24/11/2018

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
at No comments:

The Great Barrier Reef Is “In For A Rough Ride”

Scientific American - Megan Gannon

Eminent coral researcher Terry Hughes says the key to protecting the iconic corals off Australia’s coast is to stop global warming
Credit: NASA
During summer 2017 a large swath of Australia’s Great Barrier Reef—normally a riot of electric oranges, reds and other colors—turned ghostly pale.
Unusually warm water temperatures, partly due to global warming, had caused the corals to expel from their tissues the symbiotic algae that provide them with food and give them their brilliant hues. It was the second mass-bleaching event to hit the reef in as many years. Together, the back-to-back events hit two thirds of the reef.
Now, with the 2019 Australian summer poised to begin, atmospheric scientists are predicting an El Niño—a recurring period marked by warmer temperatures in the tropical Pacific Ocean. This
Professor Terry Hughes. Credit: Arccoe Wikimedia
potential for high temperatures again poses a threat to the Great Barrier Reef, one that marine biologist Terry Hughes—a high-profile champion of coral reef protection—will be watching, looking for signs of more damage to the reef as he continues to push for protecting it.
Hughes thinks there are some worthy mitigation efforts to explore, such as reforesting the watersheds that drain into the reef to prevent pollution-bearing runoff. But ultimately he believes the key to saving corals lies in addressing greenhouse gas emissions that fuel global warming.Hughes’s efforts to raise awareness about the fate of the 2,300-kilometer-long coral reef—the largest on the planet and home to thousands of marine species—have put him at odds with business and political interests. Last month it emerged the Australian Research Council (ARC) would drop its funding of the coral reef institute Hughes directs at James Cook University in Queensland—a move decried by ocean scientists around the world. (The ARC and the current conservative Australian government have said the decision was not politically motivated, according to news reports.) Last week Hughes was awarded The John Maddox Prize for championing scientific evidence in the face of hostility. Scientific American caught up with him at the annual Falling Walls science conference in Berlin earlier this month and spoke about the future of the Great Barrier Reef.

An edited transcript of the interview follows.

What is your outlook for the Great Barrier Reef in the coming months?
NOAA [the U.S. National Oceanic and Atmospheric Administration] and the Australian Bureau of Meteorology are both projecting a high likelihood of an El Niño event forming later this year. If that happens, the likelihood of bleaching when summer sea temperatures peak next March would be very high, but we won’t know for sure until about January. A well-timed cyclone could cool the water despite the long-term forecast. But you have to be careful what you wish for. In 2016 the southern third of the Great Barrier Reef was rescued by a spent cyclone that brought the [water] temperature down about 2 to 3 degrees Celsius. But with Cyclone Debbie in 2017, the bleaching had already occurred and the storm was a category 4 when it hit the coast—so it was actually very damaging and destructive [to the reef].

How do you monitor a bleaching event?
Our aerial surveys, which we match to satellite temperature data, are reef-wide. It takes us seven or eight days to crisscross the entire Great Barrier Reef in a small plane flying up to eight hours a day. It’s pretty grueling but that’s the best way that we have of getting the full picture. We ground-truth all of that [data] underwater [during dives]. Each event that we study has a different geography. The 2016 event was very much a northern affair. The maps for the 2017 bleaching will show that the hottest part of the reef—the part that had the most bleaching—was in the center.
Dead coral. Credit: J.W. Alker Getty Images
Is there any area of the reef you are especially worried about?
My worst nightmare is that the bottom [southern] third of the Great Barrier Reef, which escaped the last two events, will bleach. It was simply good luck that prevented it from bleaching in 2016 and 2017. Those reefs have very high numbers of branching corals that happen to be the most susceptible to bleaching. So if it does get a blast of heat next summer or some summer soon, there will be high levels of mortality. That would mean all sectors of the reef will have been hit within a handful of years.

How did the Australian government respond to the bleaching events?
The Great Barrier Reef story in Australia, following the unprecedented back-to-back bleaching, is very politically contentious. You would think an appropriate response by the government would be to declare, for instance, that it wasn’t going to proceed with the world’s largest coal mine [with a coal shipping terminal near the reef] or that it would ramp up its renewable energy targets. Neither has occurred. The government has put quite a lot of money into investigating different interventions. Some are downright silly—the [underwater cooling] fans, the floating sunscreen. There’s a campaign to ban plastic straws. If you were cynical, you would say that it was more about giving the appearance of helping reefs when the elephant in the room is still climate change. There’s also money for improving water quality. Runoff of sediment and nutrients from agriculture into the inner part of the Great Barrier Reef is an important issue, but the amount of funding that’s being spent on that is nowhere near sufficient to reach the government’s own targets. As the country responsible for the Great Barrier Reef World Heritage Area, Australia should be leading the international efforts to reduce emissions, especially following the latest IPCC [Intergovernmental Panel on Climate Change] report. Our current commonwealth government has officially signed on to the 1.5-degree C target [for limiting global temperature rise] of the Paris agreement, but Australia’s emissions are actually increasing.

How will the loss of funding from the Australian Research Council affect your work?
It’s roughly a quarter of our funding and it won’t take effect for another two to three years, so we’ve got time to continue with our current level of activity and to change our funding model by moderate amounts to make up that loss. It’s not good news, certainly. But we will continue to do the research that we’re doing, especially if we see bleaching next year.

What do people misunderstand about the Great Barrier Reef?
There are still about 10 billion corals out there alive and kicking. We’ve just gone through one hell of a natural selection event where the so-called losers—the heat-susceptible species—have been badly depleted. The mix of species has changed. The genetic composition of the coral populations is changing. I think that is just the beginning of a transition that hopefully will make the Great Barrier Reef tougher for inevitable future events. Things will generally get worse before they get better. Until CO2 emissions and temperatures stabilize, the corals are going to be in for a rough ride. Because corals have big populations that are geographically widely dispersed, there is light at the end of the tunnel—but it is completely contingent on whether we can keep temperatures to the 1.5-degree C target.

Links
at No comments:

U.S. Climate Report Warns Of Damaged Environment And Shrinking Economy

New York Times - Coral Davenport | Kendra Pierre-Louis

Fighting the Camp Fire this month in Magalia, Calif. Credit Justin Sullivan/Getty Images
WASHINGTON — A major scientific report issued by 13 federal agencies on Friday presents the starkest warnings to date of the consequences of climate change for the United States, predicting that if significant steps are not taken to rein in global warming, the damage will knock as much as 10 percent off the size of the American economy by century’s end.
The report, which was mandated by Congress and made public by the White House, is notable not only for the precision of its calculations and bluntness of its conclusions, but also because its findings are directly at odds with President Trump’s agenda of environmental deregulation, which he asserts will spur economic growth.
Mr. Trump has taken aggressive steps to allow more planet-warming pollution from vehicle tailpipes and power plant smokestacks, and has vowed to pull the United States out of the Paris Agreement, under which nearly every country in the world pledged to cut carbon emissions. Just this week, he mocked the science of climate change because of a cold snap in the Northeast, tweeting, “Whatever happened to Global Warming?”
But in direct language, the 1,656-page assessment lays out the devastating effects of a changing climate on the economy, health and environment, including record wildfires in California, crop failures in the Midwest and crumbling infrastructure in the South. Going forward, American exports and supply chains could be disrupted, agricultural yields could fall to 1980s levels by midcentury and fire season could spread to the Southeast, the report finds.
“There is a bizarre contrast between this report, which is being released by this administration, and this administration’s own policies,” said Philip B. Duffy, president of the Woods Hole Research Center.
All told, the report says, climate change could slash up to a tenth of gross domestic product by 2100, more than double the losses of the Great Recession a decade ago.
Scientists who worked on the report said it did not appear that administration officials had tried to alter or suppress its findings. However, several noted that the timing of its release, at 2 p.m. the day after Thanksgiving, appeared designed to minimize its public impact.
Still, the report could become a powerful legal tool for opponents of Mr. Trump’s efforts to dismantle climate change policy, experts said.
“This report will weaken the Trump administration’s legal case for undoing climate change regulations, and it strengthens the hands of those who go to court to fight them,” said Michael Oppenheimer, a professor of geosciences and international affairs at Princeton.
The report is the second volume of the National Climate Assessment, which the federal government is required by law to produce every four years. The first volume was issued by the White House last year.
The previous report, issued in May 2014, concluded with nearly as much scientific certainty, but not as much precision on the economic costs, that the tangible impacts of climate change had already started to cause damage across the country. It cited increasing water scarcity in dry regions, torrential downpours in wet regions and more severe heat waves and wildfires.
The results of the 2014 report helped inform the Obama administration as it wrote a set of landmark climate change regulations. The following year, the E.P.A. finalized President Barack Obama’s signature climate change policy, known as the Clean Power Plan, which aimed to slash planet-warming emissions from coal-fired power plants. At the end of the 2015, Mr. Obama played a lead role in brokering the Paris Agreement.
But in 2016, Republicans in general and Mr. Trump in particular campaigned against those regulations. In rallies before cheering coal miners, Mr. Trump vowed to end what he called Mr. Obama’s “war on coal” and to withdraw from the Paris deal. Since winning the election, his administration has move decisively to roll back environmental regulations.
An oil refinery in Port Arthur, Tex. President Trump has pushed to roll back regulations on carbon emissions. Credit Brandon Thibodeaux for The New York Times
The report puts the most precise price tags to date on the cost to the United States economy of projected climate impacts: $141 billion from heat-related deaths, $118 billion from sea level rise and $32 billion from infrastructure damage by the end of the century, among others.
The findings come a month after the Intergovernmental Panel on Climate Change, a group of scientists convened by the United Nations, issued its most alarming and specific report to date about the severe economic and humanitarian crises expected to hit the world by 2040.
But the new report also emphasizes that the outcomes depend on how swiftly and decisively the United States and other countries take action to mitigate global warming. The authors put forth three main solutions: putting a price on greenhouse gas emissions, which usually means imposing taxes or fees on companies that release carbon dioxide into the atmosphere; establishing government regulations on how much greenhouse pollution can be emitted; and spending public money on clean-energy research.
A White House statement said the report, which was started under the Obama administration, was “largely based on the most extreme scenario” of global warming and that the next assessment would provide an opportunity for greater balance.
The report covers every region of the United States and asserts that recent climate-related events are signs of things to come. No area of the country will be untouched, from the Southwest, where droughts will curb hydropower and tax already limited water supplies, to Alaska, where the loss of sea ice will cause coastal flooding and erosion and force communities to relocate, to Puerto Rico and the Virgin Islands, where saltwater will taint drinking water.
More people will die as heat waves become more common, the scientists say, and a hotter climate will also lead to more outbreaks of disease.
Two areas of impact particularly stand out: trade and agriculture.

Trade disruptions
Mr. Trump has put trade issues at the center of his economic agenda, placing new tariffs on imports and renegotiating trade deals such as the North American Free Trade Agreement. But climate change is likely to be a disruptive force in trade and manufacturing, the report says.
Extreme weather events driven by global warming are “virtually certain to increasingly affect U.S. trade and economy, including import and export prices and businesses with overseas operations and supply chains,” the report concludes.
Such disasters will temporarily shutter factories both in the United States and abroad, causing price spikes for products from apples to automotive parts, the scientists predicted. So much of the supply chain for American companies is overseas that almost no industry will be immune from the effects of climate change at home or abroad, the report says.
It cites as an example the extreme flooding in Thailand in 2011. Western Digital, an American company that produces 60 percent of its hard drives there, sustained $199 million in losses and halved its hard drive shipments in the last quarter of 2011. The shortages temporarily doubled hard drive prices, affecting other American companies like Apple, HP and Dell.
Workers cleaned up after floodwaters receded from a Western Digital factory in Thailand. Credit Rungroj Yongrit/European Pressphoto Agency
American companies should expect many more such disruptions, the report says.
“Climate change is another risk to the strength of the U.S. trade position, and the U.S. ability to export,” said Diana Liverman, a University of Arizona professor and co-author of the report. “It can affect U.S. products, and as it drives poverty abroad we can lose consumer markets.”

Agricultural risks
The nation’s farm belt is likely to be among the hardest-hit regions, and farmers in particular will see their bottom lines threatened.
“Rising temperatures, extreme heat, drought, wildfire on rangelands and heavy downpours are expected to increasingly disrupt agricultural productivity in the U.S.,” the report says. “Expect increases in challenges to livestock health, declines in crop yields and quality and changes in extreme events in the United States and abroad.”
By 2050, the scientists forecast, changes in rainfall and hotter temperatures will reduce the agricultural productivity of the Midwest to levels last seen in the 1980s.
The risks, the report noted, depend on the ability of producers to adapt to changes.
During the 2012 Midwestern drought, farmers who incorporated conservation practices fared better, said Robert Bonnie, a Rubenstein Fellow at Duke University who worked in the Agriculture Department during the Obama administration. But federal programs designed to help farmers cope with climate change have stalled because the farm bill, the primary legislation for agricultural subsidies, expired this fall.
Flooding in 2011 forced the Fort Calhoun nuclear power station near Omaha to shut down for years. Credit Nati Harnik/Associated Press
The report says the Midwest, as well as the Northeast, will also experience more flooding when it rains, like the 2011 Missouri River flood that inundated a nuclear power plant near Omaha, forcing it to shut down for years.
Other parts of the country, including much of the Southwest, will endure worsening droughts, further taxing limited groundwater supplies. Those droughts can lead to fires, a phenomenon that played out this fall in California as the most destructive wildfire in state history killed dozens of people.
The report predicts that frequent wildfires, long a plague of the Western United States, will also become more common in other regions, including the Southeast. The 2016 Great Smoky Mountains wildfires, which killed 14 people and burned more than 17,000 acres in Tennessee, may have been just the beginning. But unlike in the West, “in the Southeast, they have no experience with an annual dangerous fire season, or at least very little,” said Andrew Light, a co-author of the report and a senior fellow at the World Resources Institute.
Climate change is taking the United States into uncharted territory, the report concludes. “The assumption that current and future climate conditions will resemble the recent past is no longer valid,” it says.
There is always some uncertainty in climate projections, but scientists’ estimates about the effects of global warming to date have largely been borne out. The variable going forward, the report says, is the amount of carbon emissions humans produce.

Links
at No comments:

Labor’s Battery Plan – Good Policy, Or Just Good Politics?

The Conversation - 

With the right settings, Labor’s new scheme could benefit householders as well as the grid itself. Shutterstock.com
Federal Labor obviously likes the politics of giving rebates of up to A$2,000 each to 100,000 households of prospective voters so they can install domestic batteries. But is this good policy that will support Australia’s transition to a reliable, affordable, low-emissions energy system, or is it just middle-class welfare?
The Grattan Institute has previously been critical of solar subsidies similar to this program. In 2015 we found that household solar photovoltaic (PV) installations driven by state and federal government subsidies cost Australia around A$9 billion. Many solar incentive programs were uncapped, and their costs blew out as the price of PV systems dropped rapidly.
The parallels with battery technology are clear: batteries may be expensive and uncommon today, but many commentators expect them to drop rapidly in price.
More recently, my colleagues and I have lamented the Victorian government’s return to the bad old days of solar subsidies. Its Solar Homes program promises A$1.24 billion in subsidies over 10 years and would roughly triple the level of household solar in Victoria. Yet most households will be financially better off installing solar even without this subsidy. If fully implemented, it will be a great waste of taxpayers’ money.
The case for public subsidies for household batteries is stronger than for household solar panels. Batteries are better able to help cut the cost of the entire energy system and so don’t just benefit the people who install them – they also benefit electricity consumers more generally. By releasing stored power when most needed, batteries can reduce reliance on expensive “peaking” power plants that operate only at times of high demand. And they can reduce the cost of expanding network capacity to supply all customers at peak times.
By contrast, solar primarily eats into midday demand, which is already low due to the output of the large existing fleet of solar panels. While solar has historically reduced peak demand to some degree, the Australian Energy Market Operator considers that this effect is reducing as solar has pushed peak demand later in the day.
Impact of rooftop solar PV on peak demand. AEMO 2018, The NEM Reliability Framework
In a perfect world, households would have enough private incentive to install batteries when they benefit the entire system. If households faced higher electricity prices at times of peak demand, they would be rewarded for reducing system-wide costs by installing batteries.
But we do not live in this perfect world. Governments are reluctant to mandate that households pay higher prices during peak periods, and retailers find it hard to convince households to accept these more complex tariffs. Cost-reflective pricing is unlikely to become widespread any time soon, meaning there is a case for public subsidy to household batteries – provided the subsidies are capped, and end when battery prices inevitably fall.
Using smart controls to coordinate multiple batteries can maximise their benefits. These so-called “virtual power plants” allow the controller to reduce a household’s draw on the grid at peak times, thus reducing costs for both the household and the system. Federal Labor should increase the benefits of its policy by mandating that people who receive a subsidy participate in such a scheme, and by targeting installations to areas where the network most needs support.
On balance, federal Labor’s policy appears to be a sensible step towards a smarter, lower-emissions electricity grid. It can be tweaked to maximise benefits to the whole system, not just to the lucky households that get government assistance. And its cost is capped, which reduces the risk of the sort of cost blowouts that have plagued solar subsidy schemes.
Unlike some of the Coalition’s policies, such as its plan to underwrite new generation, Labor’s battery policy is likely to help rather than hinder Australia’s energy transition.

Links
at No comments:

Business Council Excoriates Coalition's 'Ad Hoc And Extreme' Energy Policies

The Guardian - 

Jennifer Westacott says plan sets a ‘dangerous precedent’ and threatens Australia’s economic attractiveness
The Business Council of Australia chief executive, Jennifer Westacott, says the Coalition’s energy plan brings ‘new risks’ and unintended consequences. Photograph: Mick Tsikas/AAP
The Business Council of Australia has blasted the Morrison government’s energy plan, declaring it will exacerbate sovereign risk, interfere with market outcomes and discourage investment in critical infrastructure.
The BCA has used a submission to the Treasury to launch an excoriating critique of the government’s price regulation measures, and the so-called “big stick” divestiture policy, saying the proposed introduction “of these heavy-handed, intrusive treasurer-ordered remedies in the energy sector sets a dangerous precedent for other sectors of the economy and threatens our economic attractiveness by sending a signal to the world that investing in Australia comes with considerable risks”.
“The Business Council supports lower electricity prices but does not believe this will be achieved by ad hoc and extreme intervention in the electricity market, which brings new risks, unintended consequences and has never worked before,” the submission, signed off by the group’s chief executive, Jennifer Westacott, says.
The BCA’s rhetorical rocket is directed at policies being pursued by the energy minister, Angus Taylor, to reduce power prices ahead of the next federal election, which include a threat to break up power companies if they engage in price gouging.
The critique from the influential business group is similar to sentiments expressed by the power companies, which claim the proposed regime could be unconstitutional, and the renewable energy sector.
A separate proposal to underwrite new investment in coal generation has also been blasted by the normally diplomatic Ai Group, which noted the government’s proposal could leave taxpayers exposed to liabilities “with a net present value of billions of dollars”.
Taylor insists the government will press ahead with its controversial proposals, although they could meet internal resistance once the legislation arrives at the Coalition party room, with some MPs privately concerned about pursuing heavy-handed interventions like divestiture and price regulation.
On the underwriting of new power generation projects, Taylor said on Thursday the government would produce a shortlist of projects including gas, coal and hydro “by early next year”.
He said “24/7 power” was crucial to keeping the lights on and maintaining industrial production, and the government was “determined” to support new generation.
The positioning over energy policy came as Labor unveiled its pre-election offering, including a $15bn program for driving the transformation in Australia’s energy system to low-emissions sources.
The former prime minister Malcolm Turnbull is also poised to re-enter the fray with an energy speech in early December, after observing recently the Liberal party was not capable of dealing with climate change.
Labor has implored the Coalition not to walk away from Turnbull’s signature energy policy – the national energy guarantee – but, in the event bipartisanship cannot be achieved, Bill Shorten will roll out an alternative if Labor wins the next federal election.
The plan includes topping up the Clean Energy Finance Corporation to the tune of $10bn and a new $5bn fund to modernise ageing transmission infrastructure – the ramparts of a 10-year plan to boost the share of renewable energy in the grid and retire coal generation. The funding is off-budget and does not hit the bottom line.
The Labor leader said he would use the Australian Energy Market Operator’s integrated system plan as the basis for transforming the energy system, with a Shorten government playing a hands-on role creating renewable energy zones, investing in new generation and transmission infrastructure and also in firming technologies, like batteries and gas peaking plants.
Shorten said that, if he wins the next federal election, the government will fund the transformation through concessional loans, equity and contract-for-difference auction schemes that are already used in some Australian states, and internationally.
Labor will also roll out other climate change policies between now and the end of the year, including some form of emissions trading scheme for liable entities – Australia’s biggest polluters – and mandatory vehicle emissions standards.
Some business groups and energy stakeholders expressed concern that Labor’s interventionist policy of underwriting or directly funding new generation was problematic.
“We have consistently called for a minimalist approach to market intervention,” the BCA said in response to the Labor policy. “Much of the detail still needs to be worked through, including the underwriting and investment program for low-emissions generation”.
“In such a complex policy area it is important that a thorough consultation process with industry occurs, drawing on evidence-based policy. If the last decade has shown anything, it’s that the devil is in the detail, and we need to get that right”.

Links
at No comments:

'Without Balance' And 'Sensible': Labor's Massive Energy Plan Divides Critics

Fairfax - David Crowe | Nicole Hasham

Labor has sparked a political clash over a new plan to use $15 billion in Commonwealth debt to finance new energy projects, with critics warning of a flood of spending on renewable power while others acclaim the "sensible" move.
Opposition Leader Bill Shorten surprised the energy industry with the scale of the investment plan, promising $5 billion to upgrade transmission lines and $10 billion for new electricity generation – excluding projects powered by coal.
Labor leader Bill Shorten. Credit: AAP
The policy relies on the use of additional debt to invest in new projects, assuming the debt will be backed by assets and will generate a commercial return over time.
But the Investor Group on Climate Change, which represents super funds and others with more than $2 trillion, warned that huge public investments could make it more uncertain for private investors already spending on energy projects.
Prime Minister Scott Morrison has declared the NEG to be "dead" and has abandoned its mechanism to reduce carbon emissions, but Mr Shorten said he was willing to legislate the scheme if he won the election and the Coalition changed its mind.
Groups as diverse as the Australian Chamber of Commerce and Industry, the Business Council of Australia, the Electrical Trades Union and the Australian Energy Council emphasised the NEG as a way to ensure certainty.
Illustration: Matt Golding
While Labor did not reveal the cost of its financing plan, similar schemes in the past have incurred significant expenses including the interest paid on the debt.
Mr Shorten said his policy was to inject another $10 billion into the Clean Energy Finance Corporation over five years from next year, if Labor won the election.
The initial investment of $10 billion in the corporation when it was established in 2011 cost $312 million in expenses over four years. The $10 billion was not counted as an expense because the investments are treated as assets.
Energy Minister Angus Taylor warned that the electricity grid was already seeing a surge of investment in renewable power projects that could not deliver reliable power around the clock.
"This is just a policy without balance," he told Fairfax Media.
"They are encouraging huge investments in intermittent power over and above the $15 billion that is already being spent, which is at record levels.
"That’s why we have to take a break and absorb the investment we have now, not layer another $15 billion on top."
Mr Taylor is developing similar plans to underwrite new projects but wants them to provide "dispatchable" power such as gas, hydro or coal-fired electricity as well as solar and wind with battery storage.
Minerals Council of Australia chief Tania Constable said the Labor policy "discriminated" against other forms of energy and chose to "pick winners" by subsidising renewables.
Former chief executive of the CEFC Oliver Yates, a Liberal Party veteran and former Macquarie banker, said Labor’s $10 billion investment boost to the organisation was "very sensible" and would ensure the cost of capital did not rise as a result of stimulating investment in the renewable sector.
"Given the build out [of new projects] that is required by 2030 to get to 50 per cent renewables, that means the demand for capital is high in that sector," he said.
"If you want to actually lower the power price ... you want to inject capital into that market. Having another lender come into the market will actually help hold down borrowing costs."
Mr Yates said federal Labor’s plan for reverse auctions to attract new projects at the lowest cost was a proven way to provide investor certainty and had worked well in the ACT and Victoria.
He said this approach would provide stability and the lowest-cost electricity following years of national energy policy upheaval.
"This market has been trashed with uncertainty. That means investors are requiring a higher risk premium because of the uncertainty government policy has provided,” Mr Yates said.
"What a reverse auction does is, because the government provides a long term contract, it removes that risk from the project so the project can bid at the lowest price possible."
Mr Yates said if Labor was to rely solely on reviving the National Energy Guarantee, an investor would be "still subject to worrying a future government could come in and throw it out the window".
Mr Yates said while taxpayers paid the cost of interest on government borrowing used to fund CEFC investments, this was less than the average returns the corporation generated, meaning taxpayers were not worse off.
The corporation was established to be "a sustainable institution and [that] means trying not to burn your money or cost the taxpayer money," he said.
Australian Energy Council chief executive Sarah McNamara, whose organisation represents major generators, said Labor’s decision to resurrect the National Energy Guarantee correctly identified that stable policy was the key to greater investment and lower energy prices.
Greens climate change and energy spokesman Adam Bandt said Labor’s policy was timid and "will keep coal in the system for decades".
Parliamentary Library analysis commissioned by the Greens last month showed Australia would need to shut 12 of its coal power stations by 2030 to do its share to avoid the worst global warming impacts predicted by the Intergovernmental Panel on Climate Change.
"Scavenging a policy from the Liberals’ rubbish bin is not good enough. As a climate policy, this will do nothing to stop the planet burning," Mr Bandt said.
The Australian Conservation Foundation said Labor had responded to the climate change crisis, in contrast to the government's "reckless and irresponsible abandonment" of any emissions policy for the energy sector. Progressive think tank the Australia Institute also lauded the policy as a step in the right direction.
The Australian Council of Social Service applauded Labor’s move towards a faster clean energy transition. But it said more support should be provided to low-income earners struggling with high energy bills who could not afford to invest in solar power and batteries.

Links
at No comments: