STRIPPED of the political grandstanding, Australia's Renewable Energy Target would fail any reasonable cost-benefit test. However much internal warmth the thought of more windmills and solar panels might generate, the cold hard truth is that renewable energy targets have serious economic implications that warrant close scrutiny. Unfortunately, in handing alternative energy companies a subsidised monopoly to supply 20 per cent of our electricity, the RET scheme is unlikely to reduce emissions cost effectively, if at all.
The economics are simple. Given current technology, the electricity generated from renewables will be much more expensive. In May last year, the Productivity Commission calculated that next year, the cost of one megawatt hour of electricity from Australia's vast black coal reserves would be $30-35. Wind power would cost twice as much -- $55 to $80 per megawatt hour. And however scorching the Australian summers, solar power will cost $200 to $400 per megawatt hour. Read more.