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Reaction mixed towards Australia's reduced renewable energy target

Xinhua, May 19, 2015 Adjust font size:

Industry reactions have been mixed towards Australia's bipartisan agreement to scale back the renewable energy target for 2020.

On Tuesday, Industry Minister Ian Macfarlane said the new target remains ambitious but it was a challenge that the energy industry needed to embrace.

The Coalition Government and Labor Opposition ended a 12-month stalemate on Monday by agreeing to reduce the renewable energy target for electricity from 41,000 to 33,000 gigawatt hours.

The original target, set in 2010, was based on 20 percent of expected demand in 2020, but more recent projections of electricity demand have dropped significantly.

It still requires electricity companies to increase their production from renewable sources from 16,000 gigawatt hours within five years.

But energy market analysts from Bloomberg said the compromise will see investment in Australian projects drop from 16.5 billion to 11.75 billion US dollars by 2020.

Clean Energy Council chief executive Kane Thornton said the political indecision around what the reduced target should be had also ripped investment from the industry's hands.

"The industry was entirely frozen. There was no new investment if the situation continued," he said.

The government originally proposed a 36 percent cut to 26,000 gigawatt hours but Labor said it would not budge below 35,000.

The two reached a compromise when the government agreed to remove a mandate to review the target every two years.

Macfarlane said Matthew Warren, Energy Supply Association of Australia CEO, thinks the target was too high and the due date too soon.

"Matthew's view is that it is almost impossible to build this many wind towers in the time that they have available," Macfarlane told ABC. "Remember they have to build as much wind generation in the next five years as has been built in the last 15."

The target was criticized when first established as, by avoiding oil and coal exports, it makes up closer to 2 percent of Australia's total energy production.

South Australia has its own renewable energy target of 33 percent on domestic electricity energy production. Endi