Peter, I misinterpreted what you meant. I think I understand your point now. However, I must disagree with your direct action comment. There is no cost of abating emissions in renewables. It is commercially viable. Even the government-owned Clean Energy Finance Corporation yields 8.1% on project finance - that is far better than any term deposits on the market, and far higher than the benchmark bond average of around 3.5%.

What you could argue is that in order to achieve such high yields in the renewable sector you must distort the marketplace by introducing regulations such as the RET. However, this would be avoided in my scenario - China can distort the market as much as they want, and we should profit off their policies.

The idea that renewable projects are profitable contradicts your idea regarding abating emissions at the lowest cost. Direct action and the carbon tax cost taxpayers, whereas investing in renewables provides a return to taxpayers, lowering their long term tax burden. Moreover, the CEFC is achieving higher yields than more diversified portfolios such as the government's Future Fund.

Even though investing in renewables it is profitable in Australia, it is more profitable in China. According to Ernst & Young's Renewable Energy Country Attractive Index, China is the best country to invest in renewables.

Considering Australia has a budget deficit, we must ensure that the capital invested in renewables is used as efficiently as possible - that is why I suggest international investment.

Regards

Spencer

Spencer Wright,

> “There is no cost of abating emissions in renewables. It is commercially viable.”

That comment is not supported by the evidence. Read the 2014 RET Review Report https://retreview.dpmc.gov.au/56-cost-abatement There are many other authoritative reports from other OECD countries that draw the same conclusion.

The RET Review Report Executive Summary says:

>“With the renewables industry now established in Australia, the main rationale for the RET hinges on its capacity to contribute towards the Government’s emissions reduction target in a cost effective manner. However, the RET is a high cost approach to reducing emissions because it does not directly target emissions and it only focuses on electricity generation. It promotes activity in renewable energy ahead of alternative, lower cost options for reducing emissions that exist elsewhere in the economy. In the presence of lower cost alternatives, the costs imposed by the RET are not justifiable.”

Here’s an interesting article from Germany: ““Energiewende” Takes A Massive Blow…Top Green Energy Proponent Concedes: “Blunder With Ugly Consequences”! http://notrickszone.com/2014/12/09/energiewende-takes-a-massive-blow-top-green-energy-proponent-concedes-blunder-with-ugly-consequences-huge-blow-to/#sthash.aP54nNTI.ziYo9jNr.dpbs

See Slide 10 here: http://canadianenergyissues.com/2014/01/29/how-much-does-it-cost-to-reduce-carbon-emissions-a-primer-on-electricity-infrastructure-planning-in-the-age-of-climate-change/ It compares the electricity cost versus emissions intensity of electricity in selected countries and states with high proportions of renewables and high proportion of nuclear energy. The contrast is obvious and stark. Then consider the irony in Slide 14, and recognize that you are one of the many advocating for the wrong solution.

The evidence is overwhelming - renewables are a very high cost way to abate emissions and cannot have a significant impact on reducing global GHG emissions (because of their high abatement cost compared with other alternatives, emissions leakage, and negligible proportion of global electricity generation.

Are you open to challenge your beliefs?

I often challenge and change my beliefs.

Perhaps the divergence is that I referred to project finance, which is a loan. In this case the CEFC lend money and yield 8.1%. This may not account for the whole cost of the project - which I believe the documents you refer to. If the CEFC granted money for projects, I would be very critical.

I am trying to narrow down the cost to government, not the whole cost including corporations - this was not the perspective of my original piece.

We both appear to argue that renewables in Australia are not effective. We just change in regards to what we should do instead.

Thanks for your input Peter.

The cost to the economy is what counts. All the high cost of renewables are a cost to the country, and therefore to our standard of living. They have no beneficial effect on global GHG emissions because of carbon leakage.

If renewables were economically viable as you claimed in one of your earlier comments, then we do not need the CEFC or RET or any other incentives to support them.

Furthermore, the CEFC's rate of return is not a commercial rate of return for the risk involved. It is hugely subsidised. The CEFC is taking all the regulatory risk. The loans should be from financiers without any government involvement and should be at commercial rates of return. There is no rational argument for government involvement.

Peter, I keep thinking to myself that we are more aligned than it would otherwise appear.

Regarding renewables being commercially viable, I did mention that a counter-argument was that the market was distorted due to the RET. In other words, they are viable, but mostly (or possibly only) due to that distortion.

I also agree that overall large-scale renewables are doing harm to the economy and that is why I advocate for a different approach.

It seems to me that the only thing we disagree on is what that different approach should be.

My starting position was a carbon pricing/ETS pathway, but which corporation is going to go into a nuclear reactor start-up that way, even without obstruction?

I've come to a direct action position, but not in the direction our government is taking. Let's take the French path.

Meanwhile, we should export coal only for smelting purposes, or to developing countries until they can proceed to nuclear, or to developed countries demonstrably committed to going to nuclear. Ultimately, however, much of it will have to stay buried to avoid CAGW.