Climate Change Is The Elephant In The Budget Room

Eureka Street - Francine Crimmins*

When Scott Morrison announced the 2017-18 Budget this week there was one phrase he didn't dare to utter in his meticulously written and rehearsed speech. It's just two short words, climate change, but when used together they conjure a public debate even our minister for the environment gets tongued tied over.

Morrison's omission of climate change in the federal budget has set a tone of ignorance to improving energy policy in a meaningful way. Dr Paul Burke, a fellow at the Crawford School of Public Policy at the Australian National University, thinks 'It shows that climate change isn't a number one priority if it's not mentioned at all in a budget speech.'
The only mention of energy security was in the wider context of pressures on the cost of living for Australians. Morrison said the Prime Minister's energy security plan will provide 'reliable and affordable energy for all Australians' and that $3 billion was already being invested in new emissions technologies.
When it comes to new funding to assist in reducing emissions — nothing to see here. Funding for the environment budget was cut 14 per cent since the Coalition formed government in 2014. Under this budget, it is predicted the cut could be up to 27 per cent by 2020.
New energy related measures in this budget include a focus on increasing gas production, taking out the most funding with $86.3 million. This sum will cover $19.6 million to increase gas market transparency and over $30 million for discovery of new potential gas stores.
On the renewable energy front, $6.2 million is going to support the Solar Communities program which supports food rescue charities and other community groups to install solar to reduce their emissions and save on energy costs. There's also $110 million being set aside for Turnbull's Snowy Hydro 2.0 and a hefty investment into a solar thermal project in Port Augusta.
In addition, the National Landcare Program will receive $5 million to support a community led project into threatened species. The Great Barrier Reef will also receive $1 billion after the worst coral bleaching season in history was reported late last year.
Despite this, it's clear an overwhelming focus in environmental funding is on exploration and harvesting of gas for Australia's future in energy. It is short sighted to place money into environmental conservation projects, such as the reef fund, without first actively attempting to treat the cause of the coral bleaching — our fossil fuel emissions.

"This lack of commitment to energy in public policy, and now national budgeting, ignores overwhelming scientific evidence that not reducing to net zero emissions by the end of the century will cause climate change levels to become extremely dangerous."

Environmental organisations on Twitter were not oblivious to the omission in the Treasurer's address. Friends of the Earth Australia tweeted: 'Like many, we're disappointed to see so little funding for the environment and no mention of climate change in the budget speech.'
The lack of attention given to climate change in this budget comes after Minister for the Environment Josh Frydenberg admitted Australia wouldn't meet its Paris commitment of zero emissions by 2020. Instead, he predicts 2050 is a more realistic target. The Energy Reduction Fund, the government's climate policy, has no new funding under this budget.
This lack of commitment to energy in public policy, and now national budgeting, ignores overwhelming scientific evidence that not reducing to net zero emissions by the end of the century will cause climate change levels to become extremely dangerous. Countries at The Paris COP21 agreed on a limit of keeping global warming below 1.5 degrees by 2020. This decision was reached as a way to limit warming before it reaches a catastrophic level of 2 degrees. This promise appears to be abandoned by the Turnbull government in the most recent budget.
Australia's budget not only is a betrayal of the future of Australia's health, biodiversity and economic security, but also negligent of an international agreement which was set up to ensure a fair approach to climate for nations.

*Francine Crimmins is studying a double degree of Journalism and Creative Intelligence & Innovation at the University of Technology Sydney.

Links

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Turnbull Lets Fig Leaf Droop And Stands Naked On Climate Policy

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.

Links

• Turnbull’s budget ignores energy crisis and dodges climate
• The energy revolution is here – but are consumers invited?
• Budget criticised for lack of climate change measures
• Budget 2017: government goes hard on gas and hydro in bid for energy security

Budget 2017: Government Goes Hard On Gas And Hydro In Bid For Energy Security

The Conversation - Hugh Saddler | Alan Pears | Roger Dargaville |Tony Wood

Gas infrastructure and exploration attracted the lion’s share of new energy announcements in the 2017 federal budget. Sean Heatley/Shutterstock.com

The budget contains several measures designed to boost energy security, including:

• A$90 million to expand gas supplies, partly through increased unconventional gas exploration
• a potential Commonwealth buyout of an expanded Snowy Hydro scheme
• up to A$110 million for a solar thermal plant at Port Augusta
• monitoring of gas and electricity prices by the Australian Competition and Consumer Commission.

Below, our experts react to the measures.

Gas price problem far from solved
Roger Dargaville, Deputy Director, Melbourne Energy Institute, University of Melbourne
The budget contains a broad range of funding in energy-related areas, with a significant focus on gas resources, making A$78 million available for onshore unconventional gas exploration and reform in the gas markets, and A$7 million for studies into new gas pipelines to South Australia, from both Western Australia and the Northern Territory.
Interestingly, there is A$110 million in equity available (but not guaranteed) for a solar thermal plant in Port Augusta. And most notably, the government has proposed purchasing the Snowy Hydro Scheme from the New South Wales and Victorian governments, ensuring that the scheme stays in public hands.
The budget also includes A$13 million for CSIRO to improve energy forecasting tools, and A$8 million for the ACCC to investigate consumer energy pricing issues.
Overall, the budget highlights the government’s desire to do something about gas prices, but offers little to make a significant difference to a very difficult problem. Gas market reform and new pipelines are unlikely to reduce the exposure of the domestic market to price rises driven by international exports.
Importantly, there is little new funding in the budget directly relating to reducing carbon emissions and meeting the pledges made in the Paris Agreement (a 26-28% emission reduction relative to 2005 levels by 2030). Also noteworthy is the fact that funding for the carbon capture and storage flagship ceases in 2018-19.

‘On energy this budget is small fry’
Tony Wood, Energy Program Director, Grattan Institute
The budget does little more on energy than endorse the government’s deal with Senator Nick Xenophon on corporate tax cuts, complemented by modest commitments to energy security, more gas and better regulation.
Government facilitation of gas development and beefing up the energy capability of the Australian Energy Regulator and the ACCC are simple logic, and the one- off payment to pensioners to help with electricity bills will be welcomed by them.
Major public funding for further feasibility studies is a little more questionable. If the gas crisis can’t galvanise support from pipeline companies and gas consumers for pipelines, why would governments reach a different conclusion?
And finally, one can only speculate as to why the federal government is contemplating buying out the NSW and Victorian governments’ share of Snowy Hydro. Presumably it is because the feds are concerned about securing support for the proposed expansion.
In summary, on energy this budget is small fry ahead of major policy decisions that rest on the forthcoming Finkel Review of the National Electricity Market next month, and the climate change policy review later in the year.

The Commonwealth will look at expanding the Snowy Hydro Scheme and buying it off the states. AAP Image/Lukas Coch

A step towards radical energy reform?
Hugh Saddler, Honorary Associate Professor, Centre for Climate Economics and Policy, Australian National University
Few announcements in the budget speech are more emblematic of complete policy reversal than the announcement that the Commonwealth would buy the shareholdings in Snowy Hydro Limited of the governments of NSW (58%) and Victoria (29%), to add to the 13% currently owned by the Commonwealth. This comes almost exactly 11 years after Prime Minister John Howard, responding to vociferous public opposition, pulled the plug on plans by all three governments for a public float of their entire shareholdings. What is more, Treasurer Scott Morrison has now announced that, once owned by the Commonwealth, Snowy Hydro would remain in public ownership.
This announcement of course accompanies the government’s Snowy 2.0 proposal, for a fivefold increase in the Snowy scheme’s current 500 megawatt pumped storage capacity (at Talbingo). This was used, after commissioning in 1974, to allow inflexible coal fired power stations to operate with constant output levels day and night, but is now almost never used. This presumably reflects commercial decisions by Snowy Hydro, as it trades in the National Electricity Market.
The rationale for Snowy Hydro 2.0 is to facilitate operation of a grid with a high share of renewable generation, by smoothing out variations in wind and solar supply. Does this announcement mean that the government envisages moving away from a strictly commercial approach to using the assets of the Snowy scheme? Is this a first step towards radical restructuring, or even dismantling, of the National Electricity Market?

Stronger legislation needed
Alan Pears, Senior Industry Fellow, RMIT University
The detailed A$265 million energy package includes a number of useful measures to strengthen the weak regulatory culture of the energy sector that has allowed our energy crisis to evolve. But it is still limited: strong legislative reform and active support of emerging competitors will also be needed. It is a modest investment compared with recent multibillion-dollar energy cost increases. If it is successful, it will deliver vary large net benefits to the economy by limiting energy price increases. Unfortunately, past efforts to fix the energy situation have largely failed to deliver real outcomes: we need clear objectives for outcomes, and a mechanism to implement contingency strategies if they are not achieved.
In a context of increasing urgency for stronger action on climate, and the reality that the global “burnable carbon” budget is very limited, investment to encourage more gas development seems misplaced. More emphasis on energy efficiency, renewables and smart energy systems would make much more sense. Energy efficiency already saves billions on energy costs and could save much more, while renewable energy is becoming cheaper than fossil fuel alternatives. They also help to achieve our climate targets. And fossil fuels are responsible for almost three-quarters of Australian emissions, so we need strong action to meet our international obligations.
The extension of the A$20,000 tax write-off for small business spending on equipment is a measure that, at least for small businesses, offsets a significant barrier to investment in energy efficiency. Firms will also be able to continue to claim the write-off to improve the economics of investments in on-site renewable energy and storage. Of course, the problem still remains for spending over A$20,000 by small businesses, and for larger businesses.
The energy security plan, which includes funding for ACCC to police energy industry behaviour is only a small step towards fixing the disastrous failures of energy policy and a transition to a 21st century energy policy framework. Much more will need to be done.

Links

• Gas crisis? Energy crisis? The real problem is lack of long-term planning
• Snowy Hydro gets a boost, but ‘seawater hydro’ could help South Australia
• With gas and hydro plans, the government is looking at the whole picture
• Turnbull unveils Snowy plan for pumped hydro, costing billions