Renewable subsidy schemes have come under fire for being costly and inefficient, but if they were redesigned to support local manufacturing they could deliver real value.

The NSW Government hosted its Solar Summit Mark 2 in Newcastle this week to discuss the future of government policy on solar and other renewables.

This is, in large part, an attempt by the O’Farrell government to appear sensible and forward-thinking in the wake of its ham-fisted handling of the Solar Bonus Scheme – the outcome of Solar Summit Mark 1 – which upset almost everyone while achieving precisely nothing.

But the outcomes of this process really do matter.

How we nurture our new renewable energy industries is a topic of critical national importance – and nowhere moreso than in our great industrial regions whose social and economic wellbeing still depends largely on emissions-intensive industries like coal-fired power generation, aluminium smelting and heavy manufacturing.

Ensuring ordinary Australians win out of this economic shift will require a focus at all levels of government on developing the new cleantech industries that will provide the skilled trades jobs that support communities into the future.

The biggest factor in transitioning to a lower-carbon economy will of course be the federal government’s carbon tax, with details to be released in the weeks ahead.

Despite the fear-mongering by Tony Abbott and a noisy band of climate deniers and industry nay-sayers, certainty on a carbon price will provide certainty to business to invest in emissions-lowering infrastructure and operations. There is actually strong mainstream business support for a price on carbon.

But alongside the carbon price, we will need a range of complementary measures including state government policies around energy and procurement that support investment in local industry.

So far, policy design has failed miserably on this front.

The NSW Solar Bonus Scheme is a good example. As has been pointed out loudly and frequently, the scheme, which paid householders generously for the solar energy they produced via rooftop panels, was an expensive way to produce clean energy.

The scheme was popular and did lead to widespread take-up, as householders realised they could get ahead on their energy bills and start making money as clean energy producers. That’s a good thing.

But the scheme was ill-conceived. If its aim was to boost production of energy from renewable sources, there are far more efficient ways to do that – for example, with large-scale solar or wind plants.

But that doesn’t mean that consumer renewable subsidy schemes should be scrapped and disregarded as part of the solution to acting on climate change.

Rather they can play an important role in industry development.

Consumer renewable subsidy schemes that promote production of clean energy should also be designed to support local industry and jobs.

NSW’s Solar Bonus Scheme, similarly to those around the country, did little to support our fledgling solar panel manufacturing industry here in NSW.

The big winners have been Chinese manufacturers, who have benefited from hundreds of millions in state and federal government subsidies to now supply rooftop panels to 95 per cent of the Australian market.

In NSW we have just one business locally manufacturing rooftop panels. They are producing a high quality product and trying to develop capacity and economies of scale – but struggling to compete against a flood of low-cost imports.

When governments take action that creates markets for solar panels or invests in renewable energy generation – and they should be taking action in these areas – we also need a plan to develop a high-end manufacturing capability to support good jobs to support our blue-collar industrial regions.

Government must work with unions and industry to find innovative ways to do this. In the case of the Solar Bonus Scheme, that could mean a higher rate of subsidy for householders who choose locally-made over imported panels.

Our solar industry, as it stands, employs 9,400 people – but only 300 of those are in manufacturing. The vast bulk are in service, sales and installation.

We could just throw up our hands and leave the cleantech manufacturing jobs to China and others economies like Germany, Spain and California, that have embraced the opportunities offered by the global uptake of clean technology.

But manufacturing is important. One million Australians are employed in manufacturing jobs. A strong manufacturing sector is essential to providing skilled trades job opportunities for a new generation of Australian workers. 

In a region like the Hunter, manufacturing is a large part of the industry mix and delivers enormous economic benefit, with each manufacturing job on average directly creating another three jobs across the supply chain.

The lesson from the NSW Solar Bonus Scheme is not that renewable subsidy schemes are a waste of money – but that they need to be better designed to meet the social and economic challenges of the future.

Tim Ayres is NSW Secretary of the Australian Manufacturing Workers Union