The cow and milk for free

Angus Taylor knew what he was doing. Despite all evidence to the contrary, he is a bright man. He understands accounting tricks. He knew there was a crisis and he preferred to wait for it.

When Taylor delayed release of the country’s electricity pricing update, pushing it out past the election, he was only putting off the inevitable. The issues he was concealing were not short term. They had been cultivated over a decade in which the formulation of energy policy had essentially been handed over to fossil fuel companies.

This capture affects both sides of politics. The last government made no attempt to properly tax gas exporters and the new government is not proposing any different. In most of the country, there is no requirement to service the domestic market. The system allows for maximum profits with no thought to consequences. It is the cow and the milk for free.

Under Taylor, the carbon market was massively distorted. Until it is reformed, it is largely useless in cutting emissions. The energy market was similarly neglected. Companies were forced to keep open power plants that should have been closed.

A third of coal supply is currently offline because the power stations responsible for it are so decrepit.

This is the fantasy of an unreformed energy sector, to which is added the war in Ukraine, floods that affected coal supply, and
a cold snap that caused demand to surge.

Price caps have now been instituted. The spot market has been suspended. This is the first time the Australian Energy Market Operator has intervened in the national market, rather than in the markets of individual states. It is a clear illustration of how incompetently the system has been run.

Increasingly, no matter the question, the answer is renewables. Labor needs to do more to cultivate this reality. The country is a decade behind on projects that would have alleviated the energy crisis it now faces.

Labor has announced a $20 billion project to upgrade the energy grid. It has an electric vehicles policy that will subsidise cars and create incentives for infrastructure. Yet is has ruled out some of the key interventions needed by the country. It will not introduce a carbon price, despite this being the most efficient way to deal with emissions. It continues to pretend that business should decide whether new coalmines are opened up around the country.

Peter Dutton claims the energy market is “precarious” and that the transition to renewables is happening “too quickly”. He says Labor is “spooking” it. He sees the world through a lens of fear, so why not the industry in front of which his party has been prostrated for a decade?

It is a mark of the paucity of debate in this country that someone could argue action has been too quick when in fact it has been too slow. In the end, Taylor bought an extra month before it all came undone. In energy policy, this passes for forward planning.

This article was first published in the print edition of The Saturday Paper on June 18, 2022 as "The cow and milk for free".

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