Green energy firms in Australia hit by target cuts

The Australian government last week chose to cut support for cleaner energy sources. The government says the cut in the Renewable Energy Target (RET) takes account of a decline in overall demand for electricity that has been sparked, in part, by higher power prices. It also says the lower target will provide certainty to the renewables sector.

The decision is not as drastic as it could have been. A government-commissioned review by businessman and climate change sceptic Dick Warburton had proposed, as one option, scrapping the RET altogether.

However, the new target still has to make its way through parliament either with the support of the Labor opposition or of a number of independent senators in the Upper House - neither of which is a sure thing.

But months ago, when it became clear the government would cut or dump the target RET, business apparently began to dry up.

Australia is the highest carbon emitter per capita of any country in the OECD. It is not only small operators who have been hurt. One of Australia's largest wind turbine tower producers, Keppel Prince Engineering in Victoria, announced last Thursday it had sacked 100 workers because of the government's RET decision.

A number of large-scale renewable energy producers had already been affected by the conservative government's lack of commitment to renewable energy, says the sector's peak body, the Clean Energy Council.

In July, clean energy solutions provider Pacific Hydro cut its staff by 10%; Hydro Tasmania has said the government's scrapping of the carbon tax would significantly cut into profits, and US company, Recurrent Energy, has reportedly closed its Australian office.

The Clean Energy Council says a cut in the RET will kill much of Australia's renewable energy industry, which employs about 21,000 people nationwide.

"A substantial reduction of [the] target to around 27,000 GWh… would equate to a 64% reduction in future investment and effectively devastate the renewable energy sector," says the council's acting chief executive Kane Thornton, adding that consumers will end up paying higher, not lower power bills because of the cut in supply.

The European Union has announced it will cut greenhouse gas emissions by at least 40% on 1990 levels by 2030.

Australia, the highest carbon emitter per capita of any country in the Organisation for Economic Co-operation and Development (OECD), has an existing emissions reduction target of at least 5% by the end of this decade.