The renewable energy bill now before the Senate proposes that 20 per cent of electricity be derived from renewable sources.
This would offer no advantage to Australia while crippling the competitiveness of our energy supply. Based on the cost premium required for wind, the least uncompetitive available renewable source, and the bill's penalty costs on electricity retailers, the proposal requires energy at double the cost of commercial sources.
On average this would raise the average cost of generated electricity by 10 per cent and impose a deadweight loss on the economy of $1.8 billion per year.
Should the wider cap-and-trade emission trading scheme also be introduced, the 20 per cent renewable requirement will not even bring about a net reduction in carbon emissions.
With the ETS, it would merely change the composition of that reduction, making its achievement more expensive.
Ten years ago Australia developed the world's most competitive and lowest-cost electricity supply. This was brought about by energy deregulation and privatisation.
Combined with the creation of the National Electricity Market and Australia's natural advantages in energy sources this has produced immense value to the nation's competitiveness across the range of industries.
The seeds to progressively dismantling this asset started with the 1997 Mandatory Renewable Energy Target. Though ostensibly designed to require 2 per cent of electricity to be generated by subsidised renewables, this now requires more than 4 per cent from these sources and the new bill would boost that to 20 per cent.
Though the MRET scheme was never a good idea, unlike in 1997 it can no longer be credibly argued that, given time, wind generated electricity will be competitive with conventional fossil fuels.
These regulatory measures mean that instead of ensuring that the lowest cost energy dominates the market and putting pressure on all sources to reduce their prices, we are requiring the use of high-cost energy sources.
The resultant damage is compounded by imposing a tax on energy in the form of the ETS which would markedly increase costs.
Together the two measures will undermine the benefits we have gained from our low-cost energy and the political and regulatory institutions that allowed it to percolate though the economy.
At least with the ETS it may be argued that we have a tax with revenues directed back to those the political powers deem to be most worthy of extra subsidies (or cushioning the blow to firms whose corporate viability is exposed).
But with the mandatory renewable agenda all we have is a high-cost energy source.
This is imposed on the consumer by a form of tax, the revenues from which are directed back to the suppliers of the intrinsically uncompetitive energy sources.
Evidence from overseas shows that any jobs created as a result of the forced requirement to use mandatory renewables come at a cost in excess of $200,000 each.
Moreover, Spain's experience indicates for each subsidised job created, there are 2.2 jobs lost.
Mandatory renewables are promoted by an archetypical combination of "Baptists and bootleggers". When Baptists call for a ban on alcohol sales on Sundays, it's the bootleggers who benefit.
The bootleggers -- those with commercial interests in wind farms and other high-cost renewables -- like the protectionist lobby before them, point to visible developments in facilities built on the back of the economic distortions they seek.
But the damage of acceding to the special pleading for high-cost electricity is much greater than was the case with the introduction of external tariff protection.
Unlike manufacturing facilities previously made possible by restraining import competition, wind farms no longer have any pretensions of being the nursery for an infant industry that will mature into genuine world competitive and productive activities.
Moreover, in making a poor use of our resources, they are sapping the nation's competitiveness on a much greater scale because of the all-pervasive nature of electricity within the economy.
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