Shorten's Energy Plan Better Than No Plan At All

SMH - Editorial

Some readers might be forgiven for sighing and turning the page when they read that Opposition leader Bill Shorten has just launched yet another climate change policy to take to the next election.
Australian climate policies have a lower survival rate than newly hatched deep sea turtles flippering across the beach for the safety of the ocean.

It is true that the vicious politics of energy and climate change have forced the ALP to adopt a suite of policies which are very far away from the first-best, market-friendly options to reduce carbon emissions which were being contemplated a decade ago.

Still, on balance, it is hard not to agree with Mr Shorten's basic point: after a decade of climate wars it would be better to have a national climate change policy, even a compromised one, rather than none at all, which is what the Coalition is proposing.

Leader of the Opposition Bill Shorten says climate change is already a "disaster". Credit: Ben Rushton

While Mr Shorten said he believed climate change was already a "disaster", he is not acting like the problem is all that urgent. He has taken a very cautious, small target approach.

Gone is any plan for a single, clear mechanism for pricing carbon which the Herald endorses.  Instead, Mr Shorten has proposed a modified version of the rather complicated National Energy Guarantee, which the Coalition dumped three months ago, backed up by a smorgasbord of ad hoc subsidies and investments in renewable energy.

Mr Shorten's Plan A is to revive the mechanism in the NEG which sets a limit on carbon emissions in the electricity sector.  Mr Shorten is all too aware, however, of the difficulty of winning parliamentary and state government approval for the policy.

Even though, until three months ago Prime Minister Scott Morrison said the NEG was the best thing since sliced bread, the recalcitrant rump which hold the Coalition's climate policy hostage is now against it.
It will be even harder to push the NEG through the parliament because Mr Shorten is proposing to modify the Coalition's discarded plan by almost doubling the target for reductions in greenhouse gas emissions to 45 per cent below 2005 levels.

This is logical. Without carbon reductions of at least that size in the electricity sector, it will be all but impossible to achieve the 26 per cent reduction across the whole economy to which Australia pledged itself under the Paris climate treaty. But the Coalition will likely have none of it.
Yet even that higher target might not be enough to secure the support in the Senate of the Greens, who dislike the NEG and want even bigger cuts. It will depend on the outcome of the election but Mr Shorten, if he becomes prime minister, is unlikely to find common cause with the parties on either left or right and is preparing for legislative gridlock.

Mr Shorten's Plan B is to directly spend about $15 billion on the new generation, interconnectors and back-up power sources such as batteries and pumped hydro needed for a low-carbon electricity grid based on renewable energy. It complements policy already being pursed in South Australia and Victoria.

Yet it is a second or third best option. If a clear carbon price signal were in place, the market – rather than bureaucrats – could have been left to decide on the optimal outcomes and tax payers would not carry the risk of making dud investments.
Mr Shorten has included no detail on how he is planning to ensure he invests wisely except to say he will channel much of it through the Clean Energy Finance Corporation, which at least has some track record.

He has been most specific about a populist plan offering $200 million for a rebate to install  battery storage in 100,000 homes. Home battery storage has a place in a low-carbon grid but it is not clear why it deserves this special subsidy up-front. Home batteries also give most benefit to the few lucky households which have them rather than the whole energy grid.
The Coalition has already started a scare campaign comparing the battery program to the "pink batt" insulation scheme under the Rudd government but this is premature.  The battery industry is much better prepared for this extra investment than insulation in 2009.

The Coalition will also run scare campaigns that renewable energy will send prices power soaring but the Reserve Bank of Australia has said the opposite is true. Bringing in more renewable energy to replace old, breakdown-prone coal plants will cut the price of electricity generation.

The Coalition clings to the fantasy that it can build its own coal-fired power plant.
That would be a massive waste of taxpayers' money and a huge step backwards in the fight to reduce emissions.

Links

• Bill Shorten sets new course on climate, boosting renewables and subsidising batteries for 100,000 homes
• Is Labor's energy plan really a wrecking ball for industry?
• 'Without balance' and 'sensible': Labor's massive energy plan divides critics
• How about a Robin Hood carbon tax to combat climate change?
• A climate dividend for Australians
• Bill Shorten: 'We've got to end the climate change war'
• Labor says Australia can remain energy 'superpower' – but only if climate wars end
• Bill Shorten demands gas market transparency to tackle 'energy crisis'
• Bill Shorten says Labor willing to pass Finkel legislation to prevent climate 'brawling'
• Bill Shorten to accuse Coalition of 'vandalism over pragmatism' on energy policy