Does voluntary abatement really work? Computer says no…

Former NSW Premier Jack Lang famously once said: “in the race of life always back self-interest – at least you know it’s trying”. The recent King Review of the Federal Government’s Emissions Reduction Fund (ERF) suggested increasing capability of voluntary action by companies to deliver further emissions reduction in Australia.

Voluntary abatement was proffered as a credible alternative to legislation to constrain emissions through pricing or regulation. All gain no pain. It sounds nice, but is this going to work?

One way of considering the effectiveness of voluntary abatement is to look at the performance of possibly the longest running and biggest voluntary abatement scheme in Australia: GreenPower.

Since 1997 Australian electricity consumers have been able to buy aggregated green electricity from GreenPower: a jointly government owned brand that sells tranches of renewable electricity to consumers. You can buy a little (like 10 per cent) or a lot (like 100 per cent). These purchases are aggregated and used to buy off take for renewable projects. In effect they drive increased demand for renewable energy.

It’s a simple and effective way for all households and businesses to have access to a scheme where they can volunteer to buy renewable energy without having to install solar panels or other technologies. But there’s a problem. No one is buying it.

In 2010 there were nearly 780,000 residential GreenPower customers in Australia and another 54,000 business customers. In 2019 this had faded to only 146,000 residential customers and 23,000 business customers. Even then, many of these these are only buying the smallest shares of renewables in their electricity.

GreenPower customers by year vs solar PV customers. 2010-19 Source: Clean Energy Regulator, GreenPower

By contrast, over the same period, rooftop solar PV has gone the other direction. In 2010 there were 283,000 households with solar panels, by 2019 there were 2.3 million.

Faced with the option of buying in to a voluntary government run renewable energy scheme or buying your own solar panels that deliver a net cost saving, it seems to be no contest: consumers want their own renewables and they like the cash payback. Altruism is running a very distant second.

If you think the raw numbers of customers are intense, the electricity numbers are even more stark. Rooftop solar PV was trailing GreenPower in 2010, generating around 650,000 MWh a year while GreenPower delivered 2.19 million MWh.

GreenPower vs Rooftop solar PV: MWh per annum 2010-19 Source: GreenPower, Clean Energy Regulator

In 2019 the roles had radically reversed: GreenPower contributed a little over half a million MWh of clean electricity, while rooftop solar PV generated 14.8 million MWh. That’s 29 times more clean energy.

In terms of a scorecard on how consumers value voluntary behaviour versus technologies that deliver both that “green” feeling and real cost savings, they are choosing the latter in droves.

There may be a few reasons for this:

1. It’s the law: The legislation of a Renewable Energy Target in 2009 may have shifted the perception of renewables as a cause to support to something that was mandated by law. This may have eroded voluntary action given the outcomes were basically enshrined by law.

2. It’s the brand: Rooftop solar PV has become a highly competitive market in Australia with a wide range of suppliers. GreenPower is a brand that is shared by a collective of governments. It’s a weak position to sell something. Most GreenPower sales are at low or zero cost to consumers, a small greenPower top up as an incentive in broader retail competition. So the true weakness of the brand may be masked by this.

3. It’s voluntary: at the end of the day, maybe voluntary actions with no reward except a warm inner glow only have a relatively small market of durable consumers. From the evidence, GreenPower is at risk of all but disappearing without a trace at a time when the Federal Government is talking up the potential of voluntary action on climate change.

4. It’s not tangible: Consumers are voting with their wallets, and they clearly prefer a cool 21st century machine on their roof that saves money and is good for the planet than giving money to some scheme that helps do something somewhere else. It’s not even a contest.

If governments were serious about voluntary action, they might do well to punt the GreenPower brand off to a third party that can promote it and has basic incentives to increase customers and volumes. At the moment it looks like dated window dressing in a world that has mostly passed it by.

And that’s a shame. Because GreenPower is, in many cases, cheaper per tonne of emissions and more sympathetic to the needs of the grid than households who are buying small power stations which cannot be seen, let alone controlled, by the market operator.