Today, 19 December 2012, the Climate Change Authority provided the Minister for Climate Change and Energy Efficiency with the Final Report of the Review of the Renewable Energy Target.

In summary, some of the key recommendations are:

  • the large-scale Renewable Energy Target should remain fixed in terms of gigawatt hours and there should be no change to the shortfall charge at this point in time;
  • the next review of the Renewable Energy Target should be in 2016 (not 2014) and particular regard should be given at that point in time to:
    • the fact that the Renewable Energy Target should be viewed as a transitional measure complementary to the introduction of the Carbon Pricing Mechanism; and
    • in the event that the carbon price or electricity demand are significantly lower than currently projected, increasing the shortfall charge to manage against the risk that the Renewable Energy Target would not be met;
  • partial exemption certificates should be made "tradeable" and an opt-in facility should be established to provide large electricity users with an option to better manage their compliance costs; and
  • the Productivity Commission's review of the Jobs and Competitiveness Program associated with the Carbon Pricing Mechanism should be expanded to also review the partial exemption framework of the Renewable Energy Target (given the similarities of these assistance measures for emissions-intensive, trade-exposed industries).

Significant consideration has been given to the contribution of the Renewable Energy Target (in particular the small-scale Renewable Energy Target) to increasing electricity costs however the thrust behind many of the recommendations is that on balance policy certainty is a key ingredient for investor confidence and catalysing investment in large-scale clean energy projects.

The Federal Government is required to respond to the Final Report by June 2013.

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