Assessment of efficacy
This section assesses the efficacy of existing policy, regulatory and
institutional settings for renewable energy in Australia. This
assessment is made based on the insights gained from a review of key
policy, regulatory and institutional settings (as presented in sections
3.1 to 3.3), complemented by some thoughts on the all-to-familiar
shenanigans of the policy and legislative processes. Some key points are
discussed as follows:
- Lack
of political constituency for redressing climate change challenge :
Although the enormity of climate change challenge is well recognised
in Australia, the political constituency to act is limited. The review
as presented in section 3.1 should substantiate this observation; this
review clearly demonstrates that policy efforts for reducing total
emissions in Australia have been largely insufficient. For example,
despite growing public concerns about climate change, the National
Greenhouse Response Strategy (NGRS) adopted in the early 1990s mainly
focused on no-regret measures for emissions reduction. In the
mid-1990s, as the ineffectiveness of such measures became clearer, the
National Greenhouse Strategy (NGS) was adopted, which went beyond
no-regrets measures by introducing the Mandatory Renewable Energy
Target (MRET) of having 2% electricity generation from renewable
sources by 2010. Despite some progress in promoting renewable
generation, the NGS turned out to be insufficient for reducing total
emissions, as it mainly reinstated the previously cancelled measures
for emissions reduction. After the 2007 federal election, Australia
drastically changed its environmental stance. The ratification of the
Kyoto Protocol, expansion of the MRET to 20% by 2020, and
introduction of a national carbon pricing scheme thereafter firmly
established a stance that prioritised emissions reduction. But this
stance was short-lived, and a significant roll-back of policy measures
for emissions reduction was witnessed after 2014 election, as the
Coalition government repealed the carbon pricing scheme, reduced the
renewable energy target to 33,000 MWh (equivalent to about 15% of
total generation in 2020), cut the funding for Clean Energy Finance
Corporation, and abolished the Climate Commission.
- Piecemeal policy for promoting renewable energy : In the
absence of adequate political constituency, the renewable energy
policy setting in Australia is characterised by piecemeal policy
efforts for promoting renewable generation. As presented in section
3.1, these policy efforts have primarily been made as a response to
immediate pressure for the country to act on climate change. This
pressure has arisen from increasing domestic concerns about climate
change challenge and international commitment (e.g., Kyoto
Protocol) to emissions reduction. The 2007-08 financial crisis
appeared to have created a general anxiety about economic slowdown and
its crippling effects on living standards. In such environments,
issues of climate change have assumed a dormant role. The outcomes
have been a significant roll-back of policy support for renewable
energy, for example, reduced the renewable energy target to 33,000
MWh.
- Regulatory uncertainty : Under the guidance of above-noted
piecemeal policy, the task of developing effective regulation has
become extremely difficult. This is so because any major policy change
typically needs change in the underlying regulation, which requires
recourse to time-intensive, and sometimes confrontational, legislative
processes. The outcomes are therefore significant regulatory
uncertainty. This viewpoint gets further substantiated by a review of
the legislative landscape, as presented in section 3.2. This review
shows that renewable energy legislations have been subject to frequent
change in Australia, mainly as the results of underlying policy
changes.
- Limited institutional capacity : The institutional
arrangements for making and implementing renewable energy policy and
regulation are well-developed in Australia with clear delineations of
institutional responsibilities (Figure 1). Notwithstanding the
satisfactory assignation of institutional responsibilities, the
capacity of these institutions to fulfil their responsibilities is
limited by factors, such as, frequent institutional change
(e.g., department reorganisation), reduction in budget
allocation, and political interference. A review of the institutional
landscape – as provided in section 3.3 – should provide some
credence to this viewpoint.
The above discussion identifies major lacunae in the existing policy,
regulatory and institutional settings. This discussion is further
extended below, with the view to draw out some points that will need to
be considered in order to improve the efficacy of the policy, regulatory
and institutional settings. This extended discussion is developed based
on the insights gained from a review of broader policy settings in
section 2. Some of the main points are as follows.
As presented in section 2, the electricity policy setting in Australia
has historically favoured cheap and abundant indigenous fuels
(especially, coal) for power generation, to subserve wider priorities
and agendas of socio-economic development of the country. In such
environments, issues of climate change have become subordinate to
wider socio-economic priorities, hence a lack of political
constituency for redressing climate change challenge. Piecemeal policy
efforts for promoting renewable generation, significant regulatory
uncertainty, and limited institutional capacity are therefore natural
outcomes, as a rapid increase of renewable generation would undermine
the wider socio-economic priorities that have favoured coal-based
generation.
To rectify the situation will require the formation of a national
consensus to shift wider developmental priorities towards the
development of a low-carbon economy, because this consensus will
facilitate the development of more effective policy, regulation and
institutions for promoting a major transformation of the existing
coal-dominated generation mix, aimed at reducing emissions from power
generation. The formation of such a consensus will be the outcome of a
complex and challenging political bargaining process, through which
various affected interests will be accommodated.