Big investors say an increasingly unsettling debate over climate policies is making it harder to push ahead with renewable energy generation projects, imperilling the transition away from fossil fuel power even as ageing coal assets are coming to the end of their lives.
The warnings came a day after electricity and gas producers such as AGL Energy said they were concerned that the economics of new developments were poor, partly because costs had risen but energy prices had not.
“We thought we had broken the climate war cycle and, unfortunately, it looks like we’re back in it, and it’s tough to make decisions in that context,” said Mussaret Nagree, the chief energy transition officer at Wesfarmers’ sprawling industrials and fertiliser division.
Nagree, speaking on Wednesday at The Australian Financial Review Climate and Energy Summit, said the political instability was making large, long-term abatement and renewable generation projects impossible to justify.
“We need policy consistency,” she said.
“We need a bipartisan position… we can’t be in a situation where we’re a hostage to three-year election cycles when we’re looking at large-scale abatement projects that cost hundreds of millions, if not billions, of dollars, and only make a return over 20 or 30 years.”
The push for renewable energy generation has accelerated in recent years as the closure of major coal-fired power plants nears.
Eraring, the country’s largest plant, near Lake Macquarie, is scheduled to go offline in 2029, while the Yallourn plant in the La Trobe Valley is scheduled to close in 2028.
Coal, natural gas and oil made up more than 60 per cent of all generation last year, according to statistics from the Department of Climate Change, Energy, the Environment and Water.
However, by 2050, renewables are projected to make up 95 per cent of the national electricity market, with onshore wind and large-scale solar generation expected to dominate.
But, while Labor has stood firmly by its renewable energy targets and spent billions of dollars on schemes subsidising the renewable energy buildout, the area is increasingly contested by the likes of the Coalition and One Nation.
Clean Energy Council chief executive Jackie Trad – a former Labor MP and former Queensland treasurer – said the Coalition’s focus on nuclear energy as a fossil fuel replacement was a “fanciful distraction”, arguing that the absence of coherent policy settings had created a bottleneck on funding for projects.
“Inconsistent policy positions from major political parties have destabilised the investment certainty for replacement energy in Australia,” said Trad.
“There is a real, desperate, urgent need for stability in the policy and political environment.
“We need it for industry, we need it for households, [and] we need it for the increased demand that AEMO has acknowledged is coming our way for the digital prosperity in terms of data centre development and [artificial intelligence],” referring to the Australian Energy Market Operator.