ENERGY POLICY AND CLIMATE CHANGE
Electricity bills have soared in recent years despite promises from Canberra to the contrary. When then prime minister Tony Abbott removed the carbon tax, he claimed the move would cut power bills up to 9 per cent, saving the average household $200 a year- it did not happen because a carbon price was only one amongst a myriad of factors that buffet energy markets.
One big problem has been a lack of investment from power companies following almost 20 years of political bickering and infighting over climate change that left Australia without a coherent energy policy and the power industry in limbo.
Business Editor for the ABC, Ian Verrender, writing on this issue with substantial knowledge and insight, is credited up front for the thorough overview of the current energy market heavily cited below
As the ageing coal-fired generators are switched off, in some countries at least, the gap is being filled by investment in renewable energy; solar and wind. Given the intermittent nature of renewable energy, it needs to be backed up, either with some other energy source or energy storage.
Given Australia’s gas abundance, it should have been the stop-gap in the transition from coal to renewables. When renewables switch off, gas was supposed to fill the gap. Unfortunately, gas prices across the east coast of Australia have more than tripled in the past few years because the new gas export industry locked us into global prices into the 2020s.
Former prime minister Malcolm Turnbull tried to fix the problem by threatening export controls. It worked, for a while. But since December 2017 year prices again have soared. That had a huge impact on electricity prices. Gas is the swing factor in power price setting in Australia.
Gas now sets the cost of electricity bills.
Threats and tough talk about the power companies make for great headlines. But the only way to permanently fix the problem is to reserve enough gas for domestic use, as Western Australia does. Until that happens, electricity prices will continue to climb, regardless of who is in power.
The Australian Gas Industry
The 2016 ACCC East Coast Gas Inquiry report.
The ACCC inquiry found that
- Eastern state gas suppliers and pipeline operators have abused a monopoly pricing power to gouge higher prices out of domestic users;
- There is little regulatory pressure to stop the market abuse;
- Pipeline pricing is largely unconstrained by either the threat of regulation or effective competition.
- Pipeline pricing exacerbates the effect of supply tightness on wholesale gas price, and
- A $2 per gigajoule increase in the wholesale price of gas could increase residential bills by 5 percent in New South Wales and 11 percent in Victoria.
- The difference between a competitive market and an uncompetitive market in south-eastern Australia could be as much as $4 a gigajoule for wholesale gas.
- The development of the LNG industry in Queensland saw industrial gas users in particular being "acutely” affected by the transition, and
“The triple whammy of the introduction of LNG, and with it exposure to international gas pricing, a fall in oil prices leading to a downturn in exploration and new development, and regulatory uncertainty and exploration moratoria, has created an increasingly complex environment for many gas market participants. Less than 20 per cent of the transmission pipelines on the east coast are currently subject to regulation under the National Gas Law and National Gas Rules.”
Another key impediment to a competitive market is the lack of transparency and information about the level of reserves and commodity and transport prices.
The inquiry found evidence of capacity is being withheld by incumbents on some regional pipelines, which is restricting competition for supply from other retailers. Australian gas consumers - big and small - are caught in the pinchers of unregulated monopoly players the ACCC accused of price gouging and a rapidly diminishing supply that is forcing up prices.
The regulations do not provide an effective deterrent against monopoly behaviour. The early 1990s coverage test in the Competition and Consumer Act was designed to rein in the vertically integrated might of Telstra, which monopolised not only networks but the retail and wholesale ends of communication networks.
Under the current law, for a pipeline to be regulated, it must be proved that access is required to promote a material increase in competition in the upstream or downstream markets. The upstream customers - such as chemical companies, steel makers and concrete producers - have tried and failed to get regulatory coverage.
The downstream gas suppliers - including Santos, Origin Energy and AGL - have not wasted their money on a legal challenge.
In between the downstream and upstream players lie the big infrastructure businesses, dominated by APA which owns around three-quarters of Australia's 20,000 kilometres of gas transmission pipelines.
Credit Suisse analyst Peter Wilson told clients "Few of its (APA's) assets are subject to significant regulatory oversight, despite the fact that very little pipe-on-pipe competition exists and that high greenfield capital costs and low brownfield costs effectively entrench it as the monopoly provider in most cases,"
APA itself estimated only about 10 per cent of its $2.1 billion revenues were subject to regulation. Excessive pipeline charges can have a significant impact on investment in new gas supply and can prevent gas from flowing to where it is valued most highly.
The ACCC report found that if tariffs on some of the major routes in the east coast were 50 per cent lower, then it could result in a $1/GJ reduction in the delivered price of gas in the southern states - or around 10 to 15 per cent of the current price.
Mr Wilson noted that the path to increased regulation cleared all the political hurdles. "To conclude that APA face increased regulation you need only accept that policy makers accept that there is a crisis, pipeline reform is one of few politically achievable policy responses and APA is earning a monopolistic rent and it has lost the support of customers. As the market tightens and gas prices rise, pressure on policy makers to resolve the crisis will only intensify."
Mr Wilson said given the slow pace of legislative change and need for industry consultation, it could be five years before the effects of any new regulation kicks in.
The dearth of supply might raise eyebrows, given no nation on earth has spent more developing its gas industry in the past decade - around $150 billion. In recent years east coast prices have more than doubled, rising from $3 to $4 per gigajoule (GJ) to the range of $7 to $10 GJ.
The dearth in gas supply for Australian consumers is fundamentally due to the fact that the vast majority of gas along the eastern seaboard gets piped to Queensland and then shipped off to Asia. Even Cooper Basin production is now being fed into the Gladstone LNG facilities to go overseas.
Origin Energy has about 800 petajoules - enough gas to supply New South Wales for eight years - high quality coal seam gas in southern Queensland which Origin have chosen not to develop after the gas industry in NSW was effectively snuffed out.
No new fields are being developed due a combination of tumbling global prices and the bans on exploration and fracking continuing to spread from state to state. This leaves offshore Victoria as the primary source of supply for the southern markets.
Principal at the energy consultants ITK David Leitch said State and Federal Government’s must make gas explorers and lease holders disclose their reserves and prices.
The only reason Origin's reserves are well understood is that they were required to disclose them in the course of BG's failed 2008 takeover.
Mr Leitch said the industry's lack of transparency was a disgrace given the importance of gas in the Australian economy.
"Increasingly eastern Australia is reliant on gas from Bass Strait and we have not had a detailed update from BHP and Esso for some time about what is left. It's a matter of national importance - if we are going to run out in 10 years, we'd better be putting our thinking caps on right now."
The ACCC's Rod Sims is equally worried. He told an industry conference in Darwin "It is difficult at this stage to envisage where new gas supply will come from in the short to medium term to alleviate the high prices looming for gas users in the south”. Gas accounts for up to 40 per cent of input costs in some industries, and up to 80 per cent for chemical producers.
Business Editor for the ABC, Ian Verrender, writing on this issue with substantial knowledge and insight, is credited up front for the thorough overview of the current energy market cited below
Source: Ian Verrander. The Three Hip Pocket Issues that will decide the next election. ABC news.3 DEC 2018. https://www.abc.net.au/news/2018-12-03/hip-pocket-issues-which-will-decide-the-next-federal-election/10575832
Ex Prime Minister Malcolm Turnbull’s Energy Policy
The June 2018 Turnbull Government National Energy Guarantee draft shows big users could be forced to help keep nation's lights on. Big users would have been required to put power back into the grid if a shortfall looks likely.
A "reliability requirement" would "incentivise" large energy users to help put more dispatchable power back into the grid if a nationwide shortfall looks likely.
A "reliability obligation" could also be triggered, where big business could be "expected to demonstrate" how they would source dispatchable power in times of peak demand.
If there is still a shortfall, the government would also have the ability to "procure the required resources to close the remaining gap". That is, to force private energy companies to sell their resources to the Government.
Big business is worried the system would force them to take on risk and cost for dealing with power shortfalls.
A Coalition policy to divest energy companies of assets upset many Liberals, always angrily opposed to even the unlikely possibility that a Coalition Government would intervene in the energy market and force a private company to sell assets. This “big stick” threat to energy companies is fundamentally illiberal.
However, the Monash Forum would be very happy for the Government to intervene in the energy market by investing in new dispatchable power resources including new coal mines.
The Monash Forum [aka Monkey Pod Group].
2 months after Tony Abbott was knifed as Liberal Party leader by Malcolm Turnbull in 2015, an informal gathering of conservative faction MPs began weekly ‘lunches’ in the Monkey Pod room of Parliament house.
This group of Liberals, dubbed the “Monkey Pods’, included Tony Abbott, Peter Dutton, Kevin Andrews and Eric Abetz [both dumped from the Ministry by Malcolm Turnbull], Sophie Mirabella, Natasha Griggs, Craig Kelly, Ian Goodenough and Peter Dutton who reportedly organised these lunches.
One conservative said it was more about Mr Dutton, then the most prominent conservative minister in cabinet, forming his own internal support network than trying to restore Mr Abbott to the leadership.
Mr Abbott arrived at one lunch with chocolate cake baked by his new "landlady" Peta Credlin, who was the former prime minister's chief of staff.
Source: Latika Bourke. The Sydney Morning Herald. Liberal MP hits out, says 'get a life' after revelations of Abbott's 'Monkey Pod' gatherings. November 25, 2015. https://www.smh.com.au/politics/federal/liberal-mp-hits-out-says-get-a-life-after-revelations-of-abbotts-monkey-pod-gatherings-20151125-gl7ohj.html
This ‘Monkey Pod’ group would be the foundation from which Peter Dutton would launch his failed bid to wrestle control of the Liberal Party back to the Conservative faction in August 2018.
The Monash Group
By April 2018, the ‘Monkey Pod Group’ had essentially evolved into what became the “Monash Group”, with a few National Party MP additions. George Christensen invited Nationals MPs to join a group “encouraging the government in the promotion of and facilitation of and/or construction of coal-fired power stations”.
Nationals senator John Williams said he supported coal-fired generation and he had replied to a text message inviting him to join. Former Nationals leader Barnaby Joyce was also “linked to” the group.
Liberal MP Craig Kelly confirmed in April 2018 that a group of 20 Coalition backbenchers has created the Monash Forum to encourage the government to support the coal industry, warning against the “demonisation” of coal.
The group is named after the first world war general John Monash, owing to his role in opening up Victoria’s Latrobe Valley for coal production.
Chairman of the government’s backbench committee on the environment and energy, Kelly told Guardian Australia the group’s position will add to pressure for government support for new coal-fired power. Kelly said.
“One of the aims of the group is to emphasise the importance of coal-fired generation. Coal is demonised by a large section of the community – that demonisation is incorrect, because coal is absolutely vital to the national economy both for export and the generation of cheap, reliable electricity.”
Kelly said if AGL’s Liddell power station were closed, the “optimum outcome for the grid” would be to construct a new coal-fired power station.
He said private-sector investment in coal might not be forthcoming due to possible technological change and changes to climate policy by a future government so “the government may need to step in and assist the build” of a new power station.
Sky News reported that the Monash Forum manifesto included a petition that posed the question:
“If the government can intervene to build Snowy 2.0, why not intervene to build Hazelwood 2.0 on the site of the coal-fired power station in Victoria that’s now being dismantled?” It suggests a new low emissions coal-fired power station could be built for “no more than $4 billion”.
Labor spokesperson on Energy Mark Butler correctly predicted at the time that “New coal is more expensive and more polluting than alternatives, yet the hard right want to waste taxpayers’ money on their coal fantasies demanding Malcolm Turnbull guarantee new investment in coal-fired power.”
Source: Paul Karp Coalition backbenchers unite to lobby for coal under banner of Monash Forum The Guardian, Tue 3 Apr 2018. https://www.theguardian.com/australia-news/2018/apr/03/monash-forum-coalition-backbenchers-lobby-coal
A second element of the NEG which drew strong internal criticism from the Monash Forum of the Coalition was the embedded climate change policy. It included an emissions obligation which would have imposed rules on power companies to force them to reduce carbon emissions.
Morrison Government Energy Policy
The NEG [National Energy Guarantee]-which the new Treasurer Josh Frydenberg was central in engineering and promoting when he was the Minister for Energy- was dumped from Coalition policy immediately before the dismissal of Malcolm Turnbull as Prime Minister.
Ironically, elements of the NEG that caused back-room angst from conservatives in the Liberal Party, were essentially kept in Coalition policy.
The "reliability obligation" and threat of government forced ‘procurement’ of private company energy assets, the ‘big stick’, remain Coalition policy.
To appease the conservative pro dispatchable power, pro coal mining advocates of the Monash Forum in the Coalition, Prime Minister Morrison announced two other energy policy changes.
First, Coalition policy would no longer include imposing rules on power companies to force them to reduce carbon emissions. This imposition was dismissed as unnecessary according to Mr Morrison and the new Federal Energy Minister Angus Taylor, given that Australia was on track to meet our carbon emission reduction target for 2030 “in a canter”. More on the “in a canter” claim later.
Second, to further appease climate change sceptics and coal mining advocates in the party, the Government also announced that it was exploring a “short list” of dispatchable power projects. The Coalition’s focus would not be the Labor Party focus on renewables and subsidised home batteries.
The Coalition would instead focus on coal, gas and hydro projects which the Government will consider underwriting. Voters would be informed of these developments in early 2019, before the Federal election.The notion of underwriting coal projects comes straight out the Monash Forum play book.
Labor's Energy Policy
Ahead of the upcoming The COAG Energy Meeting and the Labor Party National Conference scheduled for December 2018, the Labor Party released an energy policy.
According to political journalist Michelle Gratton on November 23rd, the following overview was presented. -
- Labor's promised to subsidise home batteries ($2,000 for households with incomes under $180,000)- dubbed "pink batts to pink batteries" to trigger memories of Kevin Rudd's ill-prepared policy. -
- Labor proposes an additional $10 billion for the Clean Energy Finance Corporation; its investments would support large-scale generation and storage projects.
- Labor investment would be in renewables, pushing towards its target of 50 per cent of Australia's energy coming from renewables by 2050.
- An ALP government would provide $5 billion for "future-proofing" the energy network — the transmission and distribution systems.
- Labor's energy policy is in the context of a much more ambitious emissions reduction target than the government has — a 45 per cent economy-wide reduction by 2030 on 2005 levels, compared with the Coalition's 26 per cent to 28 per cent.
The Business Council of Australia welcomed "Labor's commitment not to support heavy-handed, intrusive changes into the energy sector such as forced divestiture".
The Australian Chamber of Commerce and Industry was likewise encouraged by the Labor energy platform to introduce an albeit different National Energy Guarantee.
Scott Morrison circulated a Tony Abbott ‘carbon tax’ scare mongering clone reply.
According to the Prime Minister, the Labor plan was for a "carbon tax" and the proposed subsidy for "pink batteries" would leave households "$8,000 out of pocket".
Climate Change and Gas Emission Reduction
ABC reporter Casey Briggs reported on the national COAG energy meeting in late December 2018, with the big story being silence from the Energy Minister Angus Taylor on climate change. “
A meeting of Australia's energy ministers had ended bitterly divided, with the country's biggest Liberal-run state accusing the Commonwealth of blocking discussion on climate change”.
The ministers signed off on a ‘reliability obligation’ on retailers, which the Federal Government says will ensure continuous supply of electricity.
However, Liberal New South Wales Energy Minister Don Harwin led a revolt over carbon emissions
"As a sign of how out of touch they are, they wouldn't let us have the discussion…… It is imperative that we end the Canberra climate wars. NSW is going to work with both Labor and Liberal state and territory governments around the country to make that happen. My strong sense is that all of the states and territories want climate and energy policy to be brought together".
Mr Harwin had been pushing to revive the emissions obligation, which would impose rules on power companies to reduce carbon emissions. It was a key component of the NEG dumped in August, days before Malcolm Turnbull was overthrown as prime minister.
Queensland Energy Minister Anthony Lynham said the meeting was "not very pleasant. [Federal Energy Minister] Angus Taylor has no interest in emission control, no interest in climate change… Whatever political flavour you are, we'll be working together because climate change is real for this nation."
The effectiveness of measures to put downward pressure on power prices was also questioned by some states. Queensland State Labor Minister Mr Lynham said the Commonwealth's proposal for a default electricity price could push up bills for Queenslanders by up to 30 per cent.
On the other hand, Federal Energy Minister Angus Taylor said he achieved everything he wanted to from the meeting.
"We got a good outcome, we didn't get distracted and we won't get distracted. We have a very clear focus — get prices down, keep the lights on and ensure that all Australians get a fair deal on their electricity prices."
The peak body for energy retailers and generators welcomed progress on the reliability obligation, but said it was hoping for progress on climate change. Australian Energy Council chief executive Sarah McNamara said "It is disappointing that COAG has again missed the opportunity to deal with the ongoing emissions policy vacuum,".
Mr Taylor brushed off questions about the proposal from NSW as well as the tone of discussion in the COAG Energy meeting, except to add that the Government would meet Paris Agreement emissions targets “in a canter”.
Department of Environment and Energy Carbon Emissions Report 2018
ABC Reporter Stepahie Dalzel reported on December 21st that
‘The latest carbon emissions projections, released by the Department of Environment and Energy, predict Australia will only reduce its carbon emissions by 7 per cent by 2030 — well short of the target’.
Prime ministers Tony Abbott and Malcolm Turnbull pledged to cut emissions by 26 per cent. The Abbott Government pledged to slash emissions by at least 26 per cent on 2005 levels by 2030. In 2016, Malcolm Turnbull put pen to paper and ratified the Paris Agreement.
Australia is not on track to reach its overall Paris 2030 climate emissions target according to the new Federal Government data.
Professor Frank Jotzo, an expert in climate change policy at the Australian National University, said insistence that Australia would meet its Paris commitments was "misleading".
"There's no basis in the information provided in the report today to suggest Australia is on track to meet the 2030 emissions target, none whatsoever. On the basis of these projections, Australia would miss the Paris Agreement target by a very long margin, and that is before taking into account the international community who would expect Australia to take on a stronger emissions reduction target."
Professor Jotzo said while the figures showed carbon emissions from electricity sources were projected to fall, emissions in other sectors — like transport and so-called "fugitive" emissions (releases of gases from industry operations) were rising”
Professor Jotzo noted that data shows clearly that overall emissions have steadily increased since 2014.
"It's going in the wrong direction, it could go in the right direction, but it would require effective policy. When we hear statements by government ministers that say we are on track, when clearly we are not, we can really only see that in political terms. However, it is not an honest reflection of what is in fact happening. One would really wish for a more honest appraisal of where the nation is at, and what will be needed in order to get that transition that we need to achieve those Paris emissions targets."
Despite the figures, Environment Minister Melissa Price insisted the Government would meet the Paris commitment.
"We're very comfortable where we sit now and very comfortable we're going to meet that 2030 target. In terms of the electricity sector, we're overachieving with respect to bringing emissions down in that sector. I'm really proud of the policies we've got”.
What Minister Price did not mention is how the Government was planning to meet those 2030 carbon emission reduction targets despite the clear evidence provided by Professor Jotzo there was no scientific basis to support her claims.
The political apologetics in the wake of Professor Jotzo’s critique and the evidence documented by a Government Department came from new Prime Minister Scott Morrison when he returned from a trip to visit Australian troops overseas with Christmas Greetings.
On December 22nd, three days before Christmas when few people would be paying attention to Government climate change and energy policy, The Australian newspaper carried a page 2 report in which the Prime explained how Australia would meet its gas emission obligations “in a canter”.
Reporter Ben Packham for The Australian reported that Mr Morrison would be ‘cashing in’ on “carried over emission credits from pacts to help meet Australia’s 2030 target”.
Australia would use 367 megatonnes worth of Co2 credits from overshooting commitments under the first and second Kyoto agreements to more half Australia’s emissions abatement task under the Paris deal.
Labelled a cynical “trick” by the Greens, this carbon accounting decision means that a Coalition Government would only have to lower emissions by 328 megatonnes instead of 695 by 2030.
This carbon accounting “trick” on the part of the Prime Minister was an attempt to take the political air out of his own Department of Environment and Energy findings which projected a fall in Australian carbon emissions [563Mt] to 2030 would be around 7 percent on 2005 levels, not the promised 26 percent.
The use of carry over carbon emission credits was not ruled out by the 2018 international climate change talks in Kato-wise, Poland.
Notwithstanding the reality that the use of carbon emission carry over credits was also the practice of Labor Government’s from 2008 to 2013, Ben Packham’s Australian report cited Labor’s climate change and energy spokesman Mark Butler going on the offensive
"It is clear that the Liberals are burying their heads in the sand and ignoring the vast majority of Australians who are crying out for desperate action on climate change”.
The Greens climate change spokesman Adam Bandt noted the Coalition were “cooking the books on climate change to half its measly targets” and called on Labor to stop using similar “tricks” in 2019.
Labor frontbencher Mark Dreyfus accused the Government of evading the truth. "What we need is a government other than this dysfunctional chaotic Government, that is prepared to put in place a climate policy. The Government's own figures show emissions are rising and what Australia needs is a government prepared to put in place actual action on climate change”.
Strangely, the ACCC report did not support a push by big industrial groups and industry organisations for gas reserves being specifically set aside for the domestic market as it would have a "detrimental effect on an already uncertain supply".
Without new sources of supply, largely unregulated gas price gouging and most importantly a resistance to the notion of Australian gas reserves being specifically set aside for the Australian energy market, gas energy costs are going to rise and put more pressure on the budgets of big industrial users and households alike.
Consequently, electricity bills for industry and household consumers have no hope of coming down in the foreseeable future, regardless of the endless claims and counter claims of the current Government and the Opposition.
What we are getting at the present time is political gamesmanship on energy policy that is tinkering around the edges of a guaranteed domestic gas supply and unregulated price gouging.
Both the major parties and the Greens seem to be energy market players tangled in an in an ideological mess.
On January 1st, 2019 the man dubbed “the Minister for getting electricity prices down” by Scott Morrison called a press conference spruiking January 1st 2019 reductions in power bills of “up to 15 percent” in four Australian States.
Energy Minister Angus Taylor claimed companies such as AGL, Origin and Energy- Australia had cut prices for standing offer customers by between $70 -$560 a year.
“Government pressure on retailers has resulted in lower price bills from today for standing-offer customers in NSW, Victoria, southeast Qld and South Australia”.
Source reporter Craig Brown, The Australian. Most won’t benefit from power deal. January 2nd 2019. P3).
As Energy expert Tony Wood noted, the Minister neglected to mention that 92% of consumers are not on standing offer electricity market plans and, therefore, most customers would not benefit from equally questionable reduction in power bills slated by the Minister for the 8% affected.
“The commonwealth hasn’t actually done anything. What they have done is made lots of noises, lots of threats, lots of shouting and the retailers have responded in part to that”
Source; Tony Wood, Grattan Institute. Cited by reporter Craig Brown, The Australian. Most won’t benefit from power deal. January 2nd 2019. P3).
Expect more of the same leading up to the 2019 election.
On climate change, competing carbon emission targets for 2030 are five elections away in the future.
Labor’s record is in no way squeaky clean.
- Labor will not have to account for an ambitious 45 precent carbon emissions reduction target until 2030;
- Federal Labor recently stated the development of the Adani coal mine would ‘not impact’ on Australia’s carbon emission reduction commitments and
- A Labor Government in Queensland is backing the Adani mine to prop up regional employment and State Government revenue.
Meantime, leaked feedback from the 2018 State election in Victoria from does not auger well for Coalition ‘second preference’ prospects either. Liberal MP Jackie O’Dwyer said Liberals were broadly considered to be “…climate change deniers”.
If the Coalition 'scare campaign' can convince the electorate that the choice becomes one between Coalition Energy policy that claims to address our electricity bills and Labor's Climate Change Policy which adddresses our carbon gas emission targets, the Labor Party's chances of winning Government will lose some skin in this space.
But don't tell my children I said that peddling a lie is a ever a responsible, mature thing to do. The story is not all doom and gloom if you look outside the 'Canberra bubble'
Positive Action on Climate Change and Energy outside the ‘Canberra bubble’.
For we who lament the decade long stalemate in Federal Government action on energy prices and climate change, an opinion piece by Simon Holmes à Court published on the first day of the new year in The Guardian offered some profound insight into developments in this arena driven by interest groups outside the ‘Canberra bubble’.
“While the government continued to trash Australia’s international reputation by reaffirming allegiance to coal on the global stage, lying about progress on our climate commitments and dismissing the findings of the landmark IPCC report business, the states and the public took matters into their own hands to dramatically change the energy picture”.
States go their own way
In an election year, the Victorian government upped its renewable energy target to 50% by 2030, wrote contracts for six large wind and solar projects at record low prices and rolled out a plan for an additional 700,000 solar rooftop installations, committing to focus on renters and low-income households. Climate-aware voters had an easy choice at the November state election, with the opposition’s policy limited to a plan to build new fossil fuel power stations
Feeling the heat from the Victorian experience, the NSW Coalition government sought to distance itself from the trashed Liberal brand, with energy minister Don Harwin calling out his federal counterparts as out of touch on energy and climate. With little progress to show for the last eight years in office and the state lagging on almost every energy indicator, Harwin has much work to do before the March election.
A change of government in South Australia had many worried that the Weatherill government’s energy initiatives would be derailed, but the new Liberal government has embraced the state’s leadership position. Former coal town Port Augusta has bounced back with 13 clean energy projects under development, and the state is rolling out a virtual power plant project that will allow 50,000 households (starting with those on lower incomes) to be fitted with solar and batteries, saving on power bills and working in unison in much the same way as the mega-battery.
In Tasmania, the Liberal party pledged 100% renewables and their Labor counterparts responded with a 120% target. The ACT moved closer to its net 100% renewables target.
Queensland backed both the federal Labor Party carbon emissions reduction target and refused to invest State Government money into the Adani mine project, while Western Australia continues to muddle along without any real policy.
Also, Federal Energy Minister Angus Taylor’s plan to set a cap on energy prices was soundly rejected by his states colleagues and legislation aimed at giving him a “big stick” to beat investors with until confidence improve has been pushed off to a Senate committee and is unlikely to see the light of day.
Businesses on board
Increasingly businesses are taking energy matters into their own hands .
- Sun Metals, a zinc refinery in George Christensen’s Queensland electorate, installed one million solar panels to lower their power costs;
- The Commonwealth Bank became the first Australian company to join the RE100, a group of 156 global companies committed to 100% renewable power in the coming years. Much of the bank’s power will be supplied by the Sapphire windfarm, which incidentally will be partly financed by a community investment project. The project, one of 105 of its kind around the country, has been overwhelmed with $7.5m pledges from locals keen to get in on the action;
- The South Australian chamber of mines and energy secured a renewable energy deal that will save its members 20-50% on their power bills;
- Macquarie Bank has joined a consortium developing a wind and solar farm bigger than every existing wind and solar farm in the country combined;
- The Asia Renewable Energy Hub, to be located in the Pilbara region of WA, is backed by Vestas, the world’s largest wind turbine manufacturer. The project will connect by sub-sea cable to Indonesia, supply processors in WA’s north west and generate “green” hydrogen;
- Snowy Hydro, now owned 100% by the federal government, announced that it can offer long-term, reliable supply contracts based on a portfolio of wind, solar and hydro for less than $70MWh – a price coal-fired power stations can match only if someone else pays for the coal or the power station.
- Retailer Powershop introduced a 5% price reduction attributed to new renewables investment.
- The Australian Energy Market Commission announced that most consumers would soon receive price reductions largely thanks to increased wind and solar generation – South Australians can expect to see falls of 6.5%.
- More than a dozen large wind and solar farms contracted at prices well below $60MWh – below the market prices for coal and gas – in arrangements that involve little or no subsidies.
Despite the Coalition’s focus on supporting new dispatchable power options including possibly underwriting new ‘clean coal’ mines to appease the Monash Forum, and Labor giving a green light to the Adani Coal mine development, Holmes A Court noted that energy supplies are on a different path. Some are taking matters into their own hands -
-Almost everyone in the energy sector now accepts that renewables are cheaper than building new coal capacity including the CSIRO and the country’s largest power companies, Origin and AGL.
- AGL pushed back against extraordinary pressure from the Turnbull government and announced that its Liddell power station will close in 2022. It will be replaced with a portfolio of projects delivering “cheaper, more reliable and cleaner power”.
- The average Australian coal power station is 31 years old – five years older in New South Wales with an average age at retirement of 41.
- The Australia Institute tracked 108 coal unit “trips” during 2018. In each case hundreds of megawatts of generation instantly and unexpectedly disappeared, stressing the network.
In the three years from 2018-2020, Australia will install a little over 12 gigawatts of renewables, as much as was installed in the 30 years after the country’s first windfarm opened at Salmon Beach in Western Australia in 1987.
-Since 2017, 19 new windfarms and 30 new solar farms have been registered and in early December the two millionth Australian household went solar. Once derided as insignificant, solar supplied more than 7% of Australia’s power over the past three months. Co2 Gas Emissions
- A little over a decade ago, when just 5.2% of our power was from renewables, the Rudd government was swept into office with an aspirational pledge of “20% by 2020”. That target has been met two years early. - Analysts Green Energy Markets predict one-third of our power will be from clean energy by 2021.
- The Australian Energy Market Operator produced the most rigorous study of the possible future of our grid and determined that on the least-cost path
– with no new policy – the grid would reach 47% renewables in 2030 and 72% in 2040, while keeping the lights on.
-As each coal-power station closes it can and will be replaced by renewables and storage.
Battery Storage supplies
Storage has moved ahead in leaps and bounds.
-While SA’s Tesla mega-battery seemingly receives equal parts derision and adulation from politicians and commentators, energy experts have been quick to heap on praise
– the $90m battery was actively providing stabilisation services 95% of the time in its first year, earning $19.6m in net market revenue;
- Four other megabatteries have been commissioned – at Alice Springs, Ballarat, Dalrymple and Gannawarra;
- The Snowy 2.0 pumped hydro storage project moved a step closer with board approval; - At least 10 other pumped hydro projects have been announced;
- The NSW government launched a roadmap identifying 24 potential pumped hydro projects leveraging existing state-owned reservoirs;
- Energy market analysts SunWiz estimate that 25,000 households installed small-scale battery systems in 2018, collectively matching the combined capacity of the country’s grid-scale megabatteries; and
- On the back of solid growth, three battery storage companies have set up shop in South Australia.
Conclusion A senior adviser to the Climate and Energy College at Melbourne University, Holmes à Court concluded that
“ We’re making great progress on the electricity sector, but much more needs to be done across the economy – locally and globally – if we’re to have a fighting chance of passing a safe climate to the next generation”.
Source: Simon Holmes à Court. In 2018 the Australian government chased its energy tail. Here's a more hopeful story https://www.theguardian.com/commentisfree/2018/dec/31/2018-australian-government-energy-more-hopeful-story
FOR MORE ON ENERGY RESOURCES AND CLIMATE CHANGE SEE THE COAL MINING CHAPTER