The current energy debate is farcical. What does this government stand for?

Tuesday 19 September 2017

Opinion piece written by Honorary Professor John Hewson, Energy Change Institute member and former leader of the Liberal Party. This article originally appeared in The Guardian.

How bizarre can the energy debate get? Every time I think that we have heard it all, reached the “bottom”, or whatever, even stranger things happen – now almost daily.

Our political leaders have now spent years scoring points on each other, and attempting to shift the blame, indeed, doing everything they can to avoid addressing the issue of rapidly rising electricity and gas prices. Yet, ironically, they are collectively to blame.

In all this “colour and movement” neither the government, nor the opposition, has yet produced a believable and deliverable energy policy. That is, a policy to specify the path forward to a low-carbon society, demonstrating a genuine capacity to lower power prices and to guarantee supply.

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The bottom line is an outcome you might reasonably have expected that they would have wanted to avoid. While consumers are totally confused about what our pollies are doing, they get their regular power bills, which they can’t understand, and the power companies certainly don’t help them in this respect, so they remain absolutely convinced that they are being “ripped off”, which of course they are!

One of the most disturbing aspects of all this is that the government seems to have lost its sense of what it stands for – or at least what the electorate had come to accept that it stood for.

For example, as a Liberal government supposedly believing in small government, little regulation, market processes and private enterprise, they now feel at home “shirtfronting” the board and management of a significant power company, AGL, pressuring them to reverse a board decision to close the Liddell power plant in 2022.

This has come on the heels of them pressuring gas companies to “reserve” a proportion of their output for the domestic market, rather than for the exports that they had been encouraged to pursue in the past.

While it is reasonable to expect that government should define a regulatory framework within which the power market would operate, this is certainly a “new” interpretation of “market forces” and of what it means to be a “conservative” or a “Liberal”. Isn’t it much more “socialist”? Is this but the early stages of the nationalisation of the power sector?

And this is a government led by Malcolm Turnbull, who assumed the leadership with the expectation that he actually believed in a significant and urgent response to the climate challenge – indeed, an issue on which he once, apparently, believed in passionately enough to cross the floor of the parliament.

Moreover, we all emerged from the last election saturated with the “promise” of “jobs and growth”. Just how many thousands of jobs, and billions of dollars of investment and growth, have been lost due to this short-term, political opportunism and game playing?

Finkel went to great lengths to recognise the political reality of the government’s objections to the best and second best, responses – namely, an emissions trading scheme and an emissions intensity scheme – proposing a technology neutral clean energy target (CET) to provide a clear direction and certainty for the essential transition to reach our Paris commitments by 2030. While this clearly contemplated the necessary further movement to renewables as a source of power, it still admitted a sizeable reliance on coal-fired power by that date.

It is worth pointing out that a true “conservative” response would be a purely market-based emissions trading scheme, using a market-determined carbon price to ensure the most cost-effective transition.

The suggestion that we may now need a new, supercritical, coal-fired power plant to fill a capacity gap left by the closure of Liddell is, quite frankly, farcical. When the private sector says they will not build or finance it, it is simply just a sop to the National party to even raise it as a possibility. But then, of course, in our “new conservatism” we don’t respect what markets are telling us, do we?

This “gap” would be easily filled by a combination of base-load solar thermal projects, batteries and some better demand management well before 2022. Having set the regulatory direction of the “market” with a CET, the government should stand back and let the technologies compete to deliver the most cost-effective and sustainable outcome.

It is also worth recognising that a new coal-fired power plant, if it could be built, may simply accelerate the closures of other older, less efficient, plants, so not actually closing the perceived “gap”.

Turnbull needs to rise well above this mire and deliver the leadership he promised on assuming the prime ministership. If he does, I believe the electorate would cut him a lot of slack. However, to continue as he is, he will surely lose the next election. It will be his failure to address the rising costs of power, housing, childcare and school fees, and other key elements of the cost of living, that will be decisive with voters.

Updated:  21 January 2018/Responsible Officer:  Director, Energy Change Institute/Page Contact:  Webmaster