent senators including himself.

“I expect that there will be negotiations in coming weeks but it’s a very fraught situation,” he said.

What do you think? Should the green energy sector accept a target of 33,500 as suggested by the Clean Energy Council? This would unlock a great deal of investment that is currently tied up, waiting for some form of certainty in the marketplace.

Or should the organisations representing the renewable energy sector stand firm (and together) and insist on receiving the full 41,000 gigawatt hours as promised? This may result in eventual benefit to the country however at what cost to investment in the industry from banks, financiers and companies looking to some form of level playing field that will give them an opportunity to invest.