01/09/2018

Options On Energy Policy Leave Coalition In A Sticky Situation

The Guardian - 

The government finds itself in a mess after the national energy guarantee was used as a catalyst to evict Turnbull
The imperative of emissions reduction now hangs over Liberal leaders like the sword of Damocles. Photograph: David Gray/Reuters 
We’ve lost another prime minister in the front bar brawl that is Australian politics, but we’ve lost something else as well, something that’s a bit harder to see.
For the last decade or more, a group of people in the political system have been trying to land a bipartisan consensus on energy policy and climate change, persevering through all the dispiriting cycles of trying to achieve that end, hoping that a corner could be turned.
That animating current in politics, and it’s been a significant one, now seems to have hit a dead end. That’s the feeling. We’ve reached a point of no return.
If that supposition proves to be correct, this a profound problem for the country, more profound than the revolving door at the Lodge, which is deeply disconcerting, but just one symptom of a deeper malaise.
The Coalition is in a terrible mess on this issue. The national energy guarantee, the last roll of the dice for consensus, was used as a catalyst to blow up a prime minister, just as emissions trading was deployed for the same end, removing the same party leader, in 2009.
As a consequence of that rancid history, the imperative of emissions reduction now hangs over Liberal leaders like the sword of Damocles. Any leader wanting to do something knows they will have to run the gauntlet of the conservatives, and the brains trust of the conservative faction has proven itself so resistant to facts and evidence that it can’t even count numbers for a leadership spill.
Unless Scott Morrison can neutralise the naysayers, and construct a nifty suspension bridge over a lava pit to push this issue forward, the practical consequence of what we’ve just witnessed is a deep paralysis inside a party of government. That paralysis works against the national interest.
It feels like the Titanic is about to hit the iceberg.
This is all the more depressing because in Australia, we’ve been good at this stuff. We’ve been highly effective at managing economic transformation over the past three decades largely because our institutions are solid, and our parties of government have, by-and-large, risen to the occasion.
We are standing on the threshold of another, critically important, transformation – one where an economy with high per capita emissions evolves to one built on the necessity of carbon constraint – but, unfortunately for all of us, one of the major parties has checked out of the conversation.
Let’s clear the wreckage of the fortnight and look with clear eyes at the situation as it now stands.
The Morrison government is in a position where it is a signatory to the Paris agreement, yet there are no policies to deliver the outcome. There is a talking point doing the rounds that Australia will meet its Paris commitments “in a canter” – but this is complete nonsense.
Scott Morrison looks at a piece of coal in Parliament House in Canberra. His government has no policies to deliver on Paris agreement commitments. Photograph: Lukas Coch/AAP 
It is possible (although the Energy Security Board says otherwise) that we could reduce emissions by 26% in the electricity sector without a settled policy to get us there because emissions in the sector are already falling (because ageing coal is leaving the system and the renewable energy target has pulled forward investment).
But what about the rest of the economy? Emissions are rising elsewhere, and there is no plan or roadmap to curb them.
This government has dithered for years about the imposition of new emissions standards for vehicles. Ministers have not been brave enough to bring forward a concrete proposal because the Coalition party room would limber up for another implosion.
Then there’s agriculture. Many Nationals take it as a personal affront if someone suggests anything be done in agriculture. The fact that their own constituents are now being battered by horrendous drought and hanging on grimly in areas gradually being rendered unviable by inexorable climatic change is an irony that seems lost of many of our elected representatives.
So that’s the outlook on emissions. Now let’s ponder the concept of certainty.
The national energy guarantee was proposed to create policy certainty to help drive the correct mix of investment in Australia’s electricity generation assets. That was its purpose. That policy is now on the back burner.
What isn’t on the back burner is the new Morrison government’s need to deliver a fix on power prices once the prime minister has concluded the healing and stability tour. That’s on the front burner. But this is a problem with no easy fix.
The government slapped together a package of measures in the dying days of the Turnbull regime designed to lower power prices – work that would have normally taken months of careful deliberation in a cabinet subcommittee.
So now we have no over-arching mechanism for investment certainty, and a bunch of expedited measures proposed on the fly, including heavy handed market interventions, such as breaking up power companies if they don’t play ball with the government and lower prices.
Call me crazy, but that doesn’t sound like the building blocks of a stable investment climate. This is a market where people have to make decisions about investing in generation assets with a shelf life of 30 or 40 years, so they need to be able to assess risks and forecast the future with a reasonable degree of certainty.
As a consequence of things being patched together in political extremis, and not really making sense if you think about them for longer than five seconds, we’ve already entered a stand off that would be funny if it wasn’t so serious.
The government is saying to the power companies give us what we want or we’ll whack you with our big stick, and the power companies are saying if you want lower prices, you’d better give us the rules of the road, because we’ve been waiting for that patiently for a decade, and ending price volatility doesn’t happen just because you are facing an election and it feels like the Titanic is about to hit the iceberg.
So all this is pretty tough. Tougher still will be the short-term politics if Labor decides to return to the parliament in September supporting the national energy guarantee, which the opposition can then try to deploy as both a shield and a sword as the federal election closes in.
Labor hasn’t yet decided what it will do yet but there are a couple of obvious options. It could say there’s no point in trying to find a bipartisan solution anymore, so we’ll just seek a mandate for our own ideas, see you at the election boys.
Option two would be grab the national energy guarantee and come back at the Coalition by supporting a policy the government itself designed, but can’t seem to support without plunging into civil war.
Option two is sticky for the Coalition. Part of the reason conservatives campaigned against the national energy guarantee is because they want a partisan fight with Labor on climate change and energy. But how do you fight, compellingly and coherently, against a policy the government designed?
What are you going to say? Imagine the talking points. After careful consideration, we have reached the sorry conclusion that our own policy (that we spent months telling you was critically important) is stupid? It sounds beyond parody.
The Coalition can construct a fight about the fact that Labor will propose a higher emissions reduction target. But even this contest is now more cluttered. What was meant to be a sharp and simple contrast – Labor has a radical target, we have a sensible one – is complicated by the fact the Coalition is currently too unstable and riven to settle on any emissions reduction target at all.
“Hello, we are the Liberal party, and we have nothing to say on emissions reduction, because when we do, things inside our show go crazy” might work in some parts of the country. It’s certainly possible. Stranger things have happened.
But imagine being a Liberal trying to defend that position in inner metropolitan seats in Sydney, Melbourne and Brisbane – or in a seat such as Wentworth, where there will shortly be a byelection, because the Turnbull era ended on Friday.
Good luck.

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