22/05/2019

The Message Morrison Shouldn't Take Away From The Election

Fairfax - Ben Oquist*

If the message the government hears from the election is that the climate does not matter it will not just be energy policy that suffers. Australia’s economy and Scott Morrison’s politics will require a different interpretation.
The election result does not change the scientific imperative to reduce carbon emissions. The climate wars - the battle over effective climate action policy - are not done, but the energy wars - over Australia’s renewable energy uptake - should be.

Prime Minister Scott Morrison will forge ahead with his government's climate change policy. Hear what he has said on the topic, after his election win.

The business-led push for the now dumped National Energy Guarantee was driven by this desire. Addressing the energy trilemma – pollution, prices and reliability – requires an integrated approach that takes on all three issues. In short, if emissions policy is ignored there will not be the investor certainty that will drive new investment in the clean energy and storage that will ultimately lead to lower prices and greater reliability.
The economics of electricity production means that a new coal fired power station will never again be built in Australia without large government subsidies and future carbon price indemnity.
The market has spoken and renewables – plus storage – have beaten coal. While making its case for the "Battery of the Nation" Snowy 2.0 Project, Snowy Hydro made public its own market analysis– it is cheaper to build firmed renewables than coal. This victory is decades in the making and will take many years to shake through the system, but there is no doubt about it. While it is clear that a slim majority of Australians voted for a party without a credible policy to reduce greenhouse gas emissions, it is not clear that a majority of Australians are happy for the federal government to keep treading water on climate policy.
So what can the Coalition do? Our energy market rules were designed for an era that is ending and we need smarter rules at the wholesale and retail level so that the market can function properly. The good news for the Prime Minister is that better rules will mean lower bills, more reliability and cleaner generation.
The Australian Energy Market Commission is considering a rule change on wholesale demand response. Demand response allows consumers of electricity to get paid to use less energy at peak demands times when prices are high. Increasing grid reliability, lowering costs and cutting pollution all at once. The Australia Institute has co-sponsored a rule change and it has widespread support from business and consumers, everyone except the incumbents, who want to protect their market power.
Ministers genuinely dedicated to guaranteeing lowering electricity costs would be championing these new energy market rules that would lift the regulatory ceiling on renewables, rather than advocate for new coal-fired power stations that will not supply a single electron before 2029.
Supporting contentious coal mines might have proved to be a good way to rally conservative voters in regional Queensland, but automated mines are never going to rally local economies. The Adani coal mine will not solve regional unemployment in Queensland in the way voters have been led to believe. Even if the mine were to go ahead, the vast majority of unemployed Queenslanders will remain unemployed and it would threaten existing coal jobs at older, less automated mines.
However, there is always another election around the corner. Without serious energy and regional development policy delivered soon there is little chance that regional Australians, or anyone with an electricity bill, will be so easily convinced of the benefits of coal in three years’ time.
Prime Minister Scott Morrison on Monday. Credit: AAP
Australia’s climate wars are far from over. Arguably, they have yet to begin. While some Queensland Nationals MPs are seemingly pleased that they have helped hold back the tide of renewable energy and electric cars, the fact is Australian energy businesses are not going to invest in coal and Australia’s coal mines are not going to employ more than 0.5 per cent of Australia’s workforce.
Australia’s economy and politics will require better than what the Coalition offered at this election and a smart government will figure this out. Despite the triumphalism of some of coal’s boosters, we have proof that in part the Prime Minister already knows this. Scott Morrison spent almost no time during the election campaign spruiking coal and in fact promoted $25 billion dollars in renewable energy investment. We can be sure he will not be bringing a lump of coal into Parliament again.
And as Tony Boyd in The Australian Financial Review wrote yesterday when assessing what the election lessons were for business: "A rational energy policy that incentivises a more rapid transition from fossil fuels to renewables should not be a hard sell for Morrison given that cheaper energy would underpin increased downstream processing in the mining sector’.

*Ben Oquist is the executive director of independent think-tank the Australia Institute.

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