10/12/2016

On Climate Policy And Power Prices Turnbull Is Talking Rubbish. Here Are Some Facts

The Guardian - 

Ruling out carbon pricing is not, to quote Malcolm Turnbull, doing ‘everything that we can to put downward pressure on energy prices’ – it’s a recipe for keeping prices higher. Photograph: Mick Tsikas/AAP 
"I  just want to be very, very clear that energy prices are too high already. We will do everything that we can to put downward pressure on energy prices. We will not impose a carbon tax, or an emissions trading scheme – that is our position."
This is the prime minister, Malcolm Turnbull, talking to the Melbourne radio host, Neil Mitchell, on Thursday, talking nonsense as it turned out – which is what the government has been doing all week on the subject of climate change.
How do I know he was talking nonsense?
There are any number of reports we can draw on to call out what can only be described as unmitigated, lowest common denominator, political crap emanating from the mouth of the prime minister – but I’ll just pick a couple.
Let me share with you the findings of a report that lobbed into the public domain at the start of the week, sandwiched between the government opening what could have been a rational and productive conversation about climate change and energy policy, and the government melting in a small puddle of panic.
A firm called Jacobs was commissioned by the energy networks industry, in cooperation with the CSIRO, to look very carefully at Australia’s climate policy options. Jacobs is the same economic modelling firm used by the Climate Change Authority to analyse the impact of various policies. The CSIRO signed off on the report.
The firm looked at which policy would allow Australia to meet the emissions reduction obligations the Turnbull government signed up to when it ratified the Paris international climate agreement with the least impact on households.
The answer was very clear. It was an emissions intensity trading scheme.
That would be the scheme the energy and environment minister, Josh Frydenberg, very sensibly floated, after he cleverly and carefully set up the Direct Action review with sufficient breadth to be able to consider it – before he ran a mile when Cory Bernardi, Tony Abbott and Craig Kelly started stamping their feet and flaring their nostrils like a triumvirate of bulls in a paddock.
For readers who want more fine print, I’ll quote Jacobs: “The lowest electricity residential bills occur when the existing set of technology-specific policies are extended to all low-emission options and where trading within the generation sector is allowed.
“This is mainly because of the depressing effect on wholesale prices of bringing in and subsidising the dispatch cost of low-emission generation, with the depressing effect of wholesale prices outweighing the scheme liabilities.”
What this means in English is if you set up a technology-neutral emissions trading scheme in the electricity industry, and allow trading to happen, there’s an implicit subsidy for low-emission power generation, and that delivers lower prices for consumers than some of the alternatives.
You might be interested to know that the emissions intensity scheme (now scorned by the Turnbull government as being a source of upward pressure on household energy bills) would deliver an average saving of $216 a year on household electricity bills compared with business as usual.
Let me say that again lest your eyes have glazed over.
A saving.
Lower power bills.
Now what is the “business as usual” example in the Jacob scenario?
That’s the existing policy mix. That would be the Direct Action policy framework, with tighter baselines to drive the reductions required to meet Australia’s Paris commitments of reducing emissions 26% to 28% below 2005 levels by 2030, plus the existing state-based renewable energy targets, which the government in Canberra claims not to like.
The status quo with the tweaks required to hit the Paris target are not the magic formula to lower power prices, they are the opposite. It’s the most expensive option Jacob looked at.
So ruling out carbon pricing is not, to quote Turnbull, doing “everything that we can to put downward pressure on energy prices” – it’s a recipe for keeping power prices higher than they would otherwise be.
And failing the test he’s set for himself is not the only problem Turnbull faces. Lacking the bottle to have a serious conversation about a rational, long-term energy policy framework to govern the electricity industry, and other high emissions players, is a recipe not only for higher power prices, but also for more energy insecurity.
More blackouts. A less efficient grid.
Now how do I know that? Because the chief scientist, Alan Finkel, has produced a report saying so in no uncertain terms.
Finkel has said people can’t invest in new electricity infrastructure in the absence of regulatory certainty, and when investment doesn’t happen, we have a second-rate grid.
So, to recap this tale of woe, Turnbull’s two key political messages since Frydenberg’s unseemly capitulation to conservatives earlier in the week – that we won’t do carbon pricing lest it inflate power bills, and that governments have a fundamental obligation to keep the lights on – are entirely inconsistent with the actions the government is taking.
The government, by digging in, is inflicting a 10th-rate policy on households, on the institutional investors who fund our grid, on the energy industry, on businesses who rely on power supply to generate economic activity.
Voters are being taken for a monumental ride. The government is acting like an outfit that thinks voters are stupid.
Perhaps this is considered smart strategising in our noxious post-truth political times. Perhaps there’s a gamble here that everything will be fine, because voters have had a gutful of experts and their studies, and journalists and their annoying fact-checking and relentless nit-picking. It’s all about the vibe.
Well here’s some vibe in return. Treating voters with contempt isn’t smart. It isn’t clever. It isn’t in the national interest.
It’s just wrong.
For Malcolm Turnbull, who knows better, and has been better, braver, stronger, more committed to evidence and logic and reason, the wrong is magnified.
Over 20 years of political reporting I have applied a consistent test to the governments I’ve watched: are they trying to do some good in the world? Are they trying to make Australia a better place?
On climate policy, apart from pushing through the ratification of the Paris agreement, which was a laudable gesture, and a difficult one to execute given the government’s poisonous internals, the Turnbull government is not trying to do some good in the world.
Right now, it is failing my fundamental test. It’s trying to skate through, and hope no one notices.

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