AGL Energy's CEO says RET should be dropped

Oct 28, 2014 - Michael Fraser, the CEO of Australian power producer AGL Energy (ASX:AGK), said Friday on Radio National that Australia’s 2020 renewable energy target (RET) scheme is “broken” so it should be abandoned completely.

Last week, Australia’s ruling party presented a proposal to cut the RET to a "real" 20% of demand, or around 26,000-27,000 GWh. This would be a significant reduction from the existing 41,000 GWh of annual renewable power output target by the end of the decade.

Fraser has said the government should scrap the RET and start anew as already investor confidence in that programme has been shaken too much. His company is among the main coal-fired power producers in the country, while it also operates some gas-fired, wind and hydropower plants.

In August, AGL Energy was actually mentioned as one of the companies that would reap nice profits from a possible cut to the RET. The “Who really benefits from weakening the Renewable Energy Target?” report said that coal-fired power plant operators in Australia can receive up to AUD 8 billion (USD 7bn/EUR 5.6bn) in additional profit between 2015 and 2030 if the government cut or abolished the RET. For AGL, the extra profits were calculated to reach AUD 1 billion for these 15 years. The report was commissioned by The Climate Institute, Australian Conservation Foundation and WWF-Australia.

The RET, the instrument promoting wind, solar and other renewable energy projects in Australia, was functioning quite well until in February 2014 the government appointed global warming skeptic Dick Warburton to review it. Now, the whole industry is waiting for the Tony Abbott government and the opposition Labor party to reach an agreement on whether and how much to cut the target.

(AUD 1 = USD 0.883/EUR 0.696)

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