The Wilkins Review just got buried. In previous times, the handing down of this report would have been timed for maximum effect to build pressure against direct regulatory measures that support renewable energy. Instead it was buried on a busy news day immediately after the Gov’t announced $1.5 billion of direct investment in solar energy.
Roger Wilkins, the head of Citigroup’s public sector group and former head of the NSW Cabinet Office, was appointed in February last year to examine climate policy with particular reference to ‘complementary mechanisms’ to the CPRS and whether they are still needed to correct market failures.
It was widely expected that Wilkins would recommend that the CPRS will eliminate the need for most other mechanisms – the market being more powerful than God.
Now that the CPRS is completely on the nose, this message is no longer as popular as it once might have been. Not that it should ever have been popular. It is clear from the experience in Germany, California, Denmark, Spain and other countries that are building a renewable energy industry, that the most effective policies have been feed-in-tarrifs and other direct investment in renewables. These are effectively industry development policies – and they work.
The political and public failure of the CPRS means that Rudd will be under increasing pressure to adopt other complementary measures to cut emissions and promote renewable energy if he is to maintain any credentials on climate change.
2 Comments
If he’s a “respected” economist of course he opposes any form of intervention or regulation. The real answer is that RET is not about reducing emissions (that is a side benefit), renewable subsidy is about promoting what many believe will be a critical industry in the future.
Yes Minister always taught us that you pick someone who believes the outcome you want to conduct an independent review.
Remember the Owens review in NSW. I’ve heard from several sources that the final recommendation to privatize everything was only tenuously related to the initial question “Future baseload needs”. Of course if you appoint someone who believes in privatized markets that is the answer you get.
Have you looked at the list of people on the panel for the Energy White paper?? The outcome is fairly predictable since it is stacked with incumbent interests.
It is certainly true that feed-in-tariffs (FiTs) have driven investment in renewables more than the EU ETS, but FiTs haven’t made much of a difference to emissions. Only about 0.2% of Germany’s electricity is from solar, but people feel like they are doing something because they have solar panels on their roofs.
The reason that FiTs drive investment in renewables well is that they guarantee a price, an ETS does not do this very well because the price is highly unstable. This is why an ETS should have a floor on the carbon price, which also allows there to be more emission reductions than specified by a given target. Only an ETS with a steadily increasing price floor will drive the investment in low emissions technology that we need.