The Federal Government yesterday announced it is releasing the Terms of Reference for a review into the Renewable Energy Target (RET) scheme.
In a joint announcement the Minister for Industry Ian Macfarlane and Minister for the Environment Greg Hunt said the review will be completed by the middle of the year and will be undertaken by an expert panel headed by former Reserve Bank board member Dick Warburton.
The announcement immediately sparked concerns among green groups fearing a weaker target could pave the way for increased pollution.
At the same time the solar industry said the RET Review threatens more than 7,000 jobs.
The current mandatory target is for Australia to generate 20 per cent of its electricity from renewable sources by 2020, which was introduced by the former Labor government.
It has been a boon for the renewable energy industry especially wind and solar producers.
However, it has also been blamed for increasing electricity prices and business groups are keen to see serious cuts to the renewable energy target.
Macfarlane said the review will consider the contribution of the RET in reducing emissions, its impact on electricity prices and energy markets, as well as its costs and benefits for the renewable energy sector, the manufacturing sector and Australian households.
“Unlike the pattern from the previous Government, the review will engage in real consultation, seeking submissions from the public and industry," he said.
Hunt said the government is committed to easing the pressure of electricity prices for families and business.
"That’s why we’re getting rid of the carbon tax. The carbon tax drives up the price of electricity but has had no significant impact on emissions," he said.
Hunt issued a statement earlier this week which said the carbon tax cost Australia $7.6 billion in the 2012/13 financial year.
The review will be supported by a Secretariat based in the Department of Prime Minister and Cabinet involving specialists from the Departments of Industry and Environment.
An analysis released by the REC Agents Association (RAA) claims 7,000 jobs could be axed in the solar industry alone if the Abbott government decides to abolish Australia’s RET.
Australia’s solar industry, while relatively new, has become a major employer across a wide variety of direct and indirect industries. In 2012, it was estimated to have employed more than 23,500 Australians and grew its employment rate by 51 per cent compared to the previous year.
In 2013, however, after the removal of state and federal incentives, the PV market declined 22 per cent and the solar hot water market declined 20 per cent, leading to the loss of 5,800 jobs from a peak of 23,500 direct and indirect jobs in 2012, the report said.
And while similar industry job losses have been predicted for this year, the RAA report finds that, with an unchanged RET, this trend would soon be reversed, with a potential 8,000 additional solar PV jobs created between 2014 and 2018 under a business-as-usual scenario.
Australian Industry Group chief executive Innes Willox pointed out that demand for electricity has fallen considerably and there have been other changes since the current RET target was set.
"In particulr, projections of demand have fallen so that the legislated target is now well in excess of the 20 per cent of projected demand," Willox said.
Opposition climate change spokesman Mark Butler said the review would prove that the RET has been successful.
"Previous reviews have shown the policy is delivering clean energy such as solar and wind while providing significant investment across Australia," he said.