The Australian parliament recently passed a mandatory renewable energy target for Australia. It maintains the long established 'REC' market - a trade in renewably generated electricity. The trouble with the legislation is that the effectiveness as a market mechanism for cheap clean electricity deployment has been thoroughly compromised by successive governments using it as a convenient place to dump all manner of energy 'problems' or to politically justify at best dubious stimulus measures.

The scheme was designed to harness the power of free enterprise to find the lowest-cost clean energy sources for the country. One would expect such a scheme to strongly favour the most cost competitive form of renewable generation, wind power. After all, wind is the cheapest, most reliably and bankable clean energy. But instead it appears it will mostly bank-roll domestic hotwater heating, domestic PV systems and most strangely of all, the burning of gas from coal mines!

The 'wreck' began when the Howard Government confused energy efficiency with generation and included solar hot water heaters. Such heaters are a great idea but don't belong in an electricity generation scheme and now (and for the foreseeable future) they will be the dominant source of credits; crowding out real electricity generation. The Rudd government have also found it a convenient place to the electorally-popular-but-financially-disastrous domestic solar incentive into it as well. And now we see both sides of politics lining up for the final 'wreck'  - with the suggestion that methane gas from coal mines should be treated as renewable! A market based mechanism relies on the efficiency of the market.  All these interventions and corruptions only serve to distort the market mechanism, making it far less efficient and effective.  This can be seen in the current market, with resultant low REC prices hindering the financing of genuine renewable energy projects. 

The net impact of this is that households are encouraged to abate emissions at $200 per tonne whilst they could get green power from companies like Windlab for $50. Australia is wasting money, stifling the development of  key infrastructure and jobs, and further delaying the urgently needed transformation of the electricity sector. It is time the government kept their hands off the REC and stuck to the plan at the expense of political expediency to avoid it becoming a Wreck.