Hopes rise for RET deal as aluminium reprieve flagged

Government figures are increasingly confident of reaching a deal with Labor on the future of the renewable energy target after the Clean Energy Council backed exempting aluminium from the scheme.

Cabinet is expected to discuss the RET today and give Environment Minister Greg Hunt and Industry Minister Ian Macfarlane a mandate to negotiate a settlement with Labor. CEC support for exempting the aluminium industry is seen as making the move almost certain. It is also seen as giving Labor more room to negotiate.

The government’s review of the RET, which was set up to ensure 20 per cent of electricity would be generated from renewable sources by 2020, has caused uncertainty in the sector.

There have been competing calls for it to be retained, scrapped or wound back to reflect falling demand for electricity.

The aluminium industry is one of the biggest users of electricity, and exempting it from having to buy renewable energy certificates could push up power prices unless the scheme is wound back.

CEC acting chief executive Kane Thornton, who wrote to the government last week supporting an exemption for aluminium, argued the 41,000GWh target should not change because modelling showed residential power prices would rise only by up to $4.50 a year. If that argument was not accepted, exempting aluminium would open the way to cut the target by 2100 GWh, which is aluminium’s share of the scheme.

Liberal MP Dan Tehan, who has led a group of 25 Coalition MPs pushing for the exemption, said the CEC’s support was a potential game changer in terms of getting a bipartisan agreement. He said the council’s intervention came after the Australian Workers Union also backed an exemption for aluminium. He hoped Labor would approach negotiations in good faith “to make sure we get a sensible outcome”.

Mr Hunt welcomed the CEC’s intervention as a “valuable contribution’’.