RenewEconomy - Giles Parkinson
You would think that with all the hoo-ha about the scandalous
increases in electricity prices that it would have rated some sort of
mention in the budget. You know, one of the biggest cost inputs for
business being addressed in the government’s economic centrepiece.
But no. The 2nd Morrison/Turnbull fiscal document blithely ignores
the issue, despite the fact that their lack of policy direction in the
last few years has been the major contributor to the price surges that
are scorching household and business budgets.
There’s some pointless extra money for coal seam gas, the removal of
some funds for carbon capture (finally) and some previously promised
funds for solar thermal (about time), and even another thought bubble on
Snowy Hydro – this time to buy it out from the state governments. See Matt Rose’s article for more details.
But there is nothing on climate change, no grand vision on energy.
There are no new funds for the Direct Action policy that Turnbull had
once ridiculed as a fig leaf for a climate action, and nothing on what
might take Australia along the path to the pledge it signed in the Paris
deal – effectively to reach zero net emissions by 2050.
As Labor’s Mark Butler noted this morning, the Coalition’s climate
change policy has officially gone from that fig-leaf to a non-existent
farce.
Nearly three years after celebrating the dumping the carbon price
(above), slashing the RET and ignoring expert advice (CCA and the
Climate Council), the Coalition government has no actual policy, on
energy or climate, and its negligence is adding to the stunning rise in
electricity prices it is trying to blame on everything and everyone
else.
“Malcolm Turnbull, the Prime Minister who once said he didn’t want to
lead a Liberal Party that didn’t feel as strongly about climate change
as he did, is now the Prime Minister who has completely dropped any
pretence of attempting to combat climate change,” Butler says in his
statement, noting that climate change did not rate a single mention in
the Budget speech.
“As the central pillar of the Direct Action policy, the Emission
Reduction Fund, runs out of funds, this budget delivers ZERO new
policies or funding to drive down pollution and combat climate change.
This budget allocates more new money to the Department of the House of
Representatives than it does to tackling climate change.
“Budgets are about choices and priorities, and this budget makes it
perfectly clear the Turnbull government isn’t choosing a safe climate
because they don’t think it is a priority. This budget finally makes
official what we already know; this Liberal government is failing all
future generations of Australians.”
We took big slabs of Butler’s comments because we don’t think we could say it any better.
Ostensibly, the Coalition government is waiting for the results of
the Finkel Review, and its own review into climate policy, or any of the
other 24 different reviews whose outcomes it may find convenient.
Turnbull’s also waiting to sniff the breeze out of Washington, which
is likely to be foul, and could amount to a complete withdrawal or at
very least a two-fingered salute, something that his f***-you picks as
head of the EPA and the energy department have all but guaranteed.
And then Turnbull has to consider the right wing of his own party,
and the date in September when it will come to pass that he has served a
day longer than his predecessor Tony Abbott, when we can only hope that
we might see the emergence of Turnbull 2.0.
For the moment, the Coalition’s stance is untenable. It has suggested
that “clean coal” might be the answer, but that idea – on both the
notion that this coal might be clean or economic – has been hit out of
the ball-park by all but a handful of market opportunists.
Gas is quickly being discounted too. The monies allocated for
pipeline and C&G research are yet more fig leaves. Gas will play
some role as a “peaking plant” and a “gap filler” over the next decade
or two, but the idea of gas being a transition fuel has also been belted
out of the ball-park, by the gas producers themselves.
AGL Energy says it is simply too expensive and can’t and won’t be
able to compete with the stunning falls in wind, solar and battery
storage technologies. Origin agrees, particularly after signing a
long-term agreement to buy the output of the 530MW Stockyard Hill wind
farm for just $55/MWh.
Santos is signing up for solar plants because it might be the
cheapest way of freeing up more gas, which is just one small light in a
gas business strategy that is based around an untenable, f*** the next
generation, 4°C climate strategy.
The Finkel Review, like the CSIRO/ENA reports that preceded it, and
the new thinking coming out of the Australian Energy Market Operator,
and the major utilities, will likely tell us that the transition to zero
net emissions is both possible, imperative, and likely to cost a lot
less than most people think.
The trick will come in the policy suite that is deemed best to reach
that target. One is the emissions intensity scheme, but this was largely
designed as a free kick for a technology (gas) that is now longer
considered necessary.
That can be solved, perhaps, with a really biting EIS, or perhaps
more effectively by adopting state-style renewable energy schemes and
having a managed transition through a series of auctions, the policy of
choice in many other countries.
The idea that Turnbull is now considering buying out Snowy Hydro,
completely, suggests the latter may be an option. Current market
settings and rules clearly don’t work because the price of electricity
is preposterously and unnecessarily high.
As this graph shows, the average price has more than doubled over the
last year. At times, the rise has been three or four-fold, particularly
when the incumbents were able to take advantage of their market power
in South Australia and Queensland.
That has the single happy outcome of making distributed generation – rooftop solar and battery storage – very popular.
But as the CSIRO and the networks point out, that could have
unintended consequences if power prices stay high and the technology
costs of solar and storage continue to fall to the levels anticipated by
South Australian Power Networks, of just 15c/kWh, or less than half of
their bills.
That could cause a stampede out of the grid just at a time that the
equipment installed by households and business should be harvested to
add to the power and security of the grid.
As so many people are saying, this is going to require some smart technologies, and some smart policies. There is absolutely no sign of the latter from this government yet.
Then again, this budget does jettison the conservative ideology on
small government. Perhaps it can also dump – with or without permission
from the IPA – its antipathy on climate change, and do energy consumers a
favour by accelerating, not slowing, the inevitable energy transition
away from centralised fossil fuels.
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